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High Court Of Calcutta
Ramendra Mohan Datta, B. C. Basak
UNION OF INDIA (UOI) - Appellant
Versus
BADRIDAS KEDIA - Respondent
Appeal 327 Of 1975
Decided On : 12/24/1980
ARBITRATION - AWARD - MODIFICATION - POWER OF COURT - SECTION 15 (B) AND (C) OF THE ARBITRATION ACT, 1940 - SCOPE AND APPLICABILITY - AWARD MADE WITHOUT ANY MATERIAL - PERVERSE AWARD - REMISSION TO ARBITRATOR FOR RECONSIDERATION.
Fact of the Case:
The dispute arose from an arbitration award passed for a sum of Rs. 5,091/- by the arbitrator. The learned Judge exercised powers under Section 15 (b) and (c) of the Arbitration Act, 1940 and modified the award by changing the figure from Rs. 5,091/- to Rupees 10,181. 07 and passed judgment in accordance with the said modification and correction. A decree was passed on the enhanced amount with interest.
Finding of the Court:
The Court held that the arbitrator had no material before him to enable him to reduce the said sum of Rupees 10,181. 07 by half the amount. The Court further held that the award under the circumstances could not have been said to be made in imperfect form or that it contained an obvious error which could be amended without affecting the decision of the arbitrator. The Court also held that the said arbitrator without appreciating the scope of the reference before him had made a perverse award without any material before him to arrive at that finding.
Issues: Whether the Court has the power to modify the award under the circumstances by changing the figure from Rs. 5,091/- to Rs 10,181. 07/-? Whether the Court could, under such circumstances exercise power under Section 15 (b) and (c) of the Arbitration Act. 1940 ?
Ratio Decidendi: The Court held that the power of the Court under Section 15 (b) and (c) of the Arbitration Act, 1940 to modify or correct an award is limited to cases where the award is imperfect in form or contains an obvious error which can be amended without affecting the decision of the arbitrator. In the present case, the award was not imperfect in form or did not contain an obvious error. The arbitrator had made a perverse award without any material before him to arrive at that finding. Therefore, the Court could not exercise its power under Section 15 (b) and (c) of the Arbitration Act, 1940 to modify or correct the award.
Final Decision: The Court allowed the appeal and remitted the matter for reconsideration by the arbitrator accordingly.
( 1 ) THE appeal arises from the judgment and order of S. K. Roy Chowdhury, J. dated Dec. 24, 1974 in an application for setting aside the award dated May 4, 1973 and for referring the dispute to an arbitrator to be appointed by the Court. The award was passed for a sum of Rs. 5,091/- by the arbitrator. The learned Judge exercised powers under Section 15 (b) and (c) of the Arbitration Act, 1940 and modified the award by changing the figure from Rs. 5,091/- to Rupees 10,181. 07 and passed judgment in accordance with the said modification and correction. A decree was passed on the enhanced amount with interest.
( 2 ) THE facts relevant to this appeal are that by an agreement entered into in or about 1956/57 the respondent was entrusted with certain construction works of the South Eastern Railway. By letter dated September 30, 1961 the respondent requested the General Manager, South Eastern Railway to appoint an arbitrator for adjudication of disputes relating to their claims. Pursuant thereto the General Manager, South Eastern Railway communicated his appointment of K. P. Modwell as arbitrator in terms of the arbitration agreement contained in the said contract. Statements and counter-statements were filed and an interim award was made by K. P. Modwell in favour of the respondent on June 10, 1967. Thereafter, on February 12, 1968 the respondent wrote to the District Engineer, Rourkela as follows:--"dear Sir, a sum of Rs. 10,181. 07 p. is lying in special deposit with the F. A. and C. A. O. Bilaspur. We shall, therefore, be obliged if you kindly arrange to refund of the said amount as there is no outstanding amount due from us to the Railway on account of agreement No. 203/con/ser/56. Thanking you. "by letter dated March 20, 1968 on behalf of the General Manager the said arbitrator K. P. Modwell was informed as follows:--"dear Sir, sub. : Arbitration of claims and disputes between Badridas Hanuman Bux v. Union of India (S. E. Railway) under Agt. No. 203/con/ser/56. Ref. : Arbitration hearing dated 8-3-1968. As you are aware, in the concluding Arbitration hearing in the abovementioned case held in Calcutta on 8-3-1968 the contractors pressed for an early refund of the sum of Rupees 10,181. 07 p. stated to have been held by the Railway in 'special Deposit Account'. The matter has since been examined as directed by you during the hearing and it is seen that the recoveries effected in this regard are pretty old pertaining to the periods as far back as 1959-60 and it will therefore, take some time to ascertaining the full details of the recovery and to arrange refund, if any to the contractors. It may however, be pointed out that this item is not under dispute and has not been referred to you for adjudication. As such, the issue is proposed to be settle directly with the contractor. YOURS FAIthfully. Dy. F. A. and C. A. O. (ARBN) for General Manager. Copy to M/s. Badridas Hanuman Bux. Contractors, 75 Station Road, Ranchi, Bihar for information. They are requested to contact F. A. and C. A. O. (Con) S. E. R. Bilaspur regarding release of the amount of Rupees 10,181. 07 p. and pursue the matter with him. This has reference to their letter No. RD/ AR/13 dated 12-3-1963 with which a copy of the Certificate Officer. Bonai's letter No. 333 (3)/genl. dated 10-9-1963 was sent. For General Manager. "
( 3 ) FROM the aforesaid communication it will appear that the question of refund of Rs. 10,181. 07 p. , which is the subject-matter of the present dispute herein, had not been referred to the arbitrator Modwell for adjudication and the same was taken out of the purview of the said reference. The same was to be settled directly with the contractors and direction was accordingly, given as was communicated in the said letter. Thereafter on July 12, 1968 Modwell made a final award. The said award is set out as follows:--"whereas the disputes arose between the Union of India represented by General Manager, South Eastern Rail
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