1998 Supreme(Del) 417

High Court Of Delhi
KOCHHAR CONSTRUCTION WORKS - Appellant
Versus
DELHI DEVELOPMENT AUTHORITY - Respondent
Suit 2039 of 1994
Decided On : 05/22/1998

Headnote:Arbitration Act, 1940 - Section 30 & 33 — Award in excess of jurisdiction — Permissibility — The arbitrator being a creator of agreement must operate within the four corners of agreement.

       Held :

       It is axiomatic that the arbitrator being creature of the agreement must operate within the four comers of the agreement and cannot travel beyond it. The arbitrator had to follow the limits set for him and the court can find that he exceeded his jurisdiction on proof of such excess. There are two different and distinct grounds involved in many such cases. One is the error apparent on the face of the record and the other is that the arbitrator exceeded his jurisdiction. In the latter case, the courts can look into the arbitration agreement but in the former, it cannot, unless the agreement was incorporated or recited in the award.

       In case the arbitrator is acting within the four comers of the agreement and does not exceed his jurisdiction he may himself judge the quality as well as quantity of the evidence and he may also act upon certain estimates about the market value based on his experience who would know and have means of knowing about the market rates. To this extent the Court is supposed to accept and respect his views irrespective of the fact that whether he has disclosed the rates or not in the award.

       Section 30 & 33 — Reasoned award — Detailed revision — Necessity of — Arbitrator is not expected to right a detailed Judgment and the Court cannot prove into his thought process to discover a mistake not apparent on the face of award.

       A reasoned award must disclose some intelligible reasons dealing with substantial points raised before the arbitrator as well as intimating some nexus between the material on record and the conclusions arrived at by the arbitrator to indicate trend of thought process, mental meanderings need not be referred to nor he is required to give detailed reasons as judges do. "Die question of sufficiency or lack of sufficiency of reasons depends on facts of the particular case. As regards giving actual calculations incoming to the conclusion of awarding a certain amount there appears some light conflict in the opinions but a slight in depth study indicates that there may be none.

       Even an arbitrator commits a mistake either in law or fact but such mistake does not appear on the face of the award or in a document appended to or incorporated in it so as to form part of it, the award would neither be remediad nor set aside notwithstanding the mistake

       If the arbitrator decides a dispute which is beyond the scope of reference or beyond the subject matter of the reference or he makes an award disregarding the team of the agreement or terms of the contract, it would be a jurisdictional error beyond the scope of reference and he cannot clothe himself to decide conclusively that dispute as it is an error of jurisdiction which is to be ultimately decided by the court. In the matter of challenge to the award, if there are two distinct and different grounds, namely that there is an error apparent on the face of the record and that the ar-bitrator has exceeded his jurisdiction. The arbitrator, while deciding the admitted dispute, in the latter case, the court can look into the arbitration agreement but under the former it cannot do so unless particular point or clause of the agreement was incorporated or cited in the award or evidence was made part of the agreement. In the case of jurisdictional error, "...there is no embargo on the power of the court to admit the contract into the evidence and to consider whether or not the umpire had exceeded the jurisdiction because of nature of the dispute is something which has to be determined, outside the award, whatever might be said about in the award or by the arbitrator. In the case of non-speaking award, it is not open to the court to go into the merits. Only in a speaking award, the court can look into the reasoning in the award and correct wrong proposition of law or error of law. It is not open to court to probe the mental process of the arbitrator and speculate when no reasons have been given by the arbitrator as to what impelled the arbitrator to arrive at his conclusion. But in case pf exceeding the jurisdiction, the court, with reference to the terms of contract/arbitration agreement, would consider whether or not the arbitrator/umpire has exceeded his jurisdiction in awarding or refusing to award the sum of money awarded or omitted a consolidated lump sum."