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PETITIONER: RAIPUR DEVELOPMENT AUTHORITY ETC. ETC.

       Vs.

RESPONDENT: CHOKHAMAL CONTRACTORS ETC. ETC.

DATE OF JUDGMENT04/05/1989

BENCH: VENKATARAMIAH, E.S. (J) BENCH: VENKATARAMIAH, E.S. (J) PATHAK, R.S. (CJ) MISRA RANGNATH VENKATACHALLIAH, M.N. (J) OJHA, N.D. (J)

CITATION:  1990 AIR 1426            1989 SCR  (3) 144  1989 SCC  (2) 721        JT 1989 (2)   285  1989 SCALE  (1)1279  CITATOR INFO :  RF         1990 SC1984  (33)  D          1991 SC 945  (6)  F          1992 SC 732  (2)

ACT:     Arbitration  Act,  1940: Sections 16(1)(c), 20,  21  and 30(c),  32--Award--Whether liable to be set aside on  ground that  no reasons have been given--Necessity to give  reasons where statute or Court orders.     Government Contracts: Government and their instrumental- ities--Should    as    matter   of   policy    and    public interest--Ensure that arbitration clause provides for speak- ing awards by arbitrators.     Administrative    Law:    Natural    justice--Principles of--Furnishing reasons in support of decision--Not  applica- ble  to cases arising under the law of arbitration which  is intended for settlement of private disputes.     Practice And Procedure: Courts should be slow in  taking decisions  which will have effect of  shaking  rights/titles which have been rounded on particular interpretation of law.

HEADNOTE:     The  common question arising in the instant cases  which was referred to this larger Bench is whether an award passed under the provisions of the Arbitration Act, 1940 is  liable either  to be remitted under section 16(1)(c) of the Act  or liable to be set aside under section 30(c) thereof merely on the ground that no reasons have been given by the arbitrator or umpire, as the case may be, in support of the award.     It was urged that (i) subsequent to 1976 there has  been a  qualitative change in the law of arbitration and that  it has  become necessary to insist upon the arbitrator  or  the umpire to give reasons in support of the award passed by him unless  the parties to the dispute have agreed that no  rea- sons  need  be  given by the arbitrator or  umpire  for  his decision;  (ii) since under section 16(1)(c) of the Act  the legality of an award can be questioned in Court on the basis of  an error apparent on the face of an award, the only  way

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of  ensuring that an award is in accordance with law  is  by insisting upon the arbitrator or umpire to give reasons  for the award and (iii) an arbitrator or an umpire discharges  a judicial  function while functioning as an arbitrator or  an umpire under the Act, and, therefore, is under an obligation to  observe rules of natural justice while  discharging  his duties, (iv) that the concept of natural justice had  under- gone  a  great deal of change in recent years, and  the  re- quirement of giving 145 reasons  for a decision should be treated as a new  rule  of natural justice.     While answering the question in the negative and  remit- ting the cases to the Division Bench for disposal in accord- ance with law, this Court,     HELD:  (1) The arbitrator or umpire is under no  obliga- tion  to give reasons in support of the decision reached  by him unless under the arbitration agreement or in the deed of submission  he is required to give such reasons, and if  the arbitrator  or umpire chooses to give reasons in support  of his decision it is open to the Court to set aside the  award if  it finds that an error of law has been committed by  the arbitrator  or  umpire on the face of the  record  on  going through such reasons. [161C-D]     (2) The arbitrator or umpire shall have to give  reasons also  where the court has directed in any order such as  the one made under section 20 or section 21 or section 34 of the Act that reasons should be given or where the statute  which governs an arbitration requires him to do so. [161D-E]     (1)  University of New South Wales v. Max Cooper &  Sons Pty.  Ltd. 35 Australian Law Reports p. 219; (2)  Hodgkinson v.  Fernie  &  Anr., [1857] 3 C.B.  (N.S.)  189=140  English Reports  p.  712;  (3) Champsey Bhara &  Company  v.  Jivraj Balloo Spinning and Weaving Company Ltd., A.I.R. 1923  Privy Council  66,  (4); Seth Thawardas Pherumal v. The  Union  of India,  [1955] 2 S.C.R. 48 (5) Jivarajbhai Ujamshi  Sheth  & Ors.  v.  Chintamanrao Balaji & Ors., [1964] 5 SCR  480  (6) Bungo Steel Furniture Pvt. Ltd. v. Union of India, [1967]  1 SCR  633, (7) State of Rajasthan v. M/s. R.S. Sharma &  Co., [1988] 4 SCC 353, referred to.     (3)  The people in India as in other parts of the  world such as England, U.S.A. and Australia have become accustomed to the system of settlement of disputes by private  arbitra- tion  and have accepted awards made against them as  binding even  though  no reasons have been given in support  of  the awards  for a long time. They have attached more  importance to the element of finality of the awards than their  legali- ty. [178D]     (4) Courts should be slow in taking decisions which will have the effect of shaking rights and titles which have been rounded  through  a  long time upon the  conviction  that  a particular interpretation of law is the legal and proper one and is one which will not be departed from. [179C-D]     Brownsea  Havel Properties v. Pooje Corporation,  [1958] Ch. 74 (C.A.), referred to. 146     (5)  Even after the passing of the  English  Arbitration Act,  1979  unless a court requires the arbitrator  to  give reasons  for  the award, an award is not liable  to  be  set aside  merely on the ground that no reasons have been  given in support of it. [180A-B]     (6) The foundation of any arbitration proceeding is  the existence  of an arbitration agreement between  the  persons who  are parties to the dispute. It is not as if people  are without  any remedy at all in cases where they find that  it

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is  in  their  interest to require the  arbitrator  to  give reasons for the award. In cases where reasons are  required, it is open to the parties to the dispute to introduce a term either  in the arbitration agreement or in the deed of  sub- mission requiring the arbitrators to give reasons in support of  the award. But there may be many transactions  in  which parties to the dispute may not relish the disclosure of  the reasons for the award. [151 E]     Firm Madanlal Roshanlal Mahajan v. Hukumchand Mills Ltd. lndore,  [1967]  1  S.C.R. 105; N.  Chelapan  v.  Secretary, Kerala State Electricity Board & Anr., [1975] 2 S.C.R.  811, referred to.     (7)  The two well recognised principles of natural  jus- tice are (i) that a Judge or an arbitrator who is  entrusted with  the duty to decide a dispute should  be  disinterested and  unbiased (nemo judex in cause sua); and (ii)  that  the parties  to  dispute  should be given  adequate  notice  and opportunity  to  be  heard by the  authority  (audi  alteram partem).  Giving  reasons in support of a decision  was  not considered to be a rule of natural justice either under  the law of arbitration or under administrative law. [171C]     (10)  Payyavula  Vengamma v. Payyavule Kasanna  &  Ors., [1953]  S.C.R. 119; (11) Harvey v. Shelton, [1844]  7  Bear. 455 at p. 462; (12) Haigh v. Haigh. [1861] 31 L.J. Ch.  420; (13)  Som  Datt  Datta v. Union of India &  Ors.,  [1969]  2 S.C.R.  177; (14) Bhagat Payyavula v. The Union of  India  & Ors., [1967] 3 S.C.R. 302; (15) Siemens Engineering &  Manu- facturing Co. of India Ltd. v. Union of India & Anr., [1976] Supp.  S.C.R.  489; (16) Associated  Cement  Companies  Ltd. v.P.N. Sharma & Anr., [1965] 2 S.C.R. 366; (16) A.K. Kraipak JUDGMENT: ferred to.     (8)  A  distinction  has to be  made  between  statutory arbitrations and private arbitrations. What applies general- ly  to  settlement of disputes by  authorities  governed  by public  law need not be extended to a11 cases arising  under private law such as those arising under the law of 147 arbitration  which  is intended for  settlement  of  private disputes. [178A-B]     Rohtas Industries Ltd. & Anr. v. Rohtas Industries Staff Union & Ors., [1976] 3 S.C.R. 12, referred to.     (9) It is no doubt true that in the decisions pertaining to Administrative Law, this Court in cases has observed that the  giving of reasons in an administrative decisions  is  a rule  of natural justice by an extension of  the  prevailing rule.  It would be in the interest of the world of  commerce that the said rule is confined to the area of Administrative Law. [179D-E]     (10)  The trappings of a body which discharges  judicial functions  and required to act In accordance with  law  with their  concomitant obligations for reasoned  decisions,  are not  attracted  to a private adjudication of the  nature  of arbitration  as  the  latter is not supposed  to  exert  the State’s sovereign judicial power. [180F-G]     (11) It will not be justifiable for Governments or their instrumentalities to enter into arbitration agreements which do  not  expressly stipulate the rendering of  reasoned  and speaking  awards.  Governments and  their  instrumentalities should, as a matter of policy and public and private  inter- est if not as a compulsion of law-ensure that wherever  they enter  into agreements for resolution of disputes by  resort to  private arbitration, the requirement of speaking  awards is  expressly stipulated and ensured. It is for  Governments and  their  instrumentalities to ensure in future  this  re-

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quirement as a matter of policy in the larger public  inter- est.  Any lapse in that behalf might lend itself to or  per- haps justify the legitimate criticism that Government failed to  provide against possible prejudice  to  public-interest. [181B-D]     (12)  A decision on the question involves a question  of legislative  policy which should be left to the decision  of Parliament. It is significant that although nearly a  decade ago  the Indian Law Commission submitted its report  on  the law  of  arbitration specifically  mentioning  therein  that there  was  no  necessity to amend the  law  of  arbitration requiring the arbitrator to give reasons, Parliament has not chosen to take any step in the direction of the amendment of the law of arbitration. [178H; 179G-H]     (13) In the circumstances and particularly having regard to  the various reasons given by the Indian  Law  Commission for  not  recommending  to the Government  to  introduce  an amendment  in  the  Act requiring the  arbitrators  to  give reasons for their awards, it may not be 148 appropriate  to take the view that all awards which  do  not contain  reasons  should either be remitted  or  set  aside. [178G]

&     CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 3 137-39 of 1985 etc. etc.     From  the  Judgment  and Order dated  10.4.1985  of  the Madhya Pradesh High Court in Misc. Appeal Nos. 176 to 178 of 1983.     F.S.  Nariman, G.L. Sanghi, Aspi Chimoi,  A.L.  Pandiya, Rajan  Karanjawala, S.C. Sharma, Ms. Meenakshi Arora,  Manik Karanjawala,  N.  Nettar, G.S. Narayana,  R.K.  Mehta,  Shri Narain,  Sandeep  Narain, D.P. Mohanty, Ashok  Kumar  Panda, R.K. Patri and Jatinder Sethi for the Appellants.     Soli  J. Sorabjee, A.K. Sen, M.H. Baig, Raja  Ram  Agar- walla,  P.A.  Choudhary,  A.K. Ganguli,  M.C.  Bhandare,  S. Ganesh, P.S. Shroff, Randeep Singh, Shrjawala, R.  Sasiprab- hu, S.S. Shroff, S.A. Shroff, Arun Madan, R.K. Sahoo, J.D.B. Raju,  M.M.  Kshatriya, T.V.S.N. Chari,  T.  Sridharan,  Ms. Mridula Ray, S.K. Sahoo, N.D.B. Raju, Aruneshwar Gupta, P.P. Juneja, S.K. Bagga, P.N. Mishra, H.J. Zaveri and B.S.  Chau- han for the Respondents.     Milan  Banerjee, P.P. Rao, A. Mariarputham, C.M.  Nayar, A.K.  Chakravorty, Mrs. J. Wad. Mrs. Aruna. Mathur  for  the Intervener. The Judgment of the Court was delivered by     VENKATARAMIAH,  J. The common question which arises  for consideration in these cases which are very neatly argued by learned counsel on both the sides is whether an award passed Under the provisions of the Arbitration Act, 1940 (hereinaf- ter referred to as ’the Act’) is liable either to be  remit- ted  under section 16(1)(c) of the Act or liable to  be  set aside under section 30(c) thereof merely on the ground  that no  reasons have been given by the arbitrator or umpire,  as the case may be, in support of the award.     Ordinarily all disputes arising under a contract have to be settled by courts established by the State. Section 28 of the Indian Contract Act, 1872 provides that every  agreement by  which  any party thereto is restricted  absolutely  from enforcing his rights under or in respect of 149 any contract, by the usual legal proceedings in the ordinary

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tribunals, or which limits the time within which he may thus enforce  his rights, is void to that extent. Exception 1  to the  said section 28, however, provides that the .said  sec- tion  shall  not render illegal a contract by which  two  or more persons agree that any dispute which may arise  between them in respect or any subject or class of subjects shall be referred to arbitration, and that only the amount awarded in such  arbitration  shall be recoverable in  respect  of  the dispute so referred. A brief history of the English Law of Arbitration, is  given in the learned treatise--The Law and Practice of  Commercial Arbitration in ’England by Sir Michael J. Mustill and  Stew- art  C. Boyd. For centuries commercial men preferred to  use arbitration rather than the courts to resolve their business disputes  on account of the inherent advantages in the  set- tlement  of  disputes by arbitration.  They  preferred  this alternative method of settlement of disputes to the ordinary method  of  settlement through  courts  because  arbitration proceedings  were  found to be cheap and quick.  It  was  no doubt true that the courts repeatedly expressed doubts as to the  wisdom of this preference as reflected by  the  current opinion  that arbitration was an ineffective procedure,  not that it was undesirable in itself. The commercial community, has been however, insisting on the right to arbitration  and has  always exhibited an interest in seeing that the  system is  made to work as well as possible. This led  to  repeated statutory  intervention. Accordingly laws were  passed  from time to time to make the arbitration proceedings  effective. The English Arbitration Act of 1950 and the English Arbitra- tion Act, 1979 are the two major pieces of legislation which now  control  the arbitration proceedings  in  England.  The legal  requirements of an award under English Law  are  suc- cinctly given in ’the Hand Book of Arbitration Practice’  by Ronald  Bernstein (1987). English Law.. does not impose  any legal  requirement as to the form of valid award but if  the arbitration  agreement contains any requirement to the  form of  the award the award should meet those requirements.  The award must be certain. It could be either interim or  final. An  award without reasons is valid. "The absence of  reasons does  not  invalidate  an award. In  many  arbitrations  the parties want a speedy decision from a tribunal whose  stand- ing and integrity they respect, and they are content to have an  answer  Yes or No; or a figure of X. Such  an  award  is wholly  effective; indeed, in that it cannot be appealed  as being wrong in law it may be said to be more effective  than a reasoned award." Section  1  of the English Arbitration Act,  1979,  however, pro- 150 vides  that  if it appears to the High Court that  an  award does  not or does not sufficiently set out the  reasons  for the  award in sufficient detail to enable the court to  con- sider  any question of law arising out of it, the court  has power  to order the arbitrator or umpire to give reasons  or further reasons.     In  the  United States of America as a general  rule  an arbitration  award  must contain the actual  decision  which results  from  an arbitrator’s consideration of  the  matter submitted to them but the arbitrator need not write  opinion with any specificity as a court of law does unless otherwise provided by a statute or by the submission itself.  Arbitra- tors  are  not required to state in the  award  each  matter considered or to set out the evidence or to record  findings of  facts or conclusions of law. They need not give  reasons for  their award and conclusions or the grounds  which  form

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the  basis for the arbitration determination,  describe  the process  by  which  they arrived at their  decision  or  the rationale  of the award. Although such matters are  not  re- quired, the award is not necessarily invalidated because  it sets  out the reasons or the specific findings, matters,  or conclusions  on  which it is based and faulty  reasoning  if disclosed does not by itself vitiate the award. (See  Corpus Juris Secundum, Vol. VI pp. 324-325).     In  Australia too an arbitrator, unless  required  under section 19 of the Australian Arbitration Act, 1902 to  state in  a special case a question of law is under no  obligation in law to give his reasons for his decision (vide University of  New South Wales v. Max Cooper & Sons Pvt. Ltd., 35  Aus- tralian Law Reports p. 219).     An  instructive survey of the Indian Law of  Arbitration is to be found in the learned lecture delivered by Nripendra Nath Sircar in the Tagore Law Lectures series of the Calcut- ta  University  entitled  "Law  of  Arbitration  in  British India".  After  referring to the provisions  of  the  Bengal Regulation  Act and the Madras Regulation Act,  the  learned lecturer  traces  the history of the Law of  Arbitration  in India  in  detail  commencing with Act VIII  of  1859  which codified the procedure of civil courts. Sections 3 12 to 325 of  Act VIII of 1859 dealt with arbitration between  parties to a suit while sections 326 and 327 dealt with  arbitration without  the intervention of a court. These provisions  were in  operation  when  the Indian Contract  Act,  1872,  which permitted  settlement of disputes by arbitration under  sec- tion 28 thereof as stated at the commencement of this  judg- ment came into force. Act VIII of 1859 was followed by later codes relating to Civil Procedure, namely, Act X of 1877 and Act XIV of 1882 but not much change was brought 151 about in the law relating to arbitration proceedings. It was in the year 1899 that an Indian Act entitled the Arbitration Act of 1899 came to be passed. It was based on the model  of the English Act of 1889. The 1899 Act applied to cases where if  the  subject-matters submitted to arbitration  were  the subject  of  a suit, the suit could whether  with  leave  or otherwise, be instituted in a Presidency town. Then came the Code  of  Civil Procedure of 1908. Schedule II to  the  said Code  contained the provisions relating to the law of  arbi- tration which extended to the other parts of British  India. The  Civil  Justice Committee in  1925  recommended  several changes  in  the  arbitration law and on the  basis  of  the recommendations  by the Civil Justice Committee, the  Indian Legislature  passed  the Act, i.e., the Arbitration  Act  of 1940, which is currently in force. The salient provisions of the  Act  which are relevant for purposes of this  case  are these.     The Act as its preamble indicates is a consolidating and amending Act and is an exhaustive code in so far as the  law relating to arbitration is concerned. An arbitration may  be without intervention of a court or with the intervention  of a  court  where  there is no suit pending or it  may  be  an arbitration in a suit. Unless there is an arbitration agree- ment  to submit any present and future differences to  arbi- tration to which a person is a party, he cannot be compelled to have a dispute in which he is concerned settled by  arbi- tration.  The  foundation of any arbitration  proceeding  is therefore the existence of an arbitration agreement  between the  persons who are parties to the dispute. Every  arbitra- tion  agreement  unless a different intention  is  expressed therein,  shall be deemed to include the provisions set  out in  the  First  Schedule to the Act in so far  as  they  are

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applicable  to the reference. The parties to an  arbitration agreement  may agree that any reference thereunder shall  be to an arbitrator or arbitrators to be appointed by a  person designated in the agreement either by name or as the  holder for the time being of any office or appointment. The author- ity  of an appointed arbitrator or umpire cannot be  revoked except with the leave of the court, unless a contrary inten- tion is expressed in the arbitration agreement. An  arbitra- tion  agreement does not come to an end by death of  parties thereto but shall in such event be enforceable by or against the  legal representative of the deceased. The authority  of an  arbitrator  does not stand revoked by the death  of  any party  by  whom he was appointed. In any  of  the  following cases  (a) where an arbitration agreement provides that  the reference shall be to one or more arbitrators to be appoint- ed  by  consent of the parties, and all the parties  do  not after differences have arisen, concur in the appointment  or appointments;  or (b) if any appointed arbitrator or  umpire neglects 152 or  refuses to act, or is incapable of acting, or dies,  and the arbitration agreement does not show that it was intended that  the vacancy should not be supplied and the parties  or the  arbitrators,  as the case may be’, do  not  supply  the vacancy;  or  (c) where the parties or the  arbitrators  are required  to  appoint an umpire and do not appoint  him  any party may serve the other parties or the arbitrators, as the case may be, with a written notice to concur in the appoint- ment  or  appointments or in supplying the vacancy.  If  the appointment is not made within fifteen clear days after  the service of the said notice, the court may on the application of the party who gave the notice and after giving the  other parties an opportunity of being heard, appoint an arbitrator or arbitrators or umpire, as the case may be, who shall have like power to act on the reference, and to make an award  as if he or they had been appointed by consent of all  parties. The Court may on an application of any party to a  reference remove an arbitrator or umpire who fails to use all reasona- ble  dispatch in entering on and proceeding with the  refer- ence and making an award. The court may remove an arbitrator or  umpire who has misconducted himself or the  proceedings. Where the court removes an umpire who has not entered on the reference  or  one or more arbitrators (not  being  all  the arbitrators), the court may on the application of any  party to  the arbitration agreement, appoint persons to  fill  the vacancies. The arbitrators or umpire shall, unless a differ- ent  intention is expressed in the agreement have  power  to administer  oath  to the parties  and  witnesses  appearing; state  a  special case for the opinion of the court  on  any question  of law involved, or state the award, wholly or  in part, in the form of a special case of such question for the opinion  of the court; make the award conditional or in  the alternative;  correct  in an award any clerical  mistake  or error  arising  from any accidental slip  or  omission;  and administer to any party to the arbitration such interrogato- ries as may, in the opinion of the arbitrators or umpire, be necessary.  Section  14 of the Act provides  that  when  the arbitrators or umpire have made their award, they shall sign it  and shall give notice in writing to the parties  of  the making  and  signing thereof and of the amount of  fees  and charges  payable  in respect of the arbitration  and  award. While  an award should contain the decision of the  arbitra- tors or umpire of the case, as the case may be, the Act does not  say in express terms that an award should  contain  the reasons  in  support  of the decision.  The  arbitrators  or

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umpire shall at the request of any party to the  arbitration agreement  or any person claiming under such party or if  so directed  by  the  court and upon payment of  the  fees  and charges  due in respect of the arbitration and award and  of the  costs and charges of filing the award, cause the  award or  a signed copy of it, together with any  depositions  and documents 153 which  may  have been taken and proved before  them,  to  be filed in court, and the court shall thereupon give notice to the parties of the filing of the award. Sections 15, 16,  17 and  30 of the Act which are relevant for purposes  of  this case read as follows:               15.  Power of the Court to modify  award.--The               Court  may  by  order  modify  or  correct  an               award--                       (a)  where it appears that a  part  of               the  award  is upon a matter not  referred  to               arbitration and such can be separated from the               other part and does not affect the decision on               the matter referred, or                       (b)  where the award is  imperfect  in               form, or contains any obvious error which  can               be amended without affecting such decision; or                       (c) where the award contains a  cleri-               cal mistake or an error arising from an  acci-               dental slip or omission.               16.  Power to remit award. (1) The  Court  may               from  time  to  time remit the  award  or  any               matter referred to arbitration to the arbitra-               tors  or umpire for reconsideration upon  such               terms as it thinks fit--                       (a) where the award has left  undeter-               mined any of the matters referred to  arbitra-               tion,  or where it determines any  matter  not               referred to arbitration and such matter cannot               be separated without affecting the  determina-               tion of the matters; or                       (b)  where the award is so  indefinite               as to be incapable of execution; or                       (c) where an objection to the legality               of the award is apparent upon the face of it.               (2)  Where  an award is  remitted  under  sub-               section  (1)  the  Court shall  fix  the  time               within  which the arbitrator or  umpire  shall               submit his decision to the Court.               (3)  An award remitted under  sub-section  (1)               shall become void on the failure of the  arbi-               trator or umpire to reconsider               154               it  and  submit his decision within  the  time               fixed.               17.  Judgment  in terms of  award.  Where  the               Court sees no cause to remit the award or  any               of  the  matters referred to  arbitration  for               reconsideration or to set aside the award, the               Court  shall,  after the time  for  making  an               application  to  set aside the award  has  ex-               pired,  or such application having been  made,               after refusing it, proceed to pronounce  judg-               ment  according  to the award,  and  upon  the               judgment  so pronounced a decree shall  follow               and  no  appeal  shall lie  from  such  decree               except on the ground that it is in excess  of,               or  not  otherwise  in  accordance  with,  the

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             award.               30. Grounds for setting aside award.--An award               shall  not be set aside except on one or  more               of the following grounds, namely:                        (a) that an arbitrator or umpire  has               misconducted himself or the proceedings;                        (b) that an award has been made after               the issue of an order by the Court superseding               the arbitration or after arbitration  proceed-               ings have become invalid under section 35;                        (c) that an award has been improperly               procured or is otherwise invalid.     Section 15 of the Act deals with the power of the  Court to modify award. Section 16 of the Act deals with its  power to  remit an award and section 30 of the Act deals with  the power of the Court to set aside an award. Section 17 of  the Act provides that where the court sees no cause to remit the award  or  any of the matters referred  to  arbitration  for reconsideration or to set aside the award, the court  shall, after  the time for making an application to set  aside  the award  has  expired, or such application having  been  made, after  refusing it, proceed to pronounce judgment  according to  the award, and upon the judgment so pronounced a  decree shall follow and no appeal shall lie from such decree except on  the ground that it is in excess of, or not otherwise  in accordance with, the award. The period for getting an  award remitted  for  reconsideration or for setting  it  aside  is prescribed  under Article 119 of the Limitation  Act,  1963. Section 39 of the Act provides that an appeal shall lie from the following orders passed under the Act; (1) 155 superseding  an arbitration; (2) on an award stated  in  the form  of  a  special case; (3) modifying  or  correcting  an award; (4) filing or refusing to file an arbitration  agree- ment;  (5)  staying or refusing to  stay  legal  proceedings where  there  is an arbitration agreement; and  (6)  setting aside  or refusing to set aside an award and from no  others to the court authorised by law to hear appeals from original decree  of the court passing the orders. Section 46  of  the Act makes the Act applicable to statutory arbitrations, save in  so far as is otherwise provided by any law for the  time being  in  force,  the provisions of the Act  apply  to  all statutory arbitrations. These are broadly the provisions  of the Act which govern an arbitration proceeding.     In  many  of  the cases in which awards  are  passed  by arbitrators under auspices of institutions like Chambers  of Commerce  it  may not be necessary for the  parties  to  the disputes to go to the Court to get rules issued in terms  of the awards since persons against whom awards are made  would be  willingly complying with the awards for it would  be  in their interest to do so in order to maintain their  prestige in the business world. But in other cases where there is  no guarantee  of  ready  compliance with the  awards  by  those against  whom  they are made it becomes  necessary  to  take appropriate  steps under the Act to get the awards filed  in the  Court under section 14 of the Act and to seek  the  as- sistance of the Court in getting decrees passed in terms  of the awards so that the decrees can be executed through court for the realisation of the fruits of the award. At the  same time  the Act provides the necessary machinery  for  getting the award remitted to the arbitrators or the umpire, as  the case  may be, for reconsideration or for getting  the  award set  aside in cases falling under section 30 thereof.  Under the  Indian  Arbitration Act, 1899 which  applied  to  areas lying  within  the Presidency towns section 14  provided  as

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follows:               "14. Where an arbitrator or umpire has miscon-               ducted himself, or an arbitration or award has               been  improperly procured, the Court  may  set               aside the award."                   This  section  was  couched  in  the  same               language in which section 11(2) of the English               Arbitration Act, 1889 was couched. Para 15  of               the  Second  Schedule  to the  Code  of  Civil               Procedure,  1908 which was applicable  to  the               rest of British India read as follows:               "15  ........  But no award shall be set aside               except on one of the following grounds,  name-               ly:               156                         (a) corruption or misconduct of  the               arbitrator or umpire:                         (b) either party having been  guilty               of fraudulent concealment of any matter  which               he  ought  to have disclosed, or  of  wilfully               misleading  or  deceiving  the  arbitrator  or               umpire;                         (c) the award having been made after               the issue of an order by the Court superseding               the  arbitration and proceeding with the  suit               or after the expiration of the period  allowed               by the Court, or being otherwise invalid."     Then followed the Act, i.e., the Indian Arbitration Act, 1940 which extended to the whole of the British India w.e.f. July  1, 1940 superseding the Indian Arbitration  Act,  1899 and  the  Second Schedule to the Code  of  Civil  Procedure, 1908. Section 30 of the Act provides that an award shall not be set aside except on one or more of the following grounds, namely: (a) that an arbitrator or umpire has misconducted himself or the proceedings; (b) that an award has been made after the issue of an  order by  the Court superseding the arbitration or after  arbitra- tion proceedings have become invalid under section 35; (c) that an award has been improperly procured or is  other- wise invalid.     It  may be noticed that the general ground, namely,  the award  being ’otherwise invalid’ for setting aside an  award which appeared for the first time in the Second Schedule  to the Civil Procedure Code, 1908 was not to be found either in the Indian Arbitration Act, 1899 or in the English  Arbitra- tion  Act, 1889 which contained inter alia two  grounds  for setting aside an award, namely: (i)  that an arbitrator or an umpire had  misconducted  him- self; and (ii) the award had been improperly procured. In connection with the English Arbitration Act, 1889 and the Indian 157 Arbitration  Act, 1899 certain principles had  become  well- settled although neither of these statutes made reference to illegality  or error apparent on the face of the  award.  In one of the cases frequently referred to in later  decisions, namely,  Hodgkinson  v. Fernie and another,  [1857]  3  C.B. (N.S.)  189= 140 English Reports. p. 712 it  was  recognised that the principle had been firmly established that where an error of law appeared on the face of the award or upon  some paper accompanying or forming part of the award that consti- tuted a ground for setting aside the award. Williams, J. who agreed  with  Cockburn, C.J. in the said  decision  observed

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thus:               "I  am entirely of the same opinion.  The  law               has  for many years been settled, and  remains               so at this day, that, where a cause or matters               in  difference are referred to an  arbitrator,               whether a lawyer or a layman, he is constitut-               ed  the sole and final judge of all  questions               both of law and of fact. Many cases have fully               established  that position, where awards  have               been  attempted to be set aside on the  ground               of the admission of an incompetent witness  or               the  rejection of a competent one.  The  court               has  invariably  met  those  applications   by               saying, ’You have constituted your own  tribu-               nal; you are bound by its decision.’ The  only               exceptions  to that rule, are cases where  the               award  is the result of corruption  or  fraud,               and  one  other,  which, though it  is  to  be               regretted,  is  now, I  think,  firmly  estab-               lished, viz. where the question of law  neces-               sarily  arises  on the face of the  award,  or               upon some paper accompanying and forming  part               of  the  award. Though the propriety  of  this               latter  may very well be doubted, I  think  it               may be considered as established."                   In  Champsey  Bhara &  Company  v.  Jivraj               Balloo  Spinning  and  Weaving  Company  Ltd.,               A.I.R. 1923 Privy Council, 66 which was a case               arising  from  the High Court of  Bombay,  the               Privy Council following the decision in  Hodg-               kinson v. Fernie, (supra) observed thus:               "Now the regret expressed by Williams, J.,  in               Hodgkinson v. Fernie, (2) has been repeated by               more  than one learned Judge, and it  is  cer-               tainly  not to be desired that  the  exception               should be in any way extended. An error in law               on  the  face  of the award  means,  in  their               Lordships’  view,  that you can  find  in  the               award  or  a  document  actually  incorporated               thereto,  as for instance, a note appended  by               the  arbitrator  stating the reasons  for  his               judgment, some legal proposi-               158               tion which is the basis of the award and which               you can then say is erroneous."     The  ground arising out of an error of law  apparent  on the  face  of the award prima facie appears to  fall  either under section 16(1)(c) of the Act, which empowers the  Court to  remit the award to the arbitrator where an objection  to the legality of the award which is apparent upon the face of it is successfully taken, or under section 30(c) of the  Act which  empowers  the Court to set aside an award  if  it  is ’otherwise  invalid’. The following two decisions relied  on the said two provisions of law respectively.     This  Court in Seth Thawardas Pherumal v. The  Union  of India,  [1955] 2 SCR 48 approved the view expressed  in  the case  of Champsey Bhara & Company (supra) in  the  following words at pages 53-54 thus:               "In India this question is governed by section               16(1)(c) of the Arbitration Act of 1940  which               empowers a Court to remit an award for  recon-               sideration ’where an objection to the legality               of the award is apparent upon the face of it’.               This  covers  cases in which an error  of  law               appears  on  the  face of the  award.  But  in

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             determining what such an error is, a  distinc-               tion  must be drawn between cases in  which  a               question  of law is specifically referred  and               those in which a decision on a question of law               is  incidentally material (however  necessary)               in  order to decide the question actually  re-               ferred.  If a question of law is  specifically               referred  and it is evident that  the  parties               desire to have a decision from the  arbitrator               about  that rather than one from  the  Courts,               then  the  Courts will not  interfere,  though               even  there, there is authority for  the  view               that the Courts will interfere if it is appar-               ent that the arbitrator has acted illegally in               reaching  his decision, that is to say, if  he               has  decided  on inadmissible evidence  or  on               principles  of construction that the law  does               not  countenance or something of that  nature.               See  the speech of Viscount Cave  in  Kelantan               Government  v.  Duff Development  Co.,  [1923]               A.C. 395 at page 409. But that is not a matter               which arises in this case.                         The law about this is, in our  opin-               ion,  the  same  in England as  here  and  the               principles that govern this class of case have               been  reviewed  at  length and  set  out  with               clarity by the House of Lords in F.R.  Absalom               Ltd. v. Great               159               Western   (London)  Garden  Village   Society,               [1933] A.C. 592 and in Kelantan Government  v.               Duff  Development  Co., [1923]  A.C.  395.  In               Durga  Prasad v. Sewkishendas, 54  C.W.N.  74,               79) the Privy Council applied the law expound-               ed in Absalom’s case [1933] A.C. 592 to India:               see also Champsey Bhara & Co. v. Jivraj Balloo               Spinning  and Weaving Co., 50 I.A. 324, 330  &               331 and Saleh Mahomed Umer Dossal v. Nathoomal               Kessamal, 54 I.A. 427, 430. The wider language               used  by Lord Macnaghten in Ghulam  Jilani  v.               Muhammad Hassan, 29 I.A. 51, 60 had  reference               to  the  revisional powers of the  High  Court               under  the  Civil Procedure Code and  must  be               confined  to the facts of that case where  the               question of law involved there, namely limita-               tion, was specifically referred. An arbitrator               is not a conciliator and cannot ignore the law               or  misapply it in order to do what he  thinks               is  just  and  reasonable. He  is  a  tribunal               selected  by the parties to decide their  dis-               putes  according  to law and so  is  bound  to               follow and apply the law, and if he does  not,               he can be set right by the Courts provided his               error  appears on the face of the  award.  The               single  exception to this is when the  parties               choose specifically to refer a question of law               as a separate and distinct matter."     In Jivarajbhai Ujamshi Sheth and Others v.  Chintamanrao Balaji and Others, [1964] 5 SCR 480 this Court held that  an award can be set aside on the ground of error of law  appar- ent  on the face of the record under section 30 of  the  Act but it qualified the above legal position by saying that the Court  while dealing with the application for setting  aside an  award has no power to consider whether the view  of  the arbitrator  on the evidence was justified according to  this

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Court. The arbitrator’s justification was generally  consid- ered  binding  between  the parties for it  was  a  tribunal selected  by the parties and the power of the Court  to  set aside  the award was restricted to cases set out in  section 30. The Court further observed that it was not open to it to speculate, where no reasons are given by the arbitrator,  as to what impelled the arbitrator to arrive at his conclusion. The  Court declined to recognise the power of the  Court  to attempt to probe the mental process by which the  arbitrator had reached his conclusion where it was not disclosed by the terms of his award. The relevant part of the above  decision reads thus:                        "An  award made by an  arbitrator  is               conclusive  as a judgment between the  parties               and the Court is entitled to               160               set  aside  an  award if  the  arbitrator  has               misconducted  himself  in the  proceedings  or               when  the award has been made after the  issue               of  an  order  by the  Court  superseding  the               arbitration  or after arbitration  proceedings               have  become invalid under section 35  of  the               Arbitration  Act  or where an award  has  been               improperly  procured or is otherwise  invalid:               s. 30 of the Arbitration Act. An award may  be               set aside by the Court on the ground of  error               on the face of the award, but an award is  not               invalid merely because by a process of  infer-               ence and argument it may be demonstrated  that               the  arbitrator has committed some mistake  in               arriving  at  his conclusion. As  observed  in               Champsey  Bhara  and Company v.  Jivraj  Ballo               Spinning  and  Weaving Company Ltd.,  L.R.  50               I.A. 324 at p. 331:                        ’An  error in law on the face of  the               award  means, in their Lordships’  view,  that               you can find in the award or a document  actu-               ally  incorporated thereto, as for instance  a               note  appended by the arbitrator  stating  the               reasons for his judgment, some legal  proposi-               tion which is the basis of the award and which               you  can  then say is erroneous. It  does  not               mean  that  if in a narrative a  reference  is               made to a contention of one party, that  opens               the door to seeing first what that  contention               is,  and then going to the contract  on  which               the  parties’  rights depend to  see  if  that               contention is sound.’               The  Court in dealing with an  application  to               set aside an award has not to consider whether               the view of’ the arbitrator on the evidence is               justified.  The arbitrator’s  adjudication  is               generally   considered  binding  between   the               parties, for he is a tribunal selected by  the               parties  and  the power of the  Court  to  set               aside the award is restricted to cases set out               in s.30. It is not open to the Court to specu-               late, where no reasons are given by the  arbi-               trator, as to what impelled the arbitrator  to               arrive  at his conclusion. On  the  assumption               that  the arbitrator must have arrived at  his               conclusion by a certain process of  reasoning,               the Court cannot proceed to determine  whether               the  conclusion is right or wrong. It  is  not               open  to  the Court to attempt  to  probe  the

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             mental  process  by which the  arbitrator  has               reached  his conclusion where it is  not  dis-               closed by the terms of his, award." 161     The same view was expressed by this Court in Bungo Steel Furniture Pvt. Ltd. v. Union of India, [1967] 1 S.C.R.  633. There  have been a number of decisions of this Court on  the above  question and it is not necessary to refer to  all  of them except to refer to a recent decision in State of Rajas- than v. M/s. R.S. Sharma and Co., [1988] 4 S.C.C. 353 decid- ed by Sabyasachi Mukharji and S. Ranganathan, JJ.     It  is  now well-settled that an award  can  neither  be remitted nor set aside merely on the ground that it does not contain  reasons in support of the conclusion  or  decisions reached in it except where the arbitration agreement or  the deed  of submission requires him to give reasons. The  arbi- trator  or umpire is under no obligation to give reasons  in support  of  the decision reached by him  unless  under  the arbitration  agreement  or in the deed of submission  he  is required  to  give  such reasons and if  the  arbitrator  or umpire chooses to give reasons in support of his decision it is open to the Court to set aside the award if it finds that an  error  of law has been committed by  the  arbitrator  or umpire  on  the  face of the record on  going  through  such reasons. The arbitrator or umpire shall have to give reasons also  where the court has directed in any order such as  the one made under section 20 or section 21 or section 34 of the Act that reasons should be given or where the statute  which governs an arbitration requires him to do so.     The  Law Commission of India, however, had  occasion  to consider  the question whether it should be made  obligatory on  the part of the arbitrator or umpire to give reasons  in support  of  the award in the course  of  its  Seventy-sixth Report on Arbitration Act, 1940 which was submitted in 1978. The relevant part of the report of the Law Commission on the above question reads thus:               "4.42A.  Before  leaving  section  14,  it  is               necessary to deal with one suggestion that has               been  made  to the effect that  an  arbitrator               must  be  required  to give  reasons  for  the               award. This suggestion was made by the  Public               Accounts Committee (1977-78), Sixth Lok Sabha,               Ninth Report, dealing with the Forest  Depart-               ment, Andaman. The suggestion has been brought               to  our  notice by the Ministry  of  Law.  The               Committee,  after expressing  its  unhappiness               over  the manner in which certain  arbitration               cases  which formed the subject-matter of  the               Report had been pursued, and after noting  the               delay  that  took  place in  the  disposal  of               cases, made the following observations:               162               ’In  this  distressing story,  Government  has               repeatedly  suffered loss. In the first  arbi-               tration  case, Government’s claim for  royalty               on shortfall of extraction was not upheld.  As               the  arbitrator’s award gave no reasons,  Gov-               ernment  could  not even find  out  why  their               claim  was  rejected. It will  be  strange  if               Government really finds itself so helpless  in               such case. The Committee would like Government               to make up its mind and amend the law in  such               a  manner that it would be obligatory  on  the               arbitrator  to  give reasons  for  his  award.               Meanwhile, it should be ascertained whether in

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             an  award  which sets out no reasons  the  ag-               grieved party would have no remedy whatever.’               4.43.  We  have also been  informed  that  the               Public  Accounts Committee (1975-76),  in  its               210  Report, has observed as  follows  (Public               Accounts  Committee’19776, 210th Report,  page               136, para 5.17):               ’Incidentally,  the Committee also  find  that               under  the Arbitration Act, the Arbitrator  is               not  bound to give any reason for  the  award.               The result is that often it becomes  difficult               to  challenge such non-speaking awards on  any               particular  ground. The Committee are  of  the               view  that  it should be  made  obligatory  on               arbitrators to give detailed reasons for their               awards  so that they may, if necessary,  stand               the  test of objective judicial scrutiny.  The               Committee  desire that this aspect  should  be               examined  and the necessary provision  brought               soon on the statute book.’               4.44. We’ have given careful consideration  to               the  suggestion that the arbitrator should  be               required  to give reasons. And  we  appreciate               the  embarrassment that must be caused to  the               Government  by  such awards in the  cases  re-               ferred to by the Public Accounts Committee  in               its Report referred to above. We are also  not               unmindful of the fact that the public interest               might sometimes suffer by awards which are not               supported  by reasons. But we regret  that  we               are unable to persuade ourselves to accept the               suggestion  for amending the law. Our  reasons               for this conclusion will be set out presently.               These reasons are, in our view, weighy  enough               to override other considerations.               163               4.45.  There  are,  it seems  to  us,  several               consideration that are relevant in determining               the  question whether an arbitrator should  be               required by law to give reasons for the award.                        The scheme of the Arbitration Act  is               to  provide a domestic forum, for  speedy  and               substantial  justice,  untrammelled  by  legal               technicalities,  by  getting the  dispute  re-               solved  by a person in whom the parties  have-               full faith and confidence. The award given  by               such a person under the scheme of the Act  can               be  assailed only on very limited ground  like               those mentioned in section 30 of the Act.  The               result  is that most of the awards at  present               are made rules of the court despite objections               to  their validity by the party  against  whom               those  awards  operate. To  have  a  provision               making  it  obligatory for the  arbitrator  to               give reasons for the award would be asking for               the introduction of an infirmity in the  award               which in most cases is likely to prove  fatal.               Many honest awards would thus be set aside.                         Once  the arbitrators are  compelled               to  give reasons in support of the award,  the               inevitable  effect of that would be  that  the               validity of most of the awards would be  chal-               lenged  on the ground that the reasons, or  at               least some of them, are bad and not germane to               the  controversy. Sometimes, if  four  reasons

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             are  given in support of the award and one  of               the reasons is shown to be not correct or  not               germane, the award would be challenged on  the               ground that it is difficult to predicate as to               how  far the bad reason which is  not  germane               has influenced the decision of the arbitrator.               Many  awards would not survive court  scrutiny               in such circumstances.               4.46.  It is also noteworthy that in  a  large               number  of  cases  the  arbitrators  would  be               laymen.  Although their final award may be  an               honest  and conscientious adjudication of  the               controversy and dispute, they may not be  able               to insert reasons in the award as may  satisfy               the legal requirements and the scrutiny of the               court.  The arbitrators having been chosen               by  the parties, it would, in our opinion,  be               not  correct  to put extra burden on  them  of               also giving reasons which are strictly ration-               al and germane in the eye of law in support of               their award. Once the parties have voluntarily               164               chosen  the  arbitrators,  presumably  because               they have faith in their impartiality, the law               should  not insist upon the recording of  rea-               sons by them in their award.               4.47. The previous experience, in fact, points               out  that it is awards  incorporating  reasons               which  have generally been quashed  in  court.               The  awards not giving reasons  have  survived               the  attack  on  their  validity,  unless  the               arbitrator is otherwise shown to have  misconducted himself or  his  award suffers from some other technical defect.          Once  we have the compulsion for the  incorporation of  reasons in the award given by the arbitrators,  validity of most of the awards, in our opinion, would not be able  to survive  in court. As such, the object of  the  Arbitrations Act would be substantially defeated. 4.48. Once Parliament provides that reasons shall be  given, that must clearly be read as meaning that proper,  adequate, reasons must be given; the reasons that are set out, whether they are right or wrong, must be reasons which not only will be  intelligible,  but also can reasonably be said  to  deal with  the substantial points that have been raised.  If  the award  in any way fails to comply with the statutory  provi- sions,  then it would be a ground for saying that the  award was  bad on the face of it, as Parliament has required  that reasons  shall be incorporated (Of. Re Poyser & Mills  Arbi- tration,  (1964)  2 Q.B. 467; (1963) 1 All E.R. 6 12,  6  16 (Megaw J. ).           It  is well established that where the  arbitrator gives  reasons for a conclusion of law, courts can  go  into those  reasons.  (Champsey Bhara & Co. v.  J.B.  Spinning  & Weaving Co. Ltd., A.I.R. 1923 P.C. 66; S. Dutt v. University of Delhi, A.I.R. 1958 S.C. 1050. 4.49.  It  is sometimes stated that since an  arbitrator  is bound to apply the law, there should be some means of ensur- ing  that he applied the law correctly. However, it is  also to  be  remembered  that parties resort  to  an  arbitration voluntarily and select or agree to a particular  arbitrator, because, inter alia, 165 (i) they have faith in him, and         (ii)  the proceedings will be more speedy  and  free

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from technicalities than in the courts.          The  object Of achieving speed and  informality  is likely  to  be largely frustrated if a  statutory  provision makes  it  compulsory  to give reasons for  the  award.  The general rule is that the parties cannot object to the  deci- sion given by their own judge, except in case of  misconduct and  the like. (Government of Kelantan v.  Duff  Development Co.  Ltd., [1923] A.C. 395; Russell (1970), pages  359,360). This  general principle should not be departed  from  unless weighty reasons exist for such departure.           No doubt, it is desirable that the award should be correct  in  law. But the fundamental question is,  how  far should  the finality of the award yield to the  desirability of  legal  correctness,  and  what  procedural  requirements should be insisted upon to ensure that the award is sound in law? In this connection, reference may be made to the obser- vations  of Barwick C.J. (of the High Court  of  Australia). Tata Products Pvt. Ltd. v. Hutcheson Bros. Pvt. Ltd., [1972] 127  C.L.R. 253, 258; (1972) Australia Law  Journal  Reports 119  (Australia). He observed that ’finality in  arbitration in the award of the lay arbitrator is more significant  than legal  propriety  in  all his  processes  in  reaching  that award.’           The  importance  which  the law  attaches  to  the finality of arbitration goes against the suggestion now  put forth  for giving reasons for an award. A  requirement  that the reasons for an award should be given would open too wide a  door for challenging the award, even if the  grounds  for setting aside are, by statute, restricted in other respects. 4.50. For these reasons, we are not inclined to recommend  a provision  requiring the arbitrator to give reasons for  the award.     Thus  it is seen that the Law Commission did not  recom- mend  the inclusion of a provision in the Act requiting  the arbitrator or umpire to give reasons for the award. 166     It  is  not disputed that in India it  had  been  firmly established till the year 1976 that it was not obligatory on the part of the arbitrator or the umpire to give reasons  in support of the award when neither in the arbitration  agree- ment  nor  in the deed of submission it  was  required  that reasons  had to be given for the award (vide  Firm  Madanlal Roshanlal Mahajan v. Hukumchand Mills Ltd., Indore, [1967] 1 S.C.R.  105;  Bungo Steel Furniture Pvt. Ltd.  v.  Union  of India, (supra) and N. Chellappan v. Secretary, Kerala  State Electricity  Board  & Another, [1975] 2 S.C.R. 811.  It  is, however,  urged by Shri Fali S. Nariman, who argued in  sup- port  of the contention that in the absence of  the  reasons for the award, the award is either liable to be remitted  or set aside, that subsequent to 1976 there has been a qualita- tive  change in the law of arbitration and that it  has  now become necessary to insist upon the arbitrator or the umpire to  give  reasons  in support of the award  passed  by  them unless  the parties to the dispute have agreed that no  rea- sons  need be given by the arbitrator or the umpire for  his decision.  Two main submissions are made in support  of  the above contention. The first submission is that an arbitrator or an umpire discharges a judicial function while  function- ing as an arbitrator or an umpire under the Act, and, there- fore,  is  under an obligation to observe rules  of  natural justice  while discharging his duties, as observed  by  this Court in Payyavula Vengamma v. Payyavula Kesanna and others, [1953]  S.C.R. 119. This Court relied in that decision  upon the  observations  made by Lord Langdale M.R. in  Harvey  v. Shelton, [1844] 7 Beav. 455 at p. 462 which read thus:

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        "It  is so ordinary a principle in the  administra- tion of justice, that no party to a cause can be allowed  to use any means whatsoever to influence the mind of the Judge, which  means are not known to and capable of being  met  and resisted  by the other party, that it is impossible,  for  a moment,  not to see, that this was an  extremely  indiscreet mode  of  proceeding,  to say the very least of  it.  It  is contrary to every principle to allow of such a thing, and  I wholly deny the difference which is alleged to exist between mercantile  arbitrations and legal arbitrations.  The  first principle of justice must be equally applied in every  case. Except  in the few cases where exceptions  are  unavoidable, both  sides must be heard, and each in the presence  of  the other.  In  every case in which matters are  litigated,  you must  attend to the representations made on both sides,  and you must not, in the administration of justice, in  whatever form, whether in the regularly constituted Courts or in ar- 167 bitrations, whether before lawyers or merchants, permit  one side  to use means of influencing the conduct and the  deci- sions  of the Judge, which means are not known to the  other side."     This  Court  also  relied on the decision  in  Haigh  v. Haigh,  [1861] 31 L.J. Ch. 420 which required an  arbitrator to  act  fairly in the course of its duties.  The  two  well recognised  principles  of natural justice are  (i)  that  a Judge  or  an arbitrator who is entrusted with the  duty  to decide a dispute should be disinterested and unbiased  (nemo judex  in cause sua); and (ii) that the parties  to  dispute should be given adequate notice and opportunity to be  heard by  the authority (audi alteram partem) (See  Administrative Law  by H.W.R. Wade, Part V and Judicial Review of  Adminis- trative Action by S.A. de Smith, Third Edition, Chapter  4). Giving  reasons in support of a decision was not  considered to  be  a rule of natural justice either under  the  law  of arbitration or under administrative law.     In  Som Datt Datta v. Union of India and Ors., [1989]  2 S.C.R.  177  a Constitution Bench of this  Court  held  that there was no obligation on the part of an administrative  or statutory  tribunal to give reasons for the order passed  by it.  The  relevant part of the said decision in  which  this Court considered the prevailing legal decision in England at the time reads thus:           "In the present case it is manifest that there  is no express obligation imposed by s. 164 or by s. 165 of  the Army  Act  on the confirming authority or upon  the  Central Government  to  give reasons in support of its  decision  to confirm the proceedings of the Court Martial. Mr. Dutta  has been unable to point out any other section of the Act or any of  the rule made therein from which  necessary  implication can  be  drawn  that such a duty is cast  upon  the  Central Government or upon the confirming authority. Apart from  any requirement imposed by the statute or statutory rule  either expressly  or  by necessary implication, we  are  unable  to accept the contention of Mr. Dutta that there is any general principle  or any rule of natural justice that  a  statutory tribunal  should  always and in every case give  reasons  in support of its decision.           In English law there is no general rule apart from the statutory requirement that the statutory tribunal should 168 give  reasons  for its decision in every  case.  In  Rex..v. Northumberland  Compensation Appeal Tribunal, [1952] 1  K.B. 338,  it  was  decided for the first time by  the  Court  of Appeal that if there was a ’speaking order’ a writ of certi-

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orari could be granted to quash the decision of an  inferior court or a statutory tribunal on the ground ,of error on the face of record. In that case, Denning, L.J. pointed out that the  record must at least contain the document which  initi- ates the proceedings; the pleadings, if any, and the adjudi- cation,  but not the evidence, nor the reasons,  unless  the tribunal chooses to incorporate them in its decision. It was observed  that  if the tribunal did state  its  reasons  and those reasons were wrong in law, a writ of certiorari  might be  granted by the High Court for quashing the decision.  In that  case the statutory tribunal under the National  Health Service Act, 1946 had fortunately given a reasoned decision; in  other words, made a ’speaking order’ and the High  Court could hold that there was an error of law on the face of the record and a writ of certiorari may be granted for  quashing it.  But the decision in this case led to an  anomalous  re- sult,  for  it  meant that the  opportunity  for  certiorari depended  on whether or not the statutory tribunal chose  to give  reasons  for its decision, in other words, to  make  a ’speaking  order’.  Not all tribunals, by  any  means,  were prepared  to  do  so and a superior court had  no  power  to compel them to give reasons except when the statute required it.  This  incongruity  was remedied by  the  Tribunals  and Inquiries  Act,  1958 (s. 12), (6 & 7 Elizabeth  2  c.  66), which provides that on request a subordinate authority  must supply  to a party genuinely interested the reasons for  its decision. Section 12 of the Act states that when a  tribunal mentioned in the First Schedule of the Act gives a  decision it must give a written or oral statement of the reasons  for the decision, if requested to do so on or before the  giving or  notification of the decision. The statement may  be  re- fused or the specification of reasons restricted on  grounds of  national security, and the tribunal may refuse  to  give the statement to a person not principally concerned with the decision  if it thinks that to give it would be against  the interest  of any person primarily concerned.  Tribunals  may also  be  exempted by the Lord Chancellor from the  duty  to give reasons but the Council on Tribunals must be  consulted on any proposal to do so. As already stated, 169 there  is no express obligation imposed in the present  case either by s. 164 or by s. 165 of the Indian Army Act on  the confirming  authority or on the Central Government  to  give reasons  for its decision. We have also not been  shown  any other  section of the Army Act or any other  statutory  rule from which the necessary implication can be drawn that  such a  duty  is  cast upon the Central Government  or  upon  the confirming authority. We, therefore, reject the argument  of the  petitioner  that  the order of the Chief  of  the  Army Staff,  dated  May 26, 1967 confirming the  finding  of  the Court  Martial under s. 164 of the Army Act or the order  of the Central Government dismissing the appeal under s. 165 of the Army Act are in any way defective in law."     It is, however, urged that this Court omitted to  notice an earlier decision of a Constitution Bench of this Court in Bhagat  Raja v. The Union of India & Ors., [1967]  3  S.C.R. 302  and therefore, the decision in Som Datt Datta,  (supra) should be considered as a decision per in curjam. The  point involved  in Bhagat Raja’ case (supra) was whether  in  dis- missing a revision petition filed under the Mines & Minerals (Regulation  and Development) Act, 1957 and the  rules  made thereunder, the Union of India was bound to make a  speaking order.  This  Court  held that under the  Mines  &  Minerals (Regulation  and Development) Act, 1957 the Central  Govern- ment while deciding a revision petition was required to  act

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judicially  as  a  tribunal and an  appeal  could  be  filed against  the said decision before this Court  under  Article 136 of the Constitution of India. In order to make the right of  appeal effective it was necessary that the Central  Gov- ernment  should  pass a reasoned order so  that  this  Court might  decide whether the case had been properly decided  by the  Central  Government or not and in the  absence  of  the reasons the order of the Central Government was liable to be reversed. The relevant part of the judgment of this Court in Bhagat Raja’s, case (supra) reads thus: "Let us now examine the question as to whether it was incum- bent  on the Central Government to give any reasons for  its decision in review. It was argued that the very exercise  of judicial or quasi judicial powers in the case of a  tribunal entailed upon it an obligation to give reasons for  arriving at  a  decision  for or against a party.  The  decisions  of tribunals in India are subject to the supervisory powers  of the High Courts under Art. 227 of the Constitution and 170 of  appellate powers of this Court under Art. 136.  It  goes without  saying that both the High Court and this Court  are placed  under a great disadvantage if no reasons  are  given and  the  revision  is dismissed curtly by the  use  of  the single word ’rejected’, or, ’dismissed’. In such case,  this Court can probably only exercise its appellate  jurisdiction satisfactorily  by examining the entire records of the  case and  after  giving a hearing come to its conclusion  on  the merits of the appeal. This will certainly be a very unsatis- factory method of dealing with the appeal. Ordinarily, in  a case  like  this, if the State Government  gives  sufficient reasons  for  accepting  the application of  one  party  and rejecting  that of the others, as it must, and  the  Central Government  adopts  the reasoning of the  State  Government, this Court may proceed to examine whether the reasons  given are  sufficient for the purpose of upholding  the  decision. But,  when the reasons given in the order of the State  Gov- ernment are scrappy or nebulous and the- Central  Government makes no attempt to clarify the same, this Court, in  appeal may  have to examine the case de novo without anybody  being the  wiser for the review by the Central Government. If  the State Government gives a number of reasons some of which are good  and  some are not, and the Central  Government  merely endorses the order of the State Government without  specify- ing  those reasons which according to it are  sufficient  to uphold  the  order of the State Government, this  Court,  in appeal,  may  find it difficult to ascertain which  are  the grounds which weighed with the Central Government in uphold- ing  the  order  of the State Government.  In  such  circum- stances, what is known as a ’speaking order’ is called for."     A careful reading of this decision shows that it is  not based on the ground that the order of the Central Government was not in conformity with the principles of natural justice but  on the ground that the order of the Central  Government was  subject  to the supervisory powers of the  High  Courts under  Article  227  of the Constitution of  India  and  the appellate  powers  of this Court under Article  136  of  the Constitution  of India. It is no doubt true that in  Siemens Engineering & Manufacturing Co. of India Limited v. Union of India  & Anr., [1976] Supp. SCR 489 a Bench of three  Judges of  this  Court held that every quasi judicial  order  of  a tribunal must be supported by reasons and the rule requiring the reasons to be given in support of the order 171 was  like  the principles of audi alteram  partem,  a  basic principle of natural justice which must involve every  quasi

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judicial  process and that the said rule should be  observed in  this proper spirit. In that case again the  order  whose validity  had  been questioned in this Court  in  an  appeal filed under Article 136 of the Constitution of India was  an order  passed  by the Central Government under  the  Customs Act. A reading of the decision in this case shows that  this Court felt that the rule requiring reasons in support of  an order  was a rule not covered by the principle audi  alteram partem  but an independent principle of natural justice.  We have already observed that the two recognised principles  of natural  justice were (i) that a Judge or an umpire  who  is entrusted with the duty to decide a dispute should be disin- terested  and unbiased (nemo judex in causa sua);  and  (ii) that the parties to dispute should be given adequate  notice and opportunity by the authority (audi alteram partem).  For the first time this Court laid down that the rule  requiring reasons  in  support  of an order is a  third  principle  of natural justice. It may be as observed in Bhagat Raja’s case (supra)  that the Court may require a tribunal to give  rea- sons in support of its order in ’order to make the  exercise of  power of the High Courts under Articles 226 and  227  of the Constitution of India and the powers of this Court under Article  136 of the Constitution of India effective.  It  is further  urged relying upon the decisions of this  Court  in Associated Cement Companies Ltd. v. P.N. Sharma and Another, [1965] 2 S.C.R. 366 and A.K. Kraipak & Ors. etc. v. Union of India & Ors., [1970] 1 S.C.R. 457 that the concept of  natu- ral  justice had undergone a great deal of Change in  recent years.  It  is argued that while originally there  were  two rules of natural justice in course of time many more subsid- iary  rules  had come to be added to the  rules  or  natural justice  and, therefore, in the same way the requirement  of giving  reasons  for a decision should be treated as  a  new rule of natural justice.     The second main submission made in support of the neces- sity  of  giving  reasons for the award is  that  since  the arbitrator or umpire is required to make an award in accord- ance with law as held by this Court in Seth Thawardas Pheru- mal’s  case (supra) and several other cases decided by  this Court and since under section 16(1)(c) of the Act the legal- ity  of an award can be questioned in Court on the basis  of an  error apparent on the face of an award the only  way  of ensuring  that  an  award is in accordance with  law  is  by insisting upon the arbitrator or umpire to give reasons  for the  award. It is urged that if no reasons are disclosed  it would  not be possible for the Court to find out whether  an award has been passed in accordance with law or not. 172     Our attention is drawn to the existence of the safeguard in the English Law of Arbitration (before the English  Arbi- tration Act, 1979) for ensuring that an arbitrator  deciding a dispute judicially and in accordance with the  requirement of the parties to the agreement that the dispute be  decided according  to law in the form of the power of the  Court  to compel  the arbitrator to state his award in the form  of  a special case under section 21 of the Arbitration Act,  1950. It is submitted that the provision with regard to the state- ment of the case by an arbitrator to the Court contained  in clause (b) of section 13 of the Act, i.e., the Indian  Arbi- tration Act, 1950, being one which could be exercised at the option  of the arbitrator and there being no power  for  the Court  to  compel  the arbitrator to state a  case  for  its decision, the only way of ensuring that the arbitrator  kept within  the bounds of law is to compel him to  give  reasons for his award. Our attention is also drawn to the Report  on

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Arbitration made by the Commercial Court Committee  presided over  by  Justice Donaldson (now Master of Rolls)  in  which certain  recommendations were made in order to  improve  the procedure which was prevailing in England with regard to the power  of judicial review of the decisions of  the  arbitra- tors. In the course of the said report, the Commercial Court Committee has observed thus: "Supervisory powers          3.  All systems of law provide for some  degree  of judicial  supervision  of arbitral proceedings  and  awards. These  powers  enable the Courts to intervene  in  cases  of fraud or bias by the arbitrators, contravention of the rules of  natural justice or action in excess of jurisdiction.  In the case of the English Courts these powers are conferred by sections 22, 23 and 24 of the Arbitration Act, 1950. Powers of review          4.  Most systems of law adopt the  philosophy  that the  parties, having chosen their own tribunal, must  accept its decisions "with all faults". Accordingly, they make  no, or  very  little, provision for a review by  the  Courts  of arbitral decisions which may be based upon erroneous conclu- sions of fact or law. Until recently the law of Scotland was based upon this philosophy. However, this has never been the approach  of the law of England or of some  systems  derived from  the law. English law provides for two different  forms of review, namely by motion to set aside the award for 173 error on its face and by a reference to the High Court of an award in the form of a special case. (a) Setting aside an award for error on its face          5.  Under English law the Courts have  jurisdiction to set aside any arbitral award if it appears from the award itself or from documents incorporated in the award that  the arbitrator has reached some erroneous conclusion of fact  or law.  The Court cannot correct the error. It can only  quash the award leaving the parties free to begin the  arbitration again.          6.  As  a result of the existence  of  this  power, English arbitrators customarily avoid giving any reasons for their  awards,  confining themselves that A should pay  B  a specified  sum. Where the parties wish to know  the  reasons for the award or the arbitrator wishes to give them, this is achieved by giving the reasons in a separate document  which expressly  states  that it is not part of the award  and  by obtaining an undertaking from the parties that they will not seek to refer to or use the reasons for the purposes of  any legal  proceedings.  The general pattern is,  however,  that English awards are given without reasons.          7.  In  this  important  respect  English  arbitral awards  differ  from those of most other countries.  In  the case  of  arbitrations held under the laws of  Belgium,  the Federal  Republic of Germany, France, Italy and the  Nether- lands, the giving of reasons is normally obligatory. When it comes  to enforcing an English arbitral award in  a  foreign country,  there is always some doubt whether  objection  may not  be taken to it on the ground that it is  "unmotivated", to use the continental term, although the Committee knows of no case in which this objection has yet been upheld....... .......................................................... The alternative of judicial review based on reasoned awards          25.  The  existing obstacle to  a  judicial  review based upon reasoned awards is the power and the duty of  the Court to set aside awards for error on their face. This 174 obstacle could easily be removed and this system would  then

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have considerable attractions.          26.  In every case an arbitrator would be  free  to give  reasons  for  his award. This would in  itself  be  an improvement, if arbitrators took advantage of the  facility. The  making  of  an  award is,  or  should  be,  a  rational process..  Formulating  and recording the reasons  tends  to accentuate  its rationality. Furthermore, unsuccessful  par- ties will often, and not unreasonably, wish to know why they have  been unsuccessful. This change in the law  would  make this possible.           27. Given a reasoned award, an unsuccessful  party could know whether he had a just cause for complaint.  Where no reasons were given initially and he thought that an error had  been made, he could ask for reasons to be supplied.  If the  arbitrator refused to supply them, the Court could,  in appropriate  cases,  order him to do so. This  would  be  no great burden on the arbitrator provided that the application was made promptly. He would have had some reasons for making the  award  and  all that he would need to do  would  be  to summarize them in ordinary language. Nothing formal would be required.           28.  Armed  with  the reasons for  an  award,  the unsuccessful  party  could apply to the Court for  leave  to appeal. The right of appeal could be restricted to questions of law arising out of the decision, leaving all questions of fact  to be decided finally by the arbitrator.  Furthermore, unlike  the position when the Court is being asked to  order an  arbitrator  to state an award in the form of  a  special case,  the Court would know whether any particular  question of  law  really arose for. decision since both  it  and  the parties  would  have  access to the facts as  found  by  the arbitrator. Additional restrictions could be imposed on  the circumstances in which leave to appeal would be given and in which  a  further  appeal to the Court of  Appeal  would  be permitted.           29.  An additional advantage of a change  to  rea- soned awards lies in the fact that this would tend to assim- ilate English awards to those made in other countries,  thus mak- 175 ing  English awards more acceptable and readily  enforceable abroad.          30.  Finally,  there would be the  great  advantage that  every  award would be a final  award  and  immediately enforceable as such, subject only to the right of the  Court in  appropriate cases to impose a stay of execution  pending an appeal. Such a stay could, of course, be granted  subject to  conditions, such as that the amount awarded  be  brought into Court.          31.  In a word, a system of judicial  review  based upon reasoned awards would place very grave obstacles in the way of those seeking unmeritoriously to avoid meeting  their just  obligations, would improve the standard of awards  and would render them more easily and speedily enforceable.  The same  system  is  used for the review of  decisions  of  the industrial tribunals and of the restrictive Practices  Court and has worked well. Recommendations on judicial review           32.  In  the  light of  these  considerations  the Committee makes the recommendations set out below.          33.  The system of judicial review based  upon  the special case procedure should be replaced by one based  upon reasoned  awards.  This would  involve  comparatively  minor amendments to the 1950 Act. Section 21 would be repealed and the Court would be deprived of the power and duty to set  an

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award aside because of errors of fact or law on the face  of the  award. Arbitrators would be encouraged to give  reasons for  their awards, but would only be obliged to do so if  it was necessary for the purposes of the new review  procedure. A  new  section 21 would define the right of appeal  to  the High Court.          34.  The new fight of appeal would be  confined  to questions  of law, all decisions on questions of fact  being for the arbitrator alone."     After  the submission of the report the British  Parlia- ment  enacted the Arbitration Act, 1979.  Sub-sections  (1), (2), (5) and (6) of section 176 1 of the English Arbitration Act, 1979 which are material in this case read thus: "1. Judicial review of arbitration awards--(1) In the  arbi- tration Act 1950 (in this Act referred to as ’the  principal Act’)  section 21 (statement of case for a decision  of  the High  Court) shall cease to have effect and, without  preju- dice  to  the right of appeal conferred by  sub-section  (2) below,  the  High Court shall not have jurisdiction  to  set aside  or remit an award on an arbitration agreement on  the ground of errors of fact or law on the face of the award.          (2)  Subject  to sub-section (3) below,  an  appeal shall  lie to the High Court on any question of law  arising out of an award made on an arbitration agreement; and on the determination  of  such  an appeal the  High  Court  may  by order-- (a) confirm, vary or set aside the award; or         (b)  remit the award to the reconsideration  of  the arbitrator  or umpire together with the court’s  opinion  on the question of law which was the subject of the appeal; and  where the award is remitted under paragraph  (b)  above the  arbitrator or umpire shall, unless the order  otherwise directs,  make his award within three months after the  date of the order. ...........................................................          (5)  Subject to sub-section (6) below, if an  award is made and, on an application made by any of the parties to the reference--         (a) with the consent of all the other parties to the reference, or         (b)  subject to section 3 below, with the  leave  of the court, it appears to the High Court that the award does not or does not sufficiently set out the reasons for the award, the 177 court may order the arbitrator or umpire concerned to  state the  reasons for his award in sufficient details  to  enable the  court, should an appeal be brought under this  section, to consider any question of law arising out of the award.          (6) In any case where an award is made without  any reason  being given, the High Court shall not make an  order under sub-section (5) above unless it is satisfied--         (a)  that before the award was made one of the  par- ties  to  the  reference gave notice to  the  arbitrator  or umpire concerned that a reasoned award would be required; or         (b)  that  there is some special reason why  such  a notice was not given."     Section  2  of the said Act of 1979 empowered  the  High Court  to determine any preliminary point of law arising  in the course of an arbitration reference under certain circum- stances.  It is urged that in view of the fact that  similar safeguards  which  are available in the English Law  do  not exist  in  the Indian Law, it is necessary that  this  Court

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should hold that there is an implied obligation on the  part of  the arbitrator or umpire to give reasons for  the  award unless the parties to the dispute agree that no such reasons need be given.     A  reference was made in the course of the arguments  to the decision of this Court in Rohtas Industries Ltd. &  Anr. v.  Rohtas Industries Staff Union and Ors., [1976] 3  S.C.R. 12 in which an award passed by the arbitrators under section 10-A  of the Industrial Disputes Act, 1947 had  been  struck down by the High Court in part and appeals filed against the decision of the High Court were under consideration by  this Court.  In that case the appellants contended that an  award under section 10-A of the Industrial Disputes Act, 1947  was equivalent to an award made in a private arbitration and was not amenable to correction under Article 226 of the  Consti- tution  of India. But this Court rejected this said  conten- tion by observing at page 26 thus: "   ....  Suffice it to say that a reference to arbitration under s. 10A is restricted to existing or apprehended indus- trial disputes. Be it noted that we are not concerned with a private  arbitration,  but a statutory one governed  by  the Industrial Disputes Act, deriving its validity, enforceabil- ity 178 and  protective mantle during the pendency of  the  proceed- ings, from s. 10A.     A  distinction was thus made between statutory  arbitra- tions under section 10-A of the Industrial Disputes Act  and private  arbitrations. It is not necessary to refer  to  the other cases cited before us which have a bearing on  section 10-A of the Industrial disputes Act, 1947.     The  question  which arises for consideration  in  these cases  is whether it is appropriate for this Court  to  take the  view that any award passed under the Act, that is,  the Indian Arbitration Act, 1940 is liable to be remitted or set aside solely on the ground that the arbitrator has not given reasons thus virtually introducing by a judicial verdict  an amendment to the Act when it has not been the law for nearly 7/8  decades. The people in India as in other parts  of  the world  such  as England, U.S.A. and  Australia  have  become accustomed  to  the  system  of settlement  of  disputes  by private  arbitration and have accepted awards  made  against them  as binding even though no reasons have been  given  in support  of the awards for a long time. They  have  attached more  importance  to the element of finality of  the  awards than  their  legality. Of course when reasons are  given  in support  of the awards and those reasons disclose any  error apparent on the face of the record people have not refrained from questioning such awards before the courts. It is not as if that people are without any remedy at all in cases  where they find that it is in their interest to require the  arbi- trator to give reasons for the award. In cases where reasons are  required, it is open to the parties to the  dispute  to introduce  a term either in the arbitration agreement or  in the  deed  of submission requiring the arbitrators  to  give reasons  in support of the awards. When the parties  to  the dispute insist upon reasons being given, the arbitrator  is, as  already  observed earlier, under an obligation  to  give reasons. But there may be many arbitrations in which parties to the dispute may not relish the disclosure of the  reasons for the awards. In the circumstances and particularly having regard  to the various reasons given by the Indian Law  Com- mission for not recommending to the Government to  introduce an  amendment in the Act requiring the arbitrators  to  give reasons  for their awards we feel that it may not be  appro-

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priate to take the view that all awards which do not contain reasons  should either be remitted or set aside. A  decision on  the  question argued before us involves  a  question  of legislative  policy which should be left to the decision  of Parliament. It is a well-known rule of construction that  if a  certain  interpretation has been uniformly put  upon  the meaning of a 179 statute  and transactions such as dealings in  property  and making  of contracts have taken place on the basis  of  that interpretation, the Court will not put a different interpre- tation  upon it which will materially affect those  transac- tions.  We  may refer here to the decision of the  Court  of Appeal  rendered  by Lord Evershed M.R.  in  Brownsea  Havel Properties  v. Poole Corpn., [1958] Ch. 574 (C.A.) in  which it is observed thus: "There  is  well-established authority for the view  that  a decision  of long standing, on the basis of which many  per- sons will in the course of time have arranged their affairs, should  not  lightly be disturbed by a  superior  court  not strictly bound itself by the decision."     Courts should be slow in taking decision which will have the  effect  of shaking rights and titles  which  have  been rounded  through  a  long time upon the  conviction  that  a particular interpretation of law is the legal and proper one and is one which will not be departed from.     It is no doubt true that in the decisions pertaining  to Administrative  Law, this Court in some cases  has  observed that the giving of reasons in an administrative decision  is a rule of natural justice by an extension of the  prevailing rule.  It would be in the interest of the world of  commerce that the said rule is confined to the area of Administrative Law.  We do appreciate the contention, urged on  behalf  of’ the parties who contend that it should be made obligatory on the  part of the arbitrator to give reasons for  the  award, that  there  is  no justification to leave  the  small  area covered  by the law of arbitration out of the  general  rule that the decision of every judicial and quasi-judicial  body should be supported by reasons. But at the same time it  has to  be borne in mind that what applies generally to  settle- ment of disputes by authorities governed by public law  need not be extended to all cases arising under private law  such as  those  arising  under the law of  arbitration  which  is intended  for  settlement  of private  disputes.  As  stated elsewhere  in the course of this judgment if the parties  to the  dispute feel that reasons should be given by the  arbi- trators  for the awards it is within their power  to  insist upon  such reasons being given at the time when  they  enter into  arbitration agreement or sign the deed of  submission. It  is  significant that although nearly a  decade  ago  the Indian  Law  Commission submitted its report on the  law  of arbitration  specifically mentioning therein that there  was no  necessity to amend the law of arbitration requiring  the arbitrators  to give reasons, Parliament has not  chosen  to take any step in the direction of the amendment of the 180 law  of arbitration. Even after the passing of  the  English Arbitration  Act, 1979 unless a court requires the  arbitra- tors  to give reasons for the award (vide  sub-sections  (5) and  (6) of section 1 of the English Arbitration Act,  1979, an award is not liable to be set aside merely on the  ground that no reasons have been given in support of it.     It  is  true that in two cases one decided by  the  High Court  of  Delhi and another decided by the  High  Court  of Orissa  there  are some observations to the effect  that  it

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would be in the interests of justice if the arbitrators  are required to give reasons for their awards because in  recent years the moral standards of arbitrators are going down. But generally this Court and all the High Courts have taken  the view that merely because the reasons are not given an  award is  not liable to be remitted or set aside except where  the arbitration agreement or the deed of submission, or an order made  by the court such as the one under section 20 or  sec- tion  21 or section 34 of the Act or the  statute  governing the  arbitration  requires  that the  arbitrator  or  umpire should give reasons for the award. The arbitrators or umpire have  passed  the  awards which are involved  in  the  cases before us relying on the law declared by this Court that the awards  could  not be questioned merely on the  ground  that they have not given reasons. At the same time it cannot also be said that all the awards are contrary to law and justice. In this situation it would be wholly unjust to pass an order either remitting or setting aside the awards, merely on  the ground  that no reasons are given in them, except where  the arbitration agreement or the deed of submission or an  order made  by the court such as the one under section 20 or  sec- tion  21 or section 34 of the Act or the  statute  governing the  arbitration required that the arbitrator or the  umpire should give reasons for the award.     There is, however, one aspect of non-speaking awards  in nonstatutory arbitrations to which Government and Governmen- tal  authorities  are  parties that  compel  attention.  The trappings of a body which discharges judicial functions  and required  to act in accordance with law with their  concomi- tant  obligations for reasoned decisions, are not  attracted to  a private adjudication of the nature of  arbitration  as the  latter, as we have noticed earlier, is not supposed  to exert  the  State’s sovereign judicial power.  But  arbitral awards in disputes to which the State and its instrumentali- ties  are parties affect public interest and the  matter  of the  manner  in which Government and  its  instrumentalities allow their interest to be affected by such arbitral adjudi- cations involve larger questions of policy and public inter- est.  Government  and its  instrumentalities  cannot  simply allow large financial interests of the 181 State to be prejudicially affected by non-reviewable--except in  the  limited way allowed  by  the  Statute--non-speaking arbitral  awards. Indeed, this branch of the system of  dis- pute-resolution  has, of late, acquired a certain degree  of notoriety by the manner in which in many cases the financial interests of Government have come to suffer by awards  which have  raised eye-brows by doubts as to their  rectitude  and propriety.  It  will not be justifiable for  Governments  or their instrumentalities to enter into Arbitration agreements which  do not expressly stipulate the rendering of  reasoned and speaking awards. Governments and their instrumentalities should, as a matter of policy and public interest--if not as a  compulsion of law--ensure that wherever they  enter  into agreements  for resolution of disputes by resort to  private arbitrations, the requirement of speaking awards is express- ly  stipulated and ensured. It is for Governments and  their instrumentalities to ensure in future this requirement as  a matter of policy in the larger public interest. Any lapse in that  behalf might lend itself to and perhaps  justify,  the legitimate  criticism  that  Government  failed  to  provide against possible prejudice to public-interest.     Having  given our careful and anxious  consideration  to the contentions urged by the parties we feel that law should be  allowed to remain as it is until the competent  legisla-

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ture  amends  the law. In the result we hold that  an  award passed under the Arbitration Act is not liable to be  remit- ted  or set aside merely on the ground that no reasons  have been  given  in  its support except  where  the  arbitration agreement or the deed of submission or an order made by  the Court  such  as the one under section 20 or  section  21  or section 34 of the Act or the statute governing the  arbitra- tion requires that the arbitration or the umpire should give reasons  for the award. These cases will now go back to  the Division  Bench for disposal in accordance with law and  the view expressed by us in this decision. R.S.S. 182