Research › Search › Judgment

J&K High Court · body

2018 DIGILAW 40 (JK)

Purolator India Ltd. v. State of J&K

2018-02-01

ALOK ARADHE

body2018
JUDGMENT : This application under Section 30 read with Section 33 of the Arbitration Act, 1940 has been filed for setting aside the award dated 22.12.1999 passed by the Arbitrator. 2. Facts giving rise to filing of this petition briefly stated are that a contract for construction of Waste Water Management Treatment Plan at SMHS Hospital, Srinagar, Kashmir was allotted by the Chief Engineer, J&K, Urban Environment Engineering Department vide order dated 20.03.1987 and an agreement was executed in favour of the respondent t1herein on 23.01.1988. The dispute between the parties arose pursuant to which the matter was referred for arbitration. The Arbitrator by the impugned award has decreed the claim of the respondent. Being aggrieved, the petitioner has filed this petition for setting aside of the award. 3. Learned Sr. AAG for the petitioner at the outset submitted that the award is a non-speaking award and, therefore, on this ground alone is liable to be set aside. In support of his submissions, learned Sr. AAG has referred to decision of the Supreme Court in the case of M/s Anand Brothers Pvt. Ltd v. UOI,-and ors, AIR 2015 SC 125 . On the other hand, learned counsel for the respondent while referring to Constitution Bench decision of the Supreme Court in the case of Raipur Development Authority vs. Chokhamal Contractors Etc. Etc, AIR 1990 SC 1427 has submitted that the award cannot be set aside merely on the ground that it does not contain reasons in support of the conclusion or decisions reached in it except where the arbitration agreement or the deed of submission requires him to give reasons. 4. I have considered the submissions made by learned counsel for the parties and have perused the record. Admittedly, the award in question does not contain any reasons. At this stage, it is relevant to refer to the Arbitration Clause which reads as under: “If any dispute or difference of any kind whatsoever arises whether during the progress of work or after completions of the same between the Engineer and the Contractor in connection with or arising out of contract it shall be referred to and settled by the arbitrator mutually agreed by both parties who shall act as an arbitrator under the J&K Arbitration Act. His decision on all points shall be final and binding on the parties.” 5. His decision on all points shall be final and binding on the parties.” 5. From perusal of the aforesaid clause which provides that settlement of dispute, it is evident that the arbitrator is required to give decision on all points which shall be final and binding on the parties. The expression decision has been defined in Black’s Law Dictionary, 9th Edition to mean a Judicial or agency determination after consideration of the facts and the law; exp., a ruling, order or judgment pronounced by a court when considering or disposing of a case. The Supreme Court in the case of Anand Brothers P. Ltd supra has an occasion to consider the decision rendered by the Constitution Bench of the Supreme Court in the case of Raipur Development Authority v. Chokhamal Contractors supra and has held as follows: “7. Before we examine whether the expression „finding’ appearing in Clause 70 would include reasons in support of the conclusion drawn by the arbitrator, we consider it appropriate to refer to the Constitution Bench decision of this Court in Raipur Development Authority v. M/s Chokhamal Contractors etc., (1989) 2 SCC 721 where this Court was examining whether an award without giving reasons can be remitted or set aside by the Court in the absence of any stipulation in the arbitral agreement obliging the arbitrator to record his reasons. Answering the question in the negative, this Court held that a non-speaking award cannot be set aside except in cases where the parties stipulate that the arbitrator shall furnish reasons for his award. This Court held : “33…… When the parties to the dispute insist upon reasons being given, the arbitrator is, as already observed earlier, under an obligation[pic]to give reasons. But there may be many arbitrations in which parties to the dispute may not relish the disclosure of the reasons for the awards. In the circumstances and particularly having regard to the various reasons given by the Indian Law Commission for not recommending to the Government to introduce an amendment in the Act requiring the arbitrators to give reasons for their awards we feel that it may not be appropriate to take the view that all awards which do not contain reasons should either be remitted or set aside…..” 8. Having said that, this Court declared that Government and their instrumentalities should - as a matter of policy and public interest - if not as a compulsion of law, ensure that whenever they enter into an agreement for resolution of disputes by way of private arbitrations, the requirement of speaking awards is expressly stipulated and ensured. Any laxity in that behalf might lend itself and perhaps justify the legitimate criticism that government failed to provide against possible prejudice to public interest. The following passage is in this regard apposite: “There is, however, one aspect of non-speaking awards in non-statutory arbitrations to which Government and governmental authorities are parties that compel attention. The trappings of a body which discharges judicial functions and is required to act in accordance with law with their concomitant obligations for reasoned decisions, are not attracted to a private adjudication of the nature of arbitration as the latter, as we have noticed earlier, is not supposed to exert the State’s sovereign judicial power. But arbitral awards in [pic]disputes to which the State and its instrumentalities are parties affect public interest and the matter of the manner in which Government and its instrumentalities allow their interest to be affected by such arbitral adjudications involve larger questions of policy and public interest. Government and its instrumentalities cannot simply allow large financial interests of the State to be prejudicially affected by non-reviewable - except in the limited way allowed by the statute - non-speaking arbitral awards. Indeed, this branch of the system of dispute resolution has, of late, acquired a certain degree of notoriety by the manner in which in many cases the financial interests of Government have come to suffer by awards which have raised eyebrows by doubts as to their rectitude and propriety. It will not be justifiable for Governments or their instrumentalities to enter into arbitration agreements which do not expressly stipulate the rendering of reasoned and speaking awards. Governments and their instrumentalities should, as a matter of policy and public interest - if not as a compulsion of law - ensure that wherever they enter into agreements for resolution of disputes by resort to private arbitrations, the requirement of speaking awards is expressly stipulated and ensured. It is for Governments and their instrumentalities to ensure in future this requirement as a matter of policy in the larger public interest. It is for Governments and their instrumentalities to ensure in future this requirement as a matter of policy in the larger public interest. Any lapse in that behalf might lend itself to and perhaps justify, the legitimate criticism that Government failed to provide against possible prejudice to public interest.” 6. The Supreme Court in the case of M/s Anand Brothers supra has held that the expression finding of facts means to determine a fact in dispute by verdict or a decision. In the instant case, the clause providing for settlement of dispute between the parties provides that the arbitrator shall render decision on all points. In other words, the arbitrator is required to assign reasons for his decisions on the points of dispute between the parties. Therefore, in the considered opinion of this Court, the clause which provides for settlement of dispute necessarily provides that the arbitrator has to assign reasons in support of his decisions. Admittedly, in the instant case, the arbitrator has not assigned any reasons. Therefore, the impugned order cannot be sustained in the eye of law. It is accordingly quashed. The matter is remitted to the arbitrator to decide the dispute between the parties afresh by assigning reasons on all the points of dispute. 7. With the consent of the parties, Hon’ble Mr. Justice (Retd.) O.P. Sharma is appointed as an arbitrator. The parties undertake to appear before him along with copy of the order passed today on 15.02.2018. Learned Arbitrator is requested to conclude the proceedings as expeditiously as possible preferably within a period of four months from today. Accordingly, the petition is disposed of.