JUDGMENT V.P. Gopalan Nambiyar, J. 1. By a contract, dated 21st April 1964, the work of construction of the Kuttiyadi Dam was entrusted by the Kerala State Electricity Board, to one Sri Chellappan, (the 1st Respondent) on terms and conditions specified therein. For brief, the Electricity Board will be referred to hereinafter as 'the Board' and the 1st respondent, Sri Chellappan, as 'the Contractor'. This contract, which will be referred to as the 'first contract' ran into heavy weather, for reasons which the Contractor would lay at the Board's door, and which the Board would repudiate, or at least not unreservedly accept. Suffice it to say that while the work was left unfinished, disputes and differences between the Contractor and the Board for claims against each other by reason of the non-execution of the work, mounted. While these disputes or at least a good part of them remained unresolved, the 2nd contract, dated 15th July 1967 was executed by the Contractor for the execution of the remaining part of the work on or before 31st May 1969. Without getting into details or assigning reasons, it is enough to state as a fact, that on 4th June 1968, the Contractor stopped the work and on 15th October 1968 the Chief Engineer (Civil) terminated the second contract. The Board carried on with the unfinished work. Eventually on 22nd August 1970, five points were referred for the arbitration of two arbitrators chosen by the parties namely, Sri C. S. Padmanabha Iyer, the nominee of the Board, and Sri T. Balakrishna Menon, the nominee of the Contractor, both retired Chief Engineers. On 18th September 1970 the arbitrators entered in the reference. On 7th October 1970 they nominated Sri G. Kumara Pillai, a retired Judge of this Court (the 2nd respondent) as Umpire. The arbitrators held nearly thirty sittings. The time-limit for submission of the award was being extended from time to time. The last of this extended time-limit expired on 18th December 1971. The Contractor refused to apply for further extension of time. On 28th January 1972 he filed O.P. No. 11 of 1972 for revoking the authority of the arbitrators under sections 5 and 11 of the Arbitration Act. The two grounds urged for revocation were that the arbitrator had exceeded the time-limit for submission of the award and that they were disqualified by bias from proceeding with the arbitration.
On 28th January 1972 he filed O.P. No. 11 of 1972 for revoking the authority of the arbitrators under sections 5 and 11 of the Arbitration Act. The two grounds urged for revocation were that the arbitrator had exceeded the time-limit for submission of the award and that they were disqualified by bias from proceeding with the arbitration. It was prayed that Sri G. Kumara Pillai may be directed to enter on reference in his capacity as Umpire and to proceed with the arbitration. To that petition both the arbitrators filed statements explaining the reasons for the delay, and denying the bias attributed. The disqualification attributed to Sri C. S. Padmanabha Iyer, was that he was and continued to be an Advisor to the Board, for the Idikki Project. Sri Padmanabha Iyer in his statement stated that he had intimated this fact at the time of entry on the reference but no objection was taken to his continuing as arbitrator, at any stage. He wound up his statement thus: "However, since the petitioner has chosen to say so, perhaps it may not be proper for me to continue as arbitrator in this dispute. One of the allegations made against both the arbitrators was that in connection with the production of certain documents by the Board the arbitrators passed an order, dated 8th September 1971 directing production, and, later on an application made by the Board, they reviewed their earlier order to suit the convenience of the board. The imputation of partiality implicit in the allegation was denied by both the arbitrators. Sri Balakrishna Menon's statement wound up as follows: "I was nominated as arbitrator by the petitioner. It is on his affidavit paragraph 12 that I came to learn for the first time that he would like to take the matter out of my hands. This oblique thrust has been quite embarrassing. I do not wish to continue as arbitrator in this dispute." In O.P. No. 11 of 1972 arbitrators were represented by counsel. In this application, the Contractor filed an application on 21st March 1972 to appoint Sri G. Kumara Pillai as a sole arbitrator in displacement of the two arbitrators for whose removal O.P. No. 11 of 1972 had already been filed. This seems to have been numbered as I.A. 1918 of 1972.
In this application, the Contractor filed an application on 21st March 1972 to appoint Sri G. Kumara Pillai as a sole arbitrator in displacement of the two arbitrators for whose removal O.P. No. 11 of 1972 had already been filed. This seems to have been numbered as I.A. 1918 of 1972. By its order, dated 22nd June 1972 on O.P. No. 11 of 1972, the court below allowed the application, revoked the authority of the arbitrators and directed Sri G. Kumara Pillai to enter on the reference in his capacity as Umpire. The arbitrators were restrained by a permanent injunction from further proceeding with the reference. It is seen that on the same day, the court endorsed on LA. 1918 of 1972 allowed. Vide order on the main petition", which meant that Sri Kumara Pillai was appointed sole arbitrator. 2. On 5th February 1972 the Board filed O.P. No. 19 of 1972 for extension of time for passing of the award by the arbitrators. This was disposed of by order dated 22nd June 1972 i.e., the same day, as the order in O.P. 11 of 1972. The material part of the order only stated that as O.P. 11 of 1972 had been allowed that day it had become unnecessary to extend the period as prayed for in O.P. 19 of 1972 and that the application for that purpose was therefore dismissed. 3. On 30th June 1972, the Umpire Sri G. Kumara Pillai entered on the reference in his capacity as Umpire. On 15th February 1973 after considering the claims of the Contractor and the Board, the Umpire made his award in favour of the Contractor for nearly thirty lakhs of rupees. On 20th February 1973, Sri Kumara Pillai filed the award in court and prayed that notice of filing be issued to the parties. Notice was ordered on 21st February 1973. The application was numbered as O.P. 21 of 1973. On 22nd March 1973, the Board filed an application to set aside the award and to challenge the same as invalid under sections 16, 30 and 33 of the Arbitration Act. The Board's application seems to have been numbered as I.A. 895 (a). These figures, can, with some difficulty be found on the docket of the application.
On 22nd March 1973, the Board filed an application to set aside the award and to challenge the same as invalid under sections 16, 30 and 33 of the Arbitration Act. The Board's application seems to have been numbered as I.A. 895 (a). These figures, can, with some difficulty be found on the docket of the application. On 24th March 1973 the Contractor filed an application to pass a decree in terms of the award and for interest at least at 15 per cent from the date of the decree. No separate number is seen assigned to the petition. On 26th March 1973 the Contractor filed his counter-affidavit to the Board's application to set aside the award. The matter was fixed for hearing on 4th April 1973. On that day, the Board filed an application I.A. 1176 of 1973 stating that it was necessary to file a detailed rejoinder affidavit to the objections of the Contractor, and praying for an adjournment of the hearing fixed for that day. The endorsement on the petition, dated 4th April 1973 shows that the application was allowed. The matter came for hearing on 6th April 1973. On that day the Board filed I.A. 1223 of 1973 praying for time for rejoinder affidavit. On the same day, the claimant's counsel endorsed as follows on the objection filed on 26th March 1973: "I submit that I shall not be pressing the fresh points raised in the affidavit for the purpose of today's arguments ". The Board stated in I.A. 1823 of 1973 that it was prepared to satisfy the court that the application under sections 16, 30 and 33 was prima facie maintainable and that it was necessary to adjourn the hearing for evidence, and for final argument. A prayer for that purpose was made in the petition. The endorsement on the petition, dated 6th April 1973; is: "Call on the adjourned date". On 10th April 1973, the court pronounced final orders overruling the objections filed by the Board and passing a decree in terms of the award and allowing the claimant interest at 6 per cent from the date of the order till realisation.
The endorsement on the petition, dated 6th April 1973; is: "Call on the adjourned date". On 10th April 1973, the court pronounced final orders overruling the objections filed by the Board and passing a decree in terms of the award and allowing the claimant interest at 6 per cent from the date of the order till realisation. These orders are all on O.P. 21 of 1973, and there is no trace of any numbers being separately assigned to the Contractor's application to pass a decree in terms of the award, or the Board's application to challenge and set aside the same. On I. A. No. 1223 of 1973, appears the order: "rejected", on 10th April 1973. 4. We may refer at this stage to the B-diary kept by the court in respect of O.P. 21 of 1973. The same does not show that on 6th April 1973 I.A. No. 1223 of 1973 was filed praying for adjournment and for posting the matter for evidence and for final arguments. It only shows that on 6th April 1973 arguments were heard and the matter was posted for orders on 10th April 1973 and that on 10th April 1973 the decree was passed in terms of the award. It does not show that any separate numbers were assigned to the Contractor's application and to the Board's; nor does it even show the gist or purport of the two applications. 5. From what is stated above, it would be seen that there was a complete misapplication of the mind of the Court, to the proceedings. O.P. No. 11 of 1972 was allowed on the only ground that when the matter came on for enquiry it was represented by both sides that as the petitioner had expressed his want of confidence in the arbitrators and as the arbitrators had themselves expressed their willingness to be relieved of their duties as arbitrators, their removal could be ordered; and in view of this agreement, it was necessary to revoke the authority of the arbitrators and to direct the Umpire to enter on the reference and make the award. As stated in paragraph 5 of the order, the representation was made by "both sides", presumably by the Contractor and by the Board. The arbitrators were also parties to the application. They had filed statements before the court.
As stated in paragraph 5 of the order, the representation was made by "both sides", presumably by the Contractor and by the Board. The arbitrators were also parties to the application. They had filed statements before the court. We are reluctant to read these statements, especially that of Sri Padmanabha Iyer as an unconditional expression of willingness to be removed as Arbitrators especially when bias had been attributed to them. Whatever that be, even assuming there was consent to the removal of the arbitrators, section 5 of the Arbitration Act enacts that the authority of an Arbitrator shall not be revocable except with the leave of court. Russel in his Treatise on 'Arbitration' has discussed the considerations and circumstances under which a leave of court can be granted to revoke a submission to arbitration. The discussion was adopted by the Supreme Court in Amarchand v. Ambika Jute Mills, A.I.R. 1966 S.C. 1036. The Supreme Court observed: "We now turn to the legal position which seems to us to be quite clear. Before the court exercises its discretion to give leave to revoke an arbitrator's authority, it should be satisfied that a substantial miscarriage of justice will take place in the event of its refusal. In considering the exercise by the court of the power of revocation it must not be forgotten that arbitration is a particular method for the settlement of disputes. Parties not wishing 'the law's delays' know, or ought to know, that in referring a dispute to arbitration they take arbitrator for better or worse, and that his decision is final both as to fact and law. In many cases the parties prefer arbitration for these reasons. In exercising its discretion cautiously and sparingly, the court has no doubt these circumstances in view, and considers that the parties should not be relieved from a tribunal they have chosen because they fear that the arbitrator's decision may go against them. (See Russel on Arbitration, 16th Edition, page 54). The grounds on which leave to revoke may be given have been put under five heads: 1. Excess or refusal of jurisdiction by arbitrator. 2. Misconduct of arbitrator. 3. Disqualification of arbitrator. 4. Charges of Fraud. 5. Exceptional cases.
(See Russel on Arbitration, 16th Edition, page 54). The grounds on which leave to revoke may be given have been put under five heads: 1. Excess or refusal of jurisdiction by arbitrator. 2. Misconduct of arbitrator. 3. Disqualification of arbitrator. 4. Charges of Fraud. 5. Exceptional cases. " In Kewalram Totaldas v. Diwanchand Sibal and Sons, A.I.R. 1928 Sind 195, it was pointed out, with respect to the provisions regarding arbitration in vogue at the relevant time, that the power to revoke a submission to arbitration should be exercised in the most sparing and cautious manner and only when the court is satisfied of a substantial miscarriage of justice in the event of a refusal to exercise the power. These two principles governing the exercise of the power are again to be found in Russel on Arbitration and were adopted again by Banerji, J. in Bhuwaka Bros. Ltd. v. Fatehchand, A.I.R. 1952 Cal. 294. It is beyond dispute that the court in this case did not apply its mind to the existence of any one of the considerations listed as necessary for revoking a submission to arbitration. There was thus an abdication by the court of its judicial function in granting leave under section 5 of the Act. In that sense, therefore, the order in O.P. 11 of 1972 removing the Arbitrators and directing the Umpire to enter on the reference is invalid and without jurisdiction. 6. There is further intrinsic evidence that the order was passed without application of the mind of the court to the proceedings before it. On the same day as the order on O.P. 11 of 1972, the court passed an order in I.A. 1918 of 1972, allowing the same and referring to the order on O.P. 11 of 1972 for reasons. But the order on O.P. 11 of 1972 only directed Sri G. Kumara Pillai to enter on the reference as Umpire and appointed him as Umpire. It furnished no reasons in support of the order on I. A. 1918 of 1972. The result of these two orders is, that Sri G. Kumara Pillai was invested with a dual status, as Umpire, and as the sole arbitrator. He proceeded to exercise his rights in the former capacity, and took no note of his latter capacity. We need not emphasise that there is a difference between the two.
The result of these two orders is, that Sri G. Kumara Pillai was invested with a dual status, as Umpire, and as the sole arbitrator. He proceeded to exercise his rights in the former capacity, and took no note of his latter capacity. We need not emphasise that there is a difference between the two. We are also unable to understand how the substantive application for appointment as arbitrator was dealt with as an I.A. in the application to appoint Umpire. 7. There is yet another aspect of the matter. Under rule 4 of Schedule I of the Arbitration Act, which is to be read as part of the arbitration agreement unless a contrary intention is indicated, by reason of section 3 of the Act, and no contra indication is available, an Umpire is entitled to enter on the reference if the arbitrators had exceeded the time-limit for making the award. That being so, we are unable to see why the Umpire heeded any appointment as such from the court, or a direction from it, to enter on the reference and to proceed with the arbitration. These were unnecessary reliefs for a court to grant. Counsel for the Contractor had no answer for this position. 8. Nor is this all. O.P. 19 of 1972 filed by the Board for extension of time for submission of the Award, was dismissed, not on the merits, but in view of the order on O.P. 11 of 1972. It would perhaps have been more appropriate if the order in O. P. 19 of 1972 had preceded, even by a split second, the order in O.P. 11 of 1972, especially, where, the order on the latter was not one passed on the merits, but statedly, on consent of parties. For all these reasons, we think the order in O.P. 11 of 1972 was perverse. 9. But counsel for the Contractor repeated before us the reason that found favour with the court below in O.P. 21 of 1973, namely, that the order in O.P. 11 of 1972 had become final, and was therefore outside the pale of challenge. We are unable to agree. As pointed out by counsel for the appellant before us, the Board's application in O.P. 21 of 1973 was made under sections 16, 30 and 33 of the Arbitration Act.
We are unable to agree. As pointed out by counsel for the appellant before us, the Board's application in O.P. 21 of 1973 was made under sections 16, 30 and 33 of the Arbitration Act. There is a strong body of judicial opinion that whereas section 30 of the Act, enumerates the grounds of challenge against an award, section 33 provides for the procedure of making an application challenging the validity, existence or effect of an award or arbitration agreement. A Full Bench of five Judges of the Calcutta High Court in Saha and Co. v. Tshar Singh Kripal Singh and Co., A.I.R. 1956 Cal. 321 has considered at length the scope and inter-relationship between sections 30 and 33 of the Act. The majority (Chakravarthi, C. J., Lahiri and P. B. Mukherji, JJ.) were of the view that while section 30 listed the grounds of attack, section 33 prescribed the procedure for making the application, section 31 having provided for the exclusive jurisdiction of the court in which the award was filed to determine questions as to the validity, existence or effect of an award or agreement; and section 32 having barred a suit for the purpose. The learned Judges further pointed out that the expression "set aside" and "otherwise invalid" were used in section 30 in relation to a voidable, as well as, a void award; and that section 30 (b) itself afforded sufficient indications that even void awards were within its scope. It is pointed out that if the application under section 33 were to be treated differently from the one under section 30, then, the consequences that would follow would be, that there would be no period of limitation for the former, and no appeal therefrom, whereas the period of limitation under Article 158 of the 1908 Act, and a right of appeal under section 39 of the Arbitration Act would be available for the latter. We are struck by these aspects of the reasoning of the majority in the Full Bench case, against which, nothing was said before us. Sri N. N. Sircar in his Tagore Law Lectures on 'Arbitration' observed thus at pages 231 and 241.
We are struck by these aspects of the reasoning of the majority in the Full Bench case, against which, nothing was said before us. Sri N. N. Sircar in his Tagore Law Lectures on 'Arbitration' observed thus at pages 231 and 241. "It is submitted that there is no justification for this ejusdem generis construction, and awards have been set aside as being 'otherwise invalid' on grounds which are not ejusdem generis with what has gone before in the sub-clause." (p. 231) ****** "If improper procuration of arbitration means that the arbitration agreement is liable to be challenged as void or voidable, then by reason of section 33 of the Arbitration Act, 1940, the complaining party can 'challenge the existence or validity of an arbitration agreement' by an application made under that section, which procedure is mandatory by reason of section 32, which prohibits the institution of any suit for that purpose." (p. 241) The majority judgments of Chakravarthi, C. J. and Mukherji, J. in Saha and Co.'s case, A.I.R. 1956 Cal. 321 have, between them, discussed the three Privy Council decisions, viz., E.D. Santon and Co. v. Ramdutt Ramkishen Das, A.I.R. 1922 P.C. 374, Ram Presad Chamria v. Durga Prasad Chamria, A.I.R. 1925 P.C. 293 and Chabba Lal v. Kallu Lal, A.I.R. 1946 P.C. 72. These cases have also received attention in the dissenting judgments of S.R. Das Gupta, J. and Bachawat, J. Giving the matter our careful attention, we agree with the majority view, that the cases, properly understood, support the position which we take in this case, that an invalid award including a void one can be challenged under the Act itself in any appropriate proceeding, such as under section 33. In A.R. Sarkur v. Amritlal Kalidas, A.I.R. 1954 Bombay 293 a Division Bench of the Bombay High Court (Chagla, C. J. and Dixit, J.) also took the view, broadly, that section 30 deals with the grounds, and section 33 prescribes the procedure by way of an application and that the expression 'otherwise invalid' in section 30 (c) is not to be understood ejusdem generis, and it extends the jurisdiction of the court to set aside awards otherwise than on grounds under clauses (a), (b) and (c) of section 30.
We need not get enmeshed in the niceties of the various aspects dealt with in the Calcutta and the Bombay decisions; nor in the point or disagreement between Chagla, C. J. and P. B. Mukherj, J. (See p. 344 of A.I.R. 1956 Calcutta). It is unnecessary to go into these aspects for purposes of this case. We are satisfied that as invalid appointment and reference to an Umpire, as disclosed in this case, and his resultant award, can be challenged by an application under section 33, and the award can be set aside as 'otherwise invalid' under section 30. Even if the order in O.P. 11 of 1972 were a bar to set aside the award passed by the Umpire as invalid, we are inclined to set aside the said order, and the order in O. P. 19 of 1972, by suo motu exercising our power of revision under section 115 of the C.P.C., and would do so for reasons already detailed. The so-called finality of the order in O.P. 11 of 1972 cannot be urged against the appellant. 10. Then it was said that subsequent to the appointment of the Umpire by order on O.P. 11 of 1972, counsel for the Board appeared before him without demur, and participated in the proceedings without objection for nearly six months and more, and therefore, the Board was barred by acquiescence from questioning the jurisdiction of the Umpire, or the legality of his appointment. We shall not disguise our surprise that counsel for the Board in proceedings of this complex and magnitude, did not think it fit at the earliest opportunity to dissociate himself with the statement in O.P. 11 of 1972 that he had agreed to the removal of the Arbitrators; nor, that he raised no objection at all, at any time, before the Umpire to his jurisdiction to function as such, or to the validity of the order which directed him to enter on the reference. It would not have been too much of a penalty for this remissness, if the Board found itself precluded from challenging the appointment of the Umpire of the validity of the award. But an examination of the authorities has satisfied us that the law is not quite so hard on it, and we have no desire to deny it the benefit of the law.
But an examination of the authorities has satisfied us that the law is not quite so hard on it, and we have no desire to deny it the benefit of the law. It is well-settled that if there is inherent want of jurisdiction or invalidity in the appointment of the Umpire or of the arbitrator, no amount of consent and no amount of participation or appearance before the Arbitrator or Umpire can cure the said want of jurisdiction or invalidity. It is enough for us to notice the two decisions of the Supreme Court in Khardah Co. Ltd. v. Raymon and Co. (India) (P) Ltd., A.I.R. 1962 S.C. 1810 and in Waverly Jute Mills Co. Ltd. v. Raymon and Co. (India) (P) Ltd., A.I.R. 1963 S.C. 90. Counsel for the Contractor, indeed accepted this position. But he contended, rather ingeniously, that the Umpire's entry on the reference was not an act without jurisdiction but only a case of an irregular exercise of jurisdiction. He put his case thus: that the Umpire had originally been validly nominated by the arbitrator; that on the arbitrators overstaying the time-limit within which they had to make the award, the Umpire was entitled to enter on the reference; and that irrespective of what had happened before, after the court's order on 22nd June 1972, refusing extension of time to the arbitrators, the Umpire was within his rights in entering on the reference and whatever else might have supervened before he did so, will not take away his jurisdiction and authority as Umpire to enter on the reference. The position is by no means as simple as the counsel would state it to be. The fact is, that when approached by the Contractor by letter dated 28th January 1972 to enter on the reference (enclosing a copy of O.P. 11 of 1972) on the ground that the arbitrators had exceeded the time-limit for submission of their award and that there had been no further extension of time. Sri Kumara Pillai replied by letter dated 29th January 1972 refusing to enter on the reference as Umpire and pointing out that it would not be proper for him to do so. The letter was addressed to the Board and copied to the Contractor and the arbitrators.
Sri Kumara Pillai replied by letter dated 29th January 1972 refusing to enter on the reference as Umpire and pointing out that it would not be proper for him to do so. The letter was addressed to the Board and copied to the Contractor and the arbitrators. By his further letter, dated 4th February 1972 addressed to the Contractor and copied to the Board and to the other two arbitrators, Sri Kumara Pillai referred to the Board's reply that it was opposing the Contractor's application and was praying for extension of time for making the award, and to the arbitrators' reply that there were no difference between them to enable the Umpire to step in. Sri Kumara Pillai stated that, in the circumstances, it would be improper on his part to enter on the reference as Umpire without order of court in the matter, or without notice from the arbitrators under Rule 4 of Schedule I of the Arbitration Act. Copies of the Contractor's letter and of the two letters of Sri Kumara Pillai were made available to us with the paper books supplied. Counsel for the Board criticised the conduct of Sri Kumara Pillai in writing these letters. But we think the criticism is unfounded and the attitude that he took up in these letters was fair and proper. In the face of these letters of Sri Kumara Pillai, it is futile for counsel for the Contractor to ask us to ignore the proceedings in court and to imagine that Sri Kumara Pillai had entered on the reference as Umpire in pursuance of his nomination by the arbitrators and of his undoubted right to do so, if they exceeded their time-limit. 11. We shall now turn to the application by the Board under sections 16, 30 and 33, challenging the Award and seeking that it be set aside. The application was filed on 22nd March 1973 and orders were passed on 10th April 1973. What should have been dealt with as an independent and substantive application was numbered as an interlocutory application 895 (a), not even the words I.A. being seen on the docket in the Umpire's application to file the award, viz. O.P. 21 of 1973. So was the contractor's application to pass a decree in terms of the award and for interest, which was neither marked as I.A., nor even assigned any number.
O.P. 21 of 1973. So was the contractor's application to pass a decree in terms of the award and for interest, which was neither marked as I.A., nor even assigned any number. By its order on O. P. 21 of 1973, the court below held that its order on 22nd June 1972 in O. P. 11 of 1972 had not been challenged by the Board by any appeal, and therefore the same could not be attacked. On this ground, it repelled the contention that the award was illegal and without jurisdiction. We cannot accept this view. The order in O. P. 11 of 1972 was not one of the appealable orders under section 39 of the Arbitration Act. This was admitted. It was therefore impossible to challenge the order by way of appeal; and we have already pointed out that the Board is not precluded from challenging the order as one without jurisdiction or as 'otherwise invalid', as a step in the process of challenging the award itself under section 33 of the Arbitration Act. The records of the court, in regard to O. P. 21 of 1973 again, show that the court had rushed through the proceedings and had not at all applied its mind to the questions for consideration, before it. The application for adjournment filed by the Board on 4th April 1973, (I.A. 1172 of 1973) was allowed, as seen from the endorsement on the application. On 6th April 1973, counsel for the Board presented I.A. 1223 of 1973 to post the matter for evidence and thereafter for final arguments. The court endorsed on this: "call on the adjourned date"; and rejected it on 10th April 1973, on which date final orders were pronounced on O.P. 21 of 1973. Comment should be needless on this queer procedure followed. Counsel for the Board was entitled to a fair opportunity to urge his objections and to advance his arguments. This, he did not have. The order purporting to be passed on O. P. 21 of 1973, describes it as an application to set aside the award under sections 16, 30 and 33 of the Act, which it was not. We are distressed at the unseemly hurry with which the proceedings were rushed through.
This, he did not have. The order purporting to be passed on O. P. 21 of 1973, describes it as an application to set aside the award under sections 16, 30 and 33 of the Act, which it was not. We are distressed at the unseemly hurry with which the proceedings were rushed through. The picture, if anything, is only darkened a shade further, by what we see from the records on the administrative side, that the judge, when he took up the matter for hearing, was under orders of transfer from the station. To say this, is not to give the signal for judges to shirk their work and responsibilities after an order of transfer. Counsel for the Contractor stated that his client was losing nearly Rupees thousand per day. Even if his loss were higher, courts are not expected to lose their balance and equanimity. The cursory way of disposal of the application challenging the award, betrays a non-advertence or misapplication of the mind of the court to the proceedings. The order impugned, in O. P. 21 of 1973, strikes as again, as perverse. 12. We are therefore of the opinion that the removal of the arbitrators and the consequent appointment of Sri Kumara Pillai as Umpire and the direction given to him to enter on the reference by order in O.P. No. 11 of 1972 were illegal and without jurisdiction. The award passed by him was therefore equally invalid and tainted by the same defects. We would therefore declare it as such under section 33, and set it aside as 'otherwise invalid' under section 30 of the Act. 13. That will really make it unnecessary for us to deal with the contentions urged that the award has exceeded the terms of reference and is vitiated by errors apparent on the face of the record. But, for the sake of completeness, we shall deal with these contentions also.
13. That will really make it unnecessary for us to deal with the contentions urged that the award has exceeded the terms of reference and is vitiated by errors apparent on the face of the record. But, for the sake of completeness, we shall deal with these contentions also. The terms of the reference to the Arbitrators and to the Umpire were: "TERMS OF REFERENCE TO ARBITRATION ENTERED INTO BETWEEN SHRI N. CHELLAPPAN, CONTRACTOR AND THE KERALA STATE ELECTRICITY BOARD WHEREAS certain disputes have arisen between-Shri N. Chellappan, Jagathi House, Shanghumughom, Trivandrum, hereinafter referred to as the Contractor on the one hand and the Board and the Chief Engineer, Civil, hereinafter referred to as the Board on the other, in respect of Contracts No. CEC/4/64-65 and No. 15/CED/67-68, it is agreed that the disputes formulated below only arise and they be settled by reference to arbitration. Kuttiyadi Project It is agreed that the Contract Agreement No. 15/CEC/67/68 stands terminated by letter No. C2F-359/66, dated 15th October 1968 of the Chief Engineer, Civil. The Contractor agrees to with draw the suit No. O. S. 39/1970 filed in the Badagara Sub Court by him. It is agreed that there is no other question of dispute or difference arising for settlement except those specifically detailed below in respect of the above contract. All other questions or claims of Contractor, if any, whether existing now or if arising from findings in the award under this reference or during arbitration proceedings or otherwise are hereby withdrawn and are deemed to be abandoned.� The points of reference were: POINTS OF REFERENCE 1. Regarding the first contract, i.e. Agreement No. CEC/4/64-65. Whether the claim to the sum reserved by the Contractor to be enforced in his letter dated 1st July 1967 to the Chairman, or any other lesser sum, is tenable and if so whether the same is recoverable from the Board. 2. Regarding the second contract, Agreement Mo. 15/CEC/67-68 dated 15th July 1967.(a) What is the sum still payable for the work under the said agreement and Departmental Instructions. (b) What is the sum payable to the Board in respect of supplies and/or services rendered to the Contractor by the Board in respect of the contract. (c) What is the price payable to the Contractor for such of the materials at site of Contract as were taken by the Board.
(b) What is the sum payable to the Board in respect of supplies and/or services rendered to the Contractor by the Board in respect of the contract. (c) What is the price payable to the Contractor for such of the materials at site of Contract as were taken by the Board. (d) What are the claims of the Board against the Contractor in respect of and/or under the provisions of the said Agreement.� It was stressed before us regarding the point No. 1 that the claim reserved by the contractor by his letter, dated 1st July 1967 had not been agreed to be reserved for adjudication by the Board, but had been rejected by it, definitely and unequivocally, by letters prior to 1967, that the contractor letter of 1st July 1967 had not been incorporated in the contract, and therefore the claim referred to in point No. 1 had been barred by limitation. Counsel for the Board referred us to Exts. B-3 to B-9 and to Exts. C-76 to C-79. The gist of the correspondence evidenced by these, is that while the Board was insisting that the contractor claims for rain damage, flood damage, and power failure, had all been rejected and could no longer be reagitated, and that the second contract should be executed without any reference to these, the contractor was insisting on his claims under these heads being reserved for adjudication in such ways as may be open to him under law. It was argued by counsel for the Board that there is nothing to show that the Board agreed to a reservation of the claims or otherwise acknowledged its liability in respect of the claims urged by the contractor. Without considering these aspects and examining the relevant correspondence and documents, it was contended that in the face of express plea raised by the Board that these claims were barred by limitation, the Umpire was wrong in finding that the claims had been substantiated and in decreeing a sum of nearly five lakhs of rupees to the contractor in respect of these heads of claims. We think there is force in this contention of counsel for the Board.
We think there is force in this contention of counsel for the Board. The Umpire should have examined the genesis of the claims and considered whether the claims had been rejected by the Board, and if so when, and whether at any subsequent stage the claims had been kept alive by any acknowledgment by the Board, or in any other manner known to law. In so far as the award did not address itself at all to the plea of limitation, we think that the award is vitiated by a error apparent on the face of the record. We do not propose however to go into the details of the matter and express ourselves one way or the other, as the matter will have to be re-examined when it goes back to the Arbitrators or to the Umpire, as the case may be. 14. The other point on which counsel for the Board addressed us was whether the return of the security deposit of one lakh eighty-one thousand rupees can be said to be a matter regarding the second contract" under point No. 2 (a) of the points of reference, and the title thereto. Counsel for the contractor contended that the security amount, though deposited in connection with the first contract, was transferred to, and treated as part of, the second contract, and therefore the return of the said amount which has been directed by the Umpire, was covered by point No. 2 (a) of the Reference. On the other hand, counsel for the Board contended that point 2 (a) related only to the sum still payable "for the work" under the second contract, and therefore the return of the security amount would not be covered by the point, which according to him, would relate only to the work done under the contract. It was complained that the Umpire had not considered this aspect of the question, before directing the return of the security amount. In the view that we take, we think it unnecessary to express our opinion on the merits. On the correct delineation of the scope of point 2 (a), will depend the question whether the Umpire has exceeded the terms of reference or not. The Umpire should have determined the scope of the question.
In the view that we take, we think it unnecessary to express our opinion on the merits. On the correct delineation of the scope of point 2 (a), will depend the question whether the Umpire has exceeded the terms of reference or not. The Umpire should have determined the scope of the question. The matter has to go back to the arbitrators, or the Umpire as the case may be; and we have no doubt that these aspects will receive due consideration. 15. We allow this appeal, and hold that the removal of the Arbitrators and the appointment of Sri M. Kumara Pillai as Umpire and the direction to him to enter on the reference, by order on O. P. 11 of 1972 were illegal and without jurisdiction, and made by the court without applying its mind to the proceedings before it, or the questions arising for consideration. The result is, that the reference to the Umpire, and the award passed by him, are invalid and without jurisdiction. They are therefore liable to be challenged under section 33 of the Act, and the award to be set aside as "otherwise invalid" under section 30. We do so. The order of the court below in O.P. 21 of 1973 dismissing the Board's application challenging the award under sections 16, 30 and 33 is illegal and is set aside. The order in O. P. 21 of 1973 (really it is on the Contractor's application) passing a decree in terms of the award, will stand vacated. The order on O.P. Nos. 11 and 19 of 1972 will stand set aside, and both these O. Ps. will stand remanded back to the court below for fresh disposal in accordance with law. The appeal is allowed as above. As the Board and its counsel were remiss in not taking timely objection to the legality of the appointment of the Umpire, we direct the parties to bear their respective costs throughout.