INDIAN RARE EARTHS LTD. v. M. SADASIVE PANICKER — 1988 DIGILAW 123 (KER)

JUDGMENT Shamsuddin, J. - This appeal is preferred by the petitioners in Arbitration O.P. No. 91 of 1982 on the file of the Court of Principal Subordinate Judge, Quilon which is a petition filed under Sections 16, 30 and 33 of the Arbitration Act, for setting aside the award dated 30-6-1982 passed by the 2nd respondent. The facts that led to the filing of the appeal may be briefly stated as follows : The 1st respondent was engaged as a Contractor as per Ext. P-2 agreement dated 6-6-1978 for the collection of the raw sand and sea washings from the mining areas mentioned in the tender form. The period of contract was from 1-6-1978 to 31-5-1979. The work as per the contract was commenced on 7-6-1978. The contract was terminated with effect from 12-1-1979 and the work was entrusted to another contractor, whose tender was the next highest. The 1st respondent filed a suit O.S. No. 04 of 1979 before the court of Subordinate Judge, Quilon under section 20 of the Arbitration Act. The 1st defendant in that suit is 1st appellant herein the 2nd defendant in that suit is the 1st appellant herein and the 2nd defendant is its Manager, Mineral Division, Quilon and the 2nd appellant herein. The allegation of the plaintiff in the suit was that there existed some disputes between the appellants herein and the plaintiff who is the 1st respondent herein, that Clause 23 of the tender form embodied an arbitration clause according to which all disputes of differences whatsoever arising between the parties out of or relating to the construction, meaning and operation or effect of the contract or the breach thereof shall be settled by an arbitrator to be appointed by the Managing Director and his decision shall be final and binding on both parties the dispute had arisen between him and the appellants herein and he was entitled to have the disputes and difference settled by arbitration, but the request of the 1st respondent to the appellants to refer the disputes to arbitration was not heeded to by the appellants and that this necessitated the filing of the suit under Section 20 of the Arbitration Act. The issues paragraph 21 of the plaint. On the basis of those enumerated the plaintiff sought for a decree as prayed for. The issues paragraph 21 of the plaint. On the basis of those enumerated the plaintiff sought for a decree as prayed for. The appellants filed written statements admitting the contract but refusing the allegations leveled against the appellants and the officers in the matter of execution of the contract and also denying that the workman involved in the work were the employees of the first appellant company. They also contended that there was no master-servant relationship between the 1st appellant and the workmen and hence the lay off compensation under the Industrial Disputes Act and other benefits claimed by the workers were payable by the Contractor. In regard to other claims also, it was contended that in the absence of any agreement or tender conditions, there was no liability for the appellants to pay lay off compensation to the workers as the plaintiff was not able to fulfil the contract and that necessitated the cancellation of contract. They also contended that the plaintiff had not made a request to appoint an arbitrator as provided under Clause 23 of the relevant tender and his letter dated 30-12-1978 did not refer to disputes or differences arising between the parties out of one relating to the construction, meaning and operation or effect of the contract or the breach thereof. They finally prayed for the dismissal of the suit. The learned subordinate judge held that there were disputes between the appellants and the first respondent and that one of the questions to be tackled was whether the workers employed by the 1st respondent are not the workmen under the appellants. In this view of the matter, the learned Subordinate Judge held that it was necessary to appoint an Arbitrator as contemplated by Clause 23 of the tender form. The learned Subordinate Judge further observed that as regards the choice of the Arbitrator Clause 23 contemplated appointment of an Arbitrator by the Managing Director of the 1st appellant - company by the learned counsel for the plaintiff agreed that the stage for appointment of the Arbitrator by the Managing Director was over as demand for the purpose was not complied with and since the parties were before the court, the court had power to appoint and Arbitrator of its own choice. The learned sub-judge ultimately appointed the 2nd respondent herein as Arbitrator under Section 20 of the Arbitration Act holding that under Section 20, the court had power to appoint any person as Arbitrator and was not bound by provisions contained in Clause 23. The operative portion of the decree reads thus : "I hereby appoint Sri Alfred Daniel, Princely house, Santosh Nagar, Muttada, Trivandrum - 25, Retired District and Sessions Judge and Presiding Officer of Labour Court, Quilon, as the Arbitrator for setting all the disputes and differences arising between the parties including issues enumerated in para 21 of the plaint." Thereafter, a claim statement was filed by the 1st respondent before the 2nd respondent who appointed as the Arbitrator. The allegations contained in the claim statement were denied by way of counter-statement by the appellants herein and the appellants made a counter-claim in respect of certain other matters in dispute. By an order dated 30-6-1982, the 2nd respondent passed on award. The findings of the Arbitrator on issues are as follows : "Issue No. 2 : I held that the workmen engaged in mining, collection, transportation and supply of raw sand are the workmen of the 1st respondent company and not that of the claimant. Issue No. 1 : I hold that the respondents committed breach of contract by terminating the raw sand supply contract as per letter Ext. 16 (the same as Ext. P-17) dated 12-1-1978. Issue No. 3 : I hold that the claimant sustained loss on account of the termination of the contract and that the 1st respondent company is liable to pay for the same to the claimant (details of the claims vide following paragraphs). Issue No. 4 : (Claim No. 1) (Annexure IV of the claim Statement) : I hold that the 1st respondent company is liable to pay the amount of Rs. 1,06,325,68 to the claimant on account of the excess lay off compensation paid by the claimant over and above what was proportionately due for the actual period of work. The claim of interest is dealt with separately. Issue No. 5 : (Claim No. 2). Annexure V of the claim Statement : I hold that the 1st respondent company is liable to pay an amount of Rs. 27,882.40 being the payment made to monthly paid staff in excess payment made to the workmen towards holiday wages for 5 days. The claim of interest is dealt with separately. Issue No. 5 : (Claim No. 2). Annexure V of the claim Statement : I hold that the 1st respondent company is liable to pay an amount of Rs. 27,882.40 being the payment made to monthly paid staff in excess payment made to the workmen towards holiday wages for 5 days. The claim of interest is dealt with separately. Issue No. 8 : (Claim No. 3) : Annexure V of the claim statement : I hold that the 1st respondent company is liable to pay an amount of Rs. 10,886 being loss sustained by the claimant on account of excess payment made to the workmen towards holiday wages for 5 days. The claim of interest in dealt with separately. Issue No. 6 : (Claim No. 5) : Annexure II in the claim statement : I hold that the 1st respondent company is liable to pay an amount Rs. 85,910.88 being additional wages paid to the workmen by way of 10% increase. The claim of interest is dealt with separately. Issue No. 7 : (Claim No. 4) : Annexure I in the claim statement : I hold that the 1st respondent is liable to pay Rs. 87,507.95 being the claim made on account of difference between the tonnage on which the claimant paid wages and that recorded by the weigher-machine. The claim of interest is dealt with separately. Issue No. 9 : (Claim No. 6) (Annexure III of the claim Statement) : Flood damages : Item No. 1 - I hold that the claimant is entitled to get only Rs. 7,000 as against his claim of Rs. 20,000 towards the cost of a sand stocking shed. The rest of the claim is rejected. Item No. 2 : I hold that the claimant is not entitled to any amount towards value of raw sand stocked in the shed after drying. The claim is rejected. Item No. 3 : I hold that the claimant is not entitled to anything towards cost of the sand stocked at the wharf-site. This claim is rejected. Thus I hereby find that the claimant is entitled to an amount of Rs. 7,000 only on account of flood damages. The claim for interest is dealt with separately. The claim is rejected. Item No. 3 : I hold that the claimant is not entitled to anything towards cost of the sand stocked at the wharf-site. This claim is rejected. Thus I hereby find that the claimant is entitled to an amount of Rs. 7,000 only on account of flood damages. The claim for interest is dealt with separately. Issue No. 2 : (Claim No. 7) (Annexure VII in the claim Statement) : I hold that the 1st respondent company is liable to pay an amount of Rs. 50,000 to the claimant as the value of raw sand stocked by him at the v, warf-site at the time of termination of the contract. The claim of interest is dealt with separately. Issue No. 10 : (Claim No. 8) (Annexure VIII in the claim statement) : I hold that the 1st respondent company is liable to pay and amount of Rs. 25,000 towards amount spent for rectification work for rectifying the rain-damages and recommencing work. The claim of interest is dealt with separately. Issue No. 11 : (Claim No. 9) (Annexure No. IX in the claim statement) : I hold that the 1st respondent company is liable to pay an amount of Rs. 29,250 being the excess advance paid by the claimant to the workers and remaining unrecovered due to the termination of contract. The claim of interest is dealt with separately. Issue No. 13 : (Claim No. 10) (Annexure X in the claim Statement) : I hold that the 1st respondent company is liable to pay the amount of Rs. 40,000 being the earnest money deposit to the claimant. The claim for interest is dealt with separately. Issue No. 15 : (Claim No. 11) hold that the 1st respondent company is liable to pay an amount of Rs. 1,50,000 being loss sustained by the claimant on account of loss of profit due to premature termination of the contract. The claim of interest is dealt with separately. Issue No. 16 : (Counter-claim No. 1) Made by respondents : This counter-claim is rejected. Issue No. 17 : (Counter-claim No. 2) made by the respondents : The counter-claims for Rs. 23,358.02 covered by Ext. D-18 statement for accounts is allowed. But however the value of 2260.490 M.T. of raw sand supplied for the period from 18-12-1978 to 26-12-1978 covered by weigher reading reports as per Ext. Issue No. 17 : (Counter-claim No. 2) made by the respondents : The counter-claims for Rs. 23,358.02 covered by Ext. D-18 statement for accounts is allowed. But however the value of 2260.490 M.T. of raw sand supplied for the period from 18-12-1978 to 26-12-1978 covered by weigher reading reports as per Ext. D-33 has not been admittedly paid to the claimant. Hence the claimant is entitled to receive the same from the 1st respondent. The said amount due to the 1st respondent is set off against the value of 2260.490 M.T. i.e. Rs. 39,603.75. After thus setting of the balance due to the claimant is Rs. 26,245.75. Claim covered by Ext. D-18 is Rs. 23,458.02 Value of 2260.490 M.T. of raw sand supplied by the claimant for the period from 18-12-1978 to 21-12-1978 at the rate of Rs. 17.52 per M.T. Rs. 39,603.75 ------------------- 16,245.73. ------------------- Issue No. 18 - Counter-claim No. 3 : This counter-claim is rejected. Issue No. 19 : Interest at the rate of 12% per annum as against the claim of 18% per annum, on various principles amounts claimed by the claimant under claims 1 to 5 and 7 to 10 from the date of termination of contract till the date of passing of the decree by the sub-court, Quilon, has to be allowed. I find so. The claim of interest on claim No. 6 is rejected. As regarding claim No. 11 I award interest at the rate of 12% per annum from the date of suit upto the passing of the decree by the sub-court, Quilon. Issue No. 14 The matters involved in issue No. 16 to 20 (joined issue by the parties) are covered by the issue. The parties did not join issue on any other disputes or difference which arose from the breach of contract committed by the 1st respondent. Issue No. 21 : Vide decretal portion of the award." Aggrieved by the Award, the appellants herein filed the above Arbitration O.P. No. 9/82 under Sections 6, 30 and 33 of the Arbitration Act seeking to set aside the award. The main grounds urged by the appellants in the O.P. were : (1) misconduct on the part of the Arbitrator and (2) error of law apparent on the face of the award. The main grounds urged by the appellants in the O.P. were : (1) misconduct on the part of the Arbitrator and (2) error of law apparent on the face of the award. The learned Subordinate Judge however, dismissed the petition holding that the award is a non-speaking one, that the documents do not form part of the award and that since the award is a non-speaking one, the Court has no jurisdiction to investigate into the merits of the case and to examine the oral and documentary evidence to find out whether there is any error of law apparent on the face of the award of the Arbitrator has misconducted himself. In this appeal, the appellants challenge the findings arrived at by the learned subordinate judge. The learned counsel for the appellants strenuously contended that the award is bad since the Arbitrator had misconducted himself and there is error of law apparent on the face of the award. There cannot be any any doubt that the award can be remitted or set aside only on very limited grounds mentioned in Sections 16 and 30 of the Arbitration Act. The learned counsel for the appellants at the outset submitted that he does not challenge the award of the Arbitrator relating to claim Nos. 6, 8 and 10. With regard to the rest, he had serious objection. He submitted that the award relating to counter-claim 2, which is issue No, 17 is beyond the reference and had jurisdiction of the Arbitrator. He further submitted that the finding on issue No. 2 is directly in conflict with the finding on issue No. 17 and therefore there is an error of law apparent on the face of the award. He pointed out that the Arbitrator while considering issue No. 17 relating to counter-claim No. 2 allowed Rs. 23,358.00 as being covered by Ext. D-18 statement of accounts. According to the learned counsel reference to Ext. D-18 statement would mean that this document is incorporated into the award and therefore if there is anything in the finding on issue No. 17 in so far as it relates to the master-servant relationship between the workmen of appellant company, that will constitute a legal misconduct entailing the setting aside of the award. D-18 statement would mean that this document is incorporated into the award and therefore if there is anything in the finding on issue No. 17 in so far as it relates to the master-servant relationship between the workmen of appellant company, that will constitute a legal misconduct entailing the setting aside of the award. He further contended that the Arbitrator went beyond his jurisdiction and power is awarding an amount of 1,16,245.73 in disposing of counter-claim which has subject-matter of issue No. 17 The Arbitrator allowed the counter-claim made by the appellant, but further held that the value of 2260.490 M.T. of raw and supplied for the period from 18-2-1978 was not paid to the contractor and the appellant is liable to pay the amount relating to this, in addition to the claim referred to the Arbitrator. As pointed out earlier an award is final between the parties and it is only on very limited grounds mentioned in Section 16 and 30 of the Arbitration Act an award can be remitted or set aside and on this point the authorities are uniform. One of the earliest cases on the point is the decision of the Privy Council Chamspey Bhara and Company v. Jivraj Ballo Spinning and Weaving Company Ltd. (AIR 1923 PC 66). In that cases the Privy Council Ltd., quoted the following observations of Williams in the case of Hodgkinson v. Fernie ((1987) 3 CBNS 189), with approval : "The law has for many years been settled, and remains so at this day, that, where a cause of matters in difference are referred to an arbitrator a lawyer or a layman he is constituted the sole and final judge of all questions both of law and of fact. ........... The only exceptions to that rule are cases where the award is the result of corruption or fraud, and one other, which though it is to be regretted, is not, I think firmly established, viz; where the question of law necessarily arises on the face of the award of upon some paper accompanying and forming part of the award. Though the propriety of this latter may very well be doubted I think it may be considered as. Though the propriety of this latter may very well be doubted I think it may be considered as. After reviewing subsequent decisions on the aspect the Privy Council made the following observations : An error in law on the face of the award means, in their Lordships' view, that 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 seeing first what that contention is, and then going to the contract on which the parties' rights depend to see if that contention is sound." In this context the following observation of the Privy Council is very important. "The question of whether an arbitrator acts within his jurisdiction is, of course, for the courts to decide, but whether the arbitrator sets within his jurisdiction or not depends solely upon the clause of reference. It is, therefore, for the Court to decide in this case whether the dispute which has arisen is a dispute covered by Clause 13 of the articles." The courts have also made a distinction between cases in which a question of law specifically referred to the Arbitrator and the one in which it incidentally arises. In dealing with the question whether there was an error of law apparent on the face of the award, the consistent view expressed by the courts is if the question of law is specifically referred by the parties, and an award is passed deciding that specific question of law, then the award cannot be questioned on the ground that there is an error of law apparent on the face of the award even if the question of law is wrongly decided by the arbitrator. However, the courts have held that even in such cases there are exceptions as is clear from some of the rulings which we discuss below. However, the courts have held that even in such cases there are exceptions as is clear from some of the rulings which we discuss below. In Thawardas Pherumal and another v. Union of India (AIR 1955 SC 468), their Lordships of the Supreme Court considered this aspect with references to a number of English and Indian authorities and observed : "This covers case in which an error of law appears on the face of the award. But in determining what such an error is, a distinction must be drawn between cases in which a question of law is specifically referred and those in which a decision on a question of law is incidentally material (however necessary) in order to decide the question actually referred. If a question of law is specifically referred and it is evident that the parties desire to have a decision from the Arbitrator about that rather than one from the courts, then the Courts will not interfere, though even then there is authority for the view that the Courts will interfere if it is apparent that the arbitrator has acted illegally in reaching his decision, that is to say, if he has Decided on :inadmissible evidence or on principles of construction that the law does not countenance or something of that nature. X X X An arbitrator is not a conciliator and cannot ignore the law or misapply it in order to do what he thinks is just and reasonable. He is a tribunal selected by the parties to decide their disputes according to law and so is bound to follow and apply the law and if he does not, he can be set right by the Courts provided his error appears on the face of the award. The single exception to this is when the parties choose specifically to refer a question of law as a separate and distinct matter. The single exception to this is when the parties choose specifically to refer a question of law as a separate and distinct matter. X X X If, therefore, no specific question of law is referred, either by agreement or by compulsion, the decision of the arbitrator on that is not final however must it may be within his jurisdiction and indeed essential, for him to decide the question incidentally." Their Lordships also made it clear that the parties who make a reference to arbitration have the right to insist that the tribunal of their choice shall decide their dispute according to law, before the right denied to them in any particular matter and the court must be very sure that both sides wanted the decision of the arbitrator on a point of law rather than that of the courts and that they wanted his decision on that point to be one final. The question what will constitute an error on the face of the award same up for consideration in the ruling of the Supreme Court in Re. S. Dutt v. University of Delhi (AIR 1959 SC 1050). Explaining the observations of their Lordships of the Privy Counsel in Chamspey Bhard's case (1923 P.C. 66) the court observed thus : "We are unable to agree that the Judicial Committee laid down the proposition that the learned counsel for the appellant ascribes to them. When they referred to the reasons for the judgment, they were contemplating a case where the judgement that is, the award itself, did not disclose an error, but the reasons given for it in an appended paper, did. They did not intend to say that no error can appear on the face of an award unless the reasons for the decision contained in the award were given in it. In our view, all that is necessary for an award to disclose an error on the face of it is that it must contain, either in itself or in some paper intended to be incorporated in it, some legal proposition which on the face of it and without more, can be said to be erroneous. This was the decision of the judicial Committee in the Chamspey Bara and Co. case (A) ? This was the decision of the judicial Committee in the Chamspey Bara and Co. case (A) ? As the award in this case directs specific enforcement of a contract of personal service, it involves a legal proposition which is clearly erroneous." Again the question came up for consideration of the Supreme Court in M/s. Alopi Parshad and Sons Ltd. v. Union of India (AIR 1960 SC 586) the Court observed : "Was the reference made by the parties to the arbitrators a specific reference that is, a reference inviting the arbitrators to decide certain questions of law submitted to them, If the reference is of a specific question of law, even if the award is erroneous, the decision being of arbitrators selected by the parties to adjudicate upon those questions, the award will bind the parties." In Iftikhar Ahamed and others v. Syed Meharban Ali and others (AIR 1964 SC 749), the question arose whether a previous decision in a Second Appeal would operate as rejudicate. The arbitrator came to the conclusion that the respondents were in joint possession of the property and therefore there was no ouster. If the judgment in the Second Appeal operated as res judicate the respondents had no title to the property. There was no finding by the Arbitrator that by adverse possession they (respondent) acquired title to the properties at any point of time. The Supreme Court made the following observations : "The question which was referred to the arbitrator was the dispute between the parties as regards the title to the properties. If the ad judgment of the High Court operated in law as res judicata, it would be an error of law apparent on the face of the award if it were to say that the judgement would not operate as res judicata. The District Judge was, therefore, right in holding that the award was vitiated by an error of law apparent on its face in that it was based on the proposition that the judgment of the High Court would not operate as res judicata on the question of title to the properties. If an award sets forth a proposition of law which is erroneous then the award is liable to be set aside under Section 30 of the Arbitration Act. If an award sets forth a proposition of law which is erroneous then the award is liable to be set aside under Section 30 of the Arbitration Act. This Court has held that the provisions of the Arbitration Act will apply to proceedings by an arbitrator under the Act." It is also well settled that to constitute a misconduct under Section 30(a) of the Act there need not be a moral lapse and arriving at an inconsistent conclusion even on his own finding or arrives at a decision by ignoring very material documents which throw abundant light on the controversy to help a just and fair decision will constitute a legal miscounduct within the meaning of Section 30(a) of the Arbitration Act. Dealing with this aspect, the Supreme Court in K. P. Poulose v. State of Kerala (AIR 1975 SC 1259), made the following observations : "Under Section 30(a) of the Arbitration Act an award can be set aside when an Arbitrator has misconducted himself or the proceedings. Misconduct under section 30(a) has not a connotation which is complete if the Arbitrator on the face of the award arrives at an inconsistent conclusion even on his own finding for arrives at a decision by ignoring very material documents which throw abundant light on the controversy to help adjust and fair decision. It is in this sense that the arbitrator has misconducted the proceedings in this case. We have, therefore, no hesitation in setting aside such an award." It is also settled that if the mistake is apparent on the document appended to the award or incorporated in it, so as to form part of it, that will amount to an error of law apparent on the face of the award. In M/s. Allen Bery and Co. Private Ltd. v. Union of India (AIR 1971 SC 696), the Supreme Court said thus : "The principle is that the court, while examining an award, will look at documents accompanying and forming part of the award. Thus, if an arbitrator were to refer to the pleadings of the parties so as to incorporate them into the award, the court can look at them. Thus, if an arbitrator were to refer to the pleadings of the parties so as to incorporate them into the award, the court can look at them. In some cases however, courts extended the principle and set aside the award on a finding that the contract, though only referred to but not incorporated into the award as part of it, had been misconstrued and such misconstitution had been the basis of the award." Their Lordships quoted with approval the following observations of Diplock, L.J. in Giscoma Costs Fu Andrea v. British Italian Trading Company Ltd. (1962 (2) All ER 63). "It seems to me, therefore, that, on the cases there is none which compels us to hold that a mere reference to the contract in the award entitles us to look at the contract. It may be that in particular cases a specific reference to a particular clause of a contract of it, may incorporate the contract, or that clause of it, in the award. 1 think that we are driven back to first principles in this matter, namely, that an award can only be set aside for error which is on its face It is true that an award can incorporate another document so as to entitle one to read that document as part of the award and, by reading them together, find an error on the face of the award." The question how far a document can be looked into in examining the question whether there was an error apparent on the, face of the award came up for consideration of the Patna High Court in M/s. Patel Engineering Co. Ltd. v. Indian Oil Corporation Ltd. (AIR 1975 Pat 212). Ltd. v. Indian Oil Corporation Ltd. (AIR 1975 Pat 212). The court said : "In similar circumstances in the case of Absalom Ltd. v. Great Western (London) Garden Village Society, (1933 A.C. 592), the House of Lords held that since the Arbitrator had made reference to a clause in a certain set of conditions, and having regarded to that clause given in his award, he had in so acting incorporated the clause in question in the Award and that it was plain that had misunderstood the provisions of the clause and that, therefore, there was an error of law apparent on the face of the award." A Division Bench of this court had also occasion to consider a similar question in Alwaye Municipality v. K.A. Kochunny and Company & another (AIR 1982 Ker 288) this court said : "Where in any matter any difference is referred to an arbitrator, a lawyer or a layman, he is constituted the sole and final judge of all questions both of law and of fact, Normally his decision should. There is an exception to this rule and that is where the award is the result of corruption or fraud. The case law has evolved another exception and that is an error apparent on the face of the award either because a question of law arises on the face of the award or upon some paper accompanying or forming part of the award. This exception can be explained thus. An error of law on the face of the award means that we can find in the award or document actually incorporated or accompanying it some legal proposition which on its consideration could be said to be erroneous. This conception cannot be extended to a mere narrative in the award. To put it differently, mere narration of materials in an award without particularising any document or any piece of evidence will not permit an investigation into the terms of the contract or other materials placed before the arbitrator to discover whether there is error on the face of the award." Learned counsel for the appellant, Mr. Kurain strenuously contended that in considering issue No. 17 relating to counter-claim 2, the arbitrator has made specific reference to the Statement contained in Ext. D-18 and allowed the contained claim for Rs. 23,158.02 evidently basis of the statement contained in Ext. D18. Kurain strenuously contended that in considering issue No. 17 relating to counter-claim 2, the arbitrator has made specific reference to the Statement contained in Ext. D-18 and allowed the contained claim for Rs. 23,158.02 evidently basis of the statement contained in Ext. D18. The learned counsel argued that in the statement contained in Ext. D18. The learned counsel argued that in the circumstances error of law apparent on the face of the award in determining the question as to whether the workman of the appellate or of the 1st respondent herein. In the connection, learned counsel heavily relied on the observations of the Supreme Court in M/s. Allen Bery and Co. Pvt. v. The Union of India, (supra) and also of the patna High Court in M/s. Patel Engineering Co. Ltd. v. Indian Oil Corporation Ltd. (supra) referred to above. He also laid a particular emphasis on the observations of the Kerala High Court in Always Municipality v. K. A. Kochunny (Supra), where this Court observed that mere narration of materials in general terms in an award without particularising any document or any piece of evidence will not permit an investigation into the terms of the contract or other materials placed before the arbitrator to discover whether there is error on the face of the award According to Sri. Kurain in the light of the principles enunciated in the above rulings, the reference to Ext. D18 and discussion particularising Ext. D18 will permit the court to look into it to find out whether there is an error apparent on the face of the award On the other hand, learned counsel for the 1st respondent contended that what is contained in the award relating to discussion on issue No. 17 is only a general reference to Ext. D18 and such a general reference will not permit the court to examine the document and find out the correctness or legality of the finding on the question whether the employees are of the appellant or the respondent. Having carefully considered the above appellant or the above reference to Ext. D18 in the award in the light of the principles laid down by the Supreme Court in the decisions in Allen Hurry and Company Pvt. Ltd. v. The Union of India, (Supra) and also the rulings of the Patna High Court in M/s. Patel Engineering Co. Having carefully considered the above appellant or the above reference to Ext. D18 in the award in the light of the principles laid down by the Supreme Court in the decisions in Allen Hurry and Company Pvt. Ltd. v. The Union of India, (Supra) and also the rulings of the Patna High Court in M/s. Patel Engineering Co. Ltd. v. Indian Oil Corporation Ltd. (supra) and the Division Bench of this High Court in Alwaye Municipality v. K. A. Kocchany (supra), we are of the said reference is not a mere narration of facts or general reference, but the Arbitrator has particularly referred to the document and issue No. 17 relating and therefore it is only appropriate to treat that document as forming part of the award. That brings us to the next question whether the award is bad as there is error apparent on the face of the award treat Ext. D18 as forming part of the award. As indicated above, we have above, we have to appreciate the tenability of the contention of the learned counsel for the appellant on this aspect. A perusal of Ext. D18 shows that it relates to the Provident fund Contribution Provident Fund Inspection charges, and administrative charges and they were paid by the appellants in workers in question, and the counter-claim II dealt within issue to these payments. There is no dispute that payments of provident Fund Contribution and Administrative charges were relating to the workmen in question, and learned counsel for appellant argued that if such claim is allowed by the Arbitrator, it would mean that they are workers of the respondent. Section 2(f) of the Employees 'Provident Fund' Miscellaneous Provisions Act, 1952 defines "employees" as meaning any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment and gets his wages directly or indirectly from the employer, and includes any person employed by or through a contractor in or in connection with the work of the establishment. Sub-Section (2) of Section 8A provides that a contractor from whom the amounts mentioned in Sub-section (1) may be recovered in respect of any employee employed by or through him, may recover from such employee the employee's contribution under any Scheme by deduction from the basic wages, dearness allowance and relating allowance, if any, payable to such employee. Sub-Section (2) of Section 8A provides that a contractor from whom the amounts mentioned in Sub-section (1) may be recovered in respect of any employee employed by or through him, may recover from such employee the employee's contribution under any Scheme by deduction from the basic wages, dearness allowance and relating allowance, if any, payable to such employee. Paragraph 30 of the Scheme also provides that the employer shall, in the first instance, pay both the contribution payable by himself and also, on behalf of the member employed by him directly or by or through a contractor the contribution payable by such member and clause (2) of paragraph 30 that in respect of employees employed by or through a contractor, the contractor shall recover the contribution payable by such employee and shall pay to the principal employer the amount of member's contribution so deducted together with an equal amount of contribution as also administrative charges. Clause (3) of paragraph 30 of the principal employer to pay both the contribution payable by himself in respect of the employee directly employed by him and also in respect of the employees employed by or through a contractor and also administrative charges. Paragraph 36(b) also lays down that every contractor shall submit to the principal employer within seven days of the close of every month, a statement showing the recoveries of contributions in respect of employees employed by or through him and shall also furnish to him such information as the principal employer is required to furnish under the provisions of the Scheme to the Commissioner. The Contention of learned counsel for appellant is that it is only if the employees concerned are employees of the contractor, there is a liability cast on the contractor to reimburse principal employer who paid the contribution under Section 8A of the said Act. The award of the counter-claim II relating to issue No. 17 which represents in the contributions and administrative charges paid in respect of the employees concerned and the finding contained in issue No. 17 will necessarily imply that the employees concerned are the employees of the respondent. The award of the counter-claim II relating to issue No. 17 which represents in the contributions and administrative charges paid in respect of the employees concerned and the finding contained in issue No. 17 will necessarily imply that the employees concerned are the employees of the respondent. Learned counsel for the appellants further submitted that since the finding on the issue No. 2 is in conflict with the finding on issue No. 17 relating to counter-claim No. II, the award suffers from error apparent on its face and rendering of conflicting findings on these issues will amount to legal misconduct on the part of the Arbitrator. Learned counsel for the respondent Shri P. Sukumaran Nair countered this argument by raising the contention, namely, (1) Ext. D18 cannot be considered as a document forming part of the award, and therefore it cannot be looked into in considering the question whether there is an error of law apparent on the face of the award and (2) issue No. 2 viz. whether the workmen engaged in mining, transportation and supply of raw sand are the workmen of the appellants or of the 1st respondent is a specific issue of law raised by parties, and for this reason also it is not open to the appellants to contend that there is error apparent on the face of the award, even assuming that the issue relating to the question is wrongly decided by the Arbitrator. In support of his contention the learned counsel argued that reference to Ext. D18 in the award is a mere general reference and such a reference will not permit the court to treat Ext. D18 as forming part of the record and examine the same for considering the question that there is error on the face of the award or there are conflicting findings it on two issues decided by the Arbitrator, leading to legal misconduct. We have already indicated that in the light of the principles enunciated in the rulings referred to above and having regard to the purpose for and the manner in which Ext. D18 is referred to in the award, it is not possible to accept the contention that the reference in the award to Ext. D18 is of a general nature without particularising the document and that being the position, the document has to be treated as forming part of the award. D18 is referred to in the award, it is not possible to accept the contention that the reference in the award to Ext. D18 is of a general nature without particularising the document and that being the position, the document has to be treated as forming part of the award. Learned counsel for the appellants met the second contention of the learned counsel for the 1st respondent by submitting (1) that there is no specific reference of issue No. 2 by both parties and that the reference in the instant 1st case is one made by the Sub-Court in a suit filed by the 1st respondent herein under Section 20 of the Arbitration Act, and that being the position, it cannot be considered that both parties have referred issue No. 2 to Arbitrator and (2) that issue No. 2 does not raise a specific question of law, though in disposing of the issue, incidentally questions of law may have to be decided. In our view, there is substance in both the submissions of the learned counsel for the appellants. Issue No. 2 does not specifically raise a question of law though in mining, collection, transportation and supply of raw sand are the workman of the appellants or the 1st respondent, questions of law may arise incidentally. We are therefore of the view that there is no legal bar for the appellants to contend that there is an error of law apparent on the face of the award. We are also inclined to uphold the first submission also. The reference in the instant case is made on the basis of a decree in O.S. No. 84 of 1979. It is stated in the judgment in the said suit that the appointment was made under Section 20 of the Arbitration Act and not in accordance with clause 23 of the tender form. According to Clause 23, the power to appoint the Arbitrator is vested in the Managing Director of the 1st appellant company, but in the instant case, it was the court who appointed the arbitrator. As a matter of fact, in OS. No. 84 of 1979, the appellants resisted the disputes being referred to the Arbitrator. In these circumstances, it is difficult to held that there is a reference by both the parties to the Arbitrator of any specific question of law. As a matter of fact, in OS. No. 84 of 1979, the appellants resisted the disputes being referred to the Arbitrator. In these circumstances, it is difficult to held that there is a reference by both the parties to the Arbitrator of any specific question of law. The rationable of the rulings referred to above is that once both the parties referred a specific question of law to the arbitrator the parties cannot latter contend that the decision of the arbitrator on the specific question of law referred to it by both parties is wrong and by reason of that fact, there is an error apparent on the face of the award. In any event, in the instant case, there is no reference of a specific question of law to Arbitrator. In these circumstances there is no legal impediment for the appellants to challenge the award on the ground of error apparent on the face or legal misconduct on the part of the Arbitrator. The learned counsel for the first respondent also contended that it is only in the case of a speaking award that the court can look into the reasoning of the award and it is not open to the court to probe the mental process of the arbitrator and speculate where no reasons are given by the arbitrator, as to what impelled him to come to his conclusion. In this connection, the learned counsel placed before us a very recent ruling of the Supreme Court in Hindustan Steel Works Construction Ltd. v. V. C. Rajashekhar Rao (supra) and invited our attention to the following passage in para 3 of the judgment : "It was next contended that the award contained error of law on the face of the award and there were inconsistent findings. It has to be borne in mind that it was only in a speaking award that the court could look into the reasoning of the award. In the case of Jivarajbai Ujamshi Sheth v. Chintamanrao Balaji, has this court observed that an award might be set aside by the court on the ground of error on the face of the award, but an award was not invalid merely because by a process of inference and argument it might be demonstrated that the arbitrator had committed some mistake in arriving at his conclusion. The law on this point is well settled." In the instance case, in disposing of the counter-claim No. 2 which is subject-matter of issue No. 17 the arbitrator made specific reference to Ext. D-18 statement and ultimately allowed that claim. Reference to Ext. D-18 is not a mere narration of the pleadings and contentions in the case, but a clear advertence to Ext. Dt. 18 statement of accounts which relate to payment of Provident Fund contributions and administration charges under the Provident Fund Act. Therefore, one cannot say that award is a non-speaking award at least in so far as the consideration of that issue is concerned. An award can not be considered as speaking one in part and a non-speaking one in other respects. In such cases the entire award has to be treated as speaking one. Inasmuch as the order speaks relating to issue No. 17 and the finding thereon is in conflict with the finding on issue No. 2 it has to be held that the order is bad for error apparent on the face of award. There is apparent conflict between the findings on these issues. The finding on issue No. 2 is that the workmen are the workmen of the 1st appellant, whereas finding on issue 17 would imply that the workmen are the workmen of the 1st respondent, as otherwise there cannot be any question of reimbursement by the respondent of amounts paid by the appellants towards Provident fund contribution and administration charges in respect of these employees. The learned counsel for the respondent drew our attention also to the following observations of the Supreme Court in M/s. Tarapore and Company v. Kochin Shipyard Ltd. Cochin, AIR 1984 SC 1072 : "Therefore, on principle it appears distinctly clear that when a specific question of law is referred to an arbitrator for his decision including the one touching upon the jurisdiction of the arbitrator, the decision of the arbitrator would be binding on both the parties to wriggle out of it by contending that the arbitrator cannot clutch at or confer jurisdiction upon himself by misconducting the arbitrator agreement." In the said judgement, the Supreme Court after reviewing the law on the point finally clarified the law as follows : "On a conspectus of these decisions, it clearly transpires that if a question of law is specifically referred to and it becomes evident that the parties desired to have a decision on the specific question from the arbitrator about that rather than one from court, then the court will not interfere with the award of the arbitrator on the ground that there is an error of law apparent on the face of the award even if the view of law taken by the arbitrator does not accord with the view of the court." Learned counsel for the 1st respondent relied on the ruling of the Supreme Court in Bungo Steel Furniture (Pvt.) Ltd. v. Union of India (AIR 1967 SC 378) and invited our particular attention to para 9 of the majority judgement, which reads as follows : "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 he 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." As pointed out earlier in the instant case the award is a speaking one in so far as it relates to issue No. 17 and therefore the above decisions are not helpful to the respondent. It is only in a case where the question of law is referred specifically that the parties are produced from contending that there is an error apparent on the face of the award. We have held that no specific question of law has been referred to the Arbitrator, though in deciding issue No. 2 incidentally question of law may arise. The following observation of a Division Bench of this court in State of Kerala v. Raveendranathan (1987 (1) KLT 604) is relevant in this connection. "It would thus hypothesi appear that in appropriate case where the error is not one in the sense that the court would have taken a different view but is so fundamental as to result in illegality or nullify, the decision of the arbitrator, although on a point of law of specific submission, is liable to judicial review." The learned counsel for the respondent then drew our attention to a recent ruling of the Supreme Court in Coimbatore District Podu Thosillar Sangam v. Balambramanian Foundry and others (1987 (1) SCC 723). It was held therein that it is only an error of law and not mistake of fact committed by the arbitrator which is justifiable in an application under Section 30 of the Act before the court. Conflicting findings have to be treated as an error of law and in a case where conflicting findings are entered, it has to be held that the Arbitrator has committed legal misconduct as well. The learned counsel for the 1st respondent argued that the workmen in the instant case were all working previously also for the company and really they are the workmen of the first appellant. In this connection, the learned counsel drew out attention to a decision of the Supreme Court in Hussainbhai. Calicut v. The Alath Factory Tozhilali Union, Kozhikode and others (1978 (4) SCC 257). He particularly ventured to derive support for his argument from observation of the Supreme Court that where a worker or group of workers produce goods or services and these goods or services are for the business of another, that other is, in fact, the employer, and he has economic control over the worker's subsistence, skill, and continued employment. He particularly ventured to derive support for his argument from observation of the Supreme Court that where a worker or group of workers produce goods or services and these goods or services are for the business of another, that other is, in fact, the employer, and he has economic control over the worker's subsistence, skill, and continued employment. We cannot however ignore the observations in the same judgement that if there is a total dissociation in fact between the disowning management and the aggrieved workmen, the employment is, in substance and in real life terms by another and the management's adventitious connections cannot ripen into real employment. It is also not possible to conceive of a situation where for the purpose of payment of Provident Fund contribution and administration charges the workmen will be treated as the employees of the 1st respondent and for other purposes, employees of the 1st appellant as the Arbitrator did in the instant case. In such a case the award can only be treated as one suffering from error apparent on its face and also one vitiated by legal misconduct. A Division Bench of this Court in M.F.A. Nos. 161 and 781 of 1986 to which one of us (Sivaraman Nair J.) is a party held that contradiction in the finding of issues will amount to misconduct. In para 18, the court said : "The misconduct of the Arbitrator is glaringly patent from the inconsistent conclusions reached by him. Though it was apparent on the face of the award the court below has wrongly overlooked the same. Having found that more than sufficient area was available for mining and supply of the contracted quantity of raw sand and that the appellant has not prosecuted the 1st respondent to pay any hike in wages and that the contract has not been fully performed by the 1st respondent the misconducted himself in passing the award." The learned counsel for the appellant pointed out yet another vitiating circumstances as regards the finding of the arbitrator on issue No. 17 relating to counter-claim No. 2 raised by the 1st appellant. As a counter-claim the 1st appellant claimed an amount of Rs. 23,358.02 on the basis of the Ext. D-18 accounts on account of advance paid to the claimant on 19-12-1978 to meet the Provident Fund charges, trunk call charges administration charges etc. As a counter-claim the 1st appellant claimed an amount of Rs. 23,358.02 on the basis of the Ext. D-18 accounts on account of advance paid to the claimant on 19-12-1978 to meet the Provident Fund charges, trunk call charges administration charges etc. That Claim was found to be genuine by the arbitrator as can be seen from his finding on issue No. 17 based on Ext. D-18. However, the Arbitrator further found on that issue, that the value of Rs. 220/M.T. of raw sand supplied by the claimant for the period from 8-12-1978 at the rate of Rs. 70.50 per M.T., the total value of which he estimated at Rs. 39,503.70 was not paid by the appellants to the 1st respondent and therefore after deducting the claim in Ext. D18, the 1st appellant was liable to pay to the 1st respondent a further sum of Rs. 16,200.45. According to the learned counsel for the appellant, Rs. 39,603.75 was not claimed in the suit for reference to the Arbitrator and no issue was framed by the court referring the counter-claim now made by the 1st respondent. On the basis of this fact, the learned counsel for the appellant contended that the finding on issue No. 17 is clearly beyond the scope of the reference and without jurisdiction and for that reason also, the award is bad as there is error of law apparent on the face of the award and also as the finding is beyond the scope of the reference. In our view, the learned counsel is well founded in this contention. There was no reference relating to the claim which was allowed by the arbitrator in favour of the respondent is disposing of issue No. 17. In the circumstances, the part of the award for payment of a further sum of Rs. 16,245.75 is clearly outside his jurisdiction and therefore is liable to be set aside. Since there is an error of law apparent on the face of the award and there is also, legal misconduct and the finding on issue No. 2 is in conflict with finding on issue No. 17, the finding on issue No. 2 is liable to be set aside. That part of the award allowing a set off of Rs. Since there is an error of law apparent on the face of the award and there is also, legal misconduct and the finding on issue No. 2 is in conflict with finding on issue No. 17, the finding on issue No. 2 is liable to be set aside. That part of the award allowing a set off of Rs. 39,503.70 in favour of 1st respondent under issue No. 17 is beyond the scope of the reference and that appellants are entitled to get a set off of Rs. 23,358.02 from the amounts which are ultimately found due to the 1st respondent from the appellants. Since we have held that the finding of the Arbitrator that employees concerned are workmen of the 1st appellant is unsustainable the 1st respondent is not entitled to reliefs claimed on issues 4, 5, 7 and 11 and therefore the findings on these issues are also set aside. The M.F.A. is disposed of as above. However, there will be no order as to costs.