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2019 Supreme(All) 986
IN THE HIGH COURT OF ALLAHABAD
Kaushal Jayendra Thaker, J.
Harindra Singh - Appellant
Vs.
Union Of India And Another - Respondent
First Appeal From Order No. 1237 of 2000
Decided On : 08-07-2019
K.K. Dubey, Adv., Manoj Kumar, Adv., Ashok Mehta, Adv., Devendra Gupta, Adv., S.N. Srivastava, Adv., Shiv Kumar Pal, Adv.
An arbitrator is required to assign reasons for his award, but the reasons need not be elaborate or detailed. The court will not interfere with an arbitral award on the ground that it is unreasoned unless the award is so lacking in reasons that it is impossible to understand the basis of the arbitrator's decision.
Headnote:
ARBITRATION - AWARD - REASONS - SUFFICIENCY - COURT'S POWER TO INTERFERE - INTEREST - RATE.
Fact of the Case:
The appellant, a contractor, entered into an agreement with the Union of India for the construction of ancillaries at Nowgaon (Madhya Pradesh). Disputes arose between the parties, and the matter was referred to arbitration. The arbitrator passed an award in favor of the contractor, granting certain claims and rejecting others. The Union of India objected to the award on the ground that it was unreasoned. The District Judge set aside the award on this ground.
Finding of the Court:
The High Court held that the arbitrator had assigned reasons for the award, and that the District Judge had erred in setting it aside. The court noted that the reasons were contained in a separate cover, which had not been produced before the District Judge. The court also held that the arbitrator had applied his mind to each and every claim made by the parties, and that the award was a well-reasoned one. The court further held that the rate of interest awarded by the arbitrator was excessive, and reduced it from 12% to 9%.
Issues: 1. Whether the arbitrator had assigned reasons for the award. 2. Whether the District Judge had erred in setting aside the award. 3. Whether the rate of interest awarded by the arbitrator was excessive.
Ratio Decidendi: 1. The court held that the arbitrator had assigned reasons for the award, and that the District Judge had erred in setting it aside. The court noted that the reasons were contained in a separate cover, which had not been produced before the District Judge. The court also held that the arbitrator had applied his mind to each and every claim made by the parties, and that the award was a well-reasoned one. 2. The court held that the District Judge had erred in setting aside the award, as the arbitrator had assigned reasons for the award and had applied his mind to each and every claim made by the parties. 3. The court held that the rate of interest awarded by the arbitrator was excessive, and reduced it from 12% to 9%.
Final Decision: The appeal was allowed, the arbitral award was upheld, and the rate of interest was reduced from 12% to 9%.
JUDGMENT :
Kaushal Jayendra Thaker, J.
Heard Sri K.K. Dubey for the appellant and Sri Devendra Gupta, Senior Advocate, for the respondents.
2. By means of this appeal, the appellant challenges the order dated 26.5.2000 passed by District Judge, Jhansi, in Misc. Case No.15 of 1998, whereby District Judge set aside the arbitral award dated 20.10.1997 passed by Arbitrator on the ground that reasons were ascribed and that the respondent to whom the arbitrator wrote a letter and deposited the award along with Annexure-A in two separate covers by raising the objection for payment of only the final bill, the Union of India did not produce before the authority below the second envelop which contained the reasons given by the arbitrator for allowing and/or disallowing the claim either of the appellant or the respondent.
3. The facts in brief are that by virtue of an agreement executed between the Union of India and Harindra Singh on 8.12.1987 the contract was given for a work for the value of Rs.31,48,602.40. The work was to commence from 30.121987 and was agreed to be over within a year by 29.12.1988. The work could not, however, be completed within the stipulated period and could actually be finished only on 31.3.1995. For this purpose eight extensions were given by the Union of India. The sole arbitrator had sittings of the arbitration and gave award on 20.10.1997 awarding the claim in favour of the contractor - Harindera Singh of the value of Rs.23,69,157.00. He also allowed interest on the awarded sum at the rate of 12% per annum and thus the total awarded money was calculated at Rs.23,73,489.96. The objections taken against the award are that it is against law; that the interest awarded before actual passing of the award; that the interest awarded is unreasonable; that the proceedings were not kept secret by the Arbitrator; that he had acted in excess of his jurisdiction in giving the award in respect of escalation of labour charges etc.; that the award is exparte and that the arbitral award does not state the reasons upon which it is based. The trial court did not accept any of the contentions of the Union of India but in the end portion, granted the prayer on the basis that the arbitral award lacked reasons. Thus, the prayer was made for setting aside of the award which was accepted. The Union of India had accepted all the claims but had kept the final bill pending and it was under these circumstances that the matter was sent for arbitration.
4. The Written Submission submitted by counsel for the appellant in verbatim is as under:-
"The appellant and the respondent on behalf of Union of India entered into an Contract Agreement No. CWE/JHA/J /31 of 87-88 under CWE, Jhansi Cantt. for the provisions of Ancillaries at Nowgaon (Madhya Pradesh) under the territorial jurisdiction of CWE, Jhansi Cantt.
When certain differences had arisen between the parties to the contract a request was made by the Appellant/contractor for the appointment of an Arbitrator on 26.02.1997 to the competent authority the Chief Engineer Jabalpur Zone, Bhagat Marg, Jabalpur as provided under the Contract Agreement.
Considering the request and having gone through the disputes and differences between the parties, the Competent Authority, the Chief Engineer, Jabalpur Zone, Bhagat Marg, Jabalpur, had appointed Lt. Col. S.C Dey as the sole Arbitrator vide Letter No.760408/ARB/4/E8 dated 31.03.1997 further amended by Letter No.760408/ ARB/13/E8 dated 24.07.1997 issued by the Chief Engineer, Jabalpur Zone, Bhagat Marg, Jabalpur.
After hearing both the parties at length the following award was published by the sole Arbitrator in favour of the appellant contractor.
| Claim No. | Brief Description of Claim | Claimed Amount (Rs.) |
| 1 | Payment of final RAR and undisputed portion of final bill Amount of Claim Rs. 5.40 lakh Amount amended to Rs. 7,81,698. | |
