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1961 Supreme(Ori) 33

HIGH COURT OF ORISSA
R. L. Narasimham, C. J. And J. K. Misra, J.
STATE OF ORISSA - Appellant
Versus
P. C. CHANDA - Respondent
First Appeal 123  Of  1957
Decided On : MAY 10, 1961

Advocates Appeared:
D.BHUYAN, R.K.Kar, R.K.PATNAIK, Sidharta Ray

An arbitrator is not bound to give reasons for his award or to state why and how he came to his conclusion. The giving of reasons would be an invitation to a party to embark upon further litigation.

Headnote:

ARBITRATION - AWARD - SETTING ASIDE - GROUNDS - OMISSION TO DECIDE ALL MATTERS IN DISPUTE - JUDICIAL MISCONDUCT - ORAL EVIDENCE - NECESSITY - AFFIDAVIT IN SUPPORT OF APPLICATION TO SET ASIDE AWARD.

Fact of the Case:

The State of Orissa appealed against the judgment of the subordinate Judge of Puri refusing to set aside an award dated 27th April 1956 and passing a judgment and decree in terms of that award in favor of the respondent. The respondent was a contractor who agreed to construct four bridges on the Lewis Road in Bhubaneswar for a lump sum contract of Rs. 7,58,000/-. During the construction, the contractor was informed that two of the bridges need not be constructed and that these should be omitted from the contract. The contractor did not accept the interpretation of the word "omission" in clause 7 of the Conditions of Contract, which allowed deduction to be made in respect of "omissions" at the scheduled rates in force. After the completion of the work, there was a dispute between the parties and an arbitrator was appointed under Section 8 (2) of the Arbitration Act. The arbitrator passed an award on 27th April 1956, which was challenged by the State Government on the grounds of (1) no competent reference by the Subordinate Judge to the arbitrator, (2) judicial misconduct by the arbitrator.

Finding of the Court:

The court held that there was a valid reference by the Subordinate Judge to the arbitrator, even though the exact dispute was not specified. The court also held that the arbitrator did not commit any judicial misconduct and that he had followed the rules of natural justice in conducting the proceedings. The court further held that the arbitrator was not bound to give reasons for his award or to state why and how he came to his conclusion. The court also held that the arbitrator was not bound to take oral evidence and that the State Government was not prevented from leading all available evidence bearing on the subject.

Issues: 1. Whether there was a competent reference by the Subordinate Judge to the arbitrator? 2. Whether the arbitrator was guilty of judicial misconduct? 3. Whether the arbitrator was bound to give reasons for his award? 4. Whether the arbitrator was bound to take oral evidence?

Ratio Decidendi: 1. A general reference of the dispute between the parties, by the subordinate Judge to the Arbitrator, would be a valid reference, especially when the nature of the dispute is obvious from the statements of their respective cases, put forward by the parties before the Arbitrator. 2. The arbitrator is not bound to give reasons for his award, or to state why and how he came to his conclusion. The giving of reasons would be an invitation to a party to embark upon further litigation. 3. The arbitrator is not bound to take oral evidence unless the agreement of reference prescribes in what form the award is to be made.

Final Decision: The appeal was dismissed with costs.

NARASIMHAM, C. J.

( 1 ) THIS is an appeal by the State of Orissa against the judgment of the subordinate Judge of [puri refusing to set aside an awardl dated 27th April 1956 and passing a judgment and decree in terms of that award in favour of the respondent

( 2 ) THE respondent was a contractor who agreed to construct four bridges on the lewis Road in Bhubaneswar for a lump sum contract of Rs. 7,58,000/ -. The terms of the contract were put in writing (See Ex. A ). The length of the 4 bridges, as shown in the contract, is as follows : (i) Bridge over Gangua-520 ft. ; (ii) Bridge at 2m-2140 ft-40 ft: (iii) Bridge at 2m-2715 ft-100 ft; and (iv) Bridge at 2m-4992 ft100 ft Clause 7 of the Conditions of Contract authorises the Executive Engineer to make additions, omissions or variations to the works and further stipulates that for such additions omissions Or variations extra sums may be added or deducted from the amount of the contract "at rates in accordance with the sanctioned schedule of rates in force at the time when a particular item or work was commenced". Clause 19 is the usual arbitration clause to the effect that if there is a dispute between the con-tractor and the Executive Engineer it may be referred to an arbitrator to be chosen by the parties to the contract. Soon after the commencement of the work the contractor was informed by the Engineer that bridges 2 and 3 mentioned above need Work the constructed and that these should be omitted from the contract. In a subsequent letter, Ext. B dated the 20th april 1949 the contractor was informed that on account of the omission of the aforesaid two bridges deduction would be made from the total amount payable to the contractor at the rate of Rs. 1200/- per running foot the exact length of the two bridges omitted was shown in that letter as; 2nd bridge-49 ft. and 3rd bridge 106 it-total 149 ft Apparently this deduction at Rs. 1200/- per running foot was made on the basis of clause 7 of the Conditions of contract which allowed deduction to be made in respect of "omissions" at the scheduled rates in force. The contractor, however did not accept this interpretation of the word "omission" in clause 7. According to him the 'omissions' referred to therein related to minor omissions in respect of particular items connected with the construction of the 4 bridges and could not include the omission of the two out of the 4 bridges. Hence, after the completion of the work there was a dispute between. the parties and as they did not agree on an arbitration an application was made to the Subordinate judge, Puri for the appointment of an Arbitrator under Section 8 (2) of the arbitration Act. The learned Subordinate Judge, by his order dated 11th March 1954, in M. C. no. 176 of 1953 appointed one Mr. T. if. Dixon, Superintending. Engineer, construction Circle, Central P. W. D. as the Arbitrator by his order dated 11th march 11954 (Ext. 1) and sent him a letter of appointment.

( 3 ) THE learned Arbitrator after hearing the parties passed his award on 27th April 1956 which is reproduced below: (After reproducing the award in full, the judgment proceeded): the Contractor applied under Section 14 of the Arbitration Act for passing a decree in terms of aforesaid award. The Government of Orissa did not file an independent application for setting aside the Award but in their written statement to the contractor's petition under Section 14 they raised several objections to the Award and ultimately prayed for setting it aside. The learned lower Court passed a composite order on 12th July, 1957, rejecting the objections of the State government and passing a decree in terms of the award. If this be construed as an order under Section 17 of the Arbitration Act, the government's right to challenge the judgment and decree of the lower Court would be very much restricted, and unless it can be shown that the decree was in excess of or otherwise not in accordance with the Award, Government will have no rig
















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