JUDGMENT Mr. A.N. Jindal, J.: - The appellant company, having its head office at Jalandhar, indulging into business of hire purchase, entered into an agreement on 30.5.2003 with Lakhwinder Singh son of Sarwan Singh-respondent No.1 (herein referred as, ‘the respondent No.1’) in respect of the vehicle Swaraj Mazda, hiring it to respondents No.1 and 2 on payment of total hire money of Rs.7,43,242/-. Jharmal Singh, Satwinder Singh and Sucha Singh i.e. respondents No.3 to 5 stood guarantors to indemnify all the claims of the claimant company against the hirer respondents No.1 and 2. The respondents No.1 and 2 agreed to return the purchase money in 47 monthly installments of Rs.14,800/- each. Having defaulted in the installments, the appellants repossessed the vehicle on 16.3.2004 and issued a letter to Mr. O.N. Wahi, Advocate appointing him as an arbitrator and setting the claim of Rs.95,502/- as on 30.2.2004, the details of which are given as under :- ----------------------------------------------------------------------------------------------------------------------------------------- Sr. No. Heads Amount (Rs.) ----------------------------------------------------------------------------------------------------------------------------------------- 1 Overdue installments 69,600/- 2 Ledger balance 354/- 3 Traveling expenses 10,200/- 4 Parking charges 6,900/- 5 Overdue charges on overdue installments 4,445/- 6 Postage & Penalty charges 120/- 7 Overdue charges after the maturity of the case 3,883/- ----------------------------------------------------------------------------------------------------------------------------------------- Total as on 30.4.2004 95,502/- ----------------------------------------------------------------------------------------------------------------------------------------- 2. After this appointment by the appellants, Mr. Onkar Nath Wahi, Advocate issued a registered AD to the respondents to appear before him informing that in respect of the agreement dated 20.5.2003, there was a dispute for payment of overdue hire money amounting to Rs.95,502/- as on 30.4.2004. As such they should come and contest the same. The respondents appeared and contested the cause by filing reply to the petition. 3. After hearing the parties, the arbitrator passed an award on 28.2.2006, to the tune of Rs.69,600/- as against the claimed amount of Rs.95,502/-. The claim with regard to keeping of the vehicle in his premises was declined and the loss suffered by the company, after the sale of the vehicle, to the tune of Rs.3,82,400/- was awarded. Thus, the arbitrator awarded a sum of Rs.4,69,682/- along with interest @ 3% per month. 4. Here it may be noticed that in the arbitration reference, the appellant did not claim any amount regarding loss suffered by the appellant and also the interest @ 3% per month. 5. Thus, the arbitrator awarded a sum of Rs.4,69,682/- along with interest @ 3% per month. 4. Here it may be noticed that in the arbitration reference, the appellant did not claim any amount regarding loss suffered by the appellant and also the interest @ 3% per month. 5. Against the said award the respondents filed the objection petition taking up the following pleas :- 1. The respondents were not provided proper opportunity to lead evidence and cross examine the witnesses, therefore, the arbitrator misconducted the proceedings with malafide intention. 2. The arbitrator was biased as it acted beyond the letter of reference in which only claim of Rs.95,502/- was raised but the arbitrator passed the award to the tune of Rs.4,69,682/-. 3. The respondents and their counsel regularly appeared before the Tribunal but the Tribunal was neither often available on the dates given, nor any opportunity was afforded to their counsel to cross examine the witnesses produced by the appellants. Faqir Chand Assistant Manager (AW1), in his affidavit only claimed Rs.95,502/-, whereas the supplementary affidavit furnished, cannot be made the subject of arbitration without following the procedure as provided under law. Moreover, the picture is very clear from AW-2 Nirmal Singh, Assistant Manager of the respondent No.1, which comprised of three pages. The statement is computer typed and in the end, after “ROAC” there are signatures of the arbitrator and of Nirmal Singh and underneath, on the same page, it is recorded as opportunity given “nil”. All this shows that no opportunity was actually given to cross examine the said witnesses, but the words, opportunity given “nil” were added later on. 4. Though the arbitrator has stated that the respondents did not appear but there is no such order passed by the arbitrator proceeding them ex-parte. 5. No arguments were heard by the arbitrator. 6. Though the award was passed on 18.2.2006, yet it was dispatched on 7.3.2006, which was received on 15.3.2006, therefore, the objection petition filed by them was within time. 6. The appellants contested the objection petition. Ultimately the objection petition was accepted and the award was set aside. 7. The crucial questions to be determined in this first appeal are as under : 1. Whether the award passed by the arbitrator being beyond the terms of the reference, could be sustained? 2. 6. The appellants contested the objection petition. Ultimately the objection petition was accepted and the award was set aside. 7. The crucial questions to be determined in this first appeal are as under : 1. Whether the award passed by the arbitrator being beyond the terms of the reference, could be sustained? 2. Even if the award passed beyond reference is not allowed, then whether the appellants were entitled to a sum of Rs.95,502/- as claimed vide reference dated 30.4.2004? 8. Before proceeding to decide the aforesaid questions, it may be observed that as per statement AW1/2, the respondents had paid about 11 installments, totaling to Rs.1,50,642/- against the hire purchase agreement amount of Rs.7,43,000/-. As per document Ex.AW1/4, the appellants had charged Rs.10,200/- on 16.3.2004 as expenses for repossessing the vehicle, which means that the vehicle was received back on 16.3.2004 by the appellant from the respondents. As Ex.AW1/5, the appellant had claimed parking charges @ Rs.150/- per day from 16.3.2004 to 30.4.2004 when the vehicle was sold for Rs.2,45,000/-. It means, the vehicle in question was sold on 30.4.2004. The reference was not made with regard to loss suffered by the company being the balance amount after adjustment of the sale of the vehicle and also qua interest @ 3% per month. 9. As regards the question, whether the arbitrator was within his jurisdiction to decide the dispute beyond the scope of the reference. Certainly, this court would be of the considered opinion that when the arbitrator was never requested for a particular dispute, then he could not settle the same by making subsequent request to the arbitrator, without getting it referred from the appointing authority to include the said dispute also. I find support to my this view from the judgment delivered by the Apex Court in the case of Managing Director, J and K Handicrafts, Jammu v. Good Luck Carpets (1990) 4 SCC 740 wherein their Lordships while dealing with the issue with regard to the decision of the arbitrator beyond the scope of the reference observed as under :- “Firstly, the award is not a totally non-speaking one inasmuch as it gives a resume of the incentive scheme and the agreement between the parties as also the items of the claim made by the respondent. Of course while fixing the amount found payable by the appellant, no reasons are recorded. Of course while fixing the amount found payable by the appellant, no reasons are recorded. Secondly, if there is any challenge to the award on the ground that the arbitrator had no jurisdiction to make the award with regard to a particular item inasmuch as it was beyond the scope of reference, the only way to test the correctness of such a challenge is to look into the agreement itself. In our opinion, looking into the agreement for this limited purpose neither tantamounts to going into the evidence produced by the parties nor into the reasons which weighed with the arbitrator in making the award.” 10. It T.N. Electricity Board v. Bridge Tunnel Constructions (1997) 4 SCC 12, the contractor had set up the claims raised at the rates higher than the contracted rates and twice the rate for the work done after the expiry of the contract period. For those claims, dispute was raised and the matter was referred to the arbitrator. The Civil Court made the award rule of the Court. The High Court confirmed the same. In appeal, this Court set aside the award and while discussing various contentions, observed as under: “If the arbitrator decides a dispute which is beyond the scope of his reference or beyond the subject-matter of the reference or he makes the award disregarding the terms of reference or the arbitration agreement or terms of the contract, it would be a jurisdictional error beyond the scope of reference; he cannot clothe himself to decide conclusively that dispute as it is an error of jurisdiction which requires to be ultimately decided by the Court.” 11. The aforesaid judgments were again followed by the Apex Court in case Rajasthan State Mines and Minerals Ltd. vs. Eastern Engineering Enterprises and another, 1999 AIR (SC) 3627 wherein their Lordships after taking stock of number of judgments on various issues framed the following guidelines limiting the scope of the court and the arbitrator :- “44. From the resume of the aforesaid decisions, it can be stated that: (a) it is not open to the Court to speculate, where no reasons are given by the arbitrator, as to what impelled arbitrator to arrive at his conclusion. From the resume of the aforesaid decisions, it can be stated that: (a) it is not open to the Court to speculate, where no reasons are given by the arbitrator, as to what impelled arbitrator to arrive at his conclusion. (b) It is not open to the Court to admit to probe the mental process by which the arbitrator has reached his conclusion where it is not disclosed by the terms of the award. (c) If the arbitrator has committed a mere error of fact or law in reaching his conclusion on the disputed question submitted for his adjudication then the Court cannot interfere. (d) If no specific question of law is referred, the decision of the Arbitrator on that question is not final, however much it may be within his jurisdiction and indeed essential for him to decide the question incidentally. In a case where specific question of law, touching upon the jurisdiction of the arbitrator, was referred for the decision of the arbitrator by the parties, then the finding of the arbitrator on the said question between the parties may be binding. (e) In a case of non-speaking award, the jurisdiction of the Court is limited. The award can be set aside if the arbitrator acts beyond his jurisdiction. (f) To find out whether the arbitrator has travelled beyond his jurisdiction, it would be necessary to consider the agreement between the parties containing the arbitration clause. Arbitrator acting beyond his jurisdiction is a different ground from the error apparent on the face of the award. (g) In order to determine whether arbitrator has acted in excess of his jurisdiction what has to be seen is whether the claimant could raise a particular claim before the arbitrator. If there is a specific term in the contract or the law which does not permit or give the arbitrator the power to decide the dispute raised by the claimant or there is a specific bar in the contract to the raising of the particular claim then the award passed by the arbitrator in respect thereof would be in excess of jurisdiction. (h) The award made by the Arbitrator disregarding the terms of the reference or the arbitration agreement or the terms of the contract would be a jurisdictional error which requires ultimately to be decided by the Court. (h) The award made by the Arbitrator disregarding the terms of the reference or the arbitration agreement or the terms of the contract would be a jurisdictional error which requires ultimately to be decided by the Court. He cannot award an amount which is ruled out or prohibited by the terms of the agreement. Because of specific bar stipulated by the parties in the agreement, that claim could not be raised. Even if it is raised and referred to arbitration because of wider arbitration clause such claim amount cannot be awarded as agreement is binding between the parties and the arbitrator has to adjudicate as per the agreement. This aspect is absolutely made clear in Continental Construction Co. Ltd. (supra) by relying upon the following passage from M/s. Alopi Parshad Vs. Union of India (1960) 2 SCR 793 which is to the following effect: - “There it was observed that a contract is not frustrated merely because the circumstances in which the contract was made, altered. The Contract Act does not enable a party to a contract to ignore the express covenants thereof, and to claim payment of consideration for performance of the contract at rates different from the stipulated rates, on some vague plea of equity. The parties to an executory contract are often faced, in the course of carrying it out, with a turn of event which they did not at all anticipate, a wholly abnormal rise or fall in prices, a sudden depreciation of currency, an unexpected obstacle to execution, or the like. There is no general liberty reserved to the courts to absolve a party from liability to perform his part of the contract merely because on account of an uncontemplated turn of events, the performance of the contract may become onerous.” (i) The arbitrator could not act arbitrarily, irrationally, capriciously or independently of the contract. A deliberate departure or conscious disregard of the contract not only manifests the disregard of his authority or misconduct on his part but it may tantamount to mala fide action. (j) The arbitrator is not a conciliator and cannot ignore the law or misapply it in order to do what he thinks just and reasonable; the arbitrator is a tribunal selected by the parties to decide the disputes according to law. 12. (j) The arbitrator is not a conciliator and cannot ignore the law or misapply it in order to do what he thinks just and reasonable; the arbitrator is a tribunal selected by the parties to decide the disputes according to law. 12. The aforesaid judgment was followed by the Madras High Court in case Pankaj Kumar Nevatia vs. Pradeep Kumar Nevatia and others, 2008 (2) CTC 186 wherein it was observed as under :- “16. Though the reference made to the paternal uncles might appear to be well advised, they being the creature of the agreement would act in accordance with the terms of reference only. The arbitrator could not act arbitrarily, irrationally, capriciously or independently of the contract. A deliberate departure not only manifests the disregard of his authority or misconduct on his part, but it would tantamount to mala fide action and is liable to be set aside. Vide Rajasthan State Mines and Minerals Ltd. v. Eastern Engineering Enterprises, (2000) 2 LW 729 (SC).” 13. It was not the case where the amount has been boiled on account of cumulation of the rate of interest but in this case, the amount awarded by the arbitrator was not included in the reference. The argument of the learned counsel for the appellant that this amount was explained by way of affidavit of Faqir Chand AW-1 later on is meaningless. His own statement cannot take place of the reference which may be sufficient to inform the respondents about the nature of the dispute or the reference. 14. As regards the next question, “whether the appellants are entitled to the amount of Rs.95,502/-, even if the award for the remaining amount is not passed being beyond the scope of reference?” 15. In this regard it may be observed that the installments paid by the respondents were up to 30.4.2004, but the vehicle was taken into possession much prior to that i.e. on 16.3.2004. The appellant had also sold the vehicle without the consent of the respondents. The agreement also reveals that the vehicle was on hire with the respondents and it was taken back. The agreement in Hindi and Punjabi, executed between the parties on 30.5.2003, indicates that the vehicle was only let out. In any case, the appellants were not the original owners by way of hire purchase agreement. The agreement also reveals that the vehicle was on hire with the respondents and it was taken back. The agreement in Hindi and Punjabi, executed between the parties on 30.5.2003, indicates that the vehicle was only let out. In any case, the appellants were not the original owners by way of hire purchase agreement. Thus, having repossessed the vehicle and sold without the consent and against the will of the respondents, the appellant could not claim the amount of overdue installments or the loss suffered by it on account of the balance between the loan as well as actual sale of the vehicle. 16. While taking the case from another angle, the balance amount was including interest and was to be paid out of the earnings of the vehicle. On taking back the vehicle, earnings of the respondents stopped and they were put to loss, therefore, how they could pay the interest when vehicle was taken back and the original price was adjusted after the sale of the vehicle. 17. No other argument has been raised, 18. Finding no merits in the appeal, the same is dismissed. ---------0.B.S.0------------