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2000 DIGILAW 5 (SIK)

SAGARMULL AGARWALA v. UNION OF INDIA

2000-05-09

ANUP DEB, RIPUSUDAN DAYAL

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RIPUSUDAN DAYAL, C. J. ( 1 ) THIS application is directed against the judgment and decree of the learned District Judge, Special Division dated 2-2-2000 setting aside the award of the Arbitrator in respect of a dispute which arose out of contract agreement No. GE/867/ 30 of 1980-81. The Union of India, the respondent objected to the award before the learned District Judge on the ground that some of the claims mentioned in judgment were not within the jurisdiction of the Arbitrator. It was contended before the learned trial Judge that the claims barred by the condition of agreement were taken up and awarded by the arbitrator. Other grounds of misconduct were urged on the basis of fact and non-consideration of point of law. The present appellant submitted in the reply that neither the measurements documents were produced nor the contract the agreement and general condition of contract were produced before the Arbitrator. ( 2 ) THE learned trial Judge, after referring to the decision of the Supreme Court rendered in Associated Engineering Co. v. Government of Andhra Pradesh, held that the Arbitrator cannot act arbitrarily, irrationally, capriciously or independently of contract. His sole function is to arbitrate in terms of contract. He has no power apart from what the parties had given him under the contract. If he has travelled outside the bounds of contract he has acted without jurisdiction and the Arbitrator who acts in manifest disregard of the contract acts without jurisdiction. The learned trial Judge held that in the instant case it has been established that no contract agreement was produced before the Arbitrator, and so it is clear that the Arbitrator decided the matter independently of contract and he acted without jurisdiction. In the result, the award was set aside and the respondent was directed to appoint fresh Arbitrator within a period of two months who would decided claims and counter claim within a period of three months from the date of appointment of the Arbitrator. ( 3 ) WE find the reasoning of the learned trial Judge un-exceptional. In the result, the award was set aside and the respondent was directed to appoint fresh Arbitrator within a period of two months who would decided claims and counter claim within a period of three months from the date of appointment of the Arbitrator. ( 3 ) WE find the reasoning of the learned trial Judge un-exceptional. However, the learned counsel for the appellant has submitted that inspite of the opportunity having been granted to the respondent to file documents the respondent did not file the documents and has referred to the decision rendered by the supreme Court in Secretary, Irrigation and power Department, Government of Orissa and another v. Niranjan Swain, where it was held that where the documents were not produced by a party despite the party being called upon to do so and also having given undertaking in that behalf, the Arbitrator could raise an adverse inference, if necessary, and proceed to finalise the award. On the basis of this decision, the learned counsel submits that on account of the failure on the part of the respondent to file the agreement which was in the custody of the respondent, the Arbitrator was within jurisdiction to draw adverse inference against the respondent. ( 4 ) WE are of the view that the argument advanced by the learned counsel is entirely misconceived and is based on a wrong interpretation of the judgment. There can be no doubt that the Arbitrator can draw inference on questions of facts which are to be decided by him, on failure of the party to produce evidence which that party could produce. But it does not follow from the judgment that the Arbitrator can act even without being satisfied about his jurisdiction to deal with the matter. The arbtirator gets jurisdiction from the contract and if the contract which defines the limits of his jurisdiction is not before him and he renders award without being satisfied about the limits of his jurisdiction, he acts beyond jurisdiction. We find the judgment of the learned trial Court to be well reasoned. The appeal is entirely misconceived. ( 5 ) ACCORDINGLY, the appeal is dismissed with cost of Rs. 10,000/- Mr. U. P. Sharma, learned Addl. We find the judgment of the learned trial Court to be well reasoned. The appeal is entirely misconceived. ( 5 ) ACCORDINGLY, the appeal is dismissed with cost of Rs. 10,000/- Mr. U. P. Sharma, learned Addl. Central Government Standing counsel submits that Arbitrator has already been appointed in pursuance of the order of the learned trial Judge though the proceeding could not be held before the Arbitrator because of the stay order granted by this Court The arbitrator shall dispose of the claim and the counter-claim, if any, expeditiously. Appeal dismissed. --- *** ---