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1996 Supreme(Raj) 420

High Court Of Rajasthan
Judgename : P.C.JAIN
UNION OF INDIA - Appellant
Versus
AJMER CONSTRUCTION COMPANY - Respondent
C. M. A. 325 Of 1996
Decided On : 08/02/1996

Advocates Appeared:
M.L.KALA, P.P.CHAUDHARY, S.S.LAL

An arbitrator is not required to give detailed reasons for his decision on a particular point or issue and an award can be set aside only if the arbitrator misconducted himself or the proceedings or committed an error of law apparent on the face of the award.

Headnote:

ARBITRATION ACT, 1940 - SEC. 13, 14, 39 - AWARD - VALIDITY - NON-SPEAKING AWARD - ARBITRATOR NOT REQUIRED TO GIVE DETAILED REASONS FOR DECISION ON PARTICULAR POINT OR ISSUE - AWARD CAN BE SET ASIDE ONLY IF ARBITRATOR MISCONDUCTED HIMSELF OR PROCEEDINGS OR COMMITTED ERROR OF LAW APPARENT ON FACE OF AWARD.

Fact of the Case:

Dispute arose between the parties regarding water charges in a contract agreement for store accommodation. The dispute was referred to an arbitrator who awarded a sum of Rs. 3,77,959/- to the respondent. The appellant challenged the award on the ground that the arbitrator did not consider the respective contentions of the parties regarding the dispute of water and totally ignored the provision contained regarding water in clause (31) of the agreement.

Finding of the Court:

The court held that the arbitrator did not misconduct himself or the proceedings and did not commit any error of law apparent on the face of the award. The court further held that the arbitrator was not required to give detailed reasons for his decision on a particular point or issue and that the award was valid.

Issues: Whether the arbitrator misconducted himself or the proceedings or committed an error of law apparent on the face of the award.

Ratio Decidendi: An award can neither be remitted nor set aside merely on the ground that it does not contain reasons in support of the conclusion or decisions reached in it except where the arbitration agreement or the deed of submission required him to give reasons. The arbitrator or umpire shall have to give reasons also where the court has directed in any order such as the one made under Sec. 20 or Sec. 21 or Sec. 34 of the Act that reasons should be given or where the statute which governs an arbitration requires him to do so.

Final Decision: The appeal was dismissed.

Judgment


P. C. JAIN, J.

( 1 ) THE appellants-defendant has filed this appeal under Sec. 39 of the Arbitration Act, 1940 (for short the Act) against the judgment and decree passed by the learned- Addl. Distt. Judge No. 2, Jodhpur dated 15-1-96 in Civil Misc. Case No. 227/95.

( 2 ) THE dispute raised in this appeal is very short. The relevant facts are that a contract agreement No. CE/b/j/jodh/45/84 ,was executed between the parties of store accommodation at Banar, Jodhpur. The above agreement contained a provision for reference of the disputes arising between the parties in connection with the above work to an arbitrator. A dispute regarding water charges arose between the parties. , The dispute was referred to Shri S. G. Mahajan, the Sole Arbitrator. After hearing the parties, the Sole Arbitrator gave his award on 16-2-93. The notice of making the award was given by the arbitrator to the plaintiff-respondent. Under the above award, the arbitrator awarded a sum of Rs. 3,77,959/- to the respondent No. 1. He also awarded interest. However, no dispute has been raised regarding the interest. The appellant-defendant raised certain objections before the learned District Judge when the proceedings under Sec. 14 of the Act were initiated. The petitioner challenged the award on the ground that the arbitrator did not at all consider the respective contentions of the parties regarding the dispute of water. He totally ignored the provision contained regarding water in clause (31) of the above agreement and without assigning any reason awarded a sum of Rs. 3,30,000/- as cost of the water incurred by the respondent in the execution of the above work. It may be stated that the appellant only charged a sum of Rs. 23,629/- as cost of water. As compared to this reasonable cost, the award contains a very exorbitant claim being cleared by the arbitrator without any reason and in total ignorance of the relevant clause which governs the conditions under which water is to be supplied and utilised. Thus, the award is silent about that and suffers fatally on that account. By allowing such unfounded claim in favour of the respondent, the arbitrator has misconducted himself and the award is liable to be set aside on that ground. Learned Counsel has placed reliance on the observations made in Associated Engineering Co. v. Govt. of Andhra Pradesh, AIR 1992 SC 232.

( 3 ) LEARNED Counsel for the appellant further submitted that the learned District Judge also did not consider this aspect of the matter. and he also did not deal with the real and material dispute between the parties regarding supply of water.

( 4 ) LEARNED Counsel for the respondent, on the other hand, submitted that the learned Counsel for the appellant forgot that when the MES backed out from the contract to supply water to the respondent, the latter had to manage water from a very long distance as there is fairly acute scarcity of water. Learned Counsel has admitted that the dispute between the parties will be governed by clause (31) of the contract. The appellant in flagrant violation of the provisions contained in clause (31) did not take any steps to facilitate supply of water. Only a pipe-line was laid down, but, no water was supplied in it nor different points were made and indicated from which the respondent could draw the water. In fact, the appellant did not supply water at all. It is rather surprising that even without supplying any water, the appellant chose to charge for water in the bill. Learned Counsel has very emphatically argued that the dispute regarding charges of water was before the arbitrator and he heard both the parties and then rendered his award. It is settled law that the validity of an award cannot be judged on the ground that it is not speaking award because the arbitrator is not professionally sound and does not understand the requirement of law to render a well-reasoned and well-documented award. He must follow the principles of equity and natural justice. In










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