An arbitral award must be reasoned; failure to provide reasons for decisions invalidates the award under the Arbitration and Conciliation Act.

JUDGMENT

Gopinathan, J.

Basing upon a works contract dated 3.11.1993, a dispute arose between the appellant and the respondents. Ultimately the mater was referred to the arbitrator in the year 1998 as per order dated 2.12.1998 in A.R.No.14/1998 on the file of this Court. This Court directed the arbitrator to publish the award within six months. Thereafter, the period for publishing the award was extended till 1.4.2000. The arbitrator did not publish the award within the time limit prescribed by this Court. It appears that after the expiry of the period, the parties were heard till 26.9.2000 and an award was published on 16.5.2001. Assailing the said award, the appellant approached the District Judge, Trivandrum in O.P.(Arb)No.78/2001 raising various grounds under Section 34 of the Arbitration and Conciliation Act, 1966 (hereinafter referred to as 'the Act'). By the impugned order dated 24.2.2006, that petition was dismissed. Assailing the above order, this appeal was preferred under Section 37 : 2:

of the Act.

2. Heard both sides. Perused the impugned order as well as the impugned award. Before us mainly three grounds were urged. They are:

(i) The award is in contravention of Section 31(3) of the Act as it lacks reasons.

(ii) The impugned award was passed without the mandate of this Court.

(iii) The award is vitiated by fraud.

3. We shall first consider whether the award is a speaking one or not. It is not in dispute that the parties have not agreed for a non speaking award. Therefore, the arbitrator is bound to state the reason upon which the arbitration award is based upon. That is the mandate of Section 31(3) of the Act which reads as follows:

31. Form and contents of arbitral award:

(1) An arbitral award shall be made in writing and shall be signed by the members of the abitral tribunal.

(2)For the purposes of sub-section (1), in arbitral proceedings with more than one arbitrator, the : 3:

signatures of the majority of all the members of the arbitral tribunal shall be sufficient so long as the reason for any omitted signature is stated.

(3)The arbitral award shall state the reasons upon which it is based, unless-

(a) the parties have agreed that no reasons are to be given, or (b) the award is an arbitral award on agreed terms under Section 30.

(4) Rest is omitted as not relevant.

The provision quoted above would show that except for the two reasons coming under sub clauses (a) and (b) to Clause (3) of Section 31 specifically mandates that the arbitral award shall be a speaking award. Here, the parties have no case that sub clauses (a) and (b) are applicable. Therefore, the award should be a speaking one. If not, it cannot be sustained. 4. For a correct appraisal of the argument, we find that a reading of the relevant portion of the award would be relevant.

“CLAIM NO.1: works carried out between 24.5.94 and

30.3.95 (Supply of ballast). - claim amount Rs.,1,28,240/-

The original currency of the work was upto 24.5.94 which was subsequently extended 3 times duly executing 3 rider agreements, the final being upto 30.5.95. Collection : 4:

of ballast was commenced from 28.4.94 and the first measurement was offered on 30.5.94/6.6.94. The tribunal observe that the first measurement was made after expiry of initial currency of the contract. Number of letters have been exchanged between the defendant and the claimant attributing the delays to each other.

After going through the reasons for delays available on record and the various letters exchanged between the defendant and the claimant, this tribunal is of the view that the d elay in the work is on account of the default of the contractor and hence this claim cannot be agreed to. Award is NIL.

CLAIM NO.2: Additional establishment cost between

24.5.94to 31.8.95 – claim amount Rs.40,000/-

CLAIM NO.3: Advances become irrecoverable – claim amount Rs.32,000/-.

Since Claim No.2 & 3 arise out of Claim No.1, no amount is payable. Award is NIL.

CLAIM NO.4: Last bill- CC3 and part with interest at the rate of 21% f