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1993 DIGILAW 138 (ORI)

BOARD OF TRUSTEES OF PARADEEP PORT v. NATWAR IRON AND STEEL WORKS AND CO.

1993-05-11

G.B.PATTANAIK

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G. B. PATNAIK, J. ( 1 ) THIS is an appeal under Section 29 of the Arbitration Act, against the judgement of the Subordinate Judge making an award a rule of Court. ( 2 ) M/s. Natwar Iron and Steel Works Company (respondent No. 1) entered into an agreement with the Paradeep Port Trust authorities for purchase of scrap materials at the rate of Rs. 925/- per metric tonne. Under the agreement in question the materials are to be removed within ninety days. The respondent No. 1 removed only 60. 250 metric tonnes and failed to remove the rest of the quantities agreed to be removed. The Port Trust authorities, therefore, forfeited the security deposit of Rs. 50,000/- and terminated the contract. But the said respondent No. 1 made a representation to allow it to lift the materials and the Port Trust authorities allowed the said representation. But as again the allotted quantity of 140 metric tonnes, only 89. 45 metric tonnes could be removed. Disputes having been raised by respondent No. 1 with regard to the entitlement of dues, the same were referred to Shri D. P. Mohanty, an employee of Paradeep Port Trust, for arbitration by order of the Chief Electrical and Mechanical Engineer, Paradeep Port Trust. Before the Arbitrator, the claimant as well as the Paradeep Port Trust put their respective Claim Statement and Counter Statement. The claimant claimed Rs. 6,41,347/- with interest and parties placed their materials before the arbitrator in course of hearing. On examining the statement of facts filed by the claimant and counter statement filed by the Paradeep Port Trust and the documents, papers and correspondents produced by the parties and after going through the written arguments put forth by the parties as well as hearing the oral submissions of the parties, the learned arbitrator awarded an unreasoned award amounting to Rs. 4,76,029. 02 paise in favour of the claimant in full and final settlement of all claims and disputes referred for arbitration and the counter claim put forth by the Paradeep Port Trust was rejected. 4,76,029. 02 paise in favour of the claimant in full and final settlement of all claims and disputes referred for arbitration and the counter claim put forth by the Paradeep Port Trust was rejected. ( 3 ) AGAINST the aforesaid unreasoned award, the Port Trust authorities filed an application under Sections 30 and 33 of the Arbitration Act praying to set aside the award on the ground that the arbitrator misconducted himself having not considered some material documents placed before him and on the ground that the award is based on no evidence. The claimant filed an objection to the said application stating therein that large number of documents having been produced before the arbitrator and the same having been scrutinised and examined by the arbitrator, it cannot be said that the award is based on no evidence. It was further stated that the award being an unreasoned one, the same cannot be interfered with by the Court unless any finding can be arrived at with regard to the misconduct of the arbitrator and the arbitrator having not committed any misconduct in the proceeding, the award cannot be interfered with. ( 4 ) THE learned Subordinate Judge after noticing several decisions of this Court as well as that of the Supreme Court came to hold that there is material to show that the arbitrator has taken into account the relevant documents filed by the parties and that he has considered the said documents before passing the award and, therefore, it cannot be said to be a case of no evidence. He further found that the stand taken by the Paradeep Port Trust that the award is based on no evidence or that the arbitrator has misconducted himself has no legs to stand. On the question of arbitrator's jurisdiction to award interest, he found that the arbitrator can award interest from the date of publication of the award till the date of the decree and, therefore, there has been no error committed by the arbitrator in awarding interest. With these conclusions, the objection filed by the Port Trust authorities having been rejected and the award having been made a rule of Court, the present appeal has been preferred. With these conclusions, the objection filed by the Port Trust authorities having been rejected and the award having been made a rule of Court, the present appeal has been preferred. ( 5 ) THE learned counsel for the appellants challenges the legality of the order of the Subordinate Judge on the following grounds :- (I) There being no arbitration clause in the agreement, the dispute could not have been referred to the arbitrator and, therefore, the arbitrator does not have the jurisdiction to decide the disputes and the award becomes a nullity and must be set aside; (ii) The award is vitiated as it is based on no evidence; (iii) The arbitrator misconducted himself in not considering certain relevant documents produced before him and thereby the award is vitiated; and (iv) The award of interest is without jurisdiction. ( 6 ) BEFORE examining the contentions raised by the learned counsel for the appellants, it would be appropriate to notice the powers of a Court to interfere with an unreasoned award of an arbitrator. It is the settled position of law that a Court cannot set aside an award unless it finds that there is an error apparent on the face of the award. Where no reasons have been assigned by the arbitrator to arrive at a conclusion, it would not be permissible for the Court to surmise such reasons. In case of a non-speaking award, if a document is not incorporated in the award, the Court will not be entitled to scrutinize the document. If the award of an arbitrator is a non-speaking one and the award indicates that the arbitrator had considered all the documents submitted by the parties and after hearing the submissions of the respective parties, the award was passed, it cannot be said that there is any misconduct on the part of the arbitrator which could be interfered with by a Court. In the case of Dandasi Sahu v. State of Orissa, AIR 1987 Orissa 274, it was held by this Court that where the arbitrator had considered the evidence and documents placed by the parties before him on several dates and there is nothing to indicate that he had misconducted himself, the award cannot be said to be illegal and cannot be set aside by a Court. The jurisdiction of the Court in respect of setting aside an award is limited to the grounds set out under Section 30 and the principles on which the award can be set aside are clearly explained by several judicial pronouncements. The law as it stands today is that an award without reasons for the same is not bad per se and an award can be set aside only on the ground of misconduct or an error of law apparent on the face of the award. Where a non-speaking award of an arbitrator is passed considering all the materials placed before him and the award on the face of it does not disclose any error of law which needs to be set aside, the same cannot be set aside by a Court. Absence of reasons for the award cannot be said to be an error of law on the face of the award. In the case of Jivaraj Bhai Ujamshi Sheth v. Chintamanrao Balaji, AIR 1965 SC 214 , their lordships of the Supreme Court had indicated that it is not open to the Court to speculate, where no reasons are given by the arbitrator, as to what impelled the arbitrator to arrive at his conclusion. It was further held that on the assumption that the arbitrator must have arrived at his conclusion by a certain process of reasoning, the Court cannot proceed to determine whether the conclusion is right or wrong and it is not open to the Court to attempt to probe the mental process by which the arbitrator has reached his conclusion where it is not disclosed by the terms of his award. Again, in the case of M/s. Neelkantam and Bros. Construction v. Superintending Engineer, National Highways, Salem, AIR 1988 SC 2045 , the apex Court held that where there was no legal proposition which was the basis of the award, far less a legal proposition which was erroneous, the Court could not review the award and correct any mistake in the adjudication by the arbitrator. Bearing in mind the aforesaid parameters, I will now examine the contentions raised by the learned counsel for the appellants in challenging the award in question. Bearing in mind the aforesaid parameters, I will now examine the contentions raised by the learned counsel for the appellants in challenging the award in question. ( 7 ) SO far as the first contention of the learned counsel fur the appellants is concerned, it may be noticed that neither the question of absence of an arbitration clause in the agreement had been taken before the arbitrator nor had been pleaded in the objection filed before the Court under Sections 30 and 33 of the Arbitration Act. On the other hand, the factual narration indicates that the disputes having been raised by respondent No. 1, it is the Port Trust authorities who themselves referred the disputes for arbitration to one of their employees. The Paradeep Port Trust having itself referred the disputes to one of its employees to arbitrate the same, is not entitled to raise an objection that the reference itself was bad in law. There is no prohibition for the parties to agree among themselves to get a particular dispute resolved by arbitration and in such a case that decision can be construed to be an agreement for resolving the dispute by arbitration. In the aforesaid premises, I think it is inequitable to allow the appellants to raise a contention with regard to the alleged absence of an arbitration clause in the agreement for resolving the disputes. I would, therefore, reject the first submission of the learned counsel for the appellants. ( 8 ) SO far as the second submission of the learned counsel for the appellants is concerned, on perusing the award itself, it is difficult for me to hold that the award is based on no evidence. The arbitrator himself has indicated that large number of documents were produced by the claimant as well as by the respondents and on applying his mind to those documents under reference, the arbitrator passed the award. When documents were available on record and had been filed by the parties and the arbitrator's award is an unreasoned one, it is not possible for a Court to hold that there was no evidence to sustain the award in question. The second contention of the appellant's counsel, therefore, fails. ( 9 ) COMING to the question of non-consideration of the relevant documents, I also do not find any force in the same. The second contention of the appellant's counsel, therefore, fails. ( 9 ) COMING to the question of non-consideration of the relevant documents, I also do not find any force in the same. As has been the settled position of law, a Court can examine those documents which are incorporated in the award by the arbitrator in arriving at a conclusion. If the document has not been incorporated in the award, it is not permissible to examine any document which might have been filed before the Arbitrator. In the present case, no such document can be said to have been incorporated in the award entitling the Court to look to the same. That apart, as has already been stated, the arbitrator himself indicated as to how several documents were produced by the parties and they gave their respective written submissions and finally on consideration of the same, by giving hearing on several sittings, the award was passed. I, therefore, do not find any force in the said submission of the learned counsel for the appellants. 9a. So far as the question of jurisdiction of the arbitrator to award interest is concerned, the same is concluded by the latest Bench Judgement of the Supreme Court in the case of Hindustan Construction Co. Ltd. v. State of Jammu and Kashmir, AIR 1992 SC 2192 . Therefore, the arbitrator has full jurisdiction to award interest pendente lite as well as interest from the date of the award till the date of the decree. I see no infirmity with the arbitrator awarding interest. ( 10 ) ALL the contentions have failed, the appeal fails and is dismissed. There will, however, be no order as to costs. Appeal dismissed. .