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CASE NO.:

Appeal (civil) 3683 of 1996

Appeal (civil) 4144 of 1996

PETITIONER:

PARADIP PORT TRUST AND OTHERS

Vs.

RESPONDENT:

UNIQUE BUILDERS

DATE OF JUDGMENT: 30/01/2001

BENCH:

S. Rajendra Babu & Shivaraj V. Patil.

JUDGMENT:

Shivaraj V. Patil, J.

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These two appeals are directed against the order dated

25.8.1992 passed by the High Court of Orissa in

Miscellaneous Appeal No. 228/1987. For convenience, we

will refer to Paradip Port Trust as the Trust and Unique

Builders as the Company. 2. The Trust entered into an

agreement with the Company on 31.3.1981 for sale of scrap.

Certain disputes arose between the parties. Pursuant to the

arbitration clause contained in the said agreement they came

to be referred to an arbitrator. Shri B.P.Das, Advocate,

was appointed as Arbitrator; he entered into reference and

after conducting the proceedings passed the award on

1.6.1985 to the effect that the Company was entitled to

receive a sum of Rs. 8,51,315/- together with the interest

@ 18% per annum from 28.9.1992 from the Trust. The parties

did not lead any oral evidence before the Arbitrator and

relied only on the correspondence between them. The award

passed by the Arbitrator did not contain any reasons and is

a non-speaking one. The Court of Subordinate Judge,

Jagatsinghpur, on receipt of the award, issued notices to

the parties. The Trust filed objections challenging the

award on various grounds. The court after considering the

objections under sections 30 and 33 of the Arbitration Act,

1940 (for short the `Act) upheld them and set aside the

award. Aggrieved by the same, the Company filed the

Miscellaneous Appeal before the High Court. The High Court

allowed the appeal and made the award a rule of the court

subject to the modification as to the award of interest as

indicated in the order. Hence the Trust has filed this

Civil Appeal No. 3683/1996 challenging the same in this

court. The Company has filed Civil Appeal No. 4144/1996 to

the extent it was denied interest.

3. Shri Gobind Das, learned senior counsel for the

Trust urged that (1) the High Court was not right in

reversing the order of the learned Subordinate Judge when

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the award had been passed in violation of principles of

natural justice inasmuch as certain documents were received

without notice to the Trust, after the closing of the

proceedings before the Arbitrator and thereafter the award

was passed; (2) The award passed by the Arbitrator was

beyond the scope of the arbitration agreement, as it could

not be made in respect of certain claims, the High court was

not right in upholding the award; (3) although recording of

reasons in the award could not be insisted and on that

account itself, award could not be vitiated, yet no award

could be passed arbitrarily.

4. Per contra, Shri Raj Kumar Mehta, learned counsel

for the Company made submissions supporting the impugned

order upholding the award. He added that the impugned

judgment of the High court is based on the well-settled

principles of justice in the light of the law laid down by

this Court. He urged that there was no justification for

the High Court to deny pendente lite and future interest.

5. We have considered the submissions made by the

learned counsel for the parties carefully. In para 11 of

the impugned judgment, the High Court has recorded thus :-

11. some arguments were advanced by the learned

counsel for the respondents that the arbitrator has violated

the principles of natural justice as he accepted some

documents after closing the argument and the respondents

were not given any opportunity thereafter either to explain

the said document or adduce fresh evidence in relation

thereto. This argument was abandoned after perusal of the

order-sheet of the arbitrator which shows that at each stage

adequate opportunity was given to both parties. Thus the

award in hand cannot be set aside on any of the grounds

relied on by the learned court below.

6. The learned senior counsel for the Trust was not in

a position to say that the statement made in the above

paragraph is incorrect. If that be so, his contention that

the arbitrator passed the award in violation of the

principles of natural justice, cannot be accepted. It may

be added that the parties did not lead any oral evidence and

they were satisfied with the documents placed before the

Arbitrator.

7. In the operative portion of the award it is stated

thus: -

Having perused and considered by the statements of claim

filed by the claimants, written statement and counter claim

filed by the opposite parties, documents filed by parties

and having considered the objections raised by the parties

at different stages of hearing and having carefully

considered the documents/evidence on record and arguments of

learned advocates of the parties assisted by their

respective clients I make the following awards.

M/s. Unique Builders Ltd., the claimant is entitled to

receive from Paradeep Port Trust (Respondent No. 3) a sum

of Rs. 8,51,315.00 (Rupees Eight lakhs, fifty one thousand

three hundred fifteen only) with interest at the rate of 18%

per annum with effect from 28th September, 1982. The opp.

Party are directed to pay the aforesaid amount within 60

days.

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The counter claim made by the opp. Parties 1, 2 and

Paradeep Port Trust is disallowed.

8. The contents of this award also clearly indicate

that fair and sufficient opportunity was given to the

parties by the Arbitrator. This again shows that there was

no violation of principle of natural justice in passing the

award.

9. The arbitration clause contained in the agreement

entered into between the parties reads thus: -

In the event of any dispute or difference of opinion

between the Port Trust and the Purchasers as to the

respective rights and obligations of the parties hereunder

or as to the true intent and meaning of those presents or

any articles or conditions thereof, such dispute or

difference of opinion (except the matter regarding which the

decision has been specifically provided for in the terms &

conditions) shall be referred to the sole arbitration of an

officer of the Port Trust who shall be nominated for the

purpose for the time being and his decision shall be final,

conclusive and binding on the parties. For the purpose of

this contract, the Chairman will mean the head of the

Organization.

10. The clause relating to the arbitration extracted

above, is wide enough to cover all disputes or differences

of opinion between the parties as to their respective rights

and obligations or as to the true intent and meaning of

those presents or any articles or conditions thereof (except

the matter regarding which the decision has been

specifically provided for in the terms and conditions). The

claims made in the statement by the Company, in our view,

are clearly covered and they fall within the scope of

arbitration clause. The learned counsel, referring to the

claim nos. 2 and 7 urged that these claims were outside the

terms of agreement. The Company made a claim for

Rs.12,93,260/- against various heads and the Arbitrator

granted Rs.8,61,315/- with interest as stated in the award.

It is an award made in lump sum. It is not possible to say

whether the Arbitrator awarded any amount under claim nos.

2 and 7 when the award was made only for Rs.8,61,315/- as

against the total claim of Rs.12,93,260/-. It is not

possible to read mental process of the Arbitrator as to how

he came to the conclusion in passing the award for lump sum

amount. Further the award passed by the Arbitrator cannot

be set aside assuming that another view is possible. Thus

we are unable to agree with the contention of the learned

counsel that the award passed by the Arbitrator was beyond

the scope of either the arbitration clause or the terms of

the contract or it was in excess or opposed to the terms of

reference. In view of what is stated above, it is not

possible to take a view that the award passed by the

Arbitrator was arbitrary or unsustainable.

11. From several decisions of this Court and the

provisions contained in the Act, it is clear that generally

an award passed by the arbitrator is considered binding

between the parties for the reason that the parties select

the arbitrator and powers of the court to set aside the

award are restricted to cases set out in Section 30 of the

Act. It is not open to the courts to guess or speculate

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reasons for the award, when it is non-reasoned. Courts

cannot attempt to investigate the mental process by which

the arbitrator arrived at conclusion where it is not visible

from the award. The jurisdiction of courts including High

Courts is not independent of the statute. The arbitrators

award is final both on facts as well as law. There is no

appeal from his verdict. However, an award can be set aside

only in situations specified in Sections 30 and 33 of the

Act. In the light of law already settled by this Court, we

consider it unnecessary to cite long list of decisions in

this regard. We will refer to few of them, including those

relied upon by the learned counsel for the parties in

support of their respective contentions, hereinafter.

12. In Jivarajbhai Ujamshi Sheth and others vs.

Chintamanrao Balaji and others [AIR 1965 SC 214], this

Court, in para 18, has stated that An award made by an

arbitrator is conclusive as a judgment between the parties

and the Court is entitled to set aside an award if the

arbitrator has misconducted himself in the proceedings or

when the award has been made after the issue of an order by

the Court superseding the arbitration or after arbitration

proceedings have become invalid under S. 35 of the

Arbitration Act or where an award has been improperly

procured or is otherwise invalid (S. 30 of the Arbitration

Act). An award may be set aside by the Court on the ground

of error on the face of the award, but an award is not

invalid merely because by a process of inference and

agreement it may be demonstrated that the arbitrator has

committed some mistake in arriving at his conclusion.

13. This Court in Puri Construction Pvt. Ltd. Vs.

Union of India [(1989) 1 SCC 411], has taken the view that

Even on accepting the suggestion and interpreting the

objection petition of the respondent liberally, the decision

of the High Court cannot be maintained. When a court is

called upon to decide the objections raised by a party

against an arbitration award, the jurisdiction of the court

is limited, as expressly indicated in the Arbitration Act,

and it has no jurisdiction to sit in appeal and examine the

correctness of the award on merits.

14. This Court in State of Orissa and others vs. M/s.

Lall Brothers [(1988) 4 SCC 153], has held that the fact

that there is a non-reasoned award, is no ground to set it

aside and that lump sum award is not bad per se, as such.

15. In Gujarat Water Supply and Sewerage Board vs.

Unique Erectors (Gujarat) (P) Ltd. And another [AIR 1989 SC

973], in para 11 of the judgment it is observed by this

Court that Reasonableness as such of an award unless the

award is per se preposterous or absurd is not a matter for

the court to consider. Appraisement of evidence by the

arbitrator is ordinarily not a matter for the court.

16. In a recent decision this Court in Rajasthan State

Mines and Minerals Ltd. Vs. Eastern Engineering

Enterprises and another [(1999) 9 SCC 283], after referring

to large number of decisions on the subject, in para 44 has

reiterated the position of law as stated above. The learned

counsel for the Trust, when specifically asked under which

clause of para 44 the case of the Trust falls, pointed out

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to clauses (h) and (i) of para 44 of the said judgment.

Clause (h) refers to the award made by the arbitrator

disregarding the terms of the reference or the arbitration

agreement or the terms of the contract and states that in

such a case it would be jurisdictional error, which requires

ultimately to be decided by the court. This has no

application to the present case as it is not shown to us how

the award was made by the Arbitrator disregarding the terms

of the reference or the arbitration agreement or the terms

of the contract. Clause (i) also does not help the Trust

having regard to the facts of the case in hand and the award

made by the Arbitrator based on documentary evidence. It is

not a case where the arbitrator has acted arbitrarily,

irrationally, capriciously or independently of the contract.

It is difficult for us to take a view that there has been a

deliberate departure or conscious disregard of the contract

to say that the arbitrator misconducted himself. The other

clauses contained in the same paragraph, if applied to the

facts of the case on hand, support the Company.

17. This Court in Firm Madanlal Roshanlal Mahajan vs.

Hukumchand Mills Ltd. [AIR 1967 SC 1030], has held that the

arbitrator could give a lump sum award and that he would not

be bound to give a separate award for each claim; his award

on both fact and law is final; there is no appeal from his

verdict.

18. The learned counsel for the Company pointed out

that the High Court, placing reliance on the judgment of

this Court in Executive Engineer, Irrigation, Galimala and

others vs. Abnaduta Jena [AIR 1988 SC 1520], denied

interest pendente lite. But in a subsequent decision by the

Constitution Bench of this Court in Secretary, Irrigation

Department, Government of orissa and others vs. G.C. Roy

[(1992) 1 SCC 508], it is held that the decision in Abnaduta

Jenas case did not lay down good law on this aspect. The

Constitution Bench decided the case on 12.12.1991. The

impugned order of the High Court was passed on 25.8.1992.

We agree with the submission of the learned counsel for the

Company as to the power of the arbitrator to award interest

pendente lite. However, the High Court having denied the

interest on the ground that there was no claim for interest

pendente lite before it nor any argument was advanced in

that behalf, we are not inclined to upset that part of the

order of the High Court in relation to denial of interest to

the Company. However, we do not find any good ground or

valid reason to deny future interest from the date of the

decree to the Company. Hence, having regard to the facts

and circumstances of the case we consider it just and

appropriate to award future interest @ 12% per annum from

the date of decree till payment. The award of interest from

28.9.1982 to 10.1.1985 was justified by the High Court in

the impugned judgment. The contention that there was no

basis for choosing the date 28.9.1982 is answered in the

judgment of the High Court itself stating that it was on

28.9.1982 that the Trust repudiated the contract and

forfeited the deposit made by the Company and that the

Arbitrator entered into reference on 10.1.1985. We agree

with the reasons recorded by the High Court in this regard.

Further as already noticed above, the award is made in lump

sum. As rightly observed by the High Court, unless there

appears to be a mistake on the face of the award and the

documents appended or incorporated thereto which form part

of the award, it cannot be set aside even with respect to

interest part of it. In this view of the matter, we hold

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that the Company is entitled for interest @ 18% per annum

from 28.9.1982 to 10.1.1985 and future interest @ 12% per

annum from the date of decree till payment.

19. The learned senior counsel for the Trust drew our

attention to the order dated 26.7.1993, passed by this

Court, which reads:

Issue notice.

Since the respondent is represented by counsel, no

further notice to the respondent is necessary.

The money would be paid to the respondent subject to the

respondent furnishing sufficient security to the

satisfaction of the executing court.

He added that the Trust has paid money to the Company

pursuant to the said order. If the amount is paid to the

Company, that shall be taken into consideration in

satisfying the amount awarded to the Company.

20. For the reasons stated hereinabove Civil Appeal No.

3683 of 1996, being devoid of any merit, is dismissed.

Civil Appeal No. 4144 of 1996 is allowed to the extent

indicated in para 18 above in regard to the payment of

interest and the order of the High Court to that extent

stands modified. In the facts and circumstances of the case

the parties shall bear their own costs.