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1982 Supreme(Ori) 121

High Court Of Orissa
R. C. Patnaik, J.
STATE OF ORISSA - Appellant
Versus
KIRTAN CHARAN MOHANTY - Respondent
Misc. Appeal 309  Of  1982
Decided On : 09/22/1982

Advocates Appeared:
B.K.NAYAK, R.K.RATH

A no-reason award is not invulnerable to a challenge on the ground of perversity. An award can be set aside on the ground of error of law when it is manifest on the face of the award. If there is no evidence at all before the arbitrator, the award can be assailed as being erroneous on the face of it.

Headnote:

ARBITRATION - AWARD - NO-REASON AWARD - PERVERSE AWARD - AWARD BASED ON NO EVIDENCE - CAN BE ASSAILED AS ERRONEOUS ON THE FACE OF IT.

Fact of the Case:

The respondent entered into an agreement with the appellant for the execution of work. Disputes arose between the parties, and an arbitrator was appointed to adjudicate the disputes. The arbitrator passed an award in favor of the respondent, and the appellant challenged the award on the ground that it was based on no evidence.

Finding of the Court:

The court held that a no-reason award is not invulnerable to a challenge on the ground of perversity. Perversity vitiates a decision, and this principle applies to the decisions of arbitrators as well. The court further held that an award can be set aside on the ground of error of law when it is manifest on the face of the award. If there is no evidence at all before the arbitrator, the award can be assailed as being erroneous on the face of it.

Issues: Whether a no-reason award is invulnerable to a challenge on the ground of perversity.

Ratio Decidendi: The court held that a no-reason award is not invulnerable to a challenge on the ground of perversity. Perversity vitiates a decision, and this principle applies to the decisions of arbitrators as well. The court further held that an award can be set aside on the ground of error of law when it is manifest on the face of the award. If there is no evidence at all before the arbitrator, the award can be assailed as being erroneous on the face of it.

Final Decision: The court dismissed the appeal, holding that the appellant had not specifically objected to the award on the ground of no evidence before the learned Subordinate Judge. The court also held that entertaining such an objection at this stage would tantamount to denial of justice.

R. C. PATNAIK, J.

( 1 ) THIS is an appeal against the decision of the learned Subordinate Judge, Bhubaneswar entering judgment of the award. The respondent entered into an agreement No. 17 F-2 of 1978-79 for execution of the work, namely, "protection to Scoured Bank of Kani Right near village Brahmacharipatna". Disputes having arisen between the parties, one Sri Bamadev Mohapatra, Superintending Engineer was appointed as Arbitrator to adjudicate the disputes, He was subsequently removed and Sri P. C. De, a retired District Judge was appointed as Arbitrator. He passed the award for Rs. 2,25,047/- with 10 per cent interest, on the said amount from 30-5-1979 till the date of payment or decree whichever was earlier. He disallowed the counter-claims made by the appellant.

( 2 ) THE award did not furnish any reasons and the learned Subordinate Judge negatived all the objections there-to raised by the appellant and entered judgment on the award. He directed that interest awarded by the Arbitrator would run till the date of the decree. No future interest from the date of decree was awarded by the judgment.

( 3 ) IN appeal, the learned Standing Counsel for the appellant urged that the award of the Arbitrator was based upon no evidence. The respondent had not laid any material before the Arbitrator in support of the claims and the only material that was furnished was on behalf of the appellant, namely by production of measurement book to show that the respondent had no substance in his claims. The materials that were furnished by the appellant related to the counter-claims.

( 4 ) THE award is a no-reason award which is of late much in vogue. However, to a challenge on the ground of perversity a bald award without reasons would not be invulnerable. Perversity, of course, has to be established. Where there is no evidence before the Arbitrator, in support of the award, it would be an untenable argument that there being no reasons, the award--good or bad, right or wrong, the Arbitrator being a tribunal of the choice of parties--is immune from challenge. Law is well settled that perversity vitiates a decision. This general principle has application, be the adjudication by Court, Tribunal or Arbitrator. The sanctity attached to the decision of an Arbitrator is defiled by perversity.

( 5 ) MY view gets support from a Bench decision of the Calcutta High Court in the case of Nrisingha Maitra v. Shyam Sunder Chattopadhyay (AIR 1981 Cal 65 ). It has been observed that if there is no evidence at all before the Arbitrator, the award can be assailed as being erroneous on the face of it. In Chhogmal Bawatmal v. Sankalchand G. Shah, (1949) 53 Cal WN 828, a Division Bench consisting of Harries, C. J. and Chatterjee, J. held:-- "an award can be set aside on the ground of error of law when it is manifest on the face of the award. It is, however, open to the Court to look into the relevant statements filed before the arbitration tribunal. If the Court is satisfied that the arbitrators were guilty of misconduct, then the Court should set aside their award. The expression "legal misconduct" is an ambiguous term. It means and includes some honest though erroneous breach of duty causing a miscarriage of justice. If there has been a mishandling of the arbitration proceedings or serious neglect of duty on the part of persons vested with judicial authority to determine the right and liabilities of parties which is likely to lead to substantial miscarriage of justice, then the Court is justified in setting aside the award. " Their Lordships observed that to decide an issue of fact without any evidence or material before the Arbitrators is serious dereliction of duty and proceeded to observe:-

"ordinarily the Court will not review the arbitrators' conclusions or findings provided they act within the authority and according to the principles of justice and behave fairly to both the parties. But the discretionary power of Arbitrators in the conduct of proceedings




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