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1985 DIGILAW 102 (ALL)

P. N. JAISWAL v. BANARAS HINDU UNIVERSITY

1985-01-24

A.N.VARMA

body1985
JUDGMENT A. N. Verma, J. - The appeal has been filed under section 39 of the Arbitration Act assailing the correctness and legality of an order dated 17-9-1977 passed by the court below setting aside an award on the ground that the arbitrator committed legal misconduct arising from an error of law which was stated to be apparent on the face of the award. The relevant facts are that under a written contract the appellant was required to construct Nurses Hostel for the respondent, namely, Banaras Hindu University. In the contract it was provided that some of the materials such as steel and cement shall be provided by the University. The contract also contained a clause for arbitration to the contract the same shall be referred for the arbitration of a person to be named by the Vice-Chancellor, whose decision shall be final and binding. It is alleged by the appellant that steel which University was bound to supply to him under the contract had to be purchased by him in order to complete the contract at an exhorbitant price, as a result of which he had to incur an extra expenditure of Rs. 35,143.14. The appellant asserts in his claim that he was further entitled to 10 per cent of profit on the aforesaid purchases as the same resulted from the failure of the University to supply the materials to him. Under this head the appellant claimed a sum of Rs. 13,705/-. It is further asserted that these purchases were made by the appellant at the instance of the University, and though the University was liable to supply the materials under the contract, the University did not reimburse the appellants for these extra payments. The University did not accept the claim of the appellant, whereupon the dispute was referred to the arbitrator nominated by the Vice-Chancellor. The arbitrator gave an award in favour of the appellant amounting to Rs. 38,310/- against the two claims referred to above. The relevant part of the award is extracted here : "Now, therefore, I hereby make and publish my award as follows : -------------------------------------------------------------------------------- Claim No. Award -------------------------------------------------------------------------------- 1. Claimant claims a sum of Rs. 41,000/- Award against claim Nos. 1 reduced to Rs. 35,143.14 as extra costs and 2. of steel procured from the market by the claimant. A sum of Rs. 38,310/- is awarded against claims Nos. 1 and 2 together. Claimant claims a sum of Rs. 41,000/- Award against claim Nos. 1 reduced to Rs. 35,143.14 as extra costs and 2. of steel procured from the market by the claimant. A sum of Rs. 38,310/- is awarded against claims Nos. 1 and 2 together. -------------------------------------------------------------------------------- 2. Claimant claims a sum of Rs. 13,705/- as extra amount due on account of investment in the cost of steel procured by the claimant on account of failure of the respondent to issue the same. -------------------------------------------------------------------------------- Sd. Illegible, 2/6 (M. K. Koundinya) Arbitrator" The appellant moved an application under section 14 of the Arbitration Act for filing of the award and for the same being made the rule of the court, whereupon the University filed objections against the award. The principal objection of the University was that the arbitrator had committed a manifest illegality in including some amount against the claim made by the appellant on account of the alleged investment in the cost of steel procured by him on account of the failure of the University to issue the same. The contention was that this claim was in substance a claim for damages on damages, and, therefore, not admissible in law. The Arbitrator, therefore, committed manifest error in awarding consolidated sum of Rs. 38,310/- which included not only the amount against the first claim of the appellant but also the second claim, which; was made on account of the investment in the cost of steel. The aforesaid objection of the respondent - university found favour with the court below as a result of which the award was set aside. Sri Jagdish Swaroop, learned counsel for the appellant, submitted two points for the consideration of this court namely : (1) the award in question was a non-speaking award. It did not disclose any error apparent on the face of record so as to justify setting aside of the same. The award did not contain any proposition of law which may be said to be erroneous on its face. The court below was, therefore wrong in holding that the award disclosed any manifest error on its face; (2) the court below was also in error in holding that the amount claimed by the appellant under the second claim was in substance a claim for damages upon damages. The court below was, therefore wrong in holding that the award disclosed any manifest error on its face; (2) the court below was also in error in holding that the amount claimed by the appellant under the second claim was in substance a claim for damages upon damages. Having heard learned counsel for the parties, I am clearly of the opinion that the submissions advanced by Sri Jagdish Swaroop prima facie have considerable force and they cannot be rejected out of hand. Mr. Jagdish Swaroop cited several decisions of the Supreme Court in support of his contention that unless it could be said that the award contains some proposition of law which is on its face erroneous, it cannot be said to disclose an error apparent on the face of award. Sri Sidheshwari Prasad, learned counsel for the respondent - University, on the other hand vehemently contended that the sum granted by the Arbitrator under the award undoubtedly includes some amount under the second claim made by the appellant which is in substance nothing but damages on damages. That being so, it was urged the proposition that some amount was payable to the appellant as damages on damages was implicit in the award, which proposition of law is on its face unsustainable. Learned counsel for the respondent submitted that in order to disclose an error apparent on the face of the award, it is not necessary that it should expressly incorporate some proposition of law which is on its face erroneous. He argued that even if the proposition of law is implicit in the award, the court can look into the correctness of the same and hold that the award is liable to be set aside on the ground that it discloses error apparent on the face of record. In support learned counsel placed reliance on a decision of the Supreme Court reported in AIR 1955 (SC) 468 . Having given the matter a careful consideration, it does not seem necessary to express any concluded opinion on the respective contentions of the parties set out above. For, in the course of arguments a statement has been made on behalf of the appellant giving-up the claim under the second head set out in the award for sum of Rs. Having given the matter a careful consideration, it does not seem necessary to express any concluded opinion on the respective contentions of the parties set out above. For, in the course of arguments a statement has been made on behalf of the appellant giving-up the claim under the second head set out in the award for sum of Rs. 13,705/- as extra amount due on account of investment in the cost of steel procured by the claimant on the failure of the respondent to issue the same. This fact coupled with the further fact both the court below as well as the learned counsel for the respondent University have not disputed that the appellant was at any date, entitled to claim a sum of Rs. 35,133.14 as extra cost of the steel procured from the market by the appellant, clearly leads to the conclusion that the award insofar as the first claim of the appellant for the sum of Rs. 33,133.14 is concerned, is clearly valid. Further, in the record of proceedings of the Arbitrator he has noted that stock of steel was available with the University and inspite of it, it failed to supply the same, as a result of which the appellant had to procure the same from the market at enhanced price. The first claim of the appellant mentioned in the award on account of extra costs of steel procured from the market by him, thus seems to have been accepted both by the Arbitrator as well as the court below. Consequently, the award insofar as this item is concerned, is perfectly valid and the same becomes severable from the remaining part on account of the statement made by learned counsel for the appellant before this court in the course of arguments. In this view it is not necessary to go into the question whether the second claim of the appellant mentioned in the impugned award is valid in law. In the results the appeal succeeds in part and is allowed. The order passed by the court below is set aside. A decree shall be passed in terms of the award except that instead of Rs. 38,310/- a sum of Rs. 35,143.14 shall be taken as awarded in favour of the appellant. In the results the appeal succeeds in part and is allowed. The order passed by the court below is set aside. A decree shall be passed in terms of the award except that instead of Rs. 38,310/- a sum of Rs. 35,143.14 shall be taken as awarded in favour of the appellant. The appellant shall be entitled to payment of interest at the rate of 6 per cent per annum from the date of this decree to the date of realisation of the amount thereunder. The appellant shall be further entitled to his costs but only on the sum of Rs. 35,143.14. Appeal partly allowed.