1. Dispute regarding bamboo felling license and royalty refund — Arbitration award challenged — High Court remittal for re-determination of specific issues. (Para 1 , 2 , 3 , 4 )
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1999 Supreme(SC) 468
1999(4) Supreme 17
Supreme Court of India
(From Orissa High Court)
D.P. Wadhwa & N. Santosh Hegde, JJ.
State of Orissa -Appellant
versus
Orient Paper & Industries Ltd. -Respondent
Civil Appeal No. 522 of 1992
Decided on 9-4-1999
Counsel for the Parties :
For the Appellant : P.N. Mishra, Sr. Advocate, Ms. Kirti Misra, Advocate.
For the Respondent : S.B. Sanyal, Sr. Advocate, P.N. Gupta, Advocate.
Important Points
An arbitration award is unsustainable if the arbitrator fails to address and decide all specific points of dispute referred to them. Merely agreeing with a party's determination without analyzing the core issues constitutes a failure to decide the dispute, justifying the setting aside of the award.
Subject
Arbitration Law - Arbitration Award
Act Referred
Headnote
Arbitration Act, 1940-Section 16-Power to remit award-Dispute referred to arbitration was whether method adopted by conservator of forest in quantifying tonnage of bamboo was scientific-Arbitrator merely agreed with decision of arbitrator and did not determine whether methodology adopted by conservator was correct or not-High Court holding that arbitrator did not decide disputes referred to him set aside award and remitted it back to arbitrator-Whether High Courts decision warrants interference-Held, No. (Paras 3 to 7)
Legal Category Hierarchy
Table of Contents
2. State contends non-speaking awards require no reasons when concurring with methodology — Respondent argues non-application of mind and failure to decide specific referred points. (Para 5 )
3. Arbitrator failed to determine whether the methodology was scientific or applicable to all cases, merely repeating the administrative determination without addressing specific referred points. (Para 6 , 7 )
4. An arbitrator must specifically address and decide all points referred for determination; mere concurrence with an administrative decision without analyzing specific issues constitutes non-application of mind. (Para 7 )
5. Appeal dismissed with costs. (Para 8 )
6. Does a non-speaking award require reasons if the arbitrator concurs with a specific methodology?
Yes, if the dispute referred contains specific points for determination, such as whether a method is scientific or universally applicable, the arbitrator must address those points. Mere concurrence with an administrative decision without analyzing the specific referred issues is insufficient. (Para 5 , 6 , 7 )
7. What is the legal consequence when an arbitrator fails to decide the specific points referred to them?
The award is considered unsustainable in law due to non-application of mind, justifying the court in setting aside the award and remitting the matter back to the arbitrator for re-determination. (Para 4 , 7 )
8. What constitutes a failure to decide a dispute in an arbitration proceeding?
A failure occurs when the arbitrator merely repeats a determination made by an authority without addressing the specific legal or technical questions, such as scientific validity, referred for arbitration. (Para 6 , 7 )
Judgment
D.P. Wadhwa, J.-I agree.
I may, however, add that in this case the agreement was entered into in January, 1974. After disputes and differences arose and parties went for arbitrator, the Arbitrator gave his Award on November 30, 1978. The Award was challenged by the respondent before the Sub-Judge, Bhubaneshwar who upheld the Award by judgment and order dated August 7, 1980. The matter was taken in appeal before the Orissa High Court by the respondent. High Court by its judgment dated November 19, 1986 allowed the appeal holding that the Arbitrator had failed to decide the actual disputes specifically referred to him and remitted the matter to the Arbitrator for reconsideration under Section 16 of the Arbitration Act. This appeal was filed by the State of Orissa against the judgment of the High Court and it has taken more than 12 years for the decision of the appeal. However, it was not necessary that the State Government should have challenged the order of the High Court in the circumstances of the case causing unnecessary expense to the parties and the time this Court had to spend in hearing the appeal. Had the State Government abide by the order of the High Court that the matter before the Arbitration would have been completed years ago. State cannot act like a private litigant that it must challenge every order made against it. State has to be advised properly if a case required determination of this Court under Article 136 of the Constitution.
Santosh Hegde, J.-Disputes having arisen between the State of Orissa and the respondent in this civil appeal, in respect of exclusive right and licence to fell, cut and remove bamboos, parties opted to go for arbitration as provided in the agreement. The disputes referred to the Arbitrator for determination are:-
1. “As provided in Note (i) under clause 10 of the Agreement, the C.C.F., Orissa has determined that 2300 mtrs. or 7475 running ft. of Salia bamboos and 600 mtrs. Or 1950 running ft. of Daba bamboos respectively make a tonne vide his letter No. 24755 dated 17.12.1974 (copy of which is placed in the State’s written argument and the same is held to be final and binding on both parties.”
2. “The respondent company was entitled to a refund of Rs. 2,03,325/- for excess royalty paid.”
The Arbitrator by his award held as follows:-
“As provided in Note:---(i) under clause 10 of the Agreement, the Chief Conservator of Forests has determined that 2300 metres of 7475 running feet of Salia bamboos and 600 metres of 1950 running feet of Daba bamboos respectively make a tone vide his letter No. 24755 dated 17.12.1974 copy of which is placed in the State’s written argument and the same is held to be final and binding on both parties.”
2. Based on the finding in dispute No. 1, he made a consequential award on the second issue. The said award of the Arbitrator was made a Rule of the Court by the judgment of the learned Sub-Judge, Bhubaneswar dated 7.8.1980 in Misc. Case No. 442/78.
3. Being aggrieved by the said order of the learned Sub-Judge, respondent-company preferred Misc. Appeal No. 260/80 before the Hon’ble High Court of Orissa at Cuttack. The High Court by its judgment dated 19th of November, 1986 allowed the Misc. Appeal setting aside the order of the Subordinate Judge as well as the award of the Arbitrator and remitted the matter back to the Arbitrator for re-determination.
4. Being aggrieved by the order of the High Court referred to above, this appeal is preferred. The High Court came to the conclusion that the learned Arbitrator had not decided the disputes referred to him for arbitration. Therefore, the award was unsustainable in law. Consequently, the High Court held such an award could not have been made a rule of the court by the learned Subordinate Judge.
5. Before us, Shri P.N. Misra, the learned Senior Advocate appearing for the State of Orissa contended that a perusal of the award shows that the Arbitrator had in fact concurred with the decision taken by the Chief Cons
