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Rajasthan High Court
Dave, C.J.; Kan Singh & Kan Singh, J.
Union of India - Appellant
Versus
Firm J.P. Sharma & Sons - Respondents
D.B. Civil Misc. Appeal No. 15 of 1964
Decided On : May 12, 1967
Where two or more distinct matters of difference have been referred to the arbitrator and if the arbitrator omits to decide one such distinct matter, that vitiates the whole award and consequently the same cannot be enforced. In other words, if the matters left undecided are not to be regarded as incidental or of no material importance, or they could not be said to have been determined by implication, then the whole award stands vitiated. The arbitrator is not bound to deal with each claim separately and it is open to him to deliver a consolidated award unless the arbitration specifically requires the arbitrator to deal with each claim or matter separately or unless the submission to arbitration specifically requires the arbitrator to give his decision separately on each dispute, he need not formally express his decision on each matter of difference. It will depend on the facts and circumstances of each case whether the issues are distinct and separate or they are incidental to a proper determination of the main dispute which is the subject-matter of arbitration.
The arbitrator clearly noted in the minutes that the stand taken by the Railway administration was that the calculations of the amount would be done after some primary decisions were taken on the various issues involved and, therefore, the arbitrator was asked to decide those issues first. The Railway administration indicated that after these issues were decided they would work out the actual amount on the basis of the decision given on the various issues and then the balance-sheet would be struck on that basis. It was on those submissions that the arbitrator agreed to take up the issues first so that the amount payable in respect of each claim could be arrived at. The parties were then allowed to strike down the issues jointly and then submit the issues to the arbitrator on that very day. While reproducing the issues the arbitrator himself noted "that the parties have come forward with a list of issues which they have referred for decision by the Court."
It is thus abundantly clear that is was a case where the parties had referred certain specific issues for the decision of the arbitrator and even the arbitrator himself thought that after the decision of the issues it would be possible for the parties to work out the actual amount payable.
Issues Nos.2, 3, 4 and 5 clearly show that the controversy between the parties was about the rates only. The difference set down by them was whether the plaintiff was entitled to have the rate claimed by it, if not, what rate was applicable. This clearly implies that it was for the arbitrator to determine what rate was to be applied for each item of work. In other words, once the question of rate was adjudicated upon the only thing that was to be done was to have arithmetical calculations. What amount would be payable was not so much the subject-matter of dispute as the question of the application of the correct rate to the several items of work done by the plaintiff respondent. The real dispute between the parties that was referred to the arbitrator was about the applicability of correct rate for the job done by the plaintiff-respondent.
After a careful consideration of the whole matter is not possible to hold that the arbitrator had decided the question of the correct rate applicable to the several jobs done by the contractor. In other words, he has failed to discharge the essential function entrusted to him by the parties. It is not correct to say that the parties only wanted the arbitrator to determine what sum was payable by one to the other. Indeed there was no serious dispute between them regarding the actual amount that may be payable once the question of rate was adjudicated upon. The award does not show what decision the arbitrator, has regarding the rate that was to be applied to the various items of work. Consequently, the arbitrator has failed to decide the main points of difference referred to him. The award produced by him is, therefore, incomplete and defective on that ground. (Paras 18, 41, 45, 46 & 47)
Sec. 30 contains a negative command that an award shall not be set aside save on one or more of the grounds mentioned in the section. On the other hand, Sec. 16 vests the Court with a discretion to remit an award where the award has left undetermined any of the matters referred to arbitration. In a case where there is no-misconduct in the sense that the arbitrator was animated by ill-will or dishonesty but he has committed legal misconduct in the sense that he, on account of some inexplicable reasons, has failed to determine all the points of dispute referred to him, then, the Court is not bound to set aside the award. (Para 49)
2. The respondent firm was engaged as contractor by the Northern Railway for the purpose of performing all the work of porterage of goods at the various railway stations and goods-sheds falling in Zone No. 2 of the Bikaner Division of the Northern Railway. The terms and conditions of the contract were contained in an indenture dated 3-4-57. The agreement came into force from 1-4-57 and was terminable on 31-3-60. There were two schedules A and B appended in the agreement which provided for the rates payable to the plaintiff-respondent for the various jobs to be done by it. According to the schedules the remuneration of the contractor was to be on the basis of per thousand maunds of goods handled or per vehicle or per man hour according to the nature of the work. It was also agreed between the parties that all other handling work not specified in the agreement was to be performed by the contractor at the rates to be mutually agreed upon by the railway administration and the contractor. The procedure for payment to the contractor was that he was to prepare and submit monthly bills on the basis of the goods handled during the previous month and the actual job done was to be certified by the Station Masters concerned on submission of the bills to the Divisional Superintendent. The Accounts Office was to certify the bills after a checking and payment was ordinarily to be made within six weeks of the submission of the bills. It was, however, laid down that pending final check from the several station-returns the contractor was; to be provisionally paid to the extent of 90 per cent of the amount claimed in the bills: The grievance of the contractor was that in disregard of the terms of the contract it was not paid an amount of Rs. 36,870.38 paise for the period from April, 1957 to August, 1958. It also felt aggrieved of certain unauthorised deductions made by the railway administration for the period from January, 1958 to September, 1958 to the tune of Rs. 1,24,715.44 paise. Then, according to it for the period from May, 1957 to December, 1958, certain bills for repacking stations and road-side stations aggregating to Rs. 1,01,222.03 paise were not paid to it. Then it had a further grievance that the Station Masters had not submitted about 125 bills for the period from March, 1958 to January, 1959 to the tune of Rs. 40,000/-. The plaintiff-respondent, according to it made several demands to the railway administration for settlement of his claims, but it was not heard. Consequently after serving a notice under sec. 80 of the Code of Civil Procedure the firm filed a suit against the Union of India for a sum of Rs. 3,17,728 81 paise in the court of the District Judge, Bikaner on 21.9-59. However the defendant-appellant applied under section 34 of the Arbitration Act for staying the suit as, according to the Union of India, clause 33 of the agreement provided for arbitration in the matter of all disputes between the Union of India and the contractor. We will have occasion to refer to the arbitral clause a little later. To continue the narration, the District Judge accepted this application and stayed the suit l
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