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1989 Supreme(SC) 403

SUPREME COURT OF INDIA
L.M. SHARMA AND J.S. VERMA, JJ.
State of Orissa, Appellant
Versus
Niranjan Swain, Respondent
Civil Appeal No. 3297 of 1981, D/- 10-8-1989.

Advocates:
A.K.SEN GUPTA, ARUN MADAN, J.D.B.RAJU, R.K.MEHTA, R.K.SAHOO

Headnote:

Constitution of India – Article 136 – Arbitration Act – Section 20, 21 and 34 – Interest Act, 1978 – Invalidity of an arbitrators award - Main ground taken in this appeal was that arbitrators award was per se invalid since it gave no reasons – Some other points were raised to which we shall advert later question of invalidity of an arbitrators award merely on ground that it gave no reasons was involved for decision in a large number of matters pending in this Court and in importance of this common question bunch of cases was heard and decided by Constitution Bench in Raipur Development Authority Contractors Constitution Bench has held that absence of reasons in award does not by itself result in its invalidity except where giving of reasons by arbitrator for award is requirement of arbitration agreement or deed of submission or an order made by Court or statute governing arbitration – Held, Respondent has withdrawn a certain amount against decree during pendency of this appeal amount due to the respondent shall be calculated on the basis of this modified decree amount obtained by respondent is less than amount to which respondent is found entitled as a result of this modified decree remaining amount shall be paid to respondent with from interim order of passed in this appeal and in case amount obtained by respondent is in excess of that to which he is found entitled excess amount shall be refunded by respondent to appellant similarly with interest at same rate of its refund case and Alternative contention on behalf of respondent see no reason for rejecting present case this alternative contention also balance amount of award would not be tainted with any invalidity and It would also be just and proper to sustain the award to this extent only reject contention of learned counsel for appellant that entire award should be set aside and instead accept the alternative contention of learned counsel for respondent – Appeal partly allowed.

Judgment

VERMA, J.:- This appeal by special leave under Article 136 of the Constitution challenges the judgment dated 17-8-1981 of the High Court of Orissa dismissing Misc. Appeal No. 145 of 1981 against the judgment dated February 28, 1981 passed by the Subordinate Judge, Baripada, District Mayurbhanj in Title Suit No. 106 of 1980 by which the arbitrators award for a sum of Rs. 21,11,835.00 in favour of the plaintiff - respondent, Niranjan Swain, was made a rule of the Court and a decree was passed for that amount together with interest at the rate of six per cent per annum from the date of the decree.

2. The main ground taken in this appeal was that the arbitrators award was per se invalid since it gave no reasons. Some other points were raised to which we shall advert later. The question of invalidity of an arbitrators award merely on the ground that it gave no reasons was involved for decision in a large number of matters pending in this Court and in view of the importance of this common question the bunch of cases was heard and decided by the Constitution Bench in Raipur Development Authority v. M/s, Chokhamal Contractors, (1989) 2 SCC 721. The Constitution Bench has held that the absence of reasons in the award does not by itself result in its invalidity except where the giving of reasons by the arbitrator for the award is the requirement of the arbitration agreement or the deed of submission or an order made by the Court or statute governing the arbitration. Accordingly, this contention raised in present appeal and all other similar matters was rejected by the Constitution Bench with a direction that all such cases should go back to the Division Bench for disposal in accordance with law on the remaining points surviving therein for decision. This is how the present appeal has come before us.

3. The conclusion reached by the constitution Bench in the above case and the direction even therein is as under:

"Having given our careful and anxious consideration to the contentions urged by the parties we feel that law should be allowed to remain as it is until the competent legislature amends the law. In the result we hold that an award passed under the Arbitration Act is not liable to be remitted or set aside merely on the ground that no reasons have been given in its support 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 the umpire should give reasons for the award. These cases will now go back to the Division Bench for disposal in accordance with law and the view expressed by us in this decision."

4. The only points now urged by Shri G. L. Sanghi, learned counsel for the appellant, are two, namely, (1) no interest could be awarded by the arbitrator in the present case upto the date of the award but the same is obviously included in the lump sum award of Rs. 21,11,835.00/- and the invalid part of the award not being severable from the rest, the entire award must be set aside; and (2) the High Court in its cryptic order has wrongly assumed as correct the trial Courts refusal to call the arbitrator for being examined in the Court. The learned counsel contended that any one of these defects was sufficient to set aside the entire award.

5. In reply Shri Arun Madan, learned counsel for the respondent, primarily contend that the arbitrator was empowered to award interest upto the date of award. In the alternative, learned counsel for the respondent contended that the invalid part of the award relating to grant of interest upto the date of the award was severable and, therefore, only that part should be set aside instead of setting aside the whole award. He also contended that the High Court did not make any wrong assumption and refusal to call the arbitrator for examination was justified. It was also urged that in the present case there was nothing























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