Anand Brothers Pvt. Ltd. vs Union Of India (Uoi) And Ors.
2002 Latest Caselaw 298 Del

JUDGMENT

Mukundakam Sharma, J.

1. The petitioner was awarded a work contract of providing fire fighting arrangements for defense pool accommodation in poultry farm area, Delhi Cantonment by the respondents 1 & 2. Pursuant thereof a contract agreement between the parties were also executed. The said contact agreement between the parties also contained an arbitration clause. While executing the aforesaid contact some disputes arose between the parties and in terms of the arbitration clause governing the contract the same were referred to the Sole Arbitrator, the respondent No. 3.

2. The Arbitrator entered into the reference received evidence adduced by the parties and, thereafter made and published his Award on 30.6.1999. After the Award was so published the petitioner filed the present petition under Sections 14 & 17 of the Arbitration Act praying for making the said award a rule of the Court whereas the respondent filed an objection as against the aforesaid award passed by the Arbitrator.

3. I have heard the learned counsel appearing for the petitioner and the respondent. The argument of the counsel appearing for the parties mainly revolved around the scope and interpretation of Clause 70, which is the arbitration clause between the parties. Although a stand has been taken by the respondent that the amended provisions of Section 70 is applicable in my considered opinion, the said position cannot be accepted as the contract was entered into between the parties under the old Clause 70.

4. Relevant part of Clause 70 which have a bearing the present case is extracted below:-

"... 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, findings, along with sums awarded, separately on each individual item of dispute.

5. The Arbitrator passed his Award in the following manner:-

"I do hereby make and publish my final award in writing on the dispute referred to me as under:-

10.1) Claims of the Claimants -M/s Anand Brothers Pvt. Ltd. - Appendix 'A' claims.

10.11) The Union of India represented by the Commander Works Engineers (Project) Delhi Cantt. shall pay the Claimants M/s Anand Brother Pvt. Ltd., the amount set out in the AWARD Column of the respective claim items shown against each:-

------------------------------------------------------------------------------

Sl Claim Brief description Amount Findings Amount No. No. of claims Claims Revised Claim Rs. p.

-------------------------------------------------------------------------------

1. 1. Extra items of work 4,25,000.00 Partially 1,01,500.00 not measured and 2,30,576.18 sustained paid.

2. 2.  . ....    ....   ...
3. 3.  . .....    ....   ...."
 

6. The Award is passed by the Arbitrator in respect of the other claims also but as the said claims were disposed of in a similar manner as that of claim No. 1, I refrain from quoting and extracting the same for the purpose of brevity. As the Award was passed by the Arbitrator in the aforesaid manner it was contended by the learned counsel appearing for the respondent who has filed the objection that the said award was not passed by the Arbitrator in accordance with the requirements of the provisions of the Arbitration clause. It was contended by the counsel appearing for the petitioner, on the other hand, that the agreement between the parties did not oblige the arbitrator to record his reasons for the award passed by him and he was only required to give his award indicating his findings therein Along with sums awarded separately on each individual item of dispute which according to him was done in the present case and, therefore, the award cannot be set aside on the aforesaid ground. In support of the aforesaid contention the counsel appearing for the petitioner relied upon a decision of this Court in Charanjit Kochhar v. Union of India and Anr., reported in 2001 VII AD (Delhi) 1164.

7. Counsel appearing for the respondent, on the other hand, submitted that although the his award but at the same time the said award could not have been passed in the manner passed by him as he was required to pass the award indicating his findings Along with sums awarded as separately on each individual item of dispute. It was also submitted by her that the word "finding" in the clause would mean that the arbitrator was at least required to cover material questions which arise in a particular claim for the decision of the Arbitrator and such questions should have been dealt with by the Arbitrator howsoever briefly and having not done so, this award is required to be set aside and is required to be remitted back for fresh consideration by the Arbitrator in accordance with the arbitration clause. In support of the contention she heavily relied upon the decision of this Court in Walaiti Ram Gupta v. Union of India and Ors., .

8. I have considered the submission of the counsel appearing for the parties in the light of the records available before me Along with the two decisions placed before me by the counsel appearing for the parties. The aforesaid clause 70 requires the arbitrator to give his award indicating his findings Along with the sums awarded separately on each individual item of dispute. The said clause lateron, however, came to be amended some time in 1991. By virtue of the aforesaid amendment in clause 70 the arbitrator is now required to give reasons for the award in each and every case irrespective of the value of the claims or counter claims. Therefore, in a case where the aforesaid amended provision of the clause 70 is applicable, the arbitrator is required to record his reasons for the Award whereas the Arbitration clause governing the present contract required the arbitrator to indicate his findings. The aforesaid position amply proves and establishes that even the respondent is aware of the distinction between the expression "findings" and "reasons". The aforesaid position is also well-settled that there is a distinct difference in the meaning of the two expressions "reasons" and "findings". When a dispute arises in respect of claims to which unamended clause 70 is applicable, such claims could be decided by the Arbitrator without recording and giving his reasons but even in such a case he has to record his findings. In Walaiti Ram Gupta's case (supra) this Court referred to two decisions of the Supreme Court which laid down the well-settled law that an award can neither be remitted nor set aside merely on the ground that it does not contain reasons in support of the conclusions or decisions reached in it except where the arbitration agreement or the deed of submission required him to give reasons. After referring to the said decisions the Court examined the exact import of the expression "finding" and in that regard also referred to the meaning of the expression "finding" as given in Mitra's legal & Commercial Dictionary, Fifth Edition. After quoting the same this Court held that the word "finding" in the clause would not mean that the Arbitrator is not obliged to give any reasons for the findings and that such findings would at least cover material questions which arise in a particular claim for the decision of the arbitrator and such questions have to be dealt with, howsoever briefly, by the arbitrator. The other decision of this court relied upon by the counsel appearing for the petitioner noticed the difference between the two expressions "findings" and "reasons" and thereafter it was held that when it is stated that only findings are to be recorded there is no requirement on the part of the arbitrator to record his reasons for his decision. In facts and circumstances of the said case, the Court held that the arbitrator has given his findings in respect of the Award.

9. In the present case the arbitrator made and published his final award by referring to the nature of the claims of the claimants recording therein also the amount claimed and thereafter recording his decision as sustained or partially sustained or not sustained and then showing the amount awarded. In my considered opinion, the aforesaid decision recorded by the Arbitrator is not what is contemplated under the expression "findings" in unamended clause 70 of the agreement. The said expression cannot mean and be interpreted that the Arbitrator is only required to record his decision only when he is required to give his findings.

10. In Daffadar Bhagat Singh and Sons v. Income-tax Officer, and Bhanji Bhagwandas v. The Commissioner of Income-tax, Madras, it was held that the word "finding" cover material questions which arise in a particular case for decision by the authority hearing the case or the appeal which, being necessary for passing the final order or giving the final decision in the appeal, has been the subject of the controversy between the interested parties. It was also held in the said cases that the finding can be only that which is necessary for the disposal of an appeal in respect of an assessment of a particular year. Mitra's Legal and Commercial Dictionary after referring to the various Supreme Court decisions recorded as follows:-

"A finding, therefore, could only be that which was necessary for the disposal of an appeal in respect of an assessment of a particular year the word "finding" only covers material question which arise in a particular case for the decision by the authority hearing the case or the appeal which, being necessary for passing the final order or giving the final decision in the appeal, has been the subject of controversy between the interested parties or on which the parties concerned have been given a hearing."

11. In Rajinder Nath etc., v. Commissioner of Income-tax, Delhi, it was held by the Supreme Court that a finding given in the appeal, revision or reference arising out of an assessment must be a finding necessary for the disposal of the particular case, that is to say in respect of particular assessed and in relation to the particular assessment year and that to be a necessary finding, it must be directly involved in the disposal of the case. Therefore, the expression "finding" as used in unamended clause 70 would mean some thing more than the recording of the mere decision rendered by the Arbitrator. The arbitrator in order to give his findings must cover material questions which arise in a particular claim for the decision of the arbitrator and the said material questions shall have to be dealt with howsoever briefly by the arbitrator. In the present case the arbitrator has failed to act accordingly in terms of the requirement and accordingly I have no other option but to set aside the award which I hereby do and remit the award to the arbitrator for recording his findings in the light of what have been observed in this order that is to give his findings on the material questions that have arisen for consideration in this case after affording opportunity to both the parties.

12. The matter is remitted back to the Arbitrator who has passed the Award in the present case namely, the respondent No. 3 herein irrespective of the fact as to whether he is serving or has retired and the respondents No. 1 and 2 shall not raise any objection in that regard that he cannot act in the case and that even if it is raised, the Arbitrator shall not entertain the same. The Arbitrator shall give his award in terms of the aforesaid directions within a period of three months from the date of receipt of in terms of the aforesaid order. Copies of the order be given dusty to the counsel appearing for the parties and a copy thereof shall also be sent to the Arbitrator directly. The parties shall bear their own cost.