High Court Of Delhi
DES RAJ AND SONS - Appellant
Versus
UNION OF INDIA - Respondent
REGULAR FIRST APPEAL 35 of 1980
Decided On : 03/08/1984
ARBITRATION - AWARD - NON-SPEAKING AWARD - SCOPE OF JUDICIAL REVIEW - COURT CANNOT SET ASIDE AWARD MERELY BECAUSE IT MIGHT HAVE COME TO A DIFFERENT CONCLUSION - MERE DISSENT OF COURT FROM ARBITRATOR'S CONCLUSION ON CONSTRUCTION DOES NOT EMPOWER IT TO SET ASIDE AWARD.
Fact of the Case:
A building contractor did work for the Union of India. Disputes arose between the parties and were referred to an arbitrator. The arbitrator gave a non-speaking award, which the Union of India objected to on two grounds: (1) the arbitrator lacked jurisdiction to award damages for suspension of work, and (2) the arbitrator erred in allowing a claim for rise in labor wages. The single judge set aside the award on both grounds.
Finding of the Court:
The court held that the arbitrator did not exceed his jurisdiction in awarding damages for suspension of work and that the arbitrator did not err in allowing the claim for rise in labor wages. The court found that the arbitrator's interpretation of the relevant clauses of the contract was reasonable and that the court could not set aside the award merely because it might have come to a different conclusion.
Issues: 1. Whether the arbitrator exceeded his jurisdiction in awarding damages for suspension of work? 2. Whether the arbitrator erred in allowing the claim for rise in labor wages?
Ratio Decidendi: 1. The court held that the arbitrator did not exceed his jurisdiction in awarding damages for suspension of work because the contract did not explicitly prohibit such an award. 2. The court held that the arbitrator did not err in allowing the claim for rise in labor wages because the contract did not explicitly prohibit such a claim.
Final Decision: The court allowed the appeal, made the entire award a rule of the court, and passed a decree in terms of the award. The court also awarded interest at six percent per annum on the amount awarded from the date of the decree of the learned single judge till the date of payment.
( 1 ) AVADH Behari J.-This is an appeal by a building contractor from the order of a learned single judge of this Court, dt. 22. 1. 80 The contractor did work for the respondent, Union of India. Disputes arose between the parties. They were referred to an arbitrator. He gave his award. He made a non-speaking award.
( 2 ) THE Union of India objected to the award on two grounds. Firstly they questioned the jurisdiction of the arbitrator to award damages on account of suspension of work. A sum of Rs. 44,078. 72 was awarded to the contractor on account of the fact that the work had been suspended by the Government during a certain period for no rhyme or reason. On this part of the award the learned Judge held that under clause 9 of the contract no claim was admissible for compensation due to suspension of work and the arbitrator had acted beyond his jurisdiction in awarding compensation for suspension.
( 3 ) THE 2nd claim which the arbitrator allowed was for Rs. 8,073. 25 against rise in labour wages. On the construction of clause 3. 1 which provides that the contractor shall have no claim whatsoever if on account of any local regulations or otherwise he is required to pay wages in excess of fair wages shown in the schedule, the learned judge held that the arbitrator went wrong in allowing this claim because the contract states that no extra wages can be claimed.
( 4 ) ACCEPTING these objections of the Union of India the learned Judge set aside that part of the award which awarded these two claims. From this judgment the contractor appeals.
( 5 ) IN our judgment in M/s Om Prakash Baldev Krishan Vs, U. O. I. F. A. O. (OS) 14/80 pronounced today we have dealt with this case at some length. We have held that Des Raj Vs. U. O. I. was wrongly decided.
( 6 ) THIS precise question arose for decision before one of us (Avadh Behari J.) in Rawala Con. Co. Vs. U. O. I. , 1982 Rajdhani L. R. 19. Atp. 26 it was observed :- "the arbitrator has not referred to any clause of the contract. These have not been incorporated in the contract. There is not even a general reference to the contract in the award. It is not permissible for the Court to read the clause of the contract first and then to arrive at the conclusion that the arbitrator has gone wrong in construing the terms of the contract. This principle is now well settled. The court has therefore no right to read the clauses of the contract and to find fault with the arbitrator s award by adopting a line of reasoning of its own. If the arbitrator says "on the wording of this clause I hold so and so, then that clause is impliedly incorporated into the award because he invites the reading of it". (Blaibar and Co. Vs. Leopold Newborne (London) Ltd.) (1953) 2 Lloyd e Re p. 327 at p 429 per Denning LJ. ). But here there is no reference to any specific provision of the contract on which the arbitrator may be said to have based his decision. It is quite impossible to say that he has incorporated the contract in the award in the sense that he has invited those reading the award to read the contract. "the principle of reading contracts or other documents into the award is not one to be encouraged or extended. " I am therefore not entitled, in an award which is non-speaking, to look at the contract and search it in order to see whether there is an error of law. The arbitrator has not given any reasons why he has arrived at the conclusion he did. They will always remain in the breast of the arbitrator. The route of reasoning he adopted for himself the court will never know. The court has no means to enter his mind and to explore his thought processes. " We think this is the right approach.
( 7 ) THE reasoning of the learned Judge in the impugned decision has not commended to us. He failed to appreciate that he was not hearing an appeal from the decision of the arbitrator. He was hearing a motion to set aside the award u/s 30 of the Arbitration Act. It is not open to us to set aside the award
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