Greaves Limited vs Union Of India (Uoi) And Anr. ...
2006 Latest Caselaw 625 Del

JUDGMENT

Badar Durrez Ahmed, J.

1. The question that arises before this Court is with regard to the award passed by the sole arbitrator on 29.09.1994 in respect of disputes which had arisen between the parties.

2. Without going into the details the sum and substance of the cases of the parties are as follows. The learned counsel for the petitioner submitted that the award, insofar as claim Nos. 2 (a), 3 and 8 are concerned, requires to be sustained and be made a rule of the Court. He further submitted that insofar as claim Nos. 1, 2 (b), (c) and 4 to 7 are concerned, the same require to be remitted for arbitration inasmuch as the learned arbitrator has not adjudicated claims. He submitted that the learned arbitrator had not adjudicated claims as, at that time, an earlier arbitration proceeding was pending between the parties which would form the basis of decision insofar as these claims were concerned. Now that the earlier arbitration proceedings have already culminated in an award dated 20.05.1992 which has been made a rule of the Court by an order dated 18.04.2000 passed in OMP No. 49/1992 and CS(OS) No. 3096/1992, the unadjudicated claims can be referred to an arbitrator to be nominated by the Engineer-in-Chief, Kashmir House, New Delhi ? 11 in terms of the contract between the parties. His submission, with regard to these claims, is that under the present award these claims were not adjudicated upon as the same were regarded by the arbitrator as non-arbitrable being subjudice. Now that the matter is no longer subjudice and has been concluded by virtue of the order dated 18.04.2000, these claims can be adjudicated upon. Insofar as the latter submission with regard to the non-adjudicated claims is concerned, the learned counsel for the respondent states that the decision on these claims would be dependent upon the award already made in the earlier proceedings, which culminated in the same being made a rule of the Court on 18.04.2000 as mentioned above. According to her also, these claims can now be referred to an arbitrator in terms of the contract between the parties for adjudication.

3. The main dispute, therefore, in this matter is with regard to claim No. 3. It is the objection raised by the learned counsel for the respondent that the arbitrator has awarded an amount of Rs. 1,00,187.00/- against a claim of Rs. 2,37,766.22 in respect of loss and damage claimed by the petitioner due to alleged prolongation of the contract period. It is her contention that this amount has been awarded contrary to the provisions of clause 11 of the Indian Army Forms Works ? 2249 (General Conditions of Contract) which is applicable to the transaction between the two parties. It is, therefore, her contention that the award is beyond the terms of the contract between the parties in so far as claim No. 3 is concerned and the same is accordingly liable to be set aside. The learned counsel for the petitioner, on the other hand, contended that the award, at least as regards claim No. 3 is a non-speaking award and would be open to examination only if a clause of the contract is mentioned in the award itself. He submitted that while disposing of claim No. 3, there is no mention of the aforesaid clause 11 in the award and, therefore, this Court ought not to embark upon an examination of the provisions incorporated in clause 11 and try to arrive at a conclusion as to whether the arbitrator has made a correct or incorrect award. He referred to a decision of the learned Single Judge (B N Kirpal, J, as he then was) in the case of Jagdish Chander v. Hindustan Vegetable Oils Corporation and Anr. to submit that it is not permissible for the Court to look into a contract when the contract is not incorporated in the award. He referred to paragraph 29 of the said decision wherein it is observed that ?it is not permissible for the Court to look into the contract as the contract is not incorporated in the award?. He then referred to a Division Bench decision in the case of Des Raj and Sons v. Union of India and Anr. AIR 1984 Delhi 365. In the said decision it was, inter alia, held that in a non-speaking award where the arbitrator neither has made any particular reference to any clause of the contract nor has incorporated the contract in the award, in the sense that he has invited those reading the award to read the contract, the Court is not entitled to look at the contract and search it in order to see whether there is an error of law. It was further held that the Court has no means to enter his mind and to explore his thought processes. Paragraphs 7 and 12 of the said decision are relevant for the purposes of the present case and the same are set out hereinbelow:-

7. If the arbitrator says : ?on the wording of this clause I hold so and so, then that clause is impliedly incorporated into the award because he invites the reading of it.? Blaibar and Co. v. Leopold Newborne (London) Ltd. (1953) 2 Lloyd's Rep 427 at p. 429 per Denning LJ). But here there is no reference to any specific provision of the contract on which the arbitrator may be said to have based his decision. It is quite impossible to say that he has incorporated the contract in the award in the sense that he has invited those reading the award to read the contract. ?The principle of reading contracts or other documents into the award is not one to be encouraged or extended.? I am therefore not entitled in an award which is non-speaking to look at the contract and search it in order to see whether there is an error of law. The arbitrator has not given any reasons why he has arrived at the conclusion he did. They will always remain in the breast of the arbitrator. The route of reasoning he adopted for himself the court will never know. The court has no means to enter his mind and to explore his thought processes.?

12. The locus classicus on the subject is Champsey Bara and Co. v. Jivraj Balloo Spinning and Weaving Co. Ltd. AIR 1923 PC 66. The law is clear. The difficulty is in its application. In this case there is no difficulty at all. The contract is not part of the award. The award does not open the door to look at the contract because it happens to be mentioned in the recital. A mere reference to the contract in the award does not entitle us to look at the contract. In the present case there is no specific reference to any particular clause of the contract in the award. So there is no incorporation of the contract in the award. As long ago as 1867 Cockburn CJ warned :-

We must not be over-ready to set aside awards when the parties have agreed to abide by the decision of a tribunal of their own selection, unless we see that there has been something radically wrong and vicious in the proceedings.? ?Re Hipper (1867) 2 QB 367.

It was also observed in paragraph 9 that in a non-speaking award the scope of judicial review is very much reduced, almost to a vanishing point, and, an award is not invalid merely because by a process of inference and argument it may be demonstrated that the arbitrator has gone wrong in law in arriving at his conclusion. This observation of the Division Bench was based upon a decision of the Supreme Court in the case of Jivraj Bhai v. Chintamanrao .

4. After considering the rival submissions made by the learned counsel for the parties and examining the case law as referred to above, I am of the view that the position as stated by the learned counsel for the petitioner is the correct view to take. On examining the award one finds that insofar as claim No. 3 is concerned, there is no discussion whatsoever and the amount that has been awarded to the petitioner under the said claim has been awarded without giving any reason and to that extent insofar as claim No. 3 is concerned, the award is a non-speaking one. It is an admitted position between the parties that the contract did not prohibit the making of a non-speaking award. Once a non-speaking award has been made with particular reference to claim No. 3, it is not open to the court under Sections 30/33 of the Arbitration Act, 1940 to examine or go into the probabilities and possibilities of what may have entered the mind set and thought processes of the arbitrator in arriving at the conclusion that he did. There is no way of knowing why he made the award that he did and, therefore, there is no necessity of examining the said clause 11 because he made no reference to the same in the award. Accordingly, following the settled principles as indicated by the aforesaid Division Bench decision in the case of Des Raj and Sons (supra), I am of the view that the arbitrator's finding insofar as claim No. 3 is concerned, cannot be interfered with. As regards claim No. 8, the arbitrator has passed an award of interest on the claims that have been awarded. No reasons have been given for that either and there is no way of finding out what weighed with the arbitrator when he made the award under this head. This, also cannot be interfered with. The arbitrator has awarded simple interest at the rate of 12% per annum as against the claim of interest @ 20.5% per annum. The learned arbitrator has granted interest up to the date of the decree. The petitioner would also be entitled to future interest from the date of the decree till the date of realisation @ 9% per annum.

5. Accordingly, the award, insofar as the findings of the learned arbitrator with regard to claim Nos 2 (a), 3 and 8 are concerned, is confirmed    and the award to that extent is made a rule of the Court with the aforesaid modification with regard to future interest. A decree sheet be prepared accordingly. Insofar as claim Nos.  1, 2 (b), (c) and 4 to 7 are concerned, the same are referred for adjudication by an arbitrator to be nominated by the aforementioned Engineer-in-Chief. The parties shall approach the said Engineer- in-Chief for nomination and appointment of an arbitrator within three weeks in terms of the agreement between the parties.
 

 These suits stand disposed of.