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High Court Of Madhya Pradesh
G. P. Singh and B. R. Dube, JJ.
UMRAOSINGH AND CO., MAHANAGAR, LUCKNOW (U.P.) - Appellant
Versus
STATE OF MADHYA PRADESH - Respondents
First Appeal 9 and Misc. (First) Appeal No. 60 Of 1965
Decided On : 05/01/1974
Section 34 Civil Procedure Code does not apply to arbitration proceedings. But if there is a dispute as to interest which is referred to arbitration or if all the matters in difference are referred to arbitration, the arbitrator may award interest on principles analogues to section 34 of the Code. But if the reference does not include a dispute as to interest or if it is not so widely worded as to include" all the matters in difference", the arbitrator will have no jurisdiction to allow interest after the date of the award. AIR 1955 SC 468, AIR 1967 SC 1030, AIR 1967 SC 1032, AIR 1972 SC 1507 relied on. [Para 6
(2) Arbitration Act, 1940 - S. 30 - arbitration erroneous - duty of the Court - if bad portion of the award separable, residue should be held good - if two are inseparable whole award should be avoided.
If the bad portion of the award is separable the award will be held good for the residue; whereas, if the two are inseparable, the award is altogether avoided. Russell on Arbitration, Eighteenth edition, Pages 399, 400, 401 and AIR 1973 SC 683 relied on. [Para 7
(3) Arbitration Act, 1940 - Ss. 30 and 16 - award cannot be set aside unless it is shown that the award is based on some legal proposition which is found to be unsound.
An award made by an arbitrator cannot be set aside on the ground that he has committed mistakes in law and fact. It can only be set aside if the error in law appears on the face of the record which means that there is to be found in the award or a document incorporated therein, as for instance, a note appended by the arbitrator stating the reasons for his judgment, some legal proposition which is the basis of the award and is erroneous. The award will stand unless on the face of it the arbitrator had tied himself down to some legal proposition which when examined is found to be unsound. (1923) All. E.R. 235 relied on. [Para 8
(4) Arbitration Act, 1940 - Ss. 30 and 16 - words and phrases - "mistake apparent on the face of the record" - meaning of.
Before it can be concluded that the award discloses an error apparent on its face relating to construction of a clause or term in the contract, the award must contain reference to the clause or term and a finding to its meaning. Unless that is shown, it cannot be said that the arbitrator has come to a finding on the wording of the contract which is an error apparent on its face. When there is absolutely no reference to the contract or its terms and when the award contains no reasons, it is impossible to hold that there is an error apparent on the face of the record. (1962) 2 All. E.R. 53, (1953) 2 Lloyd's Rep. at page 429, AIR 1971 SC 696, C.A. No. 107 of 1966 dated 5-12-1968 (SC), AIR 1957 SC 378 page 382, AIR 1967 SC 1030, AIR 1967 SC 1032 relied on. AIR 1955 SC 468, AIR 1960 SC 588, AIR 1973 SC 683, Miscellaneous (First) Appeal No. 17 of 1969 (MP) decided on 11th April 1972 dissented from. [Paras 8 & 9
(5) Arbitration Act, 1940 - S. 30 - arbitration clause containing the clause "as to any other matter or thing arising under or out of this contract" - meaning of.
A dispute the determination of which turns on the true construction of the contract, would also seem to be a dispute, under or arising out of or concerning the contract. AIR 1951 SC 9, 1942 A.C. 356, 111 L. J. K. B. 241, AIR 1969 SC 488, relied on. [Para 10
(6) Arbitration Act, 1940 - S. 30 - parties enter into fresh or a subsidiary contract - disputes arising out of fresh contract - cannot be covered by the arbitration clause in the original contract - such disputes are outside the jurisdiction of arbitrators.
The rule is well settled that if the parties enter into a fresh contract or a subsidiary contract in addition to the original contract, the arbitration clause in the original contract cannot cover disputes arising out of subsidiary contract or a fresh contract. Such a dispute is outside the jurisdiction of the arbitrator. AIR 1955 SC 468 relied on. [Para 11
(7) Arbitration Act, 1940 - S. 8 - validity of reference - question whether there was joint reference or not is one of fact which should be raised at proper stage. [Para 13
(8) Arbitration Act. 1940 - Ss. 30 and 8 - both parties agreeing to refer dispute to arbitration - taking part before arbitrator without objection - reference valid - objection cannot be raised that there was no joint reference to arbitration. [Para 13
( 1 ) THIS judgment shall also dispose of Miscellaneous (First) Appeal No. 60 of 1965.
( 2 ) THE facts giving rise to these appeals are that on 14th April, 1952 contract for construction of a bridge on Narmada near Mortakka was granted by the government to M/s. Umraosingh and Company, which is a partnership firm and shall hereinafter be referred to as the contractors. The contract was for a lump sum payment of Rs. 23,49,000/ -. According to Clause (13) of the Contract, the works were to be completed within 24 months. Extension of time was, however, contemplated on account of works being altered, varied or added to or on account of any delay by reason of inclement weather or causes beyond the control of the contractors. The contract contained an arbitration Clause which reads as follows:
"17. Provided always that in case any question, dispute or difference shall arise between the E. E. and the contractors: as to what additions, if any, ought in fairness to be made to the amount of the contract by reason of the works being delayed through no fault of the contractors or by reason or on account of any directions or requisitions of the E. E. involving increased cost to the contractors beyond the cost properly attending the carrying out of the contract according to the true intent and meaning of the signed drawings and specification; or as to the works having been duly completed; or as to the construction of these presents; or as to any other matter or thing arising under or out of this contract, except as to matters left during the progress of the works to the sole decision or requisition of the E. E. under clauses Nos. 1, 4, 8 and 9, or in case the contractors shall be dissatisfied with any certificate of the E. E. under Clause 6 or under the provision in Clause 13 or in case he shall withhold or not give any certificate to which they may be entitled; or as to the right of the contractors to receive any compensation; or as to the amount of such compensation payable to them under Clause 18; then such Question, dispute or difference or such certificate or the value or matter which should be certified as the case may be. is to be from time to time submitted to the arbitration of a tribunal composed of one arbitrator nominated by the contractors and one arbitrator nominated by the S. E. In the event of a disagreement between the arbitrators on any matter or matters, such matter or matters shall be referred to an umpire to be nominated by the C. E. and the award of such arbitrators or the umpire is to be final and where necessary to be equivalent to a certificate of the E. E. and the contractors are to be paid accordingly.
( 3 ) THE works were not completed within 24 months and there was a supplementary agreement between the contractors and the Government on 19th January 1954 by which the time was extended upto 31st May 1956. This agreement proceeds upon the premise that the works could not be completed within 24 months because of circumstances over which the contractors had no control. By this agreement the Government promised to pay a bonus of rupees one lac in case the works were completed within the extended time. In all other respects the terms and conditions of the principal agreement remained in full force. The supplementary agreement, leaving aside its preamble, reads as follows:
"1. Notwithstanding anything contained in condition 13 of the principal agreement, the contractor shall duly and properly complete and carry out the said work in every respect to the satisfaction of the executive Engineer by a date not later than the 31st May 1956 in strict conformity to and accordance with the terms, conditions and specifications in the principal agreement contained. 2. Upon fulfilment and performance by the contractor of the conditions of Clause 1 hereof but in no other case the Governor shall pay to the contractor a bonus of Rs. 1,00,000/- (one lakh) only in addition to the sum payable under the principal agreement. 3. In th
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