NATIONAL INSURANCE CO. LTD. v. G. C. RAY — 1993 DIGILAW 167 (ORI)

JUDGMENT : A.K. Padhi, J. - Insurer is appellant. Challenge has been made to the order of the Court making the award rule of the Court. Respondent is the owner of the Ambassador car bearing registration No. ORU-5823 and it is admitted that the car was insured with the appellant. The converge in the policy was to the tune of Rs. 23,000/-. On 17.3.1979 in between Ratanpur and Berhampur the vehicle in question met with an accident, as a result of which the car was damaged. The claimant called upon the appellant to pay damages as per the contract between the parties and a Surveyor as per the Insurance Policy was deputed to estimate the damages. As the insured did not agree with the quantum of damages offered by the insurer, the matter was referred to an Arbitrator as per Clause 7 of the agreement i.e. the Insurance Policy. 2. The learned Arbitrator after giving notice to both sides entered into reference. Both the sides adduced their evidence before learned Arbitrator who after considering the materials on record awarded a sum of Rs. 23,600/- with interest. The award was filed in the Court to make it rule of the Court. The insured filed objection u/s 30 of the Arbitration Act taking the specific ground that since the vehicle was insured for a sum of Rs. 23,000/- learned Arbitrator did not have jurisdiction to award a sum of Rs. 23,600/-, therefore, there is error apparent on the face of record and the award which has been made rule of the Court is not sustainable. 3. Learned Counsel for respondent, on the other hand, took the stand that the award being an unreasoned award the Court has no jurisdiction to set it aside. The Court after taking into consideration the contentions of both sides came to the conclusion that the Arbitrator is competent to pass an unreasoned lump sum award and therefore the award is valid and cannot be set aside as there is no error apparent on the face of the award. There is no material to prove that the Arbitrator had misconducted himself. The Trial Court with the above findings made the award rule of the Court. 4. There is no material to prove that the Arbitrator had misconducted himself. The Trial Court with the above findings made the award rule of the Court. 4. Attacking the order dated 2.5.1989 of the learned Subordinate Judge in O.S. No. 94 of 1985 in which the award passed by the Arbitrator was made rule of the Court, learned Counsel for the appellant submits that since the contract between the parties was to the tune of Rs. 23,000/- the award which is to the tune of Rs. 23,600/- is without jurisdiction. 5. Learned Counsel for the respondent, on the other hand submits that since the award is an unreasoned award and the Arbitrator has not misconducted himself the order of the Subordinate Judge is to be confirmed. 6. The agreement between the parties i.e. Insurance Policy No. 472/6100788/79 covering the date of accident forms a part of the award. After perusing the same, I find that the insured had taken the liability to indemnify to the tune of Rs. 23,000/-. 7. Clause-7 of the conditions of the contract between the parties reads as follows: All differences arising out of this Policy shall be referred to the decision of an Arbitrator to be appointed in writing by the parties in difference or if they cannot agree upon a single Arbitrator to the decision of two Arbitrators one to be appointed in writing by each of the parties within one calendar month after having been required in writing so to do by either of the parties or in case the Arbitrators do not agree of an Umpire appointed in writing by the Arbitrators before entering upon the reference.... Admittedly the Arbitrator was appointed as agreed by both the sides to arbitrate the liability of the insurer to indemnify the insured. The contract between the parties indicates that the liability of the insurer was to the maximum tune of Rs. 23,000/-. The Arbitration proceeding was maintainable as per Clause-7 of the policy. 8. It has been held in the case of M/s. Ram Das v. Union of India and Ors. 1987 I O.L.R. 460 that failure of the Arbitrator to strictly carry out the mandate in the agreement of reference invalidates the award itself. In that decided case it has been held that since the Arbitrator did not act according to the terms of the agreement, he committed legal misconduct. 1987 I O.L.R. 460 that failure of the Arbitrator to strictly carry out the mandate in the agreement of reference invalidates the award itself. In that decided case it has been held that since the Arbitrator did not act according to the terms of the agreement, he committed legal misconduct. In the case of United India Fire and General Insurance Co. Ltd. and Others Vs. Mowli Bai while considering the liability of the insurer u/s 95 of the Motor Vehicles Act, his Lordship has observed: ...The liability to indemnify the insured is limited to the contract.... In the above decided case considering the contract between the parties, his Lordship observed: ...Therefore, the appellant has undertaken the liability to reimburse to the extent of the actual damage suffered not exceeding Rs. 40,000/-.... Though his Lordship was of the opinion that the insured had spent Rs. 43,000/- and odd, his Lordship limited the liability to Rs. 40,000/-. In the award, which is the subject matter of this appeal, the Arbitrator has directed as follows: ...So I allow the claimant Rs. 23,000/- the maximum allowable under the policy. So in all I would allow Rs. 23,600/- to the claimant towards his dues. I would also allow him interest ' 8% per annum from the date of his claim i.e. from 19.7.81 till the date of decree or payment whichever is earlier. Admittedly, the award is an unreasoned and non-speaking one. It is no more res integra that when the Court deals with an award which is unreasoned and non-speaking, it cannot consider whether the view of the Arbitrator on the evidence is justified or not. It is not open to this Court to speculate, where no reasons are given by the Arbitrator, as to what impelled him to arrive at the conclusion. It is equally not open to the Court to probe into the matter i.e. the Court cannot re-appreciate the evidence. But where there is an error apparent on the face of the award it makes the award unsustainable. The error apparent on the face of the record can be found out by perusing any document incorporated in the award. In this case, since the express argument between the parties discloses that the total liability of the issurer was to the tune of Rs. 23,000/-, learned Arbitrator committed error apparent on the face of the record by awarding a sum of Rs. In this case, since the express argument between the parties discloses that the total liability of the issurer was to the tune of Rs. 23,000/-, learned Arbitrator committed error apparent on the face of the record by awarding a sum of Rs. 23,600/- thereby committed legal misconduct for which the award in question is liable to be set aside. The order of the Subordinate Judge making the award rule of the Court is also not sustainable and, therefore, is set aside. It will be open for the parties to appoint any other Arbitrator to arbitrate the difference between the parties. 9. In the result, the appeal is allowed. In the circumstances of the case, there shall be no order as to costs.