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1982 Supreme(Del) 63

High Court Of Delhi
DELHI DEVELOPMENT AUTHORITY - Appellant
Versus
UPPAL ENGINEERING CONSTRUCTION COMPANY PRIVATE LIMITED - Respondent
First Appeal (OS) 42 of 1980
Decided On : 03/05/1982

Advocates Appeared:
N.S.SISTANI, R.L.PAL

The court's scope of review of a speaking award is limited. The court cannot examine the reasonableness of the reasons given by the arbitrator or review the award on facts or law. The court can only set aside the award if the error is apparent on the face of the award or if the arbitrator has misconducted himself.

Headnote:

ARBITRATION - SCOPE OF REVIEW OF SPEAKING AWARD - ARBITRATOR'S REASONS - RELEVANCE, INTELLIGIBILITY, AND LEGAL BASIS - COURT'S JURISDICTION - FINALITY OF AWARD - LUMP SUM AWARD - VALIDITY.

Fact of the Case:

A dispute arose between the Delhi Development Authority (DDA) and Uppal Engineering Construction Co. (contractor) regarding a contract for building blocks of flats. The disputes were referred to arbitration, and the arbitrator gave a speaking award in favor of the contractor. The DDA challenged the award, arguing that the reasons given by the arbitrator were not reasonable, relevant, or based on evidence.

Finding of the Court:

The court held that the scope of review of a speaking award is limited. The court cannot examine the reasonableness of the reasons given by the arbitrator or review the award on facts or law. The court can only set aside the award if the error is apparent on the face of the award or if the arbitrator has misconducted himself.

Issues: 1. Whether the court can examine the reasonableness of the reasons given by the arbitrator in a speaking award? 2. Whether the court can review the award on facts or law? 3. Whether the court can set aside the award if the error is not apparent on the face of the award? 4. Whether the arbitrator can give a lump sum award?

Ratio Decidendi: 1. The court cannot examine the reasonableness of the reasons given by the arbitrator in a speaking award. 2. The court cannot review the award on facts or law. 3. The court can set aside the award if the error is apparent on the face of the award or if the arbitrator has misconducted himself. 4. The arbitrator can give a lump sum award.

Final Decision: The court dismissed the appeal and upheld the order of the learned Judge.

LEILA SETH, J.

( 1 ) THE short point in issue in this appeal is the seope of seruitiny of a speaking award. Does the fact that the arbitrator has given a speaking award enlarge the function of the court and permit it to examine the reasons, as a court of appeal, reviewing their "reasonableness"? In a detailed judgment delivered by us on 24th February, 1982 in Delhi Development Authority v. M/s. at Karma F. A. O. (O. S.) 142 of 1979 (1), we have held not.

( 2 ) SECTION 30 of the Arbitration Act, 1940 prescribes the grounds on which an award can be set aside. The fact that an award is a reasoned award does not extend or change the Arbitration Act or law. If the error is apparent on the face of the award, it can be set aside. Naturally in a speaking award the reasons are apparent on the face of it. Therefore, if these reasons are based on any legal preposition which is erroneous, the award can be set aside.

( 3 ) THE respondent M/s. Uppal Engineering Construction Co. (in short "the contractor") entered into a contract with the appellant, Delhi Development Authority (in short, "dda" ). The contract was for building blocks of lower income group and middle income group flats in Wazir Pur, Ashok Vihar Phase III. Disputes arose and as the agreement contained an arbitration clause, being douse No. 25, these disputes were referred to arbitration. Mr. R. S. Jindal Superintending Engineer of the DDA was appoint, the arbirator.

( 4 ) MR. Jindal gave his award on 20th June, 1977, AS the claim was for more than Rs. 50,000. 00 the arbitration clause required the arbitrator to indicate his reasons. He did so. The respondent moved this Court under sections 14 and 17 of the Arbitration Act to have the award made a rule of the court. The DDA filed objections, R. N. Aggarwal, J. heard the matter. By his order dated 6th October, 1977, the learned Judge remitted the award to the arbitrator for reconsideration and directed him submit his reasons in datail with regard to claims 5 (b) and 6 to 12.

( 5 ) IN pursuance of this direction, the detailed reasons pertaining to claims 5 (b) to 11 were submitted to this Court as per letter -dated 7th November, 1977. Thereafter the DDA once again, filed their objections dated 6th July, 1978.

( 6 ) BEFORE the arbitrator there were 20 items of claim. The claims partially allowed were these, pertaining to items 1 (a ). 1 (b), 1 (c ). 5 (b), and 6 to 11 and 17, Yogeshwar Dayal,j. who heard the matter, on agreement of parties, set aside the award in relation to item No. 17. As a result, subjest to his decision in relation to claim No. 17, the learned Judge made the award a rule of the court and passed a decree in terms thereof. He also directed that interest at the rate of 6 per cent per annum from the date of the decree till the date of the realisation, be. paid, unless the decretal amount was paid within two months. He assessed costs at Rs, 500. 00 payable to the contractor. The judgement was delivered on 26th October, 1979,

( 7 ) THE DDA being aggrieved have appealed against the above mentioned judgement. They have challenged the decision pertaining to items No. 1 (a), 1 (b), 1 (c),5 (b), and 6 to 10. The main contention of Mr. Sistani, appearing for the DDA is that the reasons are neither reasonable nor relevant nor are they based on any evidence.

( 8 ) AS already noted, we have dealt with this matter in the case of M/s. at Karma (supra ). We have held that the arbitrator when called upon to give a reasoned award is still not required to write a detailed judgment as judges do. However, he is required to indicate the trend of his thought process but not his mental meanderings. The purpose of commercial arbitration, being speed, certainty and a cheaper remedy. Since the parties choose their own arbitrator they cannot, when the award is good on the face of it, object to the decision either, upon law or facts, unless such mistake appears, on the face of the award on a document appended to or incorporated with it. M/s.






















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