JUDGMENT K. S. Paripoornan, J. - The appellant is the Kerala State Housing Board. The respondent is a contractor. The work relating to the construction of two separate blocks of flats in the Rental Housing Scheme formulated by the appellant, was awarded to the respondent contractor. The agreements in this behalf were executed on 16-9-1981, with a period of 18 months fixed for performance of the contract. The work had therefore to be completed by 15-3-1983. According to the respondent, he started the work in right earnest. The work was however completed in time, and there were charges of default on either side. The respondent would contend that the appellant had unilaterally changed the plan and the design of the buildings, that there was delay on their part in setting out the buildings as well as in furnishing structural details, and that there was delay/non-supply/interrupted supply of essential items like cement, steel etc. all of which hampered the execution of the work. The respondent would contend that despite all these hindrances which stood in the way of the timely execution of the work, he completed'a substantial portion of the work undertaken within the time stipulated. The appellant would however cast the blame on the respondent for the non-completion of the work in time. In fact, they terminated the agreements at the risk and cost of the respondent on 15-3-1983. The contractor filed two suits O.S. Nos. 86 and 186 of 1983 in the Sub-Court, Trivandrum under sections 5, 8, 11 and 20 of the Arbitration Act, 1940 inter alia to refer all the disputes and differences arising between the parties for decision by an arbitrator to be appointed by the court. Commissions were issued by the court to make local inspection, ascertain the extent of the work done, the value thereof and other matters. The Commissioners submitted their reports. The Court referred the disputes and differences to the Arbitration of Sri. Alfred Daniel, a retired District and Sessions Judge. The terms of reference and the points of dispute on which the Arbitrator was to give his award are set forth in the judgments in the two suits. The Arbitrator entered upon the reference, heard the parties and rendered his awards on 3-2-1986. We are extracting below the two awards :- M.F.A. No. 616/86. "I hereby award and Direct as follows :- Claim (a) :- The Respondent shall pay Rs.
The Arbitrator entered upon the reference, heard the parties and rendered his awards on 3-2-1986. We are extracting below the two awards :- M.F.A. No. 616/86. "I hereby award and Direct as follows :- Claim (a) :- The Respondent shall pay Rs. 3,72,572/- under this term of reference. Claim (b) :- The Respondent shall pay to the claimant Rs. 9,18,475/- under this term of reference. Claim (c) :- The Respondent shall pay to the Claimant Rs. 30,995/- as cost of concrete bricks mouldings carried out. Claim (d) :- The Respondent shall pay to the Claimant Rs. 20,000/- under this item of reference. Claim (e) :- Rejected. Claim (f) :- Rejected. Claim (g) :- The Respondent shall release the security deposit to the Claimant. Claim (h) :- The Claimant is relieved from all contractual obligations. The Claimant is exonerated from the responsibility of executing the balance contract work. Claim (i) :- In full and final settlement of accounts the Claimant is entitled to the following amounts :- (i) A sum of Rs. 3,72,572/- under claim (a) above. (ii) A sum of Rs. 9,18,475/- under claim (b) above. (iii) A sum of Rs. 30,995/- under claim (c) above. (iv) A sum of Rs. 20,000/- under claim (d) above. (v) Security shall be released to the claimant under term of reference (g) above. The Respondent is entitled to the following amounts :- (i) A sum of Rs. 5,00,000/- by way of mobilisation advance. (ii) A sum of Rs. 3,82,684.92 by way of interest on the mobilisation advance at the rate of 18% per annum from 3-11-1981 till 3-2-1986. (iii) Cost of Cement Rs. 36.889.80. (iv) Water charges Rs. 723/-. (v) Cost of empty cement bags Rs. 1,343.16. (vi) Cost of cement and steel at penal rate Rs. 59,150.94. (vii) Amount for removal of debris Rs. 2,045.80. Thus a total amount due to the Claimant is Rs. 13/2,042/- besides the release of security, and total amount due to the Respondent on full and final settlement of Rs. 9,82,837-62. After setting of the amount due to the Respondent, a sum of Rs. 3,59,20-1.38 shall be paid to the Claimant by the Respondent in full and final settlement besides security deposit which shall be released. Claim (j) :- The Claimant is entitled to interest at the rate of 12% per annum for the sum of Rs.
9,82,837-62. After setting of the amount due to the Respondent, a sum of Rs. 3,59,20-1.38 shall be paid to the Claimant by the Respondent in full and final settlement besides security deposit which shall be released. Claim (j) :- The Claimant is entitled to interest at the rate of 12% per annum for the sum of Rs. 3,59,204-38 referred above from the date of suit i.e. from 10-2-1983 till date of payment of decree whichever is earlier. Claim (k) :- Parties will suffer their respective costs. All other claims and counter claims are rejected." (M.F.A. No. 615/1986). "I hereby Award and Direct as Follows :- Claim (a) :- Order/letter No. D1-6090/II/HB/81-82 dated 15-3 1983 is set aside and the Claimant is relieved from all contractual obligations. He is also exonerated from the responsibility of executing the balance work. He is not entitled to any other relief except than those awarded under the following terms of reference. Claim (b) :- The Respondent shall pay the Claimant a sum of Rs. 9,22,900/- under this term of reference. Claim (c) :- The Respondent shall pay to the Claimant Rs. 20,000/- under this term of reference Claim (d) :- Rejected. Claim (e) :- Security deposit shall be released to the Claimant by the Respondent. Retention amount of Rs. 1,00,083/- shall be refunded to the Claimant by the Respondent. Claim (f) :- In full and final settlement of accounts the Claimant is entitled to the following amounts :- (i) Rs. 9,22,900/- under claim (b) above. (ii) Rs. 20,000/- under claim (c) above. (iii) Rs. 72,413/- towards final bill admitted. (iv) Retention amount of Rs. 1,00,083/- as per claim (e) above. (v) Security deposit shall be released to the Claimant by the Respondent. The Respondent is entitled to the following amounts :- (i) Rs. 70,380.55 towards the balance of mobilisation advance. (ii) Rs. 36,547-75 by way of interest on the said mobilisation advance from 16-3-1983 till 3-2-1986 at the rate of 18% per annum. (iii) Rs. 15,601.07 by way of cost of cement, M. S. Rod, Tor rod. (iv) Rs. 53,704/- cost of cement at penal rate. (v) Rs. 77,471.51 cost of steel at penal rate. (vi) Rs. 52.67 cost of P.V.C. pipe T.W. (vii) Rs. 1,828.20 fees paid to notary and for removal of debris. (viii) Rs. 7,633.08 cost of empty cement bags. Thus total amount due to the Claimant is Rs.
(iv) Rs. 53,704/- cost of cement at penal rate. (v) Rs. 77,471.51 cost of steel at penal rate. (vi) Rs. 52.67 cost of P.V.C. pipe T.W. (vii) Rs. 1,828.20 fees paid to notary and for removal of debris. (viii) Rs. 7,633.08 cost of empty cement bags. Thus total amount due to the Claimant is Rs. 11,15,396/- besides the release of security and total amount due to the Respondent on full and final settlement is Rs. 2,63,218.83. After setting off the amount due to the Respondent, a sum of Rs. 8,52,177.17 shall be paid to the Claimant by the Respondent in full and final settlement besides the release of security deposit. Claim (g) :- The Claimant is entitled to interest at the rate of 12% pet-annum from the date of suit i.e. from 28-3-1983 till date of payment or decree whichever is earlier for a sum of Rs. 8,52,177.17 referred to above. Claim (h) :- Parties will suffer their respective costs. All other claims and counter claims are rejected." The awards were filed in court by the Arbitrator. The records delivered to the Arbitrator by Court, and the records filed before him were returned/produced by him in Court in separate sealed covers. No documents were incorporated into the award. We may mention even here that there was no dispute that the awards were non-speaking ones. After the awards were filed in court, the court issued notice, and posted the matters for objections. The appellant - Board filed their objections seeking to set aside the award on the ground of "legal misconduct" of the Arbitrator. It has, however, to be made clear even at this stage that no personal misconduct has been attributed to the Arbitrator, but only legal misconduct, "by solely relying on the facts and figures given by the claimant in making the award." The lower court overruled the objections as in its opinion, no misconduct as envisaged in Section 30 of the Arbitration Act had been made out, and in that view, a decree was passed, in terms of the award on June 7, 1986. The Board is in appeal before us. We extract below the objections to the awards filed by the appellant, in the two cases :- M.F.A. No. 615/86. "1. The award is illegal in as much the appointment of the Arbitrator was against the provisions of the agreement between the parties. 2.
The Board is in appeal before us. We extract below the objections to the awards filed by the appellant, in the two cases :- M.F.A. No. 615/86. "1. The award is illegal in as much the appointment of the Arbitrator was against the provisions of the agreement between the parties. 2. The award is unreasonable, arbitrary and not maintainable. 3. The learned arbitrator has committed legal misconduct of himself by solely relying on the facts and figures given by the claimant in making the award. 4. The learned arbitrator has misconducted himself in not answering in full the various disputes referred to him. 5. The arbitrator has not taken into consideration the entire evidence while exonerating the claimant from contractual obligations. 6. In awarding Rs. 9,22,900/- under claim (b) the arbitrator has misconducted himself as the said amount is much in excess of the value fixed by the expert Commissioner. In awarding the said amount the learned Arbitrator has accepted in toto the figures given by the claimant. 7. The award of Rs. 20,000/- under claim (c) is not based on any acceptable evidence. 8. The arbitrator was not justified in awarding interest at 12%. In the circumstances it is prayed that the award be set aside and referred to a fresh arbitrator or remitted back for fresh award as per law." M.F.A. No. 616/86. 1. "The award is illegal in as much as the appointment of the arbitrator was against the provisions of the agreement between the parties. 2. The award is unreasonable arbitrary and not maintainable. 3. The learned arbitrator has committed legal misconduct of himself by solely relying on the facts and figures given by the claimant in making the award. 4. The learned arbitrator in awarding Rs. 3,72,572/- under claim (a) has over-looked the value assessed by an expert Commissioner on the basis of the prevalent rates. This amounts to clear misconduct on the part of the Arbitrator. 5. The award of Rs. 9,18,475/- under claim (b) is not based on any principles of law. The learned arbitrator has accepted the imaginary figures given by the claim. Consequently the arbitrator has committed legal misconduct. 6. The award of Rs. 30,995/- under claim (c) is contrary to the value fixed by the Commissioner. The learned arbitrator has misconduct himself in awarding an amount in excess of the actual value 7. The award of Rs.
The learned arbitrator has accepted the imaginary figures given by the claim. Consequently the arbitrator has committed legal misconduct. 6. The award of Rs. 30,995/- under claim (c) is contrary to the value fixed by the Commissioner. The learned arbitrator has misconduct himself in awarding an amount in excess of the actual value 7. The award of Rs. 20,000/- under claim (d) is not based on any acceptable evidence. 8. The learned arbitrator has not considered the counter claim submitted by the respondent. The award is therefore illegal and unsustainable. 9. The learned arbitrator was not justified in awarding interest at 12%. 10. The learned arbitrator has misconducted himself in not answering in full the various disputes referred to him. In the circumstances it is prayed that the award may be set aside and referred to a fresh arbitrator or remitted back for fresh award as per law." The point which arises before us is whether the awards made by the Arbitrator are liable to be set aside under section 30 of the Arbitration Act, 1940. The grounds on which a non-speaking award, as in this case, of an Arbitrator could be set aside are very limited. The Privy Council had occasion to deal with this matter in Champsey Bhara and Co. v. Jivraj Balloo Spinning and Weaving Co. Ltd. (AIR 1923 Privy Council, 66) and it was held that unless an error of law appears in, the award or a document actually incorporated thereto, it is not possible for the court to set aside the award on the ground of error of law on the face of the award. If the award is a non-speaking one, without any reasons, and no documents are appended or incorporated thereto, the court has to confine itself to the terms of the award as they appear on the face of it. This position of law laid down by the Privy Council has been accepted and applied in a catena of decisions of the Supreme Court. In Union of India v. Rallia Ram (AIR 1963 SCI 685) where it was observed :- "An award being a decision of an arbitrator whether a lawyer or a layman chosen by the parties, and entrusted with power to decide a dispute submitted to him is ordinarily not liable to be challenged on the ground that it is erroneous.
In Union of India v. Rallia Ram (AIR 1963 SCI 685) where it was observed :- "An award being a decision of an arbitrator whether a lawyer or a layman chosen by the parties, and entrusted with power to decide a dispute submitted to him is ordinarily not liable to be challenged on the ground that it is erroneous. The award of the arbitrator is ordinarily final and conclusive, unless a contrary intention is disclosed by the agreement. The award is the decision of a domestic tribunal chosen by the parties, and the civil courts which are entrusted with the power to facilitate arbitration and to effectuate the awards, cannot exercise appellate powers over the decision. Wrong or right the decision is binding, if it be reached fairly after giving adequate opportunity to the parties to place their grievances in the manner provided by the arbitration agreement. But it is now firmly established that an award is bad on the ground of error of law on the face of it, when in the award itself or in a document actually incorporated in it, there is found some legal proposition which is the basis of the award and which is erroneous. An error in law on the face of the award means : 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 proposition 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 setting first what that contention is, and then going to the contract on which the parties' rights depend to see if that contention is sound." This position was further reiterated in positive terms in Union of India v. Bungo Steel Furniture (AIR 1967 SC 1032) in these words : "......
it is well settled that the Court has no jurisdiction to investigate into the merits of the case and to examine the documentary and oral evidence on the record for the purpose of finding out whether or not the arbitrator has committed an error of law and that the award of the arbitrator can be set aside on the ground of error of law on the face of the award only when the award or in a document incorporated with it, as for instance a note appended by the arbitrator stating the reasons for his decision, there is found some legal proposition which is the basis of the award and which is erroneous." With regard to non-speaking awards, it was stated in Bungo Steel Furniture v. Union of India (AIR 1967 SC 378) :- "It is now a well-settled principle that if an arbitrator, in deciding a dispute before him, does not record his reasons and does not indicate the principles of law on which he has proceeded, the award is not on that account vitiated. It is only when the arbitrator proceeds to give his reasons or to lay down principles on which be has arrived at his decisions that the Court is competent to examine whether he has proceeded contrary to law and is entitled to interfere if such error in law is apparent on the face of the award itself." It was also held in Allen Benny & Co. v. Union of India (AIR 1971 SC 696) that when an arbitrator commits a mistake either in law or in fact in determining the matters before him, but such mistake does not appear on the face of the award or on a document appended to or incorporated in it so as to form part of it, the award will neither be remitted nor set aside notwithstanding the mistake. The position of law is thus firmly established that Arbitrators are not bound to give reasons for their award. This is eminently in accord with the public policy involved in matters of arbitration namely, that parties desire to have a final and abiding award expeditiously. The further proposition that is established is that the court cannot travel beyond the award or any documents incorporated into the award and forming part of it to discover mistakes or errors of law. Sri.
The further proposition that is established is that the court cannot travel beyond the award or any documents incorporated into the award and forming part of it to discover mistakes or errors of law. Sri. T. N. Subramonia Iyer, counsel for the appellant, would contend that the Arbitrator has misconducted himself for more reasons than one. First, he has not applied his mind to the materials available before him, and has therefore, passed the awards for excessive amounts. He would also say that the contracts having been terminated by the appellant on 15-3-1983, the claim of the contractor could only be for damages. Such damages become payable only if there is breach of contract on the part of the appellant Board. A definite finding on this aspect was therefore called for before any amount is awarded to the respondent and says counsel no such finding has been rendered. Sri. Subramania Iyer further said that the award is one totally unsupported by any material, as according to him, no evidence had been led before that Arbitrator. He should have inspected the property and since at he was not a technically qualified man he should have taken the assistance of competent people to decide on the various technical aspects of the matter, and on the amount payable. Lastly Mr. Subramonia Iyer would contend that the Arbitrator had claimed a fee of Rs. 7,500/- in each of the two matters referred to him. Government had issued circular that in such cases the maximum amount that could be claimed by the Arbitrator was only Rs. 2,700/- per reference. The demand for excessive amount, by way of remuneration or charges, liable to be paid by the appellant - Board, was itself evidence of partiality to the respondent. In this connection counsel referred us to the passages occurring in page 367 of Law of Arbitration by S. D. Singa. As stated by us earlier, the position of law in regard to non-speaking awards is now beyond question. Court can look into only the award or those documents which have been made part of or incorporated in the award and which form essential parts of the award to decide whether the award is liable to be set aside.
As stated by us earlier, the position of law in regard to non-speaking awards is now beyond question. Court can look into only the award or those documents which have been made part of or incorporated in the award and which form essential parts of the award to decide whether the award is liable to be set aside. On a perusal of the awards which we have extracted in paragraph 2 above and the objections thereto, extracted by us in paragraph 4 supra, we do not find any substance in the contentions raised by Sri. Subramonia Iyer justifying the awards being set aside. We need not highlight all these issues for the purpose of this case. The objection statements filed by the appellant before the court seeking to set aside the award alleged that the Arbitrator had gone wrong in awarding much higher amounts than what the Board would have it. There is no whisper in the objections of any act of the Arbitrator which would render his awards outside his jurisdiction or in excess of his jurisdiction. Not merely that, if the appellant had any such case, it was necessary for them to prove these aspects of the matter by cogent evidence. None such was attempted. The appellant seems to have proceeded as if their duty ended with the filing of the objection statements. In these circumstances the question of our scrutinizing the award to see whether it is vitiated by any error of jurisdiction does not arise. None of the grounds which Mr. Subramonia Iyer urged before us including the ground of excessive remuneration finds reflection in the pleadings and these facts also do not find sustenance in any evidence adduced before the court. Even assuming that all that is stated is correct, it amounts at best, only to some mistakes committed by the Arbitrator which will not justify the setting aside of the awards. There is nothing before us also to show that the Arbitrator acted without evidence or material or that he did not apply his mind to relevant evidence, even assuming that such questions are open for adjudication on the nature of the awards and the objections raised in this case.
There is nothing before us also to show that the Arbitrator acted without evidence or material or that he did not apply his mind to relevant evidence, even assuming that such questions are open for adjudication on the nature of the awards and the objections raised in this case. It is however, submitted that the recent decision of this court in M.F.A. No. 129 of 1982 enables the court to go behind the award and see whether on the materials available before the Arbitrator, any misconduct could be inferred. In other words, the submission is that despite the award being a non-speaking one, the materials available before the Arbitrator could be made use of by the court to decide whether the award is liable to be set aside on one or other of the grounds referred to in section 30. Counsel would say that this is the effect of the decision in M.F.A. No. 129 of 1982. We are unable to accept this submission. We have perused carefully the decision in M.F.A. No. 129 of 1982. That was a case where the Arbitrator had acted without jurisdiction. The contractor in that case had admittedly not fulfilled his obligations under the contract within the time allowed. He prayed for further time and that was granted on his undertaking in writing that he will not claim any excess amount for the work done by him after 3-4-1978. Despite this solemn undertaking, when the matter went to arbitration, the contractor not only claimed such amount, but the Arbitrator also very generously gave it. The case was thus one where the question of excess amount for the period after 3-4-1978 was not a matter arising under the contract, but one which was beyond the purview of the arbitration itself. There was a total lack of jurisdiction in the Arbitrator in dealing with this part of the alleged dispute. This court said that the court's scrutiny is not barred, even in the case of non-speaking awards, in cases where the Arbitrator acts outside his jurisdiction or in excess of jurisdiction. In other words, in cases where the jurisdiction of the Arbitrator is in dispute, the court is entitled to scrutinise the award to hold that the award was without or in excess of jurisdiction.
In other words, in cases where the jurisdiction of the Arbitrator is in dispute, the court is entitled to scrutinise the award to hold that the award was without or in excess of jurisdiction. For this purpose, the parties were entitled to lead evidence regarding the nature of the dispute and as to how the Arbitrator either acted outside his jurisdiction or exceeded his jurisdiction. This is what this court said :- "Where, however, the error of law, goes to his jurisdiction, as distinguished from an error within jurisdiction, extrinsic evidence can be called in aid to prove the illegality." We may also refer in this connection to the decision of the Division Bench of this court in Alwaye Municipality v. Kochunny (1982 KLT 669) where Khalid, J. had referred to the possibility of an award being set aside in exceptional circumstances on the ground of error of jurisdiction. The decision in/M.F.A. No. 129 of 1982 does not therefore come to the aid of the appellant as no question of lack of jurisdiction or excess of it has been set up or proved by the appellant. We are not therefore, inclined to interfere with the awards on the grounds of any error of law apparent on their face. The Arbitrator has passed non-speaking awards mentioning only the amounts that he has awarded. No reasons have been given from which we could infer any error of law apparent on the awards. Nor has he appended or incorporated any documents with reference to which any such error could be discovered. The appellant has not made out any ground for setting aside the awards under Section 30. The lower court has therefore rightly declined the appellant's prayer to set aside the awards for the grounds stated by them. We concur with the decision of the lower court and dismiss the appeals with costs. (Appeal dismissed).