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2007 Supreme(Bom) 530
2008(1) Bom.C.R. 716
(O.S.)
Mohta Anoop V., J.
Mutta International ... Petitioner.
Versus
Laxmi Polytex Put. Ltd. ... Respondent.
Arbitration Petition No. 454 of 2006,
Decided on 13-4-2007.
Narendra Jabi, for respondents.
Headnote:Arbitration and Conciliation Act, 1996 - Section 31 (3) (a)-Award of Arbitral Tribunal without giving reason -Challenged-Miscarriage of justice-Held, award based upon the document placed by parties is valid.-Having once agreed to refer the matter to such Tribunal and now at this stage the submission in reference to the jurisdiction of the Arbitral Tribunal to try and entertain the dispute has also no force. The award cannot be said to be illegal, null and void. The Tribunal, based on the agreed procedure as not required and therefore not given detailed reason that itself cannot be the ground for raising the issue on bias as raised for the first time in the petition. The award which is based on the documents and material placed by the parties is valid and binding.
Arbitration and Conciliation Act, 1996 - Section 31(3)(a) - Unreasoned award. - In view of agreed term between parties, the unreasoned award being within framework of law and record is valid.
Therefore, normally the arbitral award should contain the reasons, but as agreed and as permissible the parties have agreed that no reasons are to be given. Therefore, the challenge as raised by the petitioner that unreasoned award itself is illegal, unjust and contrary to the law is not tenable. The unreasoned award, in the facts and circumstances of the case, in view of the agreed term between the parties is within the framework of the law and the record. The award is there- fore valid and need no interference at least on this ground.
MORTA ANOOP V., J. : - The petitioner has challenged an Award dated 28th June, 2006 passed by the Arbitral Tribunal constituted under the Bharat Merchant Chambers Byelaws (for short "Byelaws")
2. This Court has admitted the matter on 24-1-2007. The matter was called out for hearing and it was adjourned on three occasions for settlement. As the settlement was not possible it was again listed for hearing on 5-4-2007.
The matter was adjourned for orders with liberty to the parties to settle the matter if possible. On 9-4-2007 none appeared for the petitioner. The respondent's Counsel informed that there is no possibility of settlement in the matter. The matter was heard. As none appeared for the petitioner, it was adjourned for 13-42007 for orders. The matter was called out twice, none appeared for the petitioner again. Therefore this order.
3. The respondent in view of the dispute arose referred the case with Annexures for claim of Rs. 77, 316/- with interest and costs and appointed Shri K. Agarwal as their Arbitrator. A copy of the said reference was also sent to the petitioner with directions to appoint the Arbitrators and also to file their written submissions in defence. The petitioner submitted its reply and appointed Shri Surjit Singh as an Arbitrator. Both the Arbitrators have appointed one Shri S. Poddar as Presiding Arbitrator.
4. The petitioner and the respondent have admittedly entered into an Agreement dated 31-1-2006 whereby they agreed to submit to the jurisdiction of Bharat Merchant Chambers (for short, 'Chambers') for adjudicating the dispute as per the Byelaws of the Chamber. Both the parties have agreed that unanimous/majority award should be binding on both the parties.
5. As per Clause 22 of the Bye-laws, it is not necessary for the Arbitral Tribunal to give reasons. The Tribunal therefore in view of this is authorised to pass unreasoned award and as agreed by the parties. Section 31 (3) of the Arbitration and Conciliation Act, 1996 (Arbitration Act, 1996) provides that parties can agree for such terms or procedure as contemplated under section
31 (3) which is reproduced as under :
31. Form and contents of Arbitral Award. -
(1) ...............
(2) ...............
(3) The Arbitral Award shall state the reasons upon which it is based, unless (a) the parties have agreed that no reasons are to be given. or (h) the award is an Arbitral Award on agreed terms under section 30.
6. In (Me. Dermott International Inc. Vs. Bum Standard Co. Ltd), (2006) 11 S.C.C. 181 : J.T. 2006(11) S.C. 376 : 2006(6) SCALE 220, the Supreme Court has considered and reiterated in the following paragraphs, that reasons is a mandatory unless dispensed with by the parties or by a statutory provision.
55. Another important change which has been made by reason of the provisions of the 1996 Act is that unlike the 1940 Act. the arbitrator is required to assign reasons in support of the award. A Question may invariably arise as to what would be meant by a reasoned award.
56. In Bachawat's Law of Arbitration and Conciliation, 4th & In., pp. 855-56, it is stated: c "......Reason is a ground or motive for a belief or a course of action, a statement in justification or explanation of belief or action. It is in this sense that the award must state reasons for the amount awarded. The rationale of the requirement of reasons is that reasons assure that the arbitrator has not acted capriciously. Reasons reveal the grounds on which the arbitrator reached the conclusion which adversely affects the interests of a party. The contractual stipulation of reasons means, as held in Poyser and Mills' Arbitration. In reporter, adequate reasons. Such reasons shall not only be intelligible but shall be a reason connected with the case which the Court can see is proper. Contradictory reasons are equal to lack of reasons. The meaning of the word 'reason' was explained by the Kerala High Court in the contest of a reasoned award......
'Reasons are the links between the materi
