Union Of India (Uoi) vs Kisan Sahakari Chini Mills Ltd.
2002 Latest Caselaw 1715 Del

JUDGMENT

Dr. Mukundakam Sharma, J.

1. As the facts of the present two cases are similar, by this common judgment and order, I propose to dispose of the same.

2. A tender was floated for procurement of 11950 tonnes of sugar for 1978-79 season of procurement conforming to ASC Specification No. 178 for the defense services. The supplies were to be governed by the General Conditions of Contract Form (DGS & D)-68-Revised) except Clause 14 (8) and Clause 24 thereof and the Special Terms and Conditions for supply of sugar to defense services contained in the Appendix to the said tender enquiry. The respondent No. 1 submitted its tender on 18.10.78 for supply of 4000 MT of sugar. The tender of the respondent No. 1 was accepted and the said acceptance was communicated to the respondent No. 1 by communication dt. 30.10.1978. The respondent was required to deposit a sum of Rs. 7,05,600/- towards security deposit by 9.11.78 for due performance of the contract. The respondent, however, did not deposit the security amount and the same was recovered from their pending bills. The request of the respondent No. 1 for extension of delivery period as contained in their letter dt. 15.11.78 was considered and the period of delivery was extended up to 15.12.78 without liquidated damages. The respondent, however, tendered 2100 tonnes of sugar on 15.12.78 and sought further extension for the balance of about 1900 tonnes up to 10.1.79. However, out of 2100 tonnes sugar tendered by the respondent No. 1, a quantity of 228.800 tonnes was rejected being not found to be conforming to ASC Specifications No. 178. A further, small quantity of 11.696 MT was rejected at the time of dispatch. Out of the balance quantity of about 1900 tonnes, a quantity of 659.200 M.T. was not found conforming to ASC specification and the same was, therefore, also rejected whereas rest of the quantity was found acceptable. Therefore, out of the quantity of 4000 M.T. of sugar, 3182 M.T. sugar was accepted and 899.696 MT of sugar was rejected and the said rejected store of 899.696 M.T. was cancelled from the contract by letter dt. 20.6.79. Subsequent thereto, an open tender enquiry was floated for re-purchase of the said cancelled quantity of sugar by applying the risk purchase clause, in terms of which there was a loss of Rs. 5,58,531.16. There was also a balance quantity of 7.368 tonnes for which no offer was received and, therefore, for the said quantity general damages were allegedly required to be paid. It is also revealed from the records that the respondent did not dispatch 1212.700 M.T. of sugar out of the acceptable stores and finally on 19.4.79 refused in writing to dispatch the said quantity.

3. Since a claim is made by the petitioner as against respondent No. 1 for causing loss and damage, disputes arose between the party and the same were referred to the sole arbitrator Sh. Shiv Prakash, in terms of the arbitration clause between the parties. The appointed arbitrator entered into the reference and thereafter made and published his award on 30.3.90. The said award is filed in this court as against which the respondent No. 1 filed an objection under Section 30 & 33 of the Arbitration Act whereas the petitioner has sought for making the award a rule of the court.

4. I have heard the learned counsel appearing for the parties on the aforesaid pleas and now proceed to decide the matter on merits.

5. So far Claim No. 1 of the petitioner is concerned, the same relates to a claim for Rs. 5,58,531.16 on account of risk purchase loss, which was suffered by the petitioner for not supplying the part quantity of stores by the respondent/contractor, which was rejected as a result of inspection.

6. Claim No. 2 relates to a claim of the petitioner for payment of a sum of Rs. 5,75,523.10 on account of General Damages, which was suffered by the petitioner in respect of part quantity of stores, which was inspected and accepted but not supplied by the respondent No. 1/Contractor.

7. Claim No. 3 relates to payment of interest at the rate of 12% p.a. whereas Claim No. 4 of the petitioner relates to payment of cost of the arbitration proceedings.

8. The respondent No. 1 also raised a counter-claim for a sum of Rs. 7,05,600/- being Counter-Claim No. 1 seeking for refund of security deposit, which was deducted by the petitioner from their bills. There was a further claim of the respondent under Counter Claim No. 2 for payment of a sum of Rs. 1,65,630.50 being the balance 5% price of the part quantity of stores supplied by them to the petitioner but not paid. The respondent No. 1 also claimed for a payment of Rs. 1,000/- being the refund of earnest money, which was under Counter-Claim No. 3 of the respondent. The respondent No. 1 also claimed for payment of Rs. 44,733.75 under Counter-Claim No. 4 towards transportation charges in respect of part quantity of stores from their factory godown to the nearest railway station whereas Counter-Claim No. 5 of the respondent No. 1 relates to a claim of Rs. 68,683.87 towards storage charges of the stores, which were stated to have been held in stock for delivery to the claimants and could not be delivered. Counter Claim No. 6 relates to a claim of Rs. 2,17,068/- towards loss of interest on the stock of stores earmarked for supply to the petitioner from January, 1979 to May, 1979 whereas Counter Claim No. 7 relates to payment of interest whereas Counter-Claim No. 8 relates to payment of cost. Counter-Claim No. 9 relates to a claim for the payment of future interest.

9. I have carefully perused the records and the award passed by the arbitrator. In the present case, there is no requirement for the arbitrator for giving any reasons for the award to be passed by the arbitrator. The award passed by the arbitrator indicates that no reasons have been given by the arbitrator for coming to the conclusions except for saying that the claims of the petitioner are allowed being found justified. While allowing the claim of the petitioner for a sum of Rs. 5,58,531.16 on account of risk purchase loss suffered by the petitioner for not supplying the part quantity of stores by the respondent No. 1, the arbitrator in his award against the aforesaid claim has only stated that the claim is allowed being found justified. Counsel for the respondent No. 1 submitted that when the arbitrator has used the word "justified", the same amounts to giving reasons for the same and, therefore, it cannot be said that the arbitrator has not given a reasoned award. He also submitted that it is in the interest of justice also that the arbitrator is required to give reasons for their award so that the Court, while exercising jurisdiction under Sections 30 & 33 of the Arbitration Act, 1940 could examine the legality and validity of the award in a more objective manner. It was submitted by the counsel that if in case it is held that the aforesaid award is not a speaking and reasoned award, the said award should be held to be contrary to law and justice and the same is required to be set aside.

10. I have given my in depth consideration to the aforesaid contention of the counsel for the respondent No. 1 The claim cannot be allowed unless it is held by the arbitrator that the said claim is found to be justified. The same is a conclusion arrived at by the arbitrator but such a conclusion arrived at by the arbitrator cannot be said to be a reasoned award, for no reasons are given by the arbitrator for coming to the aforesaid conclusion and, therefore, the award is not a speaking award. There is no discussion at all of the evidence adduced by the parties before the arbitrator. No appreciation of the evidence is disclosed in the award passed by the arbitrator.

11. It is a settled law that no reason is required to be given in support of the opinion or conclusion of the arbitrator except where the arbitration agreement or the deed of submission, or an order made by the court under Section 20 or Section 21 or Section 34 of the Act or the statute governing the arbitration requires that the arbitrator or umpire should give reasons for the award. In the present case the arbitrator has only given his award without giving any reasons for the conclusions arrived at by him. Since there is no requirement for giving any reasoned award, in the present case the arbitrator was competent to give his award without giving any reasons for his award and the conclusion. The Supreme Court and this Court have taken a view that merely because the reasons are not given, an award is not liable to be remitted or set aside except where the arbitration agreement or the deed of submission, or an order made by the court such as the one under Section 20 or Section 21 or Section 34 of the Act or the statute governing the arbitration requires that the arbitrator or umpire should give reasons for the award. In this connection, reference may be made to the decision of the Supreme Court in RAIPUR DEVELOPMENT AUTHORITY ETC. ETC. v. CHOKHAMAL CONTRACtorS ETC. ETC.

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12. Upon going through the entire award, I find that the award passed by the arbitrator in respect of the claims and counter-claims did not contain any reasons. Some of the counter-claims of the respondent were also allowed by the aforesaid award, in respect of which also no reason has been assigned for coming to the aforesaid conclusion.

13. In the backdrop of the above legal position when the present award is scrutinised it is apparent on the face of the record that the arbitrator has given his award by recording his conclusion only and no reason has been assigned by the arbitrator for coming to the aforesaid conclusion. Therefore, the aforesaid award is a non-speaking award and, therefore, the possibility of interference of the court to such award is very restricted and limited, for it is not possible for this court to scrutinise and examine the mental process of the arbitrator, which led to the conclusions arrived at by him while giving his award. In this connection, reference may be made to a decision of the Supreme Court in AROSAN ENTERPRISES LTD. v. UNION OF INDIA . In the said decision, it was categorically held by the Supreme Court that in the event of their being no reason in the award, question of interference by the court would not arise at all. In JIVARAJBHAI v. CHANTAMANRAO BALAJI , it has been laid down by the Supreme Court that it is not open to the court to speculate where no reasons are given by the arbitrator, as to what impelled the arbitrator to arrive at his conclusion and it is not open to the Court to attempt to assess the mental process by which the arbitrator has reached his conclusion where it is not disclosed by the terms of the award. It is also settled law that re- appraisal of evidence by the court is not permissible and, as a matter of fact, this court cannot exercise the powers of re-appreciation of evidence for coming to a contrary finding like the Appellate Court. In the light of the aforesaid settled position of law, an unreasoned award passed by the arbitrator is not open to interference on the grounds alleged by the respondent No. 1 as it is not in a position to test and scrutinise the assessment and reasonings of the arbitrator.

14. In view of the aforesaid discussion, the contention of the counsel for the respondent No. 1 is found to be without any merit and the same is rejected. Consequently, the objection filed by the respondent No. 1 also stands rejected. The award passed by the arbitrator is made a rule of the court. The petitioner shall be entitled to interest on the awarded amount from the date of decree till the date of payment.