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1988 DIGILAW 60 (MP)

TIKAM CHAND JAIN v. STEEL AUTHORITY OF INDIA LTD

1988-02-22

C.P.SEN, P.C.PATHAK

body1988
JUDGMENT C. P. Sen, J. - This an appeal under section 39(1)(vi) of the arbitration Act, 1940, against the order of the IInd Additional District Judge setting aside the order of the arbitrators dated 2-8-1971 and the award dated 8-9-1976 for Rs. 95,400. The appellant was given the work of raising, transporting and loading of iron ore in wagons at Balod from Foken mines of Rajners of Balod Tahsil on 15-11-1965. In all 61 agreements were executed for different person at different rates and for different quantities. This was for the period 15-11-1965 to 26-9-67. All these agreements contained identities, loan special conditions in the agreements. Clause 29 was the finality clause while clause 40 was the arbitration clause. Disputes and differences having raised between the parties, the, appellant gave notice on 17-2-1978 to refer the disputes as per clause 40 to the concerned arbitrator. Opinion was the arbitrator nominated by the appellant and Town Administrator on the nominee of the respondent. Retired District Judge, as also nominated but there was no necessity for reference to him since the two named arbitrators gave a joint award for Rs. 26,400 and they also overruled the objection of the respondent that there cannot be a single reference in respect of 61 contract. The respondent filed an application under Section 14(2) of the Arbitration Act, 1940, for filing of the award. After the award being filed, the respondent raised objections under Sections 30 and 33 of the Act that some of the claims of the appellant were covered under the finality clause and were not open for arbitration. Some other claims were outside the scope of arbitrator clause and did not arise out of the contracts. The objections have been sustained by the learned Additional District Judge by the impugned order after holding that the arbitrations mis-conducted themselves and the proceedings, the award is without jurisdiction and is a nullity, the award is bad on the face of it, it is illegal and invalid and, therefore, the award has been set aside on the ground the at most of the claims of the appellant were outside the scope of the contracts and could not have been arbitrated, it being indivisible award it could not be said whether those claims have been disallowed or not, the entire award must go and there could not be one single reference for all the 61 contracts. The appellant laid a claim of Rs. 8,05,342.56. This included Rs. 1,12,132.33 towards payment of enhanced wages according to the Wage Board Recommendation refund of Rs. 8,700 which were paid as retrenchment compensation to the labourers, recovery of maternity benefits of Rs. 248, extra payment for excavation and removal of over burden amounting to Rs. 7,170.90, extra payment for drilling amounting to Rs. 56,250 payment due to protected wages and loss due to blasting amounting to Rs. 20,000 payment for construction of road Rs. 8,500 payment for recovery of compensation for injuries to workmen Rs. 3,83,893 balance of contract price Rs. 78,661.17 payment for the services rendered Rs. 4,000 claim for illegal termination of contract Rs. 1,87,267.40 and claim due to difference of rates to other contractors Rs. 2,56,335. According to the respondent, each work order was a separate contract with separate agreement and stipulation as to quantity of iron ore to be supplied, rate of supply and period of completion of the work, hence a joint reference for 61 contracts is beyond the scope of reference. The appellant has been fully paid for 52 work orders and they stood fully discharged and regarding remaining 9 work orders, part payment has been made. Some of the claims are those which are covered under finality clause 29. After having heard the parties at length and gone through the record we are of the opinion that there it no merit in this appeal. Under Section 30 of the Arbitration Act, an award can be set aside if (1) the arbitrator has mis-conducted himself or the proceedings (2) if the award has been given after arbitration has been superseded and (3) if the award has been improperly procured. Under Section 16, the award can be remitted if (1) the award had left undermine any of matters referred to arbitration or there it determined any matter not referred to arbitration (2) where award is so indefinite as to be incapable of execution (3) where the objection to the legality of the award is apparent upon the face of it. Before going into the merits of the appeal, we have to see the scope and extent of interference by a court in respect of an award given by the duly appointed arbitrator. The Privy Council in Shampsey Co. v. Jivraj Balloo Co. Before going into the merits of the appeal, we have to see the scope and extent of interference by a court in respect of an award given by the duly appointed arbitrator. The Privy Council in Shampsey Co. v. Jivraj Balloo Co. (AIR 1932 PC 66) held : "Where a cause or matters in difference are referred to an arbitrator, whether 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 now, firmly established viz., where the question of law necessarily arises on the face of the award or upon some paper accompanying and forming part of the award. An error in law on the face of the award means that you can finding 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." The position is the same even today as has been held by the Supreme Court in Coimbatore Dist. B. T. Banan v. Bala Subramani Foundry ( AIR 1987 SC 2024 ). "An award can only be set aside where there is an error on its face. Further, it is an error of law and not mistake of fact committed by the arbitrator which is justiciable in the application before the court. It is an error of law and not mistake of fact committed by the arbitrator which is amendable to corrections by the court." Again the Supreme Court in M/s. Hindustan Tea Co. v. M/s. K. Shashikant & Co. (AIR 1987 SC 80) held that under the law, the arbitrator is made the final arbitrator of the dispute between the parties. The award is not open to challenge on the ground that the arbitrator has reached a wrong conclusion or has failed to appreciate facts. The Supreme Court in Union of India v. J. N. Misra (AIR 1970 SC 53) held that the arbitrator is not bound is given an award on each point. He can make his award on the whole case. The Supreme Court in Union of India v. J. N. Misra (AIR 1970 SC 53) held that the arbitrator is not bound is given an award on each point. He can make his award on the whole case. A arbitrator may award one sum generally in respect of all money claims submitted to him, unless the submission requires him to award separately on sum one or more of them. The Supreme Court in M/s. Tarapore & Co. v. Chochin Shipyard Ltd., Cochin ( AIR 1984 SC 1072 ) held that even the question of jurisdiction of an arbitrator can be the subject-matter of a specific reference. If the parties agree to refer the specific question whether the disputes raised is covered by the arbitrator agreement, it becomes a specific question of law even if it involves the jurisdiction of the arbitration and if it is so, a decision of the arbitrator on the specific question referred to him for decision even if it appears to be erroneous to the court is binding on the parties. First of all, we have to decide whether the reference of all disputes and claims arising out of 61 separate contracts could have been subject-matter or a single reference. According to the learned Additional District Judge, reference was one made for one continuous contract with 61 work orders for the make of accounting, while the arbitration gave a finding that there were 61 independent contracts and, therefore, reference itself is bad. However, the trial Judge noted that the general and special conditions of each of the agreements are one and the some, only there was difference in the period of the contracts, the rates and the quantity to be supplied. As per terms of reference, all claims and disputes arising out of 61 work orders were referred for arbitration. Such a reference is permissible and has been made with the consent of parties. We fail to understand that when the work orders are identical in the sense that they are governed by the same terms and conditions then why all the disputes arising out of these work orders could not be referred under a single reference, and the arbitrators were right in holding by order dated 2-8-1981 that the reference was valid. We fail to understand that when the work orders are identical in the sense that they are governed by the same terms and conditions then why all the disputes arising out of these work orders could not be referred under a single reference, and the arbitrators were right in holding by order dated 2-8-1981 that the reference was valid. Of course, it is a difference thing that out of 61 work orders, payment of final bills has been made to the appellant in respect of 52 work orders and he has given in writing that all his claim in respect of work orders have been fully discharged. In the arbitration proceedings, he has taken a stand that this was given under duress. Therefore, it was incumbent on the arbitrators to record their finding as to whether there has been final settlement in respect of 52 work orders and the appellant had given full satisfaction of his claim in respect of these work orders and whether such a satisfaction was recorded under duress and what has the amount payable to the appellant for the remaining 9 work orders. The appellant has claimed Rs. 1,12,323.33 for refund of enhanced wages (paid according to wage) Board Recommendations. As per clause 22 of the special conditions of the contract, the appellant was required to pay wages to its labourers as per payment of Wages Act and the rules which are amended from time to time as per Wage Board Recommendations. The contract nowhere provided that the contractor would be identified for such enhancement in the wages. Clearly, therefore, payment of wages as per Wage Board Recommendations was the liability of the appellant and this claim is not covered under the contract. The appellant claimed Rs. 2,56,335 towards difference in rates between the one given to the appellant and to other contracts who were given similar contract, that is, they were given much higher rate. Since the appellant was entitled to be paid at the rate provided under his contract, he cannot claim higher rate stipulated in the contracts of other contractors. This claim is also outside the purview of the contract. The appellant claimed Rs. 73,661.17 towards balance amount of the bills under 61 work orders. Since there is already payment of final bills in respect of 52 work orders and according to the respondent on amount of Rs. This claim is also outside the purview of the contract. The appellant claimed Rs. 73,661.17 towards balance amount of the bills under 61 work orders. Since there is already payment of final bills in respect of 52 work orders and according to the respondent on amount of Rs. 7,090.88 is the balance due in respect of remaining 9 work orders and if there was full satisfaction in respect of 52 work orders, it is incumbent on the arbitrators to confine the claim under this head in respect of 9 work orders only. This apart, in respect of claims mentioned carrier, they are obviously with regard to 61 work orders and not 9 work orders and consequently the amounts required to be brought down with respect to 9 work orders only. From the award it is not possible to say whether the award is confined only with respect to 9 work orders. The appellant has also not made separate claim in respect of each work order. No finding has been recorded by the arbitrators that none of the claims of the appellant is covered under the finality clause. The award being one and indivisible, the entire award has been rightly set aside. The trial Judge has not chosen to remit the award back to the arbitrators for afresh decision but it is open to the appellant to again take steps for reference of the disputes for fresh arbitrators. With the result, the appeal fails and it is dismissed. Parties to bear their own costs.