The Motor And General Finance Ltd. vs Singh Construction Co. And Ors.
2007 Latest Caselaw 1725 Del

JUDGMENT

Badar Durrez Ahmed, J.

1. The respondent No. 1 has filed objections in respect of the Award dated 03.09.1996 passed by the sole arbitrator. The Award is a non-speaking Award. The learned Counsel for the respondent No. 1 (Singh Construction Company) firstly contended that this matter cannot be proceeded with because the respondent No. 2 died during the pendency of these proceedings. The learned Counsel for the claimant (Motor & General Finance Ltd.) immediately stated that the Award made by the learned arbitrator in favor of the claimant was made against the respondents coextensively and they were jointly and severely liable. She also stated that the respondent No. 2 was the guarantor and she does not propose to proceed any further against the legal representatives / heirs of the said respondent No. 2. In these circumstances the first point raised by the learned Counsel for the respondent No. 1 would be of no consequence.

2. The learned Counsel for the respondent No. 1 then raised the issue that the counter claim filed on behalf of the said respondent was not at all considered and this was ground enough for setting aside the Award and remanding the matter for arbitration afresh after due consideration of the counter claim of the respondent. He placed reliance on a decision of the Supreme Court in the case of K.V. George v. Secretary to Government, Water and Power Department, Trivandrum and Anr. . I have examined that decision and I find that the same is not at all applicable to the facts of the present case. Paragraph 12 of the said decision of the Supreme Court clearly indicates that in that case the respondent had filed counter claims and the arbitrator without considering the counter claims kept the counter claims for subsequent consideration and made an Award only in respect of the claim. It was not disputed that the arbitrator did not at all consider the counter claims and had kept the same for consideration subsequently while making the Award in respect of the claims filed by the appellant before the Supreme Court. In this context the Supreme Court observed that undoubtedly the Award made by the arbitrator was not sustainable in law and the arbitrator had mis-conducted himself and the proceedings by making such an award. The Supreme Court also observed that it was the duty of the arbitrator while considering the claims of the appellant to have also considered the counter claims made on behalf of the respondents and then to make the award after considering both the claims and counter claims. Since this had not been done in that case, the Supreme Court found the Award to be wholly illegal and unwarranted.

3. The situation that arises in the present case is entirely different. Here, the counter claim has been clearly referred to by the arbitrator in its Award and after setting out the claim and the counter claim of the respondent and the documents on which the parties relied upon, the arbitrator passed a non-speaking Award by noting:

Now, I have duly considered oral submissions made and documentary evidence produced before me and matters referred to me and make my Award as under:

It cannot be said that the arbitrator did not consider the counter claim of the respondent No. 1. Therefore, the decision of the Supreme Court on which the learned Counsel for the respondent No. 1 placed heavy reliance, would be of no assistance to him.

4. The learned Counsel for the respondent No. 1 also placed reliance on a decision of this Court in the case of Kirpal Singh Khurana v. Union of India 1997 (5) AD Delhi 612. I am afraid this decision cannot be relied upon as it is not a decision on merits but this is a decision on a concession given by the counsel. This would be apparent from a plain reading of paragraph 2 of the said decision wherein it was observed that when the matter came up for hearing the counsel for the petitioner made a statement that since the counter claims raised by the respondent No. 1 therein were not considered and decided by the arbitrator, the award in question could be set aside and the case could be remitted to the arbitrator for deciding afresh in accordance with law. Unfortunately, for the respondent No. 1, this is not a case here. The learned Counsel for the claimant is making no such concession and, on the contrary, she submitted that the entire disputes before the arbitrator including both the claim and counter claim were considered by the arbitrator and the non-speaking order was made only thereafter.

5. The learned Counsel for the respondent No. 1 also sought to challenge the Award on the ground that various calculations and accounts had not been gone into by the learned arbitrator while making the Award. He contended that as per the calculations and or accounts, which form part of the record, no amount was due from the respondent No. 1 to the claimant as all Installments of the hire purchase agreement had been paid. He submitted that the learned arbitrator did not give due credence to all these documents and/ or to the payments made by the respondent No. 1 to the claimant. The learned Counsel for the petitioner drew my attention to two decisions of the Supreme Court with regard to non-speaking Awards. The decisions being Kundale ssociates v. Konkan Hotels (P) Ltd. and Bijendra Nath Srivastava v. Mayank Srivastava . Only one of the decisions would be sufficient for the present purpose and that is the decision in the case of Bijendra Nath Srivastava (supra). In paragraph 22 of the said decision, the Supreme Court observed as under:

22. We would now proceed to deal with the question as to whether the High Court was right in setting aside the award made by the arbitrator. As regards an award made by an arbitrator under the Act the law is well settled that the arbitrator's award is generally considered binding between the parties since he is the tribunal selected by the parties. The power of the court to set aside an award is restricted to the grounds set out in Section 30 of the Act, namely, (a) where the arbitrator has misconducted himself or the proceedings; (b) where the award has been after the issue of an order by the court superseding the arbitration or after arbitration proceedings have become invalid under Section 35; an (c) where the award has been improperly procured or is otherwise invalid. The Court can set aside the award under Clause (c) of Section 30 if it suffers from an error on the face of the award. An award might be set aside on the ground of an error on the face of it when the reasons given by the either in the award or in any document incorporated with it, are based upon a legal proposition which is erroneous. In the absence of any reasons for making the award, it is not open to the court to interfere with award. The court cannot probe the mental process of the arbitrator and speculate, where no reasons are given by the arbitrator, as to what impelled the arbitrator to arrive at his conclusion. An award is not invalid merely because by a process of inference and argument it may be demonstrated that the arbitrator has committed grave mistake in arriving at his conclusion. The arbitrator is under no obligation to conclusion. The arbitrator is under no obligation to give reason in support of the decision reached by him unless under the arbitration agreement or deed of settlement he is required to give such reasons.

Reading the above extract from the said decision, it is absolutely clear that in the absence of any reasons for making of the award, it is not open to the court to interfere with the Award. This court cannot probe into the mental processes of the arbitrator and speculate, where no reasons are given, as to what impelled the arbitrator to arrive at the conclusions that he did. The Supreme Court had made it very clear that the Award is not invalid merely because by a process of inference and argument it may be demonstrated that the arbitrator has committed a grave mistake in arriving at his conclusion. This is what the learned Counsel for the respondent No. 1 is requesting this Court to do. But, that is not permitted.

6. With regard to the question of rate of interest, after hearing the counsel for the parties, I feel that the rate of interest should be 10% per annum rather than 18% per annum as awarded by the learned arbitrator.

With this modification, the Award is made a rule of the Court. The decree be drawn up accordingly. The suit and the application stand disposed of.