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1985 Supreme(Ori) 218
High Court Of Orissa
G. B. PATTANAIK
FERTILIZER CORPN.OF INDIA - Appellant
Versus
BHARAT PAINTERS - Respondent
Misc. Appeal 185 Of 1982
Decided On : 12/17/1985
B.K.BEHAR, B.K.NAYAK, G.RATH
An arbitrator's conclusion may be set aside for misconduct if it is perverse or if the arbitrator has not applied his mind to the records of the case.
Headnote:
ARBITRATION - AWARD - INTERFERENCE BY COURT - NON-REASONED AWARD - INSPECTION OF SITE BY ARBITRATOR - NO EVIDENCE ON RECORD - PERVERSE CONCLUSION - MISCONDUCT OF ARBITRATOR - AWARD SET ASIDE - REMISSION TO ARBITRATOR.
Fact of the Case:
A dispute arose between the appellant, Fertilizer Corporation of India Limited, and the respondent, Messrs Bharat Painters, regarding the reimbursement of costs for de-watering during the execution of additional works in coal handling tunnels. The respondent invoked the arbitration clause in the contract, and the General Manager appointed an arbitrator to adjudicate the dispute. The arbitrator passed an award directing the appellant to pay a sum of Rs. 8,20,800/- in full and final settlement of all disputes and claims arising out of the contract. The appellant filed objections to the award under Sections 30 and 33 of the Arbitration Act, while the respondent filed an application to make the award a rule of Court. The Subordinate Judge rejected the objections raised by the appellant and made the award a rule of Court.
Finding of the Court:
The Court held that the arbitrator's conclusion was perverse and amounted to misconduct, as he had reached a conclusion which no person acting judicially and properly instructed in law could reach. The Court also found that the arbitrator had not applied his mind to the records of the case, as evidenced by the fact that he had indicated that he had gone through documents that were not produced before him. The Court further held that the award was otherwise invalid, as the arbitrator did not function in a manner befitting his role.
Issues: 1. Whether the arbitrator's conclusion was perverse and amounted to misconduct? 2. Whether the arbitrator had applied his mind to the records of the case? 3. Whether the award was otherwise invalid?
Ratio Decidendi: 1. The Court held that the arbitrator's conclusion was perverse and amounted to misconduct, as he had reached a conclusion which no person acting judicially and properly instructed in law could reach. The Court noted that the arbitrator had based his conclusion solely on his inspection of the site, which was insufficient evidence to support the award. 2. The Court held that the arbitrator had not applied his mind to the records of the case, as evidenced by the fact that he had indicated that he had gone through documents that were not produced before him. The Court found that this non-application of mind suggested absence of fair play and indicated that the arbitrator did not function in a manner befitting his role. 3. The Court held that the award was otherwise invalid, as the arbitrator did not function in a manner befitting his role.
Final Decision: The Court set aside the award of the arbitrator and remitted the matter back to the arbitrator for re-determination. The Court directed the arbitrator to take such evidence as he thought fit and proper, bearing in mind the observations made in the judgment.
G. B. PATTANAIK, J.
( 1 ) THIS is an appeal under Section 39 of the Arbitration Act against the judgment of the Subordinate Judge, Angul, in Title Suit No. 22 of 1979. By the impugned judgment, the award of the arbitrator has been made a rule of Court and the objection filed by the appellant under Sections 30 and 33 of the Arbitration Act has been rejected.
( 2 ) THE respondent-Messrs Bharat Painters entered into a contract with the appellant, the Fertilizer Corporation of India Limited, for execution of 'additional works in coal handling tunnel's at factory area at Vikrampur in the district of Dhenkanal. Disputes having arisen between the parties, the respondent invoked the arbitration clause in the contract and in accordance with the said clause, the General Manager, appointed one Shri A. K. Sinha, an employee of the Fertilizer Corporation at Gorakhpur, as the sole arbitrator. The letter of appointment also referred the dispute to be adjudicated upon which has been quoted in the impugned judgment of the Subordinate Judge and is to the effect,"claims regarding reimbursement of cost amounting to Rs. 10. 00 lakhs approximately for de-watering 3,00,000 kilo-liters of water while executing the 'additional works in Coal Handling Tunnels' at Fertilizer Corporation of India Limited, Talcher Factory Area, vide letter dated 11-8-1979 of M/s. Bharat Painters, Cuttack, Orissa, to Fertilizer Corporation of India Limited, Talcher. "the learned arbitrator passed an award directing the appellant to pay a sum of Rs. 8,20,800/- in full and final settlement of all disputes and claims arising out of the contract. The operative portion of the said award leaving aside the narration is extracted hereinbelow in extenso :-"having heard the arguments advanced by the representatives of both the parties, namely, M/s. Bharat Painters, Badambadi, Cuttack, Orissa and the Fertilizer Corporation of India Ltd. , Talcher Division, Vikrampur, Dhenkanal, Orissa, and both of their counsel, and having gone through the documents produced before me by both the parties, and having seen the work sites, I do hereby give my award as under :- award 1) The Fertilizer Corporation of India Ltd. , Talcher Division, Vikrampur, Dhenkanal, Orissa shall pay to the Contractor (Claimant), M/s. Bharat Painters, Badambadi Cuttack, Orissa a sum of Rs. 8,20,800. 00 (Rupees Eight Lakhs Twenty Thousand Eight Hundred only), in full and final settlement of all disputes and claims arising out of the said contract (Agreement No. 211, dated 7th October, 1977), as enumerated by the Claimant M/s. Bharat Painters, Badambadi, Cuttack, Orissa in their detailed statement of claims from 1 to 3 submitted under their letter No. Nil, dated 1st September, 1979. 2) The aforesaid amount shall be paid to the Contractor (Claimant) M/s. Bharat Painters, Badambadi, Cuttack, Orissa by The Fertilizer Corporation of India Ltd. , Talcher Division, Vikrampur, Dhenkanal, Orissa within 15 (fifteen) days of making this award. 3) In respect of Contractor's (Claimant's) claims Nos. 2 and 3 of the above claim statement, no claim will be entertained. 4) Both the parties, namely, M/s. Bharat Painters, Badambadi, Cuttack, Orissa and The Fertilizer Corporation of India Ltd. , Talcher Division, Vikrampur, Dhenkanal, Orissa shall pay a sum of Rs. 60. 00 (Rupees Sixty only) each to Mr. V. M. Arun, Personal Assistant to Materials Manager. The Fertilizer Corporation of India Ltd. , Gorakhpur (U. P.) towards the cost of arbitration, for the services rendered by him in clerical and typing work, and stationery. 5) Both the parties, namely, M/s. Bharat Painters, Badambadi, Cuttack, Orissa and The Fertilizer Corporation of India Ltd. , Talcher Division, Vikrampur, Dhenkanal, Orissa shall bear their own costs of this Arbitration. "the appellant filed objection to the aforesaid award under Sections 30 and 33 of the Arbitration Act on several grounds, whereas the respondent filed an application to make the award a rule of Court and b
