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PETITIONER: KANPUR NAGAR MAHAPALIKA

       Vs.

RESPONDENT: M/S NARAIN DAS HARIBANSH

DATE OF JUDGMENT: 20/08/1969

BENCH:

ACT: Arbitration-Award of Arbitrator-When bad for error  apparent on the face of the award-If Arbitrator required to deal with legal contentions in his award-Consequence of his not  doing so.

HEADNOTE: The  appellant entered into a contract with  the  respondent for  certain  construction  work at  Kanpur.   The  contract contained  an   arbitration agreement between  the  parties. The respondent filed a suit in 1946 claiming certain  monies due  from the appellant against its final bills but, at  the instance  of  the  appellant, the suit was  stayed  and  the matter  referred  to arbitration.  The  arbitrator  made  an award in March 1960’ in favour of the plaintiffs determining the  amount  payable  by  the  appellant.   Thereafter   the appellant made an application for setting aside the award on the  ground that the arbitrator misconducted himself in  not properly  considering that the claim of the  respondent  was barred by limitation under s. 326 of the U.P. Act 2 of 1916. Although  the  trial court set ’aside the  award,  the  High Court, in appeal, reversed this decision.     In  appeal  to  this  Court it  was  contended  for  the appellant  that  the award was’ bad by reason  of  an  error apparent on the face of the award. HELD: Dismissing the appeal,     In  the present case, it could not be predicated of  the award  that  there was any proposition of  law  forming  the basis  of  the award, and, therefore, it could not  be  said that there was any error apparent on the face of the  award. The  arbitrator was under the agreement in the present  case to  decide the questions which were within the  province  of the arbitrator’s jurisdiction.  It could not be said on  the face  of  the award that the arbitrator has decided  on  any principle   of   construction  which  the  law   does    not countenance.  [30 G--H; 31 A--B]     It is sufficient if the arbitrator gives an award on the whole case and he need not deal with each issue  separately. It  was  open  to  the arbitrator to  decide  on  the  rival contentions  of  the  parties as to  limitation.   In  doing so if an arbitrator makes a mistake either in law or on fact and  if  such  mistake does not appear on the  face  of  the award,  the  award  will  not  be  bad  notwithstanding  any mistake. [31 B--C]     Messrs.  Alopi Parshad and Sons Ltd. v. Union of  India, [1962]  S.C.R.  793; Champsey Bhara & Co. v.  Jivraj  Balloo Spinning  and Weaving Co. Ltd., [1923] A.C. 480 and  Dr.  S. Dutt  v.  University  of  Delhi,   A.I.R.  1958  S.C.  1050; referred to.

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JUDGMENT: CIVIL  APPELLATE  JURISDICTION’: Civil Appeal  No.  1749  of 1966.     Appeal from the judgment and decree dated May 3, 1962 of the Allahabad High Court in F.A.F.O. No. 330 of 1960. 29 J.P. Goyal and G.N. Wantoo, for the appellant. N.C. Chatterjee and Ganpat Rai, for the respondent. The Judgment of the Court was delivered by     Ray,  J. This is an appeal from the judgment  dated  3rd May,  1962 passed by the High Court at  Allahabad  reversing the order of the Civil Judge setting aside an award.     The  appellant  was formerly known as  Municipal  Board, Kanpur  and  thereafter  as  Kanpur  Nagar  Mahapalika.  The appellant in the former name of Municipal Board, Kanpur  and the  respondent  entered  into, a contract  in  writing  for construction  of  zone pumping stations  and  reservoirs  at Kanpur.  One of the clauses in the said agreement in writing contained an arbitration agreement between the parties.     The respondent filed original suit No. 45 of 1946 in the Court  of  Civil  and Sessions Judge,  Kanpur,  against  the Municipal Board, Kanpur and claimed a sum of Rs. 60, 802-4-9 representing  the  claims  on account  of  balance  sum  due according  to the final bills, interest on the  amount  due, refund  of security deposit and interest thereon.  The  suit was  instituted  in  the year 1946.   The  Municipal  Board, Kanpur  thereafter made an application under section  34  of the  Arbitration Act, 1940 for stay of the  suit  contending that  the suit related to a matter agreed to be referred  to arbitration.  On 9th August, 1952, the Court ordered stay of the proceedings.  The plaintiff preferred an appeal  against the  order.  By an order dated 4th November, 1957  the  High Court  at Allahabad directed that since the appeal  was  not pressed  by the plaintiff the Court should proceed with  the matter of reference.  Thereafter on 17th May, 1958 the Court of  Additional Civil Judge, Kanpur sent the matter  to  Shri A.K.  Roy,  Superintending Engineer, who  was  appointed  an arbitrator on the reference.     The  arbitrator  on  8th March, 1960 made  an  award  in favour  of  the  plaintiff respondent for the   sum  of  Rs. 42,772-2-9   on account of final bill, a sum of Rs.  9,705/- on account of refund of security deposit and interest on the security deposit.     The  appellant  thereafter  made  an   application   for setting  aside the award on the ground that  the  arbitrator misconducted  himself  in the proceedings  by  not  properly considering and deciding that the claim of the plaintiff was barred  by  section  326 of the U.P. Act  2  of  1916.   The Additional  Civil Judge, Kanpur by judgment dated 31st  May, 1960  set  aside the award by  holding that  the  arbitrator wrongly   decided  the  point  of  limitation  and   thereby misconducted himself.’ The High Court referred to two  lines of decisions of the Allahabad High Court on the question as 30 to  whether  the claim by the contractor for  money  due  on account of the work done by him for the Municipal Board  was governed  by  section 326 of the U.P.  Act  prescribing  six months   as   the period of limitation or by the  period  of limitation  for  three years under the Limitation  Act.  The High Court came to the conclusion that if the arbitrator had decided it in favour of the plaintiff and did not accept the prescribed  period  of limitation under section 326  of  the

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Municipalities.  Act,  it  would  not be  an  error  of  law apparent on the face of the Award.     Counsel  for the appellant contended that the  award  in the  present case was bad by reason of an error apparent  on the  face of the award.  If an error of law appears  on  the face   of   the  award it is a ground for  remitting  it  or setting  it aside.  An  exception arises where  the  parties choose   specifically  to  refer  a  question  of   law   to arbitration. This Court in the case of Messrs. Alopi Parshad and  Sons  Ltd.  v.  Union  of  India(1)  pointed  out   the distinction between a general reference on the one hand  and the specific reference on the other on any question of law.     In  the  present case, the award does not lay  down  any proposition of law on the question of limitation. The  award does   not  put  any  construction on  section  326  of  the Municipalities Act. Lord Dunedin in Champsey Bhara & Co.  v. Jivraj  Balloo  Spinning and Weaving Co.  Ltd.(2)  said  "an error  of law on the face of the award means   ......   that one  can  find  in  the award, or  in  a  document  actually incorporated  thereto., as, for instance a note appended  by the  arbitrator stating the reasons for his  judgment,  some legal proposition which is the basis of the award and  which is  the  basis of the award and which one can  then  say  is erroneous".  The  award  in  the  present  case  cannot   be impeached  either  for stating the reasons for the  judgment or  for stating any legal proposition which is the basis  of the award.     This  Court in the case of Dr. S. Dutt v. University  of Delhi(3)  said  "in our view all that is  necessary  for  an award to disclose an error on the face of it is that it must contain  either  in itself or in some paper intended  to  be incorporated in it, some legal proposition which on the face of it and without more, can be said to be erroneous".     In  the  present case, it cannot be  predicated  of  the award that there is any proposition of law forming the basis of the  award, and, therefore, it cannot be said that  there is  any  error  apparent  on the  face  of  the  award.  The arbitrator  is  under the agreement in the present  case  to decide the questions which were within the  (1)  [1962] S.C.R. 793.                    (2) [1923]  A.C. 480. (3) A.I.R. 1958 S.C. 1050. 31 province  of  the arbitrator’s jurisdiction.  It  cannot  be said   on  the face of the  award that  the  arbitrator  has decided on any principle of construction which the law  does not countenance.     Counsel   for   the   appellant   contended   that   the arbitrator should have specifically dealt with the  question of  limitation. It is sufficient if the arbitrator gives  an award  on  the  whole case and he need not  deal  with  each issue  separately.  It was open to the arbitrator to  decide on  the rival contentions of the parties  as-to  limitation. In doing so, if an arbitrator makes a mistake either in  law or  on fact and if such mistake does not appear on the  face of the award, the award will not be bad notwithstanding  any mistake.   We must not in the present case be understood  to express any opinion that there was however any mistake.     The High Court was correct in refusing: to set aside the award. For the reasons mentioned above, the appeal fails and is dismissed with costs. R.K.P.S.                                   Appeal dismissed. 32