J. D. Kapoor ( 1 ) THIS is a suit based upon the award dated 21/3/1988 rejecting the claim of the petitioner. Short question arising for determination is whether settlement between the parties arrived through letter dated 6/11/1984 was a novation of the original contract and whether the Arbitrator has misconducted by ignoring the letter dated 8/4/1995 sent by the petitioner to the respondent which according to the petitioner has the effect of setting aside the award itself. Relevant facts lie in moderate compass and are as under :- petitioner agreed to buy ordinary Grey Portland cement from the respondent vide agreement dated 6/11/1981. The relevant clause of the shipping conditions for despatch within India as contained in Annexure II is clause 3 which reads as under: "3. DEMURRAGE/despatch: demurrage/despatch according to charter party but not to exceed US $ 4200/2100 per day of 24 hours or probate. Despatch to be payable on all time saved in the discharging. Demurrage/despatch to be settled by the buyer/seller within 60 days of the presentation of demurrage/despatch claim with full set of shipping documents i. e. N. O. R. , Statement of facts. Time sheets etc. , and subject to the agreement on Time sheets, clearance by Reserve bank of India. " ( 2 ) THE term NOR stands for notice for readiness. Such a notice is required to be given by the ship owner to the person who has to load or unload the goods. Clause 16 of the Contract provided that any alterations or modification of the terms of this Contract shall be effective only when a formal amendment has been sent by both the parties hereto. Admittedly, the amendment in the Contract to the effect that the petitioner will be entitled to despatch only on the "working time saved" basis instead of "all time saved" basis as provided in clause 3 of Annexure II to the contract has neither been effected nor been sent by both the par ties. ( 3 ) ADMITTEDLY after, series of correspondence the parties finally settled their disputes on 6/11/1984. However, the petitioner woke up though belatedly on 8/5/1985 when it detected a factual error in respect of the basis which governed the payment of despatch. In the original contract such a basis was "all time saved" whereas in the final settlement, calculations were made on "work time basis". However, the petitioner woke up though belatedly on 8/5/1985 when it detected a factual error in respect of the basis which governed the payment of despatch. In the original contract such a basis was "all time saved" whereas in the final settlement, calculations were made on "work time basis". The petitioner despatched the following communication :- "as WE ALRDY IFWD YOU BY OTLX CMT 3-233 DTD JAN 29th, 85, IT WAS MUTUALLY AGREED that S5y WO PAY USD 73,779. 05 DEM/des N r5. 1,447,802-OVERAGE PRIMIUM TO STC, FOR WHICH we DESPATCHD O REP TO YR OFC ON NOV 84 T DIICUSS for CALCULATN, ETC ONE BY ONE. AFTER AGREEMT with YOU, WE PERSUADED SHIPOWNERS N OTHER concerned BASED ON OUR AGREED AMOUNT N ALL PENDG a/ciuas FINALLY SETTLED WZ THM. IEWG ABOVE FACTS, YOU MAY, WE BELIEVE. ACKNOWLEDGE THT IT IS ALMOST IMPOSSIBLE TM RVISE our FIXED FIGURE. INSTEED, TO COOPERATIVE WITH YOU WE WL arnange IMMEDIATE REMITTANCE OF ANY AMNT. IF YOU LET USHV YR CINAL CFMTN TO proceed REMITTANCE AS OUR ALRDY AGREEMT, WHCH WE be BEST WAY PR IMMDT SETTOMT OF OUTSTANDG A/c. M/time, AS YOU KNOW WELL LUCNTLY SOME korean SHIPPING COS WTRE BANKUPOED M AFFILATE duf TO FINANCIAL STRINGENCY. YR RFALIZATION OF AIL THE FACTS N. "however, the respondent s rosponse in the written statement is as under : "14 to 22: Contents of these paras are matters of record evidenced by documents including letters and telexes exchanged between the parties. All these matters relating to claims and counter claims of parties were finally settled on 6/11/1984 as recorded in STC s letter to the respondent of that date. In view of the said settlement the contract dated 6/11/1981 stood satisfied and finally concluded with effect from the said date i. e. 6/11/1984. No further rights or obligations of the parties to each other subsisted thereafter under the said agreement. In terms of the settlement of 6/11/1984 the respondent was liable to pay only the sum mentioned therein to STC in full and final settlement of accounts. The respondent has made the payment of this amount. Hence there is no dispute subsisting and thereunder arbitration contract between the parties, and the arbitration proceedings are not maintainable also for the reason. In terms of the settlement of 6/11/1984 the respondent was liable to pay only the sum mentioned therein to STC in full and final settlement of accounts. The respondent has made the payment of this amount. Hence there is no dispute subsisting and thereunder arbitration contract between the parties, and the arbitration proceedings are not maintainable also for the reason. 23 to 32: It is denied and disputed that there was any mistake made in the calculation of the despatch money due from the respondent to the claimant STC. In any event the settlement arrived at on 6/11/84 was a final settlement of account on mutually accepted terms agreed to pursuant to discussions held between the parties during 27/10/1984 to 6/11/1984. This settlement was in novation of the contract dated 6/11/1981. There was no question of any mistake being found out subsequently in the calculation of the despatch money as alleged or otherwise. Even if there was such a mistake the claimant is barred from raising any dispute especially as the said settlement dated 6/11/1984 has been acted upon by the respondent. In any event this claim now sought to be made allegedly on account of the discovery of the mistake on 6/2/1985 is time barred. Hence all demands made by the claimant for the additional payment on account of the alleged mistake are totally wrong, denied and are disputed. The respondent does not accept the correctness of any of the telexes or other communications alleged to have been send by the claimant and which are referred to in the paras under reply. AFTER the settlement of agreement dated 6/11/1984 the claimant STC is wrongly sought to revise its claim on false and incorrect pretext. Unilaterally the claim raised additional demands which were never agreed nor accepted by the respondent. In fact a non acceptance additional demands by the claimant STC were refuted and denied by the respondent. Even during the personal visit of mr. Rajinder Singh General Manager of the claimant. The respondent never agreed to even consider the payment of the despatch money on the bass of the revised time sheets or otherwise as a matter is discussed and resolved in november, 1984. Even during the personal visit of mr. Rajinder Singh General Manager of the claimant. The respondent never agreed to even consider the payment of the despatch money on the bass of the revised time sheets or otherwise as a matter is discussed and resolved in november, 1984. " ( 4 ) AS is apparent from the aforesaid averments, the stand of the respondent before the Arbitrator in brief was that since there was a final settlement on 6/11/1994 they were only liable to pay the settled amount by virtue of that settlement and no more and thereafter the arbitration proceedings between the parties were not maintainable because the said settlement was in novation of the original Contract dated 6/11/1994. ( 5 ) IT is contended by Mr. J. S. Arora, the learned counsel for the petitioner that without deciding the issue whether the settlement was within the contract or not thr Arbitrator could not have entered upon the arbitration proceedings and made an award because jurisdiction depended on his decision whether the settlement was novation of the contract or not. Even if it is assumed that the Arbitrator had the Jurisdiction to decide and arbitrate upon the dispute between the parties still the fact remains that he did not take into consideration the material document i. e. telex dated 8/4/1985 addressed by the respondent to the petitioner wherein the respondent did not take stand or plea that the petitioner had agreed to calculate the despatch on "working time saved" basis instead of "all time saved" basis as provided in the Contract. ( 6 ) ACCORDING to Mr. Arora, it was incumbent and obligatory on the part of the Arbitrator to take into consideration the telex dated 8/4/1985 for arriving at the correct conclusion for calculating the despatch, namely, whether it was on "working time saved" basis or "all time saved" basis as the only difference or dispute between the parties was in respect of the basis of calculation of despatch. ( 7 ) AS is apparent the calculations were made by the Arbitrator on the basis of the settlement between the parties which was on working time saved basis whereas the parties had agreed for despatch on all time saved basis. In Mr. ( 7 ) AS is apparent the calculations were made by the Arbitrator on the basis of the settlement between the parties which was on working time saved basis whereas the parties had agreed for despatch on all time saved basis. In Mr. Arora 8 view, the respondent cannot be allowed to take advantage of Inadvertent mistake on the part of the petitioner which was immediately brought to the notice of the respondent and, therefore, the calculations of despatch by the Arbitrator is on the wholly incorrect basis. He further contended that since the terms of the Contract had been duly signed by both the parties and in terms of Clause 10 of the Contract the basis of calculations was working time saved and not all time saved the whole award is liable to be set aside. ( 8 ) WHILE canvassing the proposition that if a material or crucial document is ignored by the arbitrator, the award is liable to be set aside, learned counsel placed reliance upon K. P. Poulose Vs. State of kera1a and another, 1975 (2) SCC 236 , wherein the Supreme court has observed that "under Section 30 (a) of the arbitration Act an award can be set aside when an arbitrator has misconducted himself or the proceedings. Misconduct under Section 30 (a) has not a connotation of moral lapse. It comprises legal misconduct which is complete if the Arbitrator on the face of the award arrives at an inconsistent conclusion even on his own finding or arrives at a decision by ignoring very material documents which throw abundant light on the controvery to help a just and fair decision. It is in this sense that the Arbitrator has misconducted the proceedings in this case. " ( 9 ) ACCORDING to Mr. Arora had the aforesaid document taken into consideration, the Arbitrator would have rejected the plea of the respondent raised during the course of the proceedings that the petitioner had agreed to charge them despatch on "working time saved" basis instead of "all time "saved" basis and this itself would have made a considerable difference in the claim of the petitioner and so much so even the possibility of change in the decision of the Arbitrator is sufficient to set aside the Award. ( 10 ) MR. ( 10 ) MR. Arora further contended that the Arbitrator abdicated his function in not returning the finding whether the settlement between the parties dated 6/11/1984 was in novation of the Contract or not by observing that it is needless to express any opinion whether the settlement dated 6/11/1981 amounts to a novation under Section 72 of the Indian Contract Act. It is contended that had the Arbitrator given the finding that the settlement is novation of the contract, the jurisdiction of the Arbitrator would itself have been ousted. ( 11 ) ON the contrary, Mr. Sanjeev Anand, learned counsel for the respondent has contended with vehemence that it was a conscious decision of the parties that the demurrage and despatch shall be calculated on "working time saved" basis and this is manifestly demonstrated from the fact that there was settlement of demurrage/despatch in respect of cement imports under five different contracts including the two in question and the negotiations between the parties continued for ten days from 27/10/ to 7/11/1984 and the said settlement was recorded in the STC s letter dated 6/11/1904. It was agreed that if the vessels is on despatch then the respondent was liable to pay to STC and in case demurrage was incurred by the vessels then the petitioner was liable to pay to the respondent. ( 12 ) MR. Anand further contended that under each of the contracts which were settled there were about more than 80 vessels which were settled and some of which were on demurrage and all these were calculated on "working time saved" basis and, therefore, to say that there was an error or mistake in the calculations detected by them subsequently is an after-thought. Even with regard to the payment of demurrage by the petitioner to the respondent with respect to the various ships under the contract in question the demurrage was calculated on the basis of "working time saved" basis although contract provided for "all time saved" basis. The letter dated 6/11/1984 itself shows that the settlement was not only in respect of despatch but it was in respect of demurrage also. ( 13 ) MR. The letter dated 6/11/1984 itself shows that the settlement was not only in respect of despatch but it was in respect of demurrage also. ( 13 ) MR. Anand urges that now to say that in respect of despatch the basis was "all time saved" and in respect of demurrage it was "working time saved" basis is inconsistent stand as had it been so respondent would not have agreed for the settlement as it could have also claimed demurrage as per terms of the Contract on "all time saved" basis. Mr. Anand further contended that. this is nothing but an after-thought and not a mistake or error committed by the officials of the petitioner as settlement effected in respect, of demurrage and despatch was not only in respect of vessels in question but in respect of five more contracts and this settlement was only in respect, of amount calculated in regard to demurrage and despatch. ( 14 ) ACCORDING to Mr. Anand, it is not correct that the settlement was with regard to the calculation to be made on the "working time saved" basis and merely because all. time settlement was not reduced into writing or signed by both the parties did not mean that settlement was on the working time basis. Mr. Anand further contended that the observations that the document dated 8/4/1905 has not been filed though referred to does not mean that the arbitrator was not aware or conscious of the fact contained in the said letter rather he did not deem this document as relevant in view of the final settlement arrived at between the parties after long deliberations and meetings between their officials. Thus the allegations of ignoring or not considering the said document is false and even if the said document had been referred to or considered by the Arbitrator, his decision would have been the same as he had relied upon the final settlement between the parties. ( 15 ) AS regards the allegations that the Arbitrator did not go into the question whether the setttlement was novation of the Contract because he found that the present case involved mutually agreed settlement mr. Anand contended that. ( 15 ) AS regards the allegations that the Arbitrator did not go into the question whether the setttlement was novation of the Contract because he found that the present case involved mutually agreed settlement mr. Anand contended that. Arbitrator has clearly held that the Contract stands discharged by reason of the said settlement which was a conscious, deliberate and solemn act on both sides under which no more sums were payable to the respondent In respect of two contracts except arising out of the clerical errors. ( 16 ) IN support of his contention that the respondent was not required to inform the petitioner that though the agreement was on "all time saved" basis but settlement was concluded on the basis of "working time saved" basis Mr. Anand contended that it was sufficient for the respondent to inform the petitioner that by way of settlement the dispute stood concluded for all times to come and since both the parties were conscious of the nature of disputes and agreed to settle it through mutual agreement, there is no error of fact or law on the face of the award and the award cannot be set aside merely on the ground that arbitrator had ignored the document/letter dated 8/4/1985 sent by the petitioner to the respondent pointing out the error in settling the dispute. ( 17 ) WHILE canvassing the proposition that. unless there is error of law or fact apparent on the face of the record, award should riot be interfered with or set aside, learned counsel has placed reliance on Trustees of the Port of Madras Vs. Engineering Construction corporation Limited (1995) 5 SCC 531 wherein the observation of privy council in Champsey Bhara and co. Vs. Jivraj Balloo Spg. and Wvg. Co. Ltd AIR 1923 PC 66 was relied upon. The observation of the Privy Council is as under : AN error in law on the face of the award means, in their lordships view that you can find in the award or a document actually incorporated thereto, as for instance, a note appended by the arbitrator stating the reasons for his judgment, some legal proposition which is the basis of the award and which you can then say is erroneous. It does not mean that if in a narrative a reference is made to a contention of one party that opens the door to seeing first what that contention is, and then going to the contract on which the parties" tights depend to see if that contention is sound. Here it is impossible to say. from what is shown on the face of the award, what mistake the arbitrators made. The only way that the learned Judges have arrived at finding what the mistake was is by saying inasmuch as the arbitrators awarded so-and-so, and inasmuch as the letter shows that the buyer rejected the cotton, the arbitrators can Only have arrived at that result by totally misijterpreting Rule 52. But they were entitled to give their own interpretation to Rule 52 or any other article, and the award will stand unless on the face of it, they have tied themselves down to some special legal proposition which then, when examined, appears to be unsound. " ( 18 ) IN the contract the calculations of despatch on "all time saved" basis is specified whereas the calculation of the demurrage is not specified. As per this Contract the demurrage is chargeable according to the charter party which means that the agreement entered into by the respondent with the ship owner whereas despatch has to be specifically on "all time saved" basis. However, the petitioner is not concerned as to what kind of agreement the respondent had entered into with shippers which was calculated on "all time saved" basis. The agreement of the petitioner with the ship owners in respect of demurrage charges is an independent contract. It will always relate to amount of demurrage but it does not mean that the petitioner had also agreed to the same basis for calculating the despatch. The basis for calculating the despatch charge was mentioned in the contract itself and this could have been altered or modified by way of writing contact to be signed by both the parties. Moreover, the respondent did not file any counter claim and has taken the plea that he has supplied demurrage by making every payment to the shippers on the basis of "working time saved" basis. The witness of the respondent has categorically admitted that modification or change of this clause of the agreement was permissible only by way of written contract. Moreover, the respondent did not file any counter claim and has taken the plea that he has supplied demurrage by making every payment to the shippers on the basis of "working time saved" basis. The witness of the respondent has categorically admitted that modification or change of this clause of the agreement was permissible only by way of written contract. In para 3 of Paulus s case (supra) Supreme Court observed that the speaking award would be set aside on the ground that a relevant document has not been considered by the Arbitrator. Not only that a duty has been cast upon the Arbitrator to call for such a document which was necessary for Just decision of the case. ( 19 ) THE witness of the respondent has also not disclosed as to on what basis the calculations of demurrage were made towards the shipment. There is no gainsaying the fact and there are catena of decisions wherein it has been held that court does not sit in appeal nor is it required to reassess or reappreciate the material and evidence produced by the parties before the arbitrator or interfere even if erroneous view has been taken by the arbitrator nor should the court set aside the award unless perversity is writ large on the face of the award. However, at the same time, it is also settled law that if any crucial document either skips the notice of the arbitrator or the arbitrator ignores the said document, consciously or unconsciously, then the award suffers from infirmity of error apparent on the face of it but the condition precedent is that the said document should of such nature which should have the affect of tilting or reversing the finding of the award which is pivotal to it. ( 20 ) EVEN if it is assumed that settlement between the parties negatived the contract still the letter sent by the petitioner to the respondent after the parties had entered into a settlement pointing out the error due to inadvertence or omission on the part of the officials of the petitioner is most crucial document around which the whole dispute revolved as the settlement in question did not specify that though the parties had agreed to settle their disputed on "all time saved" basis but now they have agreed to calculations on "working time save basis". There was a specific stipulation in the original agreement that the basis of calculation would be on all time saved basis. ( 21 ) WHENEVER any party brings to the notice of another party any such error which has crept inadvertently or unconsciously, it is incumbent upon the other party to respond to it in entirety and not to take refuge under the cover of mutually agreed settlement which itself is silent as to the reasons for deviation of the basis on which calculations for settlement were made. ( 22 ) IT is again a settled law that all efforts should be made by the arbitrator to call for and look into the documents which are necessary for arriving at a just and correct decision. Even if these documents are not relied upon and produced by any of the parties, still it is incumbent upon the Arbitrator to summon and look into such documents to arrive at a Just and correct decision. Effort of the Arbitrator should be to settle the disputes once for all and not to leave any controversy or document undealt. ( 23 ) TAKING overall view of the matter, I find that the document in question was most crucial document particularly when no counter-claim was filed by the respondent in spite of the fact that the same was brought to the notice of not only the respondent but also the arbitrator. Once the basis for calculating the despatch charge was mentioned in the contract itself, this could have been altered or modified by way of contract or agreement in writing. Had there been even a remote reference in the final settlement as to the change or alteration of the basis for calculation from "all time basis" to "work time basis", the defence of the respondent would have some legs to stand. ( 24 ) IN view of the foregoing reasons, I find that the Arbitrator has committed a grave error by ignoring the document in question which was not only the genesis of the claim of the petitioner but also the stand taken by the respondent would have been property evaluated and assessed. ( 25 ) AS a result, the petition is allowed. The impugned award is set aside and remitted to the Indian council of Arbitration for appointing a new Arbitrator for fresh decision as the Arbitrator who had given the award has expired. ( 25 ) AS a result, the petition is allowed. The impugned award is set aside and remitted to the Indian council of Arbitration for appointing a new Arbitrator for fresh decision as the Arbitrator who had given the award has expired. Parties are directed to appear before the council on 26/11/2001. Copy be sent to the Council also.