An award which is non-speaking is bad and liable to be set aside under Section 30 of the Arbitration Act, 1940.

Headnote:
ARBITRATION - AWARD - NON-SPEAKING AWARD - JURISDICTION OF ARBITRATORS - FOREIGN EXCHANGE FLUCTUATION - CONTRACTUAL TERMS - INTERPRETATION - SECTION 30 OF THE ARBITRATION ACT, 1940.
Fact of the Case:

The appellant, an authority constituted under the Oil and Natural Gas Commission Act, 1959, invited tenders for the supply of pure Helium gas. The respondent, an Indian company, submitted its bid and was awarded the contract. The respondent supplied the required quantities of Helium from time to time in terms of its tender. However, due to devaluation of the Indian rupee against the US dollar, the respondent incurred additional costs. The respondent claimed that these amounts represented, "foreign exchange loss variation pertaining to our supplies of Helium Gas during the relevant period". The appellant rejected the claim. The respondent invoked the arbitration clause in the agreement and appointed an arbitrator. The appellant also appointed an arbitrator. The arbitrators entered upon the reference and a non-speaking award was made holding that the appellant was liable to compensate the respondent for Exchange Rate Fluctuation. The appellant filed Arbitration Petition No. 52 of 1994 challenging the award. The learned Single Judge dismissed the petition.
Finding of the Court:

The Court held that the award was bad for not giving reasons in support thereof. The Court further held that the arbitrators had no jurisdiction to entertain the claim as it did not arise out of the terms of the contract or was specifically barred under the terms. The Court also held that the claim made by the respondent before the arbitrators did not fall within their jurisdiction. The award though a non-speaking one, is beyond the jurisdiction of the arbitrators and, hence, liable to be set aside.
Issues: 1. Whether the award was bad for not giving reasons in support thereof? 2. Whether the arbitrators had jurisdiction to entertain the claim? 3. Whether the claim made by the respondent before the arbitrators fell within their jurisdiction?
Ratio Decidendi: 1. The Court held that the award was bad for not giving reasons in support thereof, relying on the judgment of the Supreme Court in Raipur Development Authority v. M/s. Chokhamal Contractors and others, AIR 1990 SC 1026. 2. The Court held that the arbitrators had no jurisdiction to entertain the claim as it did not arise out of the terms of the contract or was specifically barred under the terms, relying on the judgments of the Supreme Court in Food Corporation of India v. Jagdish Chandra Saha, AIR 1994 SC 219 and Tamil Nadu Electricity Board v. M/s. Bridge Tunnel Constructions & others, AIR 1997 SC 1376. 3. The Court held that the claim made by the respondent before the arbitrators did not fall within their jurisdiction, relying on the judgment of the Supreme Court in Associated Engineering Co. v. Government of Andhra Pradesh & another, AIR 1992 SC 332.
Final Decision: The Court quashed and set aside the impugned judgment and order of the learned Single Judge as also the award dated 13th August, 1993 which is the subject matter of the Arbitration Petition No. 52 of 1994.

JUDGMENT

B.N. SRIKRISHNA, J.:---This is an appeal directed against the judgment and order of the learned Single Judge dated 13th October, 1995 dismissing the petition of the appellants under section 30 of the Arbitration Act, 1940 (hereinafter called "Act").

2.The facts leading to the present appeal, shortly stated, are as under :-

The appellant is an authority constituted under the Oil and Natural Gas Commission Act, 1959 whose main function is to carry out development of petroleum resources, production and sale of petroleum and petroleum products. The respondent is an Indian Company which is engaged in the supply of chemicals and pure Helium. On 2nd May, 1989 the appellant published a notice inviting tenders for supply of pure Helium gas. On 14th June, 1989, the interested tenderers, including the respondents, submitted their technical bids. Similarly, on 11th October, 1989 price bids were submitted by all the tenderers including the respondents. The price bids were opened on 23rd November, 1989 and the respondents bid was found to be the lowest in that the respondent had bid a price of Rs. 150/- per cubic meter out of which US $ 4.60 was to be the foreign exchange component. Since the respondent was very much in the zone of consideration, there was correspondence between the appellant and the respondent as a result of which, by letter dated 4-1-1990, the respondent lowered its offer to Rs. 149/- per cubic meter, out of which US $ 4.60 was to be the foreign exchange component. Since there was a period of 15 days allowed for entering into contract after the approval of the bid, and the appellant needed supply of Helium gas urgently, pending the signing of the contract, an ad-hoc order for supply of 52000 cubic meters of Helium gas was placed on the respondent on 17th April, 1990. This ad-hoc order was accepted by the respondent on 18th April, 1990. On 12th June, 1990 there was another order placed on the respondent by the appellant for supply of 52000 cubic meters of Helium gas. These supplies were completed by or about 3rd September, 1990. On 25th May, 1990 the appellant placed an order for supply of 3,00,000 cubic meters of Helium gas which was also accepted by the respondent on 28-5-1990. On 12th July, 1990 the supply order was issued. There is no dispute that the respondent supplied the required quantities of Helium from time to time in terms of its tender which had been accepted. In fact the respondent submitted its bills periodically which were paid. In the meanwhile, there was devaluation of the Indian rupee against US dollar which, according to the respondent tremendously increased its costs. Consequently, respondent submitted supplementary bills on 9th October, 1991 for the sum of Rs. 36,94,370.40, on 15th January, 1992 for the sum of Rs. 2,52,20,160/- and on 22nd June, 1992 for the sum of Rs. 53,30,659.73. The respondent claimed that these amounts represented, "foreign exchange loss variation pertaining to our supplies of Helium Gas during the relevant period". The respondent also placed reliance on a notification dated 25-9-1989 issued by Ministry of Petroleum and Natural Gas and a circular of the appellant No. 74 of 1989 dated 8-11-1989 to press its claim. Though the respondent's claim was recommended by the Secretary, Petroleum and Natural Gas Department, and was also strongly recommended by certain senior officers of the appellant Commission, the Commission ultimately took the view that the respondent was not entitled to claim additional amounts and by order dated 14th July, 1992 rejected the claim of the respondent. There was an arbitration clause in the agreement entered into between the appellant and the respondent for supply of Helium gas. The respondent then invoked the arbitration clause by its notice and appointed one D.C. Kothari as its Arbitrator in the matter and called upon the appellant to appoint its Arbitrator. The appellant by Telex dated 30th October 1992 appointed Justice (Retd.) V.D. Tulzapurkar a

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