Uttam Singh Duggal & Sons vs Union Of India (Uoi) And Ors.
2002 Latest Caselaw 429 Del

JUDGMENT

Vikramajit Sen, J.

1. At the vortex of the controversy that has arisen in these two Appeals is the following Arbitration clause:

"The Arbitration shall give his Award (within a period of six months form 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 the sums awarded separately on each item of dispute."

2. The words in parenthesis are not found in every agreement, but that would not make any material difference to the present controversy, since they merely prescribe the period within which the award must be published. This Arbitration Clause has already received judicial scrutiny by several single Benches of this Court. In Charanjit Kochhar v. Union of India and Anr., 2001 VII AD (DELHI) 1164, V.S. Aggarwal, J. has concluded that the word 'finding' does not mandate the recording of reasons in the award. A contrary view has been taken by C.M. Nayar, J. in Walaiti Ram Gupta v. Union of India and Ors., , i.e., that the Arbitrator is obliged to give reasons. In FAO (OS) 67-A/84 (hereinafter referred to as 'Uttam Singh's case') J.D. Jain, J. in his impugned judgment dated 30th April 1984, after detailed reasoning, has concluded that the Arbitrator was not bound to record a separate and distinct finding on each issue in controversy between the parties or rival contentions of the parties as that would have been tantamount to giving the reasoning in support of the decision. In FAO(OS) 133/91 (hereinafter referred to as 'Parameshwari Dass's case) P.K. Bahri J. in the impugned judgment dated 29th April, 1991 has observed that "No conclusions have been given by the arbitrator on these disputes. He has only awarded the sums. It cannot be, hence, said that the arbitrator has give any finding on the disputed questions of facts which were raised before him as was required to be given in accordance with the arbitration clause. It is not possible to hold that the arbitrator has impliedly given any findings when he warded certain sums. The arbitration clause clearly requires that besides awarding certain sums the arbitrator has to give his findings which the arbitrator, in the present case, failed to give, and thus, the arbitrator has committed judicial misconduct". In Suit No. 1574-A/1999 entitled Anand Brothers Pvt. Limited v. Union of India and Ors., decided in February 2002, Dr. Mukundakam Sharma, J. has recently reached a conclusion similar to the opinions of C.M. Nayar and P.K. Bahri, JJ. The views of J.D. Jain, J. were not presented to the Learned Judge and those of V.S. Aggarwal, J. appear not to have been discussed. From this narration it will be palpably clear that Single Benches have interpreted the said arbitration clause, and more particularly the word 'finding' in divergent manner. Before adumbrating the facts of the two cases before us it would also be appropriate to mention that the said Arbitration Clause has also received the attention of the Division Bench of the Calcutta High Court in Union of India v. D. Bose and Ors. , . In the proceedings in this Court the Union of India has adopted different and shifting stands, adapted to whether it was in its pecuniary interest to sustain or set aside the Award in question. The Government is expected to be steadfast in its arguments and to pursue a uniform approach in all matters. Therefore, in the five cases which have been decided by the Single Benches of this Court it cannot be appreciated that the Union of India has put forward disparate arguments.

3. In order to decide the legal nodus that has arisen in the present case it is necessary to collate the meaning given to the word 'finding'. Some of these are reproduced for easy reference. (A). In 'A Dictionary of Modern Legal Usage' authored by Bryan A. Garner the word 'finding' has been defined as under:

"finding; holdings A court properly has findings of fact and holdings or conclusions of law. The writer of the following sentence observe the distinction meticulously: "Because we find that the jury's finding of concurrent fault is amply supported by the evidence, we hold that appellee is entitled to full indemnity."

In appellate courts, properly, only holdings are affirmed, whereas factual findings are disturbed only when clearly erroneous, against the great weight of the evidence, etc., depending on the standard of review. Generally, it is not correct for an appellate court to say that it affirms a finding of fact."

(B). In 'Judicial Dictionary' by K.J. Aiyar, 13th Edition the word 'finding' has been described as under:

"Finding. Under Order XX, Rule 5, CPC, a 'finding' is a decision on an issue framed in a suit. The second part of the rule shows that such a finding shall be one which by its own force or in combination with findings on other issues should lead to the decision of the suit itself. That is to say, the finding shall be one which is necessary for the disposal of the suit. The scope of the meaning of the expression 'finding' is considered by a Division Bench of the Allahabad High Court in Pt Hazari Lal v. Income Tax Officer, Kanpur . There, the learned judges pointed out: The word 'finding', interpreted in the sense indicated by us above, will only 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 controversy between the interested parties or on which the parties concerned have been given a hearing. The Supreme Court has approved this definition. [Income Tax Officer, A Ward, Sitapur v. Murlidhar Bhagwan Das ].

For the purpose of Income Tax, a 'finding' can be only that which is necessary 'for the disposal of an appeal in respect of an assessment of particular year. [ITO v. Murlidhar Bhagwan Das ;

Rajinder Nath v. CIT Delhi ;

Daffadar Bhagat Singh & Sons v. ITO ; CIT v. S. Raghubir Singh Trust ;

S.B. Shah v. K.P. Majumdar (1966) 59 ITR 652 at 654."

(C). In 'Black's Law Dictionary' Sixth Edition the word 'finding' has been described as under:

"Finding. The result of the deliberations of a jury or a court. A decision upon a question of fact reached as the result of a judicial examination or investigation by a court, jury, referee, coroner, etc. A recital of the facts as found. The word commonly applies to the result reached by a judge or jury. See also Decision; Judgment; Verdict.

Finding of fact. Determinations from the evidence of a case, either by court or an administrative agency, concerning facts averred by one party and denied by another. Kozsdiy v. O'Falton Bd. of Fire and Police Com'rs, 31 III.App.3d 173, 334 N.E.2d 325,

329. A determination of a fact by the court, averred by one party and denied by the other, and founded on evidence in case. C.I.T. Corporation v. Elliott, 66 Idaho 384, 159 P.2d 891, 897. A conclusion by way of reasonable inference from the evidence. Welfare of Carpenter, 21 Wash.App. 814, 587 P.2d 588,

592. Also the answer of the jury to a specific interrogatory propounded to them as to the existence or non-existence of a fact in issue. Conclusion drawn by trial Court from facts without exercise of legal judgment. Compare Conclusion of law.

Finding of fact shall not be set aside unless clearly erroneous. Fed.R.Civil P.52(a). The court may amend, or make additional findings, motion of a party. Fed.R. Civil P.52(b).

A general finding by a court is a general statement that the facts are in favor of a party or entitle him to judgment. It is a complete determination of all matters, and is a finding of every special things necessary to be found to sustain the general finding.

A special finding is a specific setting forth of the ultimate facts established by the evidence and which are determinative of the judgment which must be given. It is only a determination of the ultimate facts on which the law must be determined. A special finding may also be said to be one limited to the fact issue submitted.

Finding of law. Term applies to rulings of law made by court in connection with findings of fact; such findings of rulings of law are subject to appellate review. See also Conclusion of law. Compare Finding of fact, above."

(D). In West's 'Legal Thesaurus/Dictionary' the word 'finding' has been described as under:

"Finding, n. the result of the deliberations of a jury, referee, arbitrator, court, agency, or other entity conducting an inquiry (a finding of neglect). Judgment, conclusion, pronouncement, ruling, verdict, decree, order, deduction, resolution, outcome, inference, decision, report. See also opinion."

(E) In 'The Concise Oxford Dictionary', Ninth Edition, the word 'finding' has been described as "a conclusion reached by an Inquiry"; the same meaning is ascribed by (F) the Chamber's 21st Century Dictionary viz. "a thing that is found or discovered; the event of discovering something; law a decision or verdict reached as the result of a judicial inquiry and conclusions reached as the result of some research or investigation"; (G) In Osborn's Concise Law Dictionary as "a conclusion upon an inquiry of fact"; (H) in the New Lexicon Webster's Dictionary as "the result of an inquiry or of judicial examination." The preponderant perception is that it is the end result and not the means by which the result is reached.

4. The Constitution Bench of the Hon'ble Supreme Court in Income-tax Officer, A Ward, Sitapur v. Murlidhar Bhagwan Das, , has explained the words 'finding' and 'direction' in the context of Section 34(3) of the Income Tax Act, 1922. The Second proviso to Section 34(3) lifts the ban of limitation imposed by the other proviso of the Section in the matter of taking an action in respect of or making an order of assessment or re-assessment falling within the scope of the said proviso. The opinion of the Apex Court was that "the word 'finding' will only cover material questions which arise in a particular case for decision by the authority hearing the case of 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 hearing". The Hon'ble Supreme Court referred to Order XX, Rule 5 of Code of Civil Procedure which reads thus:

"In suits in which issues have been framed, the Court shall state its finding or decision, with the reasons therefore, upon each separate issue, unless the finding upon any one or more of the issue is sufficient for the decision of the suit."

5. The Apex Court favored the view that 'finding' is the decision on an issue framed in a suit. In our opinion the relevance of this judgment to the issue in hand is that the words 'finding' and 'decision' are forensically synonymous; and that 'reasons' is not. The scope of scrutiny before the Apex Court, however, was whether views or opinions expressed on matters not strictly concerned with the decision to be rendered in respect of the Assessment Year under consideration, not being the finding or conclusion or decision or ratio decidendi, would entitle the party to compute limitation on such obiter findings. Therefore, these observations are not directly applicable to the controversy before us. The opinion was reiterated in Daffadar Bhagat singh and Sons v. Income-tax Officer, A Ward, Ferozepure, .

6. Of greater topicality and relevance is the judgment of the Division Bench of the Calcutta High Court in D. Bose's case (supra) where the same Arbitration Clause was under jural scrutiny. Although the exact wordings of the Award are not clearly forthcoming from a perusal of the judgment it would be fair to assume that they were as cryptically laconic as those in all the five cases including the case in hand. The Court observed as follows:

"The expression "finding" has been explained in Order XX, Rule 5 of the Code of Civil Procedure. It appears that the term "finding" is different from the term "reasons". "Finding" is the conclusion arrived at and "reasons" are the grounds for such conclusion. In the instant case, the arbitrator has come to his finding on each dispute referred to him for adjudication as will appear from the Award made and published by the Arbitrator. But then the Arbitrator has not given any reason for arriving at such finding. The Supreme Court in the case of Income-tax officer, 'A' Ward, Sitapur v. Murlidhar Bhagwan Das has referred to the provisions of Order XX, Rule 5 of the Code of Civil Procedure and pointed out the distinction between the expression "finding" and "reasons". The Arbitrator in the instant case,, in our opinion, in terms of the contract had duly set out the finding."

7. Apart from Order XX, Rule 5 of the Code of Civil Procedure, which lends support to the argument that 'reasons' cannot be fused with 'findings', this distinction is also clear from a perusal of Section 264 of the Criminal Procedure Code, 1973, which prescribes that in every case tried summarily in which the accused does not plead guilty the Magistrate shall record the substance of he evidence and a judgment containing a brief statement of the reasons for the findings. The significance of the use of these words is palpably clear, namely, that in terms of Order XX, Rule 5 of the C.P.C. and Section 264 of the Cr.P.C. it is not enough merely to state the findings or verdict or decision; the reasons or dialectic by which the Court arrived thereat should simultaneously be indicated for the benefit of the Appellate Court. When it is recalled that an arbitral award does not invite appellate scrutiny, the absence of the need to give reasons is at once clear. Further, it is beyond controversy that the Arbitrator was not bound to disclose reasons. This requirement has ow been incorporated in the Arbitration and Conciliation Act, 1996, and for good reason.

8. In Uttam Singh's as well as Parmeshwari Dass's cases, although the Award is in a different format, in our view they are of identical effect. In the former the claim is typically dealt with as follows:

9. For Rs. 4,96,913.61 for the work executed under the contract as per details enclosed with the Statement of Case.

10. The Respondent shall pay to the claimants a sum of Rs. 38,106/- (Rupees Thirty eight thousand one hundred and six only).

11. In the latter case, as also in M/s. Anand Brothers case, (supra) it reads thus

Claim Brief description Amount Amount of claim claimed awarded

1 Reimbursement of Rs. 11,72,681/- Rs. 3,46,903/-

the extra expendi-    (This amount
ture incurred on
increase in the     is over and
above the
rates of minimum      amount paid
wages by a       under DO
notification      No. 53).
issued by the
Central Government.  

 

12. On a perusal of the manner in which the claims were dealt with, it will be palpably apparent that the findings of the Arbitrator are not separately available. Learned counsel seeking to uphold the Award have argued that the findings can be inferred and extracted from a study of the Award, namely, that the claims were partly justified or not justified at all. Their contention is that once this inference and assumption is read into the Award, since the amount awarded is also available, the dictates and requirements of the Arbitration Clause must be found to have been complied with. The submission s that nothing more was expected of the Arbitrator, especially since findings are distinct from reasons and in all these cases reason were not to be compulsorily given by the Arbitrator. In successive judgments of the Hon'ble Supreme Court it has been articulated that the Arbitrator, who more often than not does not posses a legal background, is not expected to make an Award in the form and rigours enjoined by law for a Judge. The effort of the Court, while considering objections to the Award, should be to uphold it by giving a meaningful and pragmatic interpretation to the language of the Arbitrator. A critical and pedantic approach should be eschewed. In the analysis, we find force in the contention that the purpose and meaning sought to be expressed in the Arbitration Clause was that a lumpsum award was not to be given, i.e., each claim had to be dealt with separately. The contrary argument is that the word 'finding' means atleast a bare reasoning, and since this is missing from the Awards a judicial misconduct has occurred thereby necessitating interference by the Court, and calling for the setting aside of the Award. The contention is that at least a formal or cryptic recitation of the decision should have been articulated in the Award. However, we are unable to subscribe to this view since the definition given to the word 'finding' steers clear from 'reasoning', and favors 'verdict' or 'decision'.

13. It is apparent that the present controversy has been generated entirely due to a careless drafting of the Arbitration Clause. The need for the Arbitrator to indicate his findings is superfluous and is a surplusage in that as soon as the Arbitrator mentions the sum awarded by him he will automatically have simultaneously indicated his finding or decision on the matter. The general rule of interpretation is that it must be presumed that every word has been intentionally employed to convey a meaning different to another unless the conjunction 'or' is used; and that no word found in any phrase is a surplusage. We have given careful thought as to the intention and meaning that could be ascribed to the word 'finding'. The only distinct meaning that could be given to it, assuming that it is not a surplusage, is that it indicates that it is mandatory for reasons to be given by the Arbitrator, at a time when the legal regime considered this not to be essential. Keeping in view the clear distinction in the ambit of the words 'finding' and 'reasoning', we find it necessary to ignore the above rule of interpretation, in preference to the other equally important principle that a word must be given its ordinary meaning. If it was possible to choose between any one of many connotations of a word and thereby give a distinct role and application to the word finding, we would have done so with alacrity. Quite obviously, none of the Arbitrators though that any additional obligation had been cast on them because of the use of the word 'finding', in the six instances which have been jurally pronounced upon. We are therefore unable to accept the argument that since no reasons have been given in the Award it irreconcilably offends the use of the word 'finding', and necessitates the setting aside of the Award. The 'finding' namely, justified, or partly justified or not justified, is easily drawn from a reading of each of the impugned Awards.

14. It has also been brought to our notice that the Arbitration Clause has been subsequently amended; it now mandates the giving or reasons. C.M. Nayar, J. had viewed this amendment as clarificatory in nature and had, therefore, rejected the argument that a change had been incorporated. The counter argument is that since 'finding' is not synonymous with reasoning the amendment was necessary for mandating the stating of the reasoning in the Award. There is sufficient weight in both the arguments and we consider it unnecessary to choose between the two. In our opinion the impugned Awards comply with the requirements of he Arbitration clause. No misconduct has, therefore, been committed by the Arbitrator.

15. In both these cases, as perhaps in others already decided in diverse manner by C.M. Nayyar, V.S. Aggarwal, and Dr. Mukundakam Sharma JJ. the Arbitrators were an Army Officers. They could scarcely be expected to give an arbitral decision/finding which would be not only correct in substance, but also in legal form akin to judicial decisions. It is our view that if inferences have to be drawn to extract the 'finding' in the Awards before us, this exercise and effort must be carried out. It is also our view that if with slight exercise and effort, the impugned Awards can be upheld by not following a pedantic approach, and reading into them the use of the words partially justified or not justified as the came may be.

16. Accordingly FAO (OS) 67-A/1984 is dismissed. While departing from this Appeal it will be necessary to mention that we find that nothing substantial turns on the Order dated 7.11.1978 whereby Dalip K. Kapur, J had sent the Reference back to the Arbitrator without giving his opinion. The Learned Judge had held that "the Arbitrator will be free to deal with the matter himself as he wishes and he is also free to make another Reference if need arises". The Arbitrator proceeded to pronounce the Award and we find no infirmity in his approach. The arguments presented on behalf of Union of India, therefore, succeed.

FAO (OS) 133 OF 1991

17. Once the above conclusion is arrived at in Uttam Singh's case, it would be only logical that the Appeal in Parmeshwari Dass's case must be accepted since the arguments put forward on its behalf are in effect the same as have ably argued by counsel for Union of India in Uttam Singh's case. Mr. Navin Chawla, learned counsel for Union of India, has valiantly endeavored to draw a distinction in this case so as to make it fall outside the parameters of his arguments in Uttam Singh's case, arguing that the Arbitrator has transgressed the jurisdiction vested in him. However, the Arbitrator was appointed in terms of letter dated 31.3.1982 of the Engineer-n-Chief, Army Headquarters, without formulating and forwarding the terms of Reference. The arena of arbitral adjudication was, therefore, wide open as is also manifest from the fact that the Respondent had also filed its claims. Therefore, even if only two claims had earlier been raised by Parmeshwari Dass, there was no prohibition, impediment or legal restriction against further claims being raised before the Arbitrator. It has also been contend by Mr. Chawla that the Learned Single Judge had set aside the Award on the ground that Clause 70 of the Agreement clearly lays down that while preparing Final Bill the claims must be set up and no other claims could be entertained later on. It was his argument that this Clause excluded the jurisdiction of the Arbitrator. In the first place should not be ignored that the Union of India had itself raised the Counter Claim although this had not been spelt out at the relevant time, i.e., the receipt by it of the Final Bill. It has further been contended that the operation of Clause 70 would be oust the jurisdiction of the Arbitrator but would influence final decision on the correctness of the claims made by the Contractor. Clauses of this type need have salutary effect in that they bind the parties to raise claims contemporaneously. If so raised the opposite party is put to notice and caution to collect all necessary evidence required for defending such a claim. It is trite to state that where claims are raised after a passage of several months and years, the opposite party is automatically disadvantage in defending its case and proving its position. Every dispute, however, is liable to be adjudicated upon unless there is a statutory bar to it. In this case, as well as in interpreting exclusive Clauses in Standard Form agreements, Courts around the globe have considered it wise for giving an interpretation most favorable to the party which has not drafted the exclusion Clause. This interesting question also arose before a Single Judge of this Court in M/s. Hindustan Construction Corporation v. Delhi Development Authority , . Mohd. Shamim, J. was called upon to construe Clause 25 of the Agreement which was in the following words:

"It is also a term of the contract that if the contractor(s) does (do) not make demand of arbitration in respect of any claim(s) in writing within 90 days of the intimation from the Engineer-in-Charge that the Bill is ready for payment the claim(s) of the contractor(s) will be deemed to have been waived absolutely and the Delhi Development Authority shall be discharged and released of all liabilities under the contract is respect of those (these) claims."

18. Drawing strength from Section 28 of the Contract Act the Learned Judge set aside the Award in which the Arbitrator did not decide the claims on merits preferring to proceed on the premise that the claims stood defeated on the grounds of prescription. On the parity of this reasoning it would immediately appear logical to follow this line of reasoning thereby coming to the conclusion that it must be left to the Arbitrator to decide whether in the facts and circumstances of the case a claim not notified or raised in the Final Bill should be rejected. In Damodar Valley Corporation v. K.K. Kar , , the Apex Court observed that since the Respondent, while submitting its bill did not give the receipt as desired, namely, that he had received the payment in full and final settlement of all claims, the claim for damages for repudiation of contract raised thereafter were arbitrable. In similar vein the Hon'ble Supreme Curt in Union of India and Anr. v. L.K. Ahuja and Co., , had made the following observation which are pointedly pithy-

"In view of the well-settled principles we are of the view that it will e entirely wrong to mix-up the two aspects, namely, whether there was any valid claim for reference under Section 20 of the Act, and, secondly, whether the claim to be adjudicated by the arbitrator, was barred by lapse of time. The second is a matter which the arbitrator would decide unless, however, if on admitted facts a claim is found at the time of making an Order under Section 20 of the Arbitration Act, to be barred by limitation. In order to be entitled to ask for a reference under Section 20 of the Act, there must be an entitlement to money and a difference or dispute in respect of the same. It is true that on completion of the work, right to get payment would normally arise and it is also true that on settlement of the final bill, the right to get further payment gets weakened but the claim subsists and whether it does subsist, is a matter which is arbitrable. In this case, the claim for reference was made within three years commencing from April, 16, 1976 and the application was filed on December 18, 1976. We are, therefore, of the view that the High Court was right in this case. See in this connection the observations of this Court in Major (Retd.) Inder Singh Rekhi v. D.D.A. ".

19. M/s. L.K. Ahuja's case (supra) was approved in Jayesh Engineering Works v. New India Assurance Co. Ltd. , , and, therefore, represents the prevailing opinion of the Hon'ble Supreme Court. It may, however, be mentioned that in Union of India v. Popular Builders, Calcutta , (2000) 8 SCC 1, the Court appears to have taken a view which is slightly different to that in M/s. L.K. Ahuja's case (supra). However, even in this case it was observed that if the objection that part of the award allowing a claim made after acceptance of full and final payment by claimant-contractor was no longer arbitrable had been specifically raised during the arbitration proceedings, it may be set aside.

20. In the present case the objection appears not to have been raised before the Arbitrator and therefore ought not to have been entertained by way of Objection to the Award. Speculative though it may be, there is good reason to assume that the Arbitrator had looked into every clause of the Agreement hand had thereafter returned his findings. The reliance on Steel Authority of India v. J.C. Budharaja , (1999) 8 SCC 112 and Rajasthan State Mines & Minerals Ltd. v. Eastern Engineering Enterprises , , does not further the case of the Union of India. In view of he use of the word 'finding' in the Arbitration Clause, with due respect to the learned Single Judge, we are unable to subscribe to his opinion that since conclusion have not been given by the Arbitrator and he has only 'awarded sums', the Award is liable to be set aside. In allowing a particular claim, whether fully or partially, or in declining to award any sum, the findings of the Arbitrator had been impliedly given. The impugned Award is accordingly made Rule of the Court. The Decree Sheet be drawn up accordingly.