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HIGH COURT OF CALCUTTA
Amaresh Roy, A. K. De
DAMODAR VALLEY CORPORATION - Appellant
Versus
IKRAH NANDI COAL CO. - Respondent
A. F. O. O. 80 Of 1967
Decided On : JULY 30, 1971
ARBITRATION - Setting aside of Award - Grounds - Misconduct of Arbitrators - Error of law on the face of the Award - Scope of Arbitration - Interpretation of Contract.
Fact of the Case:
Damodar Valley Corporation (DVC) appealed against the dismissal of their application to set aside or modify an arbitration award in a dispute with Ikrah Nandi Coal Co. (Coal Co.) over deductions made in coal bills due to alleged inferior quality and lower calorific value.
Finding of the Court:
The Court held that there was no misconduct in the arbitration proceedings, as the absence of signatures of both arbitrators on some minutes did not constitute an omission of joint deliberations. The Court also found that the arbitrators did not exceed their jurisdiction by deciding on the method of sampling, as it was within the scope of the reference to arbitration. Furthermore, the Court held that the award did not contain any error of law on its face and that the arbitrators' decision on the method of sampling was not an error of law that could be challenged.
Issues: 1. Whether there was misconduct in the arbitration proceedings due to the absence of signatures of both arbitrators on some minutes? 2. Whether the arbitrators exceeded their jurisdiction by deciding on the method of sampling? 3. Whether the award contained an error of law on its face? 4. Whether the arbitrators' decision on the method of sampling was an error of law that could be challenged?
Ratio Decidendi: 1. The absence of signatures of both arbitrators on some minutes does not constitute an omission of joint deliberations, as the minutes are merely memoranda for the arbitrators' own aid and there is no legal requirement for them to be signed by both arbitrators. 2. The arbitrators did not exceed their jurisdiction by deciding on the method of sampling, as it was within the scope of the reference to arbitration, which included disputes over deductions made in coal bills due to alleged inferior quality and lower calorific value. 3. The award does not contain any error of law on its face, as the arbitrators did not state any proposition of law when they based their decision on the view that the method of sampling applied by DVC was not the correct method. 4. The arbitrators' decision on the method of sampling is not an error of law that can be challenged, as the parties chose the arbitrators to be the judges in the dispute and cannot object to the decision on the law or facts unless the mistake appears on the face of the award or in a document appended to or incorporated in it.
Final Decision: The appeal was dismissed with costs.
( 1 ) THIS appeal by Damodar Valley Corporation is directed against the judgment and order passed by a Subordinate Judge at Ali-pore dismissing the application made by the said Corporation under Sections 30 and 33 of Arbitration Act, 1940 praying for setting aside an Award or in the alternative modifying the same and if necessary for superseding the Arbitration Agreement between the said Corporation and the Respondent firm M/s. Ikrah Nandi Coal Co.
( 2 ) MATERIAL facts are that in April 1962 D. V. C. invited tenders for supply of 375000 Tonnes of Coal by road. Ikrah Nandi Coal Co. submitted tender on 21-5-1962. After the parties obtain-ed clarification on some points, on June 9, 1962 the Coal Co. submitted fresh tender on the basis of supply about 10,000 tonnes of Grade II R. O. M. Coal per month to be supplied by rail and on June 14, 1962 the D. V. C. placed order for supply of a quantity of coal by a letter of that date mentioning therein terms and conditions which included inter alia provisions for Transportation by Railway wagons and unloading of Coal wagons by D. V. C. by their Wagon Tippler and also provided for the method of sampling and analysis. In that letter of indent dated June 14, 1962 it was also provided in Clause 10. "all other terms and conditions and which have not been specified in this letter of indent, for the supply and delivery of coal to the D. V. C. 's Dur-gapur Thermal Power Station Storage Yard of Waria shall be as per D. V. C. 's Tender Specification PE-Spec-101. "
( 3 ) THE Tender Specification PE-Spec-101 mentioned in that clause is the original tender invited by D. V. C. in April 1962 and Clause 21 thereof contained the arbitration agreement in these terms; arbitration "except where otherwise provided In the Contract if at any time any question, dispute or difference whatsoever shall arise between the Corporation and the Contractor upon, or in relation to. or in connection with the Con-tract either party may forthwith give to the other notice in writing to the existence of such question, dispute or difference, and the same shall be referred to the adjudication of two arbitrators, one to be nominated by the Corporation and the other to be nominated by the Contractor, or in the case of the said arbitrators not agreeing, then to the Coal Controller, Govt of India, and the award of the arbitrators, or in the event of their not agreeing, of the Coal Controller shall be final and binding on the parties and the provisions of the Indian Arbitration Act. 1940 and of the rules thereunder and any statutory modification thereof shall be deemed to apply to and be incorporated in this Contract. "upon every or any such reference, the costs of and incidental to the reference and award respectively shall be in the discretion of the arbitrators or of the Coal Controller, as the case may be, who may determine the amount there-of. or direct the same to be taxed as be-tween Solicitor and Client, or as between party and party and shall direct bv whom and to whom and in what manner the same shall be borne and paid. "work under the contract shall be continued by the Contractor during the arbitration proceedings, unless otherwise directed in writing by the Corporation or unless the matter is such that the works cannot possibly be continued until the decision of the arbitrators or of the Coal Controller as the case may be is obtained and save as those which are otherwise expressly provided in the contract no payment due or payable by the Purchaser shall be withheld on account of such arbitration proceedings unless it is the subject-matter or one of the subject-matters thereof. "
( 4 ) THE order for supply of coal on those terms was accepted by the Coal Co. by their letter dated 16-6-1962 and several consignments of coal were supplied.
( 5 ) SOON thereafter correspondence ensued between the parties over draw-ing of samples. As early as on July 6, 1962 D. V. C. wrote to Coal Co. intimating inter alia that
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