Research › Browse › Judgment

Kerala High Court · body

1997 DIGILAW 37 (KER)

A. ABOOSHAHIMAN v. UNION OF INDIA

1997-01-28

D.SREEDEVI, P.A.MOHAMMAD

body1997
JUDGMENT P. A. Mohammed, J. - This is an appeal under Section 39 of the Arbitration Act, 1940 (for short 'the Act') filed by the claimant against the order of the Sub-Judge. Trivandrum refusing to set aside an award passed by the Arbitrator. The appellant claimant is a contractor and the respondent is the Union of India represented by the Executive Engineer, Central P.W.D. Trinendrum. 2. Certain disputes arose between the appellant and the respondent in connection with the agreement No. 8/TCD/82-83 for the work of conveyance of materials for the Trivandrum Central Division of Central Public Works Department. Those disputes were referred to an Arbitrator as per the order dated 17-10-1983 of the Chief Engineer (South Zone). The Arbitrator passed an award on 1st February, 1984 rejecting all the claims and filed the same in court which has been numbered as O.P. (Arbitration) No. 82 of 1984. The claimant filed a petition O.P. (Arbitration) No. 121 of 1984 praying to set aside the above award under Section 30 of the Act read with Section 16. The court below tried both these petitions together and passed a common order on 28-2-1987. By the said order the court below dismissed O.P. (Arbitration) No. 121 of 1984 and accepted the O.P. (Arbitration) No. 32 of 1984 and passed a decree in terms of the award. The claimant being aggrieved by the dismissal of O.P. (Arbitration) No. 121 of 1984 filed this appeal. 3. The main point canvassed by the counsel for the appellant is that the award is vitiated by errors apparent on its face and the Arbitrator committed 'legal misconduct' in making the award. While dealing with this question it is essential to examine the width of the power of this court to interfere with the finding of the Arbitrator while passing an award. 4. Clause 25 of the agreement entered into between the appellant and respondent, inter alia, provides : "In all cases where the amount of the claim in dispute is Rs. 50,000 (Rupees fifty thousand) and above, the arbitrator shall give reasons for the award." It cannot be disputed that the Arbitrator has given reasons for his conclusion wherever they are found necessary. In other words, it is a reasoned award. The award was passed by Sri S. C. Jain, B.E. (Civil) LL.B. Ministry of Works and Housing. 50,000 (Rupees fifty thousand) and above, the arbitrator shall give reasons for the award." It cannot be disputed that the Arbitrator has given reasons for his conclusion wherever they are found necessary. In other words, it is a reasoned award. The award was passed by Sri S. C. Jain, B.E. (Civil) LL.B. Ministry of Works and Housing. Government of India who was appointed as Arbitrator by the Chief Engineer (South Zone) Central Public Works Department as per the order dated 17-10-1983. 5. Lord Goddard, C.J. said in Mediterranean and Eastern Export Co. Ltd. v. Fortress fabrics (Manchester) Ltd. ((1948) 2 All ER 186), thus : "A man in the trade who is selected for his experience would be likely to know, and, indeed, would be expected to know, the fluctuations of the market and would have plenty of means of informing himself of refreshing his memory on any point on which he might find it necessary so to do." His Lordships further said : "The modern tendency is, in my opinion, more especially in commercial arbitrations, to endeavour to uphold awards of the skilled persons that the parties themselves have selected to decide the questions of issue between them. If an arbitrator has acted within the terms of his submission and has not violated any rules what is so often called natural justice the Courts should be slow in deed to set aside his award". The Supreme Court in Municipal Corporation of Delhi v. Jagan Nath Ashok Kumar ((1987) 4 SCC 497 = AIR 1987 SC 2316), observed : "After all an arbitrator as a Judge in the words of Benjamin N. Cardozo, has to exercise a discretion informed by tradition, methodized by analogy, disciplined by system, and subordinated to 'the primordial necessity of order in the social life." 6. What is discussed above is the general nature of the functions of an Arbitrator. In the case of a 'reasoned award' the court can interfere only in the following situation as contemplated by the Supreme Court in Trustees of the Port of Madras v. Engineering Constructions Corporation Ltd. (AIR 1995 SC 2423 = 1995(2) Arb. LR. 332). "The proposition that emerges from the above decisions is this : In the case of a reasoned award, the court can interfere if the award is based upon a proposition of law which is unsound in law. LR. 332). "The proposition that emerges from the above decisions is this : In the case of a reasoned award, the court can interfere if the award is based upon a proposition of law which is unsound in law. The erroneous proposition of law must be established to have vitiated the decision. The error of law must appear from the award itself or from any document or note incorporated in it or appended to the award." 7. The ground alleged for setting aside the award in this case is that an arbitrator has misconducted himself or the proceedings as contemplated under Section 30(a) of the Act. This ground can be alleged in the case of 'reasoned award' as well as a 'non-speaking award'. The 'legal misconduct' on the part of the arbitrator is the sine qua non for invoking the provision contained in Section 30(a) of the Act. The 'legal misconduct' means misconduct in the judicial sense arising from some honest though erroneous breach and neglect of duty and responsibility on the part of the arbitrator causing miscarriage of justice. Arbitrator being a creature of the contract and cannot travel beyond it either by misinterpreting the terms of the contract or otherwise. It is essential in this context to mark the distinctive function of the court while dealing with an award of the Arbitrator. The Arbitrator is the sole Judge of the quality as well as the quantity of the evidence. Therefore, the court will not take upon itself the task of being a Judge of the evidence before the Arbitrator. The 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 Champsey Bhara & Co. v. Jivraj Ballo Spinning and Weaving Co. Ltd. (AIR 1923 PC 66). If the arbitrator or umpire chooses to given reasons in support of his decision it would be open to the court to set aside the award if it finds that an error of law has been committed by the arbitrator or umpire on the basis of the recording of such reasons. The reasonableness of the reasons given by the arbitrator cannot, however, be challenged. See Brijendra Nath Srivastava v. Mayank Srivastava ((1994) 6 SCC 117 = AIR 1994 SC 2562 = 1994(2) Arb. LR 277). 8. The reasonableness of the reasons given by the arbitrator cannot, however, be challenged. See Brijendra Nath Srivastava v. Mayank Srivastava ((1994) 6 SCC 117 = AIR 1994 SC 2562 = 1994(2) Arb. LR 277). 8. In the aforesaid background of legal premises, the facts of this case will have to be evaluated for settling the issues before this Court. It is apposite to observe here that the Arbitrator is bound to give reasons for the award in all cases where the amount of the claim in dispute is Rs. 50,000/- and above. From the award, it would appear, there were altogether seven claims and the Arbitrator has given his reasons for his conclusions in respect of all the claims. There conclusions are found to be sound and reasonable. No question of law arises from those conclusions based on the evidence before the Arbitrator. 9. It was pointedly placed before us claim No. 4 and award passed thereon. They are extracted hereunder. Claim No. 4. The Claimant contractor claims an amount of Rs. 35,374/- towards reimbursement of amount recovered from the bill of demurrage charges. Award. The respondent has correctly effected the recovery in terms of the agreement conditions. The claim is accordingly not justified. The amount claimed under the above claim does not exceed Rs. 50,000/- and in view of the terms of agreement the Arbitrator is not bound to record any reasons for conclusion. However, the Arbitrator has recorded the reasons. The recovery of the amount of Rupees 35,374/- was made in terms of the conditions. When the Arbitrator has given a valid reason after verifying the terms of agreement, this court cannot attribute any sort of 'misdirection' on the part of the Arbitrator in the proceeding before him. 10. In the result, we are of the view, the provisions contained in Section 30(a) of the Act is not attracted in the facts of this case. No ground exists for setting aside the impugned award. The order of the court below is confirmed. The appeal is dismissed. No order as to costs. Appeal dismissed.