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PETITIONER: V.G.  GEORGE

       Vs.

RESPONDENT: INDIAN RARE EARTHS LTD.  SI ANR.

DATE OF JUDGMENT:       08/04/1999

BENCH: S.  Rajendra Babu., S.  N.  Phukan.

JUDGMENT:

S.N.  PHUKAN, J

       This appeal is directed against the common  judgment and order dated  25.05.1987  passed  in  M.F.A.  No.  161 of 1986 and 781 of 1986 by the High Court of Kerala.

       For  the purpose of appreciating the points urged in this appeal we may briefly state the facts.

       The appellant herein, who  is  a  mining  contractor entered into  an  agreement  with  respondent  No.  I namely Indian Rare Earths Ltd.  for mining, collection  and  supply of  raw-sand  during  the period from 1.6.1979 to 31.5.1980. It was agreed  between  the  parties  that  appellant  would supply  2,02,000  tonnes  of raw-sand at the average rate of 920 tonnes per day.  The appellant failed to  supply  entire quantity and supplied only 1,72,489.24 tonnes.  The disputes between the parties were referred to the arbitrator, who has been  made  a  party in the present appeal namely respondent No.  2.

       Before the  arbitrator  the  appellant  claimed  Rs. 24,02,272/under 10  heads  along  with  interest.  A counter claim was  also  filed  by  respondent  No.    I   for   Rs. 3,29,648.99 paise  alongwith  interest  .    The  arbitrator framed as many as 51 issues and after recording his findings a sum of Rs.  5,40,191.10 paise  with  interest  @  15%  per annum  from  11.11.82 upto the date of decree was awarded in favour of the appellant.  The award was made a rule  of  the Court  on a petition filed by the appellant under Section 17 of the Arbitration Act, 1940  (for  short  the  Act).    The respondent No.   I also filed a petition under Section 30 of the Act which was dismissed.

       Two appeals were filed before the High Court and the High Court by the common impugned judgment  and  order  held that   there  was  legal  misconduct  on  the  part  of  the arbitrator and accordingly set aside the  award  except  the finding that the present appellant was entitled to refund of the earnest money deposited.  Hence the present appeal.

       We have heard Mr.    T.L.    Vishwanatha  Iyer,  Sr. learned counsel for  the  appellant  and Mr.  G.B.  Pai, Sr. learned counsel for the respondents.

       Before  we  enter into the contentions raised in the

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case in hand, we may refer to the decisions of  this  Court. The  case  in hand it has to be stated that we are concerned with Clause(a) of Section 30 of the  Arbitration  Act  which empowers  the Court to set aside an award on the ground that an arbitrator or umpire  has  misconducted  himself  or  the proceedings.

       In State of  Orissa  and  others  Vs.    M/s.   Lall Brothers 1988 (4) SCC 153 this Court inter alia held that an award may be set aside on the ground of error on the face of the it 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  and it is also not open to the Court to speculate, where no reasons are given by the arbitrator,  as to what impelled him to arrive at his conclusions.

       In State  of  Andhra  Pradesh  and  others Vs.  R.V. Rayanim and others 1990(1) SCC  433  it  was  held  that  in matter of challenging the award there are often two distinct and different grounds - one is an error apparent on the face of  the  record  and  the  other  is that the arbitrator has exceeded his jurisdiction.  In the latter case the Court can look into the arbitration agreement but under the former  it cannot.

       In Associated Engineering  Co.    Vs.  Government of Andhra Pradesh and Another 1991(4) SCC 93 it was  held  that the   arbitrator   cannot   act  arbitrarily,  irrationally, capriciously or independently of the contract and  his  sole function  is  to  arbitrate  in terms of the contract as his authority is derived from the contract.  It  was  also  held that  if  he  has  remained  inside  the  parameters  of the contract and has construed the provisions of  the  contract, his  award  cannot  be  interfered  with unless he has given reasons for the award disclosing an error  apparent  on  the face of it.

       Thus,  law  is  well  settled  that  if the award is non-speaking, the Court can look into  the  question  as  to whether  arbitrator  has  travelled  beyond the scope of the contract as he derives his jurisdiction  from  the  contract and if the arbitrator exceeds his jurisdiction the award can be set  aside.    An  award can also be set aside in case of misconduct apparent on the face of the award.  It  can  also be  interfered  with if the arbitrator has given reasons for the award disclosing an error apparent on the face of it.

       Coming to the present appeal we  find  that  in  the impugned  award  the  arbitrator  has stated the case of the parties, issues framed by him, his findings  on  each  issue and the  amount awarded.  We may also state here that in the counter affidavit dated 23rd May, 1983 filed by the  present appellant  before  the learned sub-Judge it had been clearly stated that the contract is evidenced  by  three  integrated documents namely:    (i) Tender dated 3.5.79 (ii) Work order dated 15.5.79 and (iii) Agreement dated 24.3.79.

       Out of claims under 10 heads the arbitrator  awarded amount under claims nos.  3 & 9 of the appellant.  Out of 51 issues framed  by the arbitrator, issues nos.  15 to 18 were in respect of claim no.  3 and issues nos.  31 to 37 were in respect of claim no.  9.  We quote below issues nos.  15  to 18 in respect of claim no.  3:

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"15 - Whether six acres alone out of the mining area covered by the tender from were available for mining on  account  of obstruction  of  kudikidappukars,  ex-workers  of Associated Minerals Co.  Ltd.  and local public as alleged by  claimant in paragraph 14 of State of of claim?

16 - Whether it was respondent’s duty to see that the entire extent  of  mining  area  detailed  in  the  tender form was available for mining and that the mining  could  be  carried out without hindrance and respondent failed to discharge its duty?

Or

Whether  it  was  claimant’s  responsibility  to  settle all problems and objections which arose in the course of  mining work?

17   -  Whether  claimant  suffered  loss  as  mentioned  in paragraph 14 of the State of Claim?

18 - Whether respondent is liable  to  make  good  the  loss mentioned in issue No.  17 and if so, to what extent?"

       In  respect  of  the above issues the arbitrator has given his findings which are as follows:-

"15- The allegation that six acres of land alone out of  the mining  area  covered  by  the tender form was available for mining is not correct.  In 243 acres of land covered by  the tender  form  out  of which 92 acres belonged to respondent, more than necessary area sufficient to mine and  supply  the contract quantity of 2,00,000 to 2,20,000 MT of raw sand was actually  available  for  mining, but, on some days in April and except on one day, during the whole month of  May  1980, mining  of raw sand even in the available area and supply of raw  sand  from  there  were  not  possible,  on  some  days partially   and   on   other  days  wholly,  on  account  of obstruction by kudikidappukars and local public.

16  -  Claimant’s  right  under  the  contract  was   purely personal,  it did not amount to an interest in the 243 acres of land covered  by  the  contract  and  he  could  not  sue trangers in his own name in respect of that land, it was his responsibility  to  settle all problems and objections which arose in the course of the mining work between him  and  his mining  workers, but not with strangers like kudikidappukars and local public who claimed either rights in  the  land  or rights  and  privileges  against  the respondent, and it was respondent’s duty to see that the entire  extent  of  mining area  detailed  in  the tender form was available for mining and mining operations could be carried on  there  quety  and without   hindrance,   and   whenever   complaint  regarding obstruction was received respondent tried to discharge  that duty  by  appealing  to  public  authorities  for  help, but without success.

17-18 -  Claimant  sufferred  loss  to  the  extent  of  Rs. 2,81,461.26  and  respondent  is  liable  to  make good that loss."

       The learned counsel for the respondent  has  brought to  our  notice  Clause (c) of the tender notice which forms part of the contract between the parties.  Clause(c) of  the tender notice is stated as follows:

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"(c) - The beach and inland deposits mentioned in Block Nos. 2,4  and 6 may or may not be situated in Company’s lands and hence it shall be the responsibility of  the  Contractor  to obtain  the  consent  of  the  owners  in  whose  registered holdings the beach or inland  deposits  appear,  before  the Contractor  begins  to  collect  the  sea washings or inland deposits as the case may be.  As Indian Rare Earths  Limited will  not be responsible for the payment of any compensation to any individual on account of any  claims  resulting  from such   scrapping  of  sea  washings  or  removal  of  inland deposits, it  shall  again  be  the  responsibility  of  the Contractor  to  enter  into  agreements  with  the owners of registered  holdings  whose  lands  the  Contractor  may  be required  to  utilise  for  the  purpose  of  his successful execution of this contract, and the Company will not in  any manner be responsible or liable for all or any of the claims for compensation by the said land owners."

       It has been urged on behalf of the appellant that as the award is non-speaking one the High Court erred in law in going into  the facts of the case.  On the other hand it has been urged on behalf of the  respondents  that  the  present award  cannot  be  said  to  be  a  non-speaking  one as the findings of the arbitrator on each issue form  part  of  the award.

       As  stated above the award contains not only the sum awarded but also the case of  the  parties,  issues  framed, findings on each issue, therefore, we hold that the findings of  the  arbitrator  on the issues are the part of the award and the court can look into the findings.

       The arbitrator has come to  the  findings  that  the entire mining area covered with tender was made available to the appellant but according to the arbitrator mining was not possible  in some days in the month of April ,1980 and whole month  of  May,  1980  on   account   of   obstructions   by kudikidappukars And  local public.  The above finding of the arbitrator is in respect of the issue No.   15  which  forms part of the award.  While awarding the amount the arbitrator did  not  take  note  of  the above Clause (c) of the tender notice which is a part of the agreement and under which  the respondent   would  not  be  liable  for  such  obstruction. Therefore, we hold that the amount awarded under  Claim  No. 3  is beyond the scope of the agreement entered into between the parties and, therefore, the awarded amount in respect of Claim No.  3 cannot be sustained.

       Claim No.  9 is in respect of escalation.  It is not disputed at bar that in the agreement entered  into  between the parties  there was no escalation clause.  The arbitrator has come to the clear finding that the present appellant was not pressurised by respondent No.  I to agree  10%  hike  in the  wages of the mining workers as recorded in the findings in respect of issue No.  34.  In issue No .35 the arbitrator has recorded that the present appellant acceded to for raise in the wages of mining workers.

       The amount awarded under Claim No.  9  is  not  only beyond  the  scope of the agreement but also contrary to the findings recorded by the arbitrator.

       Therefore,  we  hold   that   the   arbitrator   has misconducted  himself in the proceedings and, therefore, the

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award is liable to be set  aside  on  the  ground  of  legal misconduct on the part of the arbitrator under Section 30 of the Act.    The  above being the position the present appeal has no merits and accordingly dismissed.    Considering  the facts  and  circumstances  of the case parties to bear their own costs.