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PETITIONER: STATE OF ORISSA & ORS.

       Vs.

RESPONDENT: LALL BROTHERS

DATE OF JUDGMENT25/08/1988

BENCH: MUKHARJI, SABYASACHI (J) BENCH: MUKHARJI, SABYASACHI (J) RANGNATHAN, S.

CITATION:  1988 AIR 2018            1988 SCR  Supl. (2) 579  1988 SCC  (4) 153        JT 1988 (3)   552  1988 SCALE  (2)542  CITATOR INFO :  RF         1989 SC 606  (7)

ACT:     Arbitration  Act  1940:  Sections 14,  17,  30  and  33- Unreasoned  award-No  ground  to set  aside  award-Lump  sum award-Not bad perse.

HEADNOTE:     The respondent-firm was entrusted with the  construction work of a ‘Minor Irrigation Project’ by the State of Orissa- Petitioner. The work was due to be completed on 3rd  August, 1977  but  it was actually  on 31st  March?  1978.  Disputes arose in regard to the payment for the work. The respondent- contractor  raised  certain claims and gave notice  for  the appointment  of an arbitrator according to the contract.  On 22nd April, 1980, the Chief Engineer appointed an arbitrator but, on an application by the respondent, the judge  removed him and appointed another arbitrator.     Before  the arbitrator, the respondent filed  its  claim along  with  some  documents and the  petitioner  filed  its counter  statement. No further evidence was adduced  and  on 23rd  June, 1982. the arbitrator gave a lump sum  award  for Rs. 14.67 lakhs with interest at 9% from 30th April, 1978.     On 11th July 1983, the Sub-Judge made the award rule  of the  Court  with  the modification  that  the  interest  was directed  to  run  from 23rd June, 1982,  instead  of  30the April, 1978.     The  High Court allowed the appeal in part  and  deleted the  direction  regarding  future interest  awarded  by  the arbitrator and modified by the Subordinate Judge.     In  the  appeal by special leave to this Court.  it  waS contended  on behalf of the State-petitioner that the  award in the instant case was an unreasoned award and a  lump such amount was awarded without specifying the amount awarded  on particular grounds.     Dismissing the special leave petition .                                                   PG NO 579                                                   PG NO 580     HELD: 1. The fact that there is an unreasoned award,  is no  ground to set aside an award. Lump sum award is not  bad per se, as such. [583A]

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   In the instant case, the award contained the recitals to the  effect that the arbitrator had gone through  the  claim statement,  counterstatement and documents  produced  before him and heard the representations made by the parties. There is no error of law apparent on the face of the award.  There was  no misconduct on the part of the arbitrator or  in  the conduct of the proceedings. [582G]     Firm  Madanlal  Roshanlal Mahajan  v.  Hukumchand  Mills Ltd.,  Indore,  [1967] 1 SCR 105; Union of  India  v.  Bungo Steel Furniture Pvt. Ltd., [1967] 1 SCR 324 and Allen  Berry JUDGMENT: 282, referred to.     2.  An  award is conclusjve as a  judgment  between  the parties and the court is entitled to set aside an award only if  the  arbitrator has misconducted himself,  or  where  an award has been inproperly procured, or is otherwise  invalid under Sections 30 and 35 of the Arbitration Act 1940. [583B]     3. 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  inference  and argument  it  may be demonstrated  that the  arbitrator  has committed some mistake in arriving at his conclusion [583C]     4.  It is not open to the Court to speculate,  where  no reasons  are given by the arbitrator, its to  what  impelled him to arrive at his conclusions. [593D]     Champsey  Bhara  &  Co.  V.  Jivraj  Balloo  Spinning  & weaving co. Ltd., L. R. 50 I.A. Jivarajbhai Ujamshi Sheth  & Ors. v. Chintamanrao Balaji & Ors. [1964] 5 SCR 480 referred to.     5. If  a question of law  was not specifically  referred to the arbirator his decision is not final. [583F]     Continental  Construction  Co. Ltd. v. State  of  Madhya Pradesh, [1988] 3 SCC 82 distinguished.

&     CIVIL  APPELLATE JURISDICTION : Special  Leave  petition (civil) No. 7396 of 1987.                                                   PG NO 581     From  the  Judgment  and Order dated 8.4.  1997  of  the Orissa High Court in M. A. No. 378 of 1983.     M.K.  Banerjee, Solicitor General, R.K. Mehta  and  Miss Mona Mehta for the Petitioners.     G.L. Sanghi, A.P. Jena and Vinoo Bhagat for the Respondent     The Judgment of the Court was delivered by     SABYASACHI MUKHARJI, J. This is an application for leave to  appeal  under Article 136 of the Constitution  from  the decision and judgment of the High Court of Orissa, dated 8th April, 1987. By the  judgment the High Court had allowed the appeal  in part and modified the award so far as it  related to  the payment of interest in the awarded  amount.  Another appeal  challenging the validity of the award was,  however, dismissed.     In  or about 1975-76 the respondent was  entrusted  with the  work of "Construction of balance work of earth  dam  of Koska Minor Irrigation Project" vide an agreement No. 207 F- 2.  The  said work was due to be completed  on  3rd  August, 1977 but it was actually completed on 31st  March, 1978. The estimated  of  value  of the work was  Rs.25,06,299.  It  is stated that the contractor, respondent herein, had  executed only 18 out of 33 items of work beside one extra item and he was paid a sum of Rs.23.63.122 for the work done.  According to,  the  petitioner  no  further amount  was  due  to,  the contractor, the respondent.

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   Final  bill was prepared on 12th February, 1980  and  it was    unconditionally   accepted   be    the    respondent- contractor. This  contention, however,  was  sought  to   be disputed before us by the respondent contractor by producing certain bill stated to be the final bill which was ‘accepted under protest ’. It is, however, not necessary for us to  go into this question at this stage.     On or about 16th April, 1980, the  respondent-contractor raised certain claims and gave notice far appointment of  an arbitrator according to the contract.  On 22nd April,  1980, the Chief Engineer appointed Shri N.K. Mishra as arbitrator. However.   on   the  application  of  the   respondent   the subordinate  Judge  removed  Shri N.K.  Mishra  and  instead appointed  Shri  P.C.  De  as  the  arbitrator.  Before  the arbitrator  the  respondent filed its claim along with  some documents and the petitioner filed his counter statement. It is  stated on behalf of the State that no  further  evidence                                                   PG NO 582 was  adduced by  the respondent but the petitioner  produced the  measurement  books. The petitioner  contended  that  no amount was due. The respondent disputed that.     The arbitrator on behalf of the claim statement and some document filed by the respondent-contractor, gave a lump sum award for Rs. 14,67,000 plus interest at 9% from 30.4. 1978. The award was given on 23rd June, 1982. On 11th July,  1983, the  learned  Subordinate judge made the award rule  of  the Court  with the modification that the interest was  directed to run from 23.6.1982 instead of 30.4. 1978. The High  Court allowed  the  appeal  in  part  and  deleted  the  direction regarding  future  interest awarded by  the  arbitrator  and modified by the learned Subordinate Judge. In appeal it  was contended before the High Court for the said judgment by the Subordinate  Judge that the following objections were  taken against the award, namely:     "(i) that there is an error of law apparent on the  face of the award ;     (ii)  that  the arbitrator has misconducted  himself  by giving a lump sure award without examining, each item of the claims,     (iii)  that the claimant having accepted the final  bill unconditionally  deposit, the contract between  the  parties stood closed and, therefore, the arbitration clause was  not operative  and the arbitrator appointed had no  jurisdiction to adjudicated upon the disputes ;     (iv) that the award of interest is without jurisdiction".     Except  the documents on record, neither of the  parties adduced  any evidence. It was urged before us that the  High Court did not accept challenge to the award but modified the order of interest as indicated before. The award in question contained the recitals to the effect that the arbitrator had gone  through  the claim statement,  counter  statement  and documents produced before him and heard the  representations made  by the parties. There is no error of law  apparent  on the  face of the award. There was no misconduct an the  part of  the arbitrator or in the conduct of the proceedings.  It was  contended before us that this is an award which was  an unreasoned  and  a  lump  of   amount  was  awarded  without specifying the amount awarded on particular grounds.                                                   PG NO 583     In our opinion, the High Court was right in refusing  to accept the challenge to the award. The fact that there is an unreasoned  award, is no ground to set aside an award.  Lump sum award is not bad per se. as such. An award is conclusive as a judgment between the parties and the court is  entitled to   set  aside  an  award  only  if  the   arbitrator   has

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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 under section 30 of the 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 inference and agrument it  may be  demonstrated that  the arbitrator has committed some mistake in  arriving at his conclusion.     It  is  not  open to the Court to  speculate,  where  no reasons  are given by the arbitrator, as to  what  impellied him to arrive at his conclusions. See in this connection the observations  of the Judicial Committee in Champsey Bhara  & Co.  v. Jivraj Balloo Spinning & Weaving Co. Ltd.,  L.R.  50 I.A.  324 and of this Court in Jilarajbhai Ujamshi  Sheth  & Ors. v. Chintamanrao Balaji & Ors., [1964] 5 SCR 480.     The  fact  that a lump sum award has been given,  is  no ground  to declare the award bad. See further Firm  Madanlal Roshanlal Mahajan v. Hukumchand Mills Ltd. Indore, [1967]  1 SCR  105 and Union of India v. Bungo  Steel  Furniture  Pvt. Ltd., [1967] 1 SCR 324 as well as the decision of this Court in Allen Berry & Co,. (P) Ltd. v. Union of India, New Delhi, [1971] 3 SCR 282.     Learned  Solicitor General for the petitioner relied  on Continental  Construction  Co.  Ltd.  v.  State  of   Madhya Pradesh,  [1988]  3  SCC 82.Reliance  was  misplaced.  If  a question  of  law  was  not  specifically  referred  to  the arbitrator his decision is not final. It was reiterated that the  arbitrator is bound by law, and if an error of  law  in the  award  is  on  the face of it, it  is  amenable  to  be corrected.     In that view of the matter the points sought to be urged in  this application for leave, are not  entertainable.  The application fails and is accordingly dismissed. N.V.K.                                  Petition dismissed.