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2007 DIGILAW 253 (JK)

Union Of India v. Wazir Chand Bhatia

2007-11-19

J.P.SINGH

body2007
1. Aggrieved by learned Additional District Judge Jammus order dated 01.11.2004, refusing to set aside the award made and published by Shri B.M. Gupta on 18.05.1993, the appellants have filed this appeal. 2. Appearing for the appellants, Mr. Gagan Basotra, raises a short submission. He says that Clause 70 of the Contract Agreement of the parties mandates the Arbitrator to indicate his findings on all matters which were referred to him for adjudication. Shri B. M. Gupta, the Arbitrator, while allowing the claims of the respondent, has not given any reasons in support thereof, thereby violating Clause 70 of the Contract Agreement, which was an error apparent on the face of the award and on that basis the appellants application seeking setting aside of the award was required to be allowed. Order of Learned Additional District Judge Jammu, refusing to set aside the award, is, therefore, required to be set aside. Learned counsel refers to M/S Gora Lal v. Union of India, reported as 2004(1) Supreme 916. 3. Mr. R. Koul, learned counsel appearing for the respondent-claimant, on the other hand, submits that the appellants had not taken the plea which has been urged by them in the memorandum of appeal, while, filing objections to the award and they were, therefore, estopped from raising this plea in the appellate Court. Reliance is placed on Union of India v. Romesh Kumar Rajgharia, reported as AIR 1974 Calcutta 345 and Roshan Lal Budh Prakash Sethi & Co. v. State of Jammu and Kashmir, reported as AIR 1975 J&K 46. 4. I have considered the submissions of learned counsel for the parties and gone through the records. 5. Plea raised by the learned counsel appearing for the appellants is purely legal in character. There is no legal impediment in appellants urging the legal ground on the existing facts on records. That apart, perusal of appellants application filed under section 30/33 of Jammu and Kashmir Arbitration Act 2002 (1945 A.D) indicates that besides questioning each and every item of the award, which the Arbitrator had allowed in favour of the respondent, in detail, and urging it to be against the terms and conditions of the contract and law, the appellants had specifically pleaded that the Arbitrator had exceeded his jurisdiction, misconducted himself and the proceedings and there was an error apparent on the face of the record, which, even otherwise, was invalid and illegal. These objections of the appellants, in my opinion, are sufficient enough on the basis whereof the Arbitrators award could be questioned by the appellants on the plea that it was bad in law because it did not give reasons while allowing the claims of the respondent. The judgments cited by learned counsel for the respondent do not lay down any such proposition of law that a question of law cannot be raised at the appellate stage. All that the Calcutta judgment and the judgment of this Court say is that the fresh factual pleas cannot be urged later before the appellate forum. The judgment cited by learned counsel for the respondent may not thus be applicable to the facts of the present case where the appellants have not raised any factual plea but had raised only a pure question of law and that too based on the judgment of Honble Supreme Court of India. I, therefore, do not find any merit in the submission of learned counsel for the respondent that the appellants cannot raise the plea that the award was vitiated because it was not supported by reasons as required by Clause 70 of the Contract Agreement. 6. Before considering the submission made by learned counsel for the parties as to whether or not the Arbitrator was required to give reasons in support of his conclusions in the award in terms of Clause 70 of I.A.F.W-2159, regard needs to be had to the relevant portion of Clause 70 of I.A.F.W-2159 which forms part of the Contract Agreement between the parties and deals with the issue as to how an award has to be made and published by the Arbitrator. This Clause, for facility of reference, is reproduced hereunder:- "70. Arbitration: -- All disputes between the parties to the Contract (other than those for which the decision of the C.W.E, or any other person is by the Contract expressed to be final and binding) shall, after written notice by either party to the Contract to the other of them, be referred to the sole arbitration of an Engineer Officer to be appointed by the authority mentioned in the tender document. .................................................................................................................. .................................................................................................................. The Arbitrator shall give his award within a period of six months from the date of his entering on the reference or within the extended time as the case may be on all matters referred to him and shall indicate his findings, along with sums awarded, separately on each individual item of dispute." 7. The aforementioned extracted clause of I.A.F.W-2159 is similar to the clause which came up for consideration before Honble Supreme Court of India in Gora Lals case where, while dealing with the issue, Honble Supreme Court held as follows:- A perusal of the aforesaid clause would show that the Arbitrator is required to indicate a finding along with sum awarded separately on each individual item of the dispute. While giving a finding, the Arbitrator necessarily has to take into consideration the disputes, claims and counter claims of the parties and after considering the evidence on such claims and the legal position, has to record his findings on each disputed items. In the present case what we find is that the Arbitrator on each item has awarded a sum which according to us is not a finding but is merely a conclusion. The point for determination in this case is whether the Arbitrator ought to have given reasons in support of his findings, along with sums awarded, on each items of dispute. To decide this point, we have to go by the text and the context of Clause 70 of the arbitration agreement quoted above. Under the said clause, the Arbitrator was required to identify each individual item of dispute and give his findings thereon along with the sum awarded. In this context one has to read the word "findings" with the expression "on each item of the dispute" and if so read it is clear that the word "findings" denotes " reasons" in support of the said conclusion on each item of dispute. The word "finding" has been defined in Words and Phrases Permanent Edition 17, West Publishing Co. to mean an ascertainment of facts and result of investigations. Applying the above test to Clause 70, we are of the view that the Arbitrator was required to give reasons in support of his findings on the items of dispute along with sums awarded. The word "finding" has been defined in Words and Phrases Permanent Edition 17, West Publishing Co. to mean an ascertainment of facts and result of investigations. Applying the above test to Clause 70, we are of the view that the Arbitrator was required to give reasons in support of his findings on the items of dispute along with sums awarded. We make it clear that this order is confined to the facts of this case and our interpretation is confined to Clause 70 of the arbitration agreement in this case." 8. I will now examine the award of the Arbitrator and the submissions made by learned counsel for the parties in the light of the judgment of Honble Supreme Court of India. 9. While allowing the claims of the respondent the Arbitrator has framed a table with the following descriptions: - S.No. Claims in brief Amount of claim Award Amended claim Rs. 1 2 3 4 Against serial no. 1 of the table the Arbitrator gives the serial number of the claim. He records the description of the claim against column no.2. Amounts claimed and awarded have been reflected under column nos. 3 and 4 respectively. In column no.2, after recording the description of the claim, the Arbitrator records "claim sustained/Claim partly sustained/Claim not sustained". 10. He has thus allowed claims appearing at serial nos. 1, 2, 4, 6, 8, 14, 15 and 16 for amount of Rs. 16,147.79, 6405.85, 6124.00, 31,016.17, 20,000.00, 31,600.00, 7395.00, 94,675.02, respectively alongwith interest at the rate of 10% per annum with effect from 06.10.1989 till the date of payment or decree whichever was earlier, as against claims of Rs. 15779.67/16147.79, Rs. 80,000/8,775.14, Rs. 1,50,000/21,420.00, Rs. 5,00,100./l,42,162.75, Rs.2,00,000/1,47,882, Rs. 1,25,000/63,200, Rs. 40,000/16,263.89, Rs. 1,30,000/94,675.02 respectively for these item numbers. 11. Perusal of the award of the Arbitrator indicates that he has not given any reason(s) while allowing the claims in favour of the respondent. 12. The expressions "claim sustained"/"claim partly sustained"/"claim not sustained", appearing in the award in column no.2 of the table appearing in the award would not, in my opinion, amount to a finding by the Arbitrator on the claims which were pending adjudication before him. 12. The expressions "claim sustained"/"claim partly sustained"/"claim not sustained", appearing in the award in column no.2 of the table appearing in the award would not, in my opinion, amount to a finding by the Arbitrator on the claims which were pending adjudication before him. Cryptic expressions like "sustained", "partly sustained" and "not sustained", appearing in the award, would not amount to findings as contemplated by Clause 70 of the Arbitration agreement because the expression "findings" appearing in the clause denotes reasons in support of the conclusions reached by the Arbitrator on each item of the dispute. In view of the categoric judgment of Honble Supreme Court of India on the issue in question while dealing with a similar arbitration clause, further dilation on the issue may be un-necessary. 13. Considered thus, in the light of the judgment of Honble Supreme Court of India, the award of the Arbitrator thus becomes unsustainable because learned Arbitrator has not given reasons while allowing the claims of the respondent. Omission to give reasons in support of the award is an error apparent on the face of the award. The award of the Arbitrator is thus required to be set aside. 14. Learned Additional District Judge Jammu has, therefore, erred in refusing to set aside the award. Order passed by him on 01.11.2004, which is impugned in this appeal, is accordingly set aside. 15. Allowing appellants application under Section 30/33 of the J&K Arbitration Act, the award of the learned Arbitrator dated 18.05.1993 is accordingly set aside. The competent authority, empowered to appoint the Arbitrator under the contract agreement, shall accordingly refer the dispute to the Arbitrator for its fresh adjudication and award in accordance with law.