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2001 DIGILAW 281 (HP)

H. P. HOUSING BOARD v. RANJIT SINGH RANA

2001-10-09

M.R.VERMA

body2001
JUDGMENT M.R. Verma, J. (Oral):- Since common questions of law and identical facts ar2 involved in these two objection petitions, therefore, these are being disposed of by this common order. 2. The predecessor-in-int2rest of the objector and the claimant entered into an agreement No.S DA/CD-1/8/89-90 regarding work of residential complex below BSC Shimla. Disputes arose between the parties out of the said contract, therefore, as per the contract; the matter was referred for arbitration. The arbitrator made his award dated 28.4.1999. The objector, successor-in-in-terest of the original party to the contract preferred objections under Section 34(3) of the Arbitration and conciliation Act, 1996 (hereafter referred to as the Act) against the said award being OMP (M) No.25 of 1999. 3. The predecessor-in-interest of the objector and the claimant also entered into another agreement No.SDA (D-II) 9 of 1989-90 regarding work of construction cf residential complex below BSC Shimla. The disputes having arisen between .he parties out of the said contract, as per the terms of the contract, were inferred for arbitration and the arbitrator made award dated 31.3.1999. The objector, successor- in-interest of the original party to the contract, preferred objections under Section 34(3) of the Act being OMP.(M) No.26 of 1999. 4. The cliamant/respondent contested the objections and filed reply to the objection petitions. 5. In both the cases following identical issues were framed:- "1. Whether the award is against the public of India, as alleged? 2. Whether the Arbitrator while making the award has exceeded his jurisdiction? 3. Relief." 6. Parties led evidence by way of affidavits. 7. Arguments were heard. 8. At the time of arguments, the learned Counsel for the objectors raised a preliminary objection that though it has been pleaded in the objection petitions that the arbitrator has not assigned reasons for his award and there is no specific denial by the respondent but no issue on such controversy has been framed whereas by virtue of the virtue of sub-section (3) of Section 31 of the Act the awards in question are bad in law and are liable to be set aside for the reasons that they do not contain any reason on the basis of which they have been made. 9. 9. Sub-section (3) of Section 31 of the Act reads as follows:- "(1.) ***** ***** ***** (2) ***** ***** ***** (3) The arbitral award shall state the reasons upon which it is based, unless (a) the parties have agreed that no reasons are to be given, or (b) the award is an arbitral award on agreed terms under Section 30. (4) to (8) **** **** ***** 10. It is evident from the aforesaid provisions that the arbitrator is obliged to state reasons upon which his arbitral award is based. There are only two exceptions to the general rule viz. reasons may be dispensed with when the parties have agreed that no reason are required to be given, or where the arbitral award is on the agreed terms as provided under Section 30 of the Act. This is not the case of the parties that the awards are based on any settlement arrived at as provided under Section 30 of the Act nor it is their case that they have agreed that no reasons are to be given by the arbitrator for his awards. Therefore, the arbitrator was legally bound to state the reasons upon which the awards in question are based. (See: Tamil Nadu Electricity Board v. M/s. Bridge Tunnel Construction & Ors. AIR 1997 SC 1376. 11. In H.P. Housing Board & Anr. v. M/s. Vijay Construction Works, (OMP(M) No. 11 of 2000 decided on 12.12.2000, this Court held as under:- "9. The expression "state the reasons upon which it is based" with reference to the context rnust mean to express the premises to the conclusion. The premises to the conclusion must be traced on the basis of available data. Therefore, the reasons, the basis of an award, must be the outcome of an act of objective thinking and analysis of the available material as per the rules of logic justifying the conclusions. 10. In view of the above meaning of the expression "state the reasons upon which the award is based", the statement of "reasons for award" as attached with the award cannot be treated as "reasons" because the alleged reasons as given .are "it is proved....claim not substantiated.. Jit is revealed...it is found." without any reference to the material on the record on the basis of which such conclusions could have been drawn. Jit is revealed...it is found." without any reference to the material on the record on the basis of which such conclusions could have been drawn. The award in question, thus, does not state the reu^ons on which it is based, bu only states the unreasoned conclusions and is, therefore, violative of Section 31(3) of the Act." 12. In view of the above position in law, the arbitrator is legally bound to assign such reasons in support of the awards which must be the outcome of an act of objective thinking and analysis of the available material as per the rules of logic justifying the conclusions. In the awards in question what the arbitrator has done is that almost under each claim he has referred to the submissions made by the parties but under most of the claims without assigning any reason for agreeing or disagreeing with the particular submissions made before him and without adopting the process of reasoning to arrive at his own conclusion, has either awarded the claim or has refused to award it or he has simply stated that the claim is not substantiated, without any reference to the material which may have been placed before him by the parties. 13. Thus, the awards in question cannot be said to contain the reasons upon which it is based as contemplated under Section 31(3) superior. The awards are, therefore, liable to be set aside for this reason alone. , 14. Issues No. 1 and 2. In view of the findings recorded on the preliminary objection here-in-above, findings need not be recorded on these issues. 15. Relief. In view of the findings given above, the impugned awards are liable to be set aside and are accordingly set aside. Both the OMPs. (M) are accordingly disposed of. 16. It was submitted by the learned counsel for the parties that the arbitral awards in question were made by the arbitrator who was appointed as such in his official capacity and has since retired, therefore, if the parties agree to appoint another arbitrator and is so appointed, it may be left open to so appointed arbitrator to rely on the material already produced by the parties during the arbitral proceedings earlier conducted. In the circumstances, aS contemplated by the learned counsel for the parties, there cannot be any objection if with the consent of the parties the new arbitrator may rely on the material what-ever might have been brought on record in the earlier arbitral proceedings by the parties.