MALABAR CEMENT LTD. v. P. P. GEORGE — 1989 DIGILAW 439 (KER)

JUDGMENT Balakrishina Menon, J. - The Malabar Cements Ltd., Walayer (hereinafter referred to as the company) has filed this appeal against the decision of the court below declining to set aside the award of the Arbitrator and passing a decree in terms thereof. The agreement between the company and the Contractor related to the civil and structural works with respect to the construction of the township at Walayer. The agreement is dated 10-12-1980. As per the terms of the agreement the work is to be completed on or before 1-3-1982. There was extension of time for completion of the work and the work was completed in July, 1984 within the extended period of time. 2. The agreement contained a clause for arbitration of disputes that might arise between the parties in the performance of the contract. The Contractor raised several disputes and filed a suit O.S. (Arb.) 64/85 on the file of the Sub-Court, Palghat under Section 20 of the Arbitration Act for filing the agreement and for reference of the disputes to an Arbitrator. The Sub-Court by judgment dated 12-12-1985 appointed the Chief Engineer (Arbitration) as the Arbitrator to decide the disputes and settled the terms of reference to the Arbitrator. Issue No. 7 in the suit relates to the terms of reference which read : "Issue No. 7 : The issues raised in the plaint are liable to be referred to the arbitrator for arbitration and they form the terms of the reference." The issues raised in the plaint are extracted at page 35 of the paper book and they read as follows : "(i) Is the claimant entitled to any additional payment over and above that covered by the final bill as prepared by the respondent on account of the performance of the contract ? If so, what is the amount due ? (ii) Is the claimant entitled to enhancement in rates for the work done ? If so, what is the amount due ? (iii) Is the claimant entitled to interest if any of the amounts if any found due under the aforesaid claims ? If so what is the Order ? (iv) Is the claimant entitled to cost of these proceedings ? If so what is the Order ?" 3. The Arbitrator has passed all award dated 29-12-1986. It is a non speaking award. If so what is the Order ? (iv) Is the claimant entitled to cost of these proceedings ? If so what is the Order ?" 3. The Arbitrator has passed all award dated 29-12-1986. It is a non speaking award. The Contractor had filed a claim statement before the Arbitrator on the basis that he is entitled to additional payments over and above the amounts covered by the final bill and also for enhancement of rates for the work done. He had also claimed interest on the amounts due to him and cost of the proceedings. 4. The Arbitrator by his award has allowed some of the claims and has awarded certain amounts an such claims. Some of the claims made by the Contractor were rejected. The counter claim by the company was also rejected. The award is at page 70 of the paper book. 5. Learned counsel for the appellant Sri R. D. Shenoy submits that the specific issues 1 and 2 referred for adjudication are not answered or adjudicated upon by the Arbitrator and the award is therefore incomplete and is liable to be set aside under Section 30 of the Arbitrator Act. The various claims allowed as per the award are dependant on an affirmative answer on issues 1 and 2 and the very fact that those claims were allowed would necessarily show that the Arbitrator had decided issues 1 and 2 in the affirmative. We find it difficult to accept the argument of the learned counsel that issues 1 and 2 referred to the Arbitrator are independent issues requiring separate answers. 6. The Supreme Court in Santa Saila v. Direndra Nath (AIR 1963 SC 1677), quoted with approval the following passage from the judgment of Parke, J. In Harrison v. Creswick (1853) 138 ER 1254. "The only question is whether the arbitrator has not by his award impliedly, if not in express terms, finally disposed the matter. The rule as laid down in the notes to Bicks v. Trippet, 1966 (I) Sm. saund. 33a is, that, where an award professes to be made de praemissis, Even where there is no award of general releases, the silence of the award as to some of the matters submitted and brought before the arbitrator, does not per se prevent it from being a sufficient exercise of the authority vested in him by the submission. saund. 33a is, that, where an award professes to be made de praemissis, Even where there is no award of general releases, the silence of the award as to some of the matters submitted and brought before the arbitrator, does not per se prevent it from being a sufficient exercise of the authority vested in him by the submission. An award is good, notwithstanding the arbitrator has not made a distinct adjudication on each or any of the several distinct matters submitted to him, provided that it does not appear that he has excluded any ......... Where an award is made de praemissis, the presumption is, that the arbitrator intended to dispose finally of all the matters in difference : and his award will be held final if by any intendment it can be made so. The rule is this, - where there is a further claim made by the plaintiff, or a cross demand set up by defendant, and the award, professing to be made of and concerning the matters referred, is silent respecting such, further claim or cross demand, the award amounts to an adjudication that the plaintiff has no such further claim, or that the defendant's cross demand is untenable; but, where the matter so set up from its nature requires to be specifically adjudicated upon, more silence will not do." The Supreme Court further observed : "Before dealing with this point it is necessary to emphasise certain basic positions. The first of them is that a court should approach an award with a desire to support it, if that is reasonably possible, rather than to destroy it by calling it illegal (See Selby v. Whitbread & Co. ((1917) 1 KB 736 at p. 748). Besides it is obvious that unless the reference to arbitration specifically so requires the arbitrator is not bound to deal with each claim or matter separately, but can deliver a consolidated award. The legal position is clear that unless so specifically required an award need not formally express the decision of the arbitrator on each matter of difference. (Vide Re. Brown and the Croydon Canal Co. ((1839) 9 Ad and Ell 522 : 112 ER 1309) and Jewell v. Christie ((1867) 2 CP 296)). The legal position is clear that unless so specifically required an award need not formally express the decision of the arbitrator on each matter of difference. (Vide Re. Brown and the Croydon Canal Co. ((1839) 9 Ad and Ell 522 : 112 ER 1309) and Jewell v. Christie ((1867) 2 CP 296)). Further, as parke, B. himself put it during the course of arguments (1853) 138 ER 1254 : "Unless the contrary appears the court will presume that the award disposes finally of all the matters in difference", and to repeat a sentence from the extract quoted earlier : "Where an award is made de praemissis, the presumption is, that the arbitrator intended to dispose finally of all the matters in difference; and his award will be held final, if by any intendment it can be made so"." 7. In a recent decision of the Supreme Court in Gujarat W.S. & S.B. v. Unique Erectors (Gujarat) (P) Ltd. (AIR 1989 SC 973) it is stated : "The contention that the arbitrator had not decided the question of arbitrability as a preliminary issue cannot also be sustained. A reference to the arbitrator's proceedings which were discussed in detail by the High Court in the judgment under appeal reveal that the procedure adopted by the arbitrator, i.e., that he will finally decide the matter, indicated that the parties had agreed to and the arbitrator had preceded with the cease, at of the parties in deciding the question of arbitrability as a separate, distinct and preliminary issue. The arbitrator has made his award bearing all the aspects including the question of arbitrability in mind." The award with which the Supreme Court was concerned in that case was a non speaking award as in the present case. The argument on the question of arbitrability was rejected on the ground that the award was a final adjudication of the disputes between the parties and being a non speaking award the Supreme Court held that it is not possible to hold that the Arbitrator had left the question of arbitrability undecided. In the present case the adjudication of a various claims by the Arbitrator had also adjudicated and decided upon the question of entitlement of the contractor for the various claims covered by issues 1 and 2. 8. In the present case the adjudication of a various claims by the Arbitrator had also adjudicated and decided upon the question of entitlement of the contractor for the various claims covered by issues 1 and 2. 8. The learned counsel for the appellant has a further contention that the Arbitrator has exceeded his jurisdiction and has misconducted the proceedings in awarding cost of escalation contrary to the terms of the agreement between the parties; The terms of the reference settled for arbitration by judgment in O.S. (Arb) 64/85 take in also the cost of escalation. The judgment is binding on the parties and it is not open to the appellant at this stage to contend that the Arbitrator had no jurisdiction to adjudicate upon the cost of escalation. The issues settled in the suit extracted at page 35 of the paper book require the arbitrator to adjudicate upon the cost of escalation and the award of the Arbitrator adjudicating upon the said claim cannot be said to be in excess of jurisdiction. As the issues settled require the Arbitrator to adjudicate upon the said question, it is not open to the appellant to challenge the award on the ground that the Arbitrator had misconducted the proceedings in awarding the escalation cost. It is not open to the appellant to raise a contention that the agreement between the parties precludes the Contractor from making any claim for the escalation cost. In the present case the award does not give any reason for the conclusions reached by the Arbitrator. Even if the conclusion are wrong, it is not open to the civil court to interfere with the award on the ground that a different conclusion is possible on the materials placed before the Arbitrator. The Supreme Court in Sudarsan Trading Co. v. Government of Kerala (1989 (I) K.L.T. 534), stated : "Appraisement on evidence by the arbitrator in never a matter which the court questions and considers. If the parties have selected their own forum, the deciding forum must be conceded the power of appraisement of the evidence. The Arbitrator is the sole judge of the quality as well as the quantity of evidence and it will not be for the court to take upon itself the task of being a judge on the evidence before the arbitrator. See the observations of this court in Municipal Corpn. The Arbitrator is the sole judge of the quality as well as the quantity of evidence and it will not be for the court to take upon itself the task of being a judge on the evidence before the arbitrator. See the observations of this court in Municipal Corpn. of Delhi v. M/s. Jagan Nath Ashok Kumar & anr. (JT 1987 (4) SC 35 : 1987 (4) SCC 497) 30. The same principle has been stated in M/s. Alopi Parshad & Sons Ltd. v. Union of India (supra). There this court held that the award was liable to be set aside because of an error apparent on the face of the award. An arbitration award might be set aside on the ground of an error on the face of it when the reasons given for the decision, either in the award or in any document incorporated with it, are based upon a legal proposition which is erroneous. But where a specific question is referred, the award is not liable to be set aside on the ground of an error on the face of the award even if the answer to the question involves an erroneous decision on a point of law". 9. In the present case the arbitrability of the question relating to the escalation cost is concluded by the judgment in the suit O.S. (Arb.) 64/1985 against the appellant and it is not open to the appellant to challenge the award as lone going beyond the agreement between the parties. For the aforesaid reasons, we confirm the judgment of the lower court and dismiss the appeal. The parties will suffer their respective costs.