( 1 ) THE respondent company is a member of the National Stock Exchange while the petitioner is a constituent who deals in stocks and shares. Disputes between the petitioner and the respondent company having arisen, the same were referred for adjudication to Col. Gujral G. Singh. who was appointed an arbitrator in terms of the bye-laws, rules and regulations of the stock exchange. Before the arbitrator as against the petitioner s claim for a sum of Rs. 24,30,794/-, the respondent company made a counter claim of Rs. 3,33,691/ -. By his award dated 25. 02. 2002, the arbitrator has rejected both the claims. While the petitioner s claim has been rejected on the ground that the same has not been substantiated, the claim made by the respondent has been turned down on the ground that the same is beyond the period of limitation prescribed for the same. Aggrieved, the petitioner has challenged the award on several grounds in so far as the same rejects her claim. The respondent company has not, however, assailed the award or appeared to contest the present application under Section 34 of the Arbitration and Conciliation Act, 1996. Consequently, the award, in so far as it rejects the claim made by the respondent, has attained finality. The only question left to be determined is whether the award in so far as it rejects the claim of the petitioner also suffers from any infirmity apparent on the face of the record so as to warrant interference with the same in the present proceedings.

( 2 ) APPEARING for the petitioner, Mr. Kumar argued that the award in so far as it pertains to the claim of the petitioner, was on the face of it, unsustainable. He urged that the arbitrator was, in terms of Section 31 (3) of the Arbitration and Conciliation Act, 1996, obliged to give reasons in support of his conclusion. The failure of the arbitrator to do so was, according to the learned counsel, a ground sufficient to justify setting aside of the award and remission of the matter to another arbitrator to be appointed by this court. Reliance in support of that submission was placed by Mr. Kumar upon the decisions of the Supreme Court in Tamil Nadu Electricity Board v. M/s. Bridge Tunnel Constructions and others AIR 1997 SC 1376, Oil and Natural Gas Corporation Ltd. v. Saw Pipes Ltd. (2003) 5 SCC 705 and the judgment of the High Court of Bombay in Vashdev Morumal Sawlani v. Yogesh Mehta and another (2002) 2 Mh. LJ 76. Reliance was also placed upon a Single Bench decision of the High Court of Himachal Pradesh in Astra Construction Pvt. Ltd. v. State of Himachal Pradesh 2002 (Vol. 108) Company Cases 711.

( 3 ) SECTION 31 (3) of the Arbitration and Conciliation Act, 1996 reads as follows:- (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 (b) the award is an arbitral award on agreed terms under section 30.

( 4 ) A plain reading of the above would show that the arbitral tribunal is under an obligation to state the reasons upon which it makes its award. That obligation would disappear only in two situations namely:- (i) where the parties have agreed that no reasons are to be given by the arbitrator or (ii) where the award is based on agreed terms under Section 30. The present case does not fall in anyone of those situations. Neither the arbitration clause on the basis whereof the reference in question was made nor any subsequent agreement arrived at between the parties at any stage prior to the making of the award, dispensed with the requirement of the arbitrator recording his reasons. It is also not a case where the award is based on agreed terms under Section 30 of the Act. There is, therefore, no gainsaying that the arbitrator was, in the instant case, obliged to state his reasons in support of the conclusions drawn by him in the award. The question is whether that requirement has been satisfied. An answer to that would necessarily depend upon how the arbitrator has d

Click Here to Read the rest of this document