STATE OF HIMACHAL PRADESH v. RAM NARAIN MADAN — 1997 DIGILAW 366 (HP)

JUDGMENT Kamlesh Sharma, AC J.: This appeal is directed against judgment dated 8th April, 1997 passed by learned single Judge of this Court whereby the objectors of the appellant-State have been dismissed and the award of the Arbitrator has been made rule of the court. The Arbitrator had given lumpsum aware1 of Rs.5,47,238/-plus interest at the rate of 12% per annum from 9 7 1985 to the date of realisation of payment or the date of decree whichever is earlier in favour of the respondent-claimant. 2. The facts in brief are that vide agreement No.8 of 1981-82 the work of construction of Civil Hospital building at Una ( Block A) was allotted f o the claimant. The agreement contained arbitration clause i.e. Clause No.25. As usual dispute arose between the parties and the matter was referred trotter Arbitrator for adjudication, who has given u non-speaking lumpsum award dated 8.6.1995 and filed it in this court, which was registered as Civil Suit No.208of l995. 3. On the basis of the objections filed by the State, reply of the claimant and rejoinder of the State learned Single Judge has framed the following issues :- 1. Whether the arbitrator has misconduct himself and the proceedings, as alleged? OPD. 2. Whether the award is without jurisdiction, as alleged. If so, its effect? OPD. 3. Whether the award is otherwise invalid as alleged? OPD 4. Relief. 4. In support of its objections the Slate has adduced evidence by way of affidavit of Shri S.D. Kaundal, the then Superintending Engineer, 8 the Circle, H.P. PWD, Hamirpur, whereas, the claimant has not led any evidence and has relied upon his affidavit filed in support of his reply to the objections. 5. Before the learned Single Judge, the learned Assistant Advocate General has confined hlaself to the following objections:- "(i) He has challenged the award on the-ground that it is a lumpsum award. (ii) According to him, claims No.25 to 27 were barred under clause 10-C. of the agreement which provided that if contrary claims regarding statutory increase in the minimum wages of labour or other costs of - materials etc., it would be referable to the Engineer-in-Charge. (ii) According to him, claims No.25 to 27 were barred under clause 10-C. of the agreement which provided that if contrary claims regarding statutory increase in the minimum wages of labour or other costs of - materials etc., it would be referable to the Engineer-in-Charge. Whose decision shall be final and binding on the parties?" Relying upon the judgments of the Supreme Court in Union of India v. Jai Narain Misra, AIR 1970 SC 753 and State of Rajasthan v. Puri Construction Co-Ltd & Anr., (1994) 6 SCC 485, the learned Single Judge has rejected the first objection holding that, "making of a lumpsum award is well within the parameters and jurisdiction of the Arbitrator as has been done in this case" The State has not challenged these findings in the present appeal. 6. So far second objection is concerned , the learned Single Judge keeping in view the judgment dated 8.1.1997 passed by Division Bench of this Court while answering the reference made to it in Civil Suit No. 151 of 1994 titled Moti Lal v. Slate of H.P. has held that as per clause 10-C of the agreement the jurisdiction of the Arbitrator is barred in to in respect of claims No.25 to 27, which pertain to the claims regarding statutory increase in the minimum wages of labour or other cost of material etc. as these are referable to the Engineer-in-chief, whose decision will be final and binding on the parties.. Despite these findings, the learned Single Judge has upheld the award on the ground that it is lumpsum award and it is not possible to find out whether the amount of claims No.25 to 27 is included in it or not. The precise observations of the learned Single Judge are: - - "Under claims No. 25 to 27, reference has been made to clause 10-C and an amount of Rs.65,775/-, Rs,31,252/- and Rs. 1,23,970/- respectively, has been claimed under these claims. However, an amount of Rs. 4,06,294/- has been awarded and it cannot be said with certainty that all these claims have been included in the said lump sum award." 7. Further, relying upon the judgment of the Supreme Court in Stale of Andhra Pradesh and another v. R.V. Rayanim etc., AIR 1990 SC 626, the learned Single Judge has- observed in para 13 of the judgment :- 13. Further, relying upon the judgment of the Supreme Court in Stale of Andhra Pradesh and another v. R.V. Rayanim etc., AIR 1990 SC 626, the learned Single Judge has- observed in para 13 of the judgment :- 13. It is thus clear that there is a lump sum award and it is not possible to find oat as to which claim has been omitted and which included in making the lump sum award. In such a situation it cannot be said that the arbitrator has travelled beyond his jurisdiction, he has to give reasons only in a speaking award. It may be mentioned that since he had not been directed for giving a reasoned award; he has not given any reasons in support thereof and In was not equally enjoined to do so." 8. Similar reasoning has been given for rejecting another objection of the State that claims under Items No. 3, 8, 9, 10, 17, 18, 20, 23 and 29. Which were admittedly withdrawn during the course of proceedings have been included in the award. Challenging these findings, the learned Advocate General has urged that from the perusal of the impugned award it is clearly discernible that part of the amount of items No. 25 to 27, which were beyond the jurisdiction of this Arbitrator, was allowed, which vitiates the whole of the award as this amount is not separable from the lumpsum amount of the impugned award. Relying upon the judgments of this Supreme court in Tamil Nadu Electricity Board v. M/s Bridge Tunnel Constructions and others, AIR 1997 SC 1376, the learned Advocate General has argued that the Arbitrator was enjoined to exclude items No.25 to 27 from his lumpsum award in view of the clear legal position that as per clause 10-C of the agreement his jurisdiction is barred in respect of these items. Referring to another judgment of the Supreme Court in Union of India v. Jain Associates and another, (1994) 4 SCC 665. the learned Advocate General has further submitted that since the amount granted is the impugned award against items No.25 to 27 cannot be separated from the lumpsum amount of the award, the whole of the award deserves to be set aside and the case may be remanded to another Arbitrator. 9. the learned Advocate General has further submitted that since the amount granted is the impugned award against items No.25 to 27 cannot be separated from the lumpsum amount of the award, the whole of the award deserves to be set aside and the case may be remanded to another Arbitrator. 9. On the other hand, learned counsel appearing for the claimant has supported the impugned judgment He has submitted that items No.25 to 27 falling under Clause 10-C of the agreement, are arbitrable by the Arbitrator. This argument has been raised to be rejected in view of the Division Bench Judgment dated 8.1.1997 passed in a reference made in Civil Suit No. 151 of 1994 titled Moti Lal v. State of HP. The learned counsel has also argued that part of the award, which pertains to the items except items No.25 to 27 may be upheld. This submissions is also without any force, as it is not discernible from the lumpsum amount of the impugned award that hew much amount has been given against items No.25 to 27. 10. After giving our best consideration to the respective contentions of learned Advocate General for the State and the learned counsel for the claimant, we find substance in the submissions made by learned Advocate General that from the impugned award it can be made out that a part of die amount of items No.25 to 27 has been granted by the Arbitrator. At page 5 of the award for "items No. 23 to 25 an amount of Rs.4,06,294/- has been •warded. Even if he has allowed claim of items No.23 and 24 and 28 to 32 in full it will come to Rs.3.74,988/- and the remaining amount of Rs. 21, 306/- is against items No.25 to 27 for which the Arbitrator had no jurisdiction. Since it cannot be said with certainty as to whether the Arbitrator has granted only Rs.21,306/- against items No.25 to 27 or more or full amount of Rs.2,54,062/- against these items, the whole of the award gets vitiated and deserves to be set aside. 11. The learned Judges of the Supreme Court in Tamil Nadu Electricity Board v. M/s Bridge Tunnel Constructions and others(supra) were dealing with almost similar situation as that of the present case whether the Arbitrator had given non-spelling lumpsum award without deciding the arbitral Unity of items mentioned in the claims. 11. The learned Judges of the Supreme Court in Tamil Nadu Electricity Board v. M/s Bridge Tunnel Constructions and others(supra) were dealing with almost similar situation as that of the present case whether the Arbitrator had given non-spelling lumpsum award without deciding the arbitral Unity of items mentioned in the claims. In this context the learned Judge have held in para 26 of the judgment:- "26. It would thus be clear that the arbitrator cannot clothe himself conclusively with the jurisdiction to decide or omit to decide the arbitrability of a particular item or the claim made by the parties. When a specific reference has been made to the arbitrator and the parties raise the dispute or arbitrability, with the leave of the Court by a direction of the court in a proceeding under Section 33, he is to decide the arbitrability of the dispute and make a decision while giving reasons in support thereof. The decision of the arbitrator, in granting r. particular sum by a non-speaking award, therefore, hinges upon the arbitrability of a dispute arising under the contract or upon a particular item claimed thereunder. He is required to give the decision thereon. The question of decision by implication does not arise since his jurisdiction to decide the dispute on merits hinges upon his jurisdiction to decide the arbitrability of the dispute. In this case, in view of the finding recorded to the Court, which has become final, as referred to earlier, the arbitrator/ Umpire was enjoined to decide the arbitrability of the claims set up by the respondent and disputed by the appellant. Admittedly, the award of the Umpire does not contain any decision on arbitrability of the claims." And in para 35:- "35. We have set out the relevant portions of the award. From a reding thereof, it is clear that the arbitrator had considered the claims made on the basis of escalation and damages, in a non-speaking award of the disputes consisting of arbitrable and non-arbitrable claims. He awarded a lumpsum amount of Rs.70,83,793/-. It is difficult to discern as to what extent the Umpire had considered the admissible and inadmissible claims which he adjudged. In such a situation, it is not possible to discern to what extent he had exercised his jurisdiction vis-a-vis of the admissible claims and disallowed the non-arbitrable claims. He awarded a lumpsum amount of Rs.70,83,793/-. It is difficult to discern as to what extent the Umpire had considered the admissible and inadmissible claims which he adjudged. In such a situation, it is not possible to discern to what extent he had exercised his jurisdiction vis-a-vis of the admissible claims and disallowed the non-arbitrable claims. So, it is not clear whether he exercised his authority either beyond his jurisdiction or in abduction thereof. In cither case, it is an error of a jurisdiction, the very foundation or his decision." and concluded in para 36:- "36. It is well settled that in the matter of challenge to the award there are two distinct and different grounds viz., that there is an error apparent on the face of the record and that the arbitrator has exceeded his jurisdiction. In the letter case,- the Court can look into the arbitration agreement but under the former it cannot be so unless the agreement was incorporated or cited in the award of evidence was made part of the agreement. In the case of jurisdiction error, there is no embargo on the power of the Court to admit the contract into evidence and to consider whether or not the Umpire had exceeded the jurisdiction because the nature of the dispute is something which has to be determined outside the award, whatever might be said about it in the award or by the arbitrator. In the case of non-speaking award, it is not open" to the Court to go into the merits. Only in a speaking award the Court can look into the reasoning in the award and correct wrong preposition of law or error or law. It is not open to the Court to probe the, mental process of the arbitrator and speculate, when no reasons have been given by the arbitrator, as to what impelled the arbitrator to arrive at his conclusion. It is not open to the Court to probe the, mental process of the arbitrator and speculate, when no reasons have been given by the arbitrator, as to what impelled the arbitrator to arrive at his conclusion. But in the later case the Court, with reference to the terms of the contract/arbitration agreement would consider whether or not the arbitrator/Umpire has exceeded his jurisdiction in awarding or refusing to award the sum of money awarded or omitted a consolidated lumpsum." (Emphasis supplied) It is further held by the learned Judges that once a finding recorded that the Umpire /arbitrator has committed error of jurisdiction, two courses are open, namely, either to remit the award to the umpire/ arbitrator for reconsideration or to set aside the award in to. 12. - In Union of India v Jain Associates and another (supra) it is held in para 9 of the judgment: - "9. It is true that if the bad portion of the award is severable from the good part the court may set aside the bad apart and uphold the rest of the award. But when it thing upon the state of mind of the Arbitrator or the Umpire, the award being a non-speaking award, it is not reasonably certain as to what part of the award is good and vice versa. And if such a part cannot be separated then the whole award must be declared as invalid and it would be set also on the ground of misconduct under Section 30(a) of the Act." 13. Therefore, in view of our findings that the Arbitrator has considered and awarded the claim under Items 25 to 27, which was not within his jurisdiction being barred under clause 10-C of the agreement, which amount is not separable from the lumpsum amount being not discernible and the ratio of the Supreme Court judgment in Tamil Nadu Electricity Board v. MS. Bridge Tunnel Constructions and others referred to here in above. we have no hesitation \ to set aside the award. We are also of the view that in the facts and circumstances of this case, the ratio of the judgment in State of Andhra Pradesh and another v. R. V. Rayanim etc. (supra) is not applicable. 14. Bridge Tunnel Constructions and others referred to here in above. we have no hesitation \ to set aside the award. We are also of the view that in the facts and circumstances of this case, the ratio of the judgment in State of Andhra Pradesh and another v. R. V. Rayanim etc. (supra) is not applicable. 14. The result of above discussion is that there is merit in this appeal and it is accepted, and the impugned judgment dated 8.4.1997 passed by the learned Single Judge in Civil Surf No 208 of 1995 is set aside. The case is remanded to the Arbitrator for fresh decision within a period of four months from the receipt of the records. In the facts and circumstances of this case, more specifically, that the Arbitrator, who had given the earlier award stands retired, we appoint Superintending Engineer, Arbitration, Solan as Arbitrator in the present case. The records be sent to him urgently. The award amount, which has been deposited by the appellant and is lying in the fixed deposited in the Registry of this Court, is ordered to be returned to the appellant along with interest. No costs.