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2007 Supreme(Bom) 25

2007(2) ALL MR 203
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
R. M. S. KHANDEP ARKAR & Dr. D. Y. CHANDRACHUD, JJ.
Union of India- Petitioner
Versus
M/s. Ghanekar Builders & Chemicals Pvt. Ltd.- Respondent
Appeal No.706 of 1998 IN Arbitration Petition No.226 of 1997
IN Award No.96 of 1997
Decided on 10th January, 2007.
Advocates appeared
Mr. SURESH KUMAR, Advocate, for the Appellants.
Mr. D. D. MADON, Senior Counsel, with Mr. C. S. KAPADIA and Ms. TRUPTI SHETTY i/b M/s. Dhruve Liladhar & Co. for the Respondent.

Headnote:Arbitration Act, 1940 - Sections 7 and 30 - Arbitral award - Arbitration proceedings - Reasons - Arbitration agreement not required Arbitrator to furnish any reasons for award - No such stipulation contained in general conditions of contract - Arbitrator not under legal obligation to furnish reasons in arbitral proceedings governed by Act. - An award is not liable to be set aside merely on the ground of absence of reasons where the arbitration agreement does not stipulate that reasons be given for the award. Unless the arbitration agreement contains a stipulation as to reasons, the arbitration was not under a legal obligation to furnish reasons in arbitral proceedings governed by the Arbitration Act of 1940.

       Arbitration Act, 1940 - Section 30 - Appeal against award - Pleadings not containing any factual or legal foundation - Absence of foundation in pleadings - Such point cannot be permitted to be raised for first time in appeal. - There is no factual or legal foundation in the pleadings. As a matter of fact there was no counter-claim. There is no challenge at all on the award of interest, in the pleadings. Absent a foundation in the pleadings, the Court in appeal cannot allow such a point to be raised. In these circumstances, it would not be permissible for such a ground to be raised for the first time in an appeal against the judgment of the single Judge dismissing a petition challenging the arbitral award.

       Arbitration Act, 1940 - Section 30 - Arbitral award - Interference with - Permissible - Only where proposition of law contained in award or in a document embodied in award found to be erroneous. - Under the Act of 1940, it was a settled principle of law that an arbitral award could be interfered with on the ground of an error apparent on the face of the record; where a proposition of law contained in the award or in a document embodied in the award was found to be erroneous.

Dr. D. Y. CHANDRACHUD, J.:- A Petition was instituted for challenging an arbitral award governed by the provisions of the Indian Arbitration Act, 1940. A learned Single Judge of this Court, by his Judgment and Order dated 18th November, 1997, did not find any merit in the grounds urged under Section 30 for impugning the validity of the award. An Appeal has been preferred against the Judgment of the learned single Judge in so far as the Court declined to accede to the challenges to the award.

2. On 27th May, 1983, the Chief General Engineer of the Western Railways awarded a contract to the respondents for the work of channelisation of the Mahim Creek. The work involved carrying out protection work for Railway Bridge No.20 between Mahim and Bandra. A formal document evidencing the terms of the contract was accordingly entered into between the parties. The Agreement dated 29th August, 1983, inter alia, contained a provision in regard to the arbitration of disputes. Disputes having been raised by the respondents, a Suit was instituted before this Court under Section 20 of the Arbitration Act, 1940. The Suit was dismissed by a learned single Judge of this Court on the ground that the claim was barred by limitation. In an Appeal filed by the respondents, a Division Bench of this Court directed by an Order dated 15th March, 1995 that the Appellants shall appoint an arbitrator within a period of eight weeks, failing which the respondents were at liberty to move the Court. By a subsequent Order, a further extension of time was granted to the Appellants to appoint an arbitrator within four weeks, failing which it was directed that Shri. S. M. Joglekar, a retired Chief Engineer, would stand appointed as the sole arbitrator. Upon the failure of the Appellants to nominate an arbitrator in terms of the arbitration clause, Shri. S. M. Joglekar stood appointed as the sole arbitrator. The arbitrator entered upon the reference. The Union of India had filed a Special Leave Petition before the Supreme Court in order to challenge the order of the Division Bench. The Special Leave Petition was dismissed by the Supreme Court on 4th April, 1997. While dismissing the Petition, the Supreme Court observed that the Union of India had failed to appoint an arbitrator upon which the Order passed by the High Court on 15th March, 1995 had attained finality. The Supreme Court observed that once the Order of the Division Bench dated 15th March, 1995 was not challenged by the Appellants herein, no case for interference was made out for setting aside the consequential Order that was under challenge. While clarifying that the remedies of the parties in respect of the merits of the award would not be affected, the Supreme Court held that the question as to the jurisdiction of the sole arbitrator would remain concluded.

3. The sole arbitrator having entered upon the reference, rendered an award dated 22nd March, 1997. The award was challenged before a learned single Judge of this Court in a Petition under Section 30 of the Indian Arbitration Act, 1940. The Petition came to be dismissed by a Judgment and Order dated 18th November, 1997. During the pendency of the Appeal, a Division Bench of this Court directed on 14th December, 1999 that the attachment that had been levied in execution of the award shall remain stayed, subject to the Appellants depositing the decretal amount with the Prothonotary and Senior Master. The amount was to be payable to the Respondents, subject to furnishing of adequate security to the satisfaction of the Prothonotary and Senior Master. The Court has been informed that the amount has accordingly been deposited and has been withdrawn by the respondents upon furnishing security.

4. The challenge to the Judgment of the learned single Judge and consequently to the award is that the award is against the provisions of the contract and that the arbitrator had ignored the stipulations contained in the Agreement between the parties that would govern th








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