An arbitrator's decision on a point of law is final if the point has been specifically referred to him for his decision, and the specific points of law raised in the issues framed by the arbitrators were referred to the Umpire for decision.

D.Falshaw, J.

1. This is an appeal by the Union of India against the order of a Sub Judge at Delhi rejecting the Governments application for setting aside an arbitration award and making the award delivered by the Umpire after a difference between the arbitrators for the payment of Rs. 3,26,251-6-3 with costs and further interest at the rate of 41/2 per cent per annum in favour of the claimant, Mr. A. L. Rallia Ram, a rule of the Court.

2. The history of the case is as follows: In August 1946 the Chief Director of Purchases (Disposals) of the Food Department of the Government of India invited tenders for the purchase of the entire stock of American cigarettes lying with the Government. The claimants tender for the purchase of the whole stock at Rs. 0-8-3 per packet of 20 cigarettes was accepted by the acceptance note Ex. P. 9 dated the 9th of September, 1946, the total purchase price being Rs. 38,93,933-7-9. The stocks were lying in Assam and Calcutta and delivery was to be taken at Calcutta in five in stalemates against payment of instalments, and there is no doubt that the claimant actually paid a sum of over Rs. 17,70,000 to the Government. He actually took delivery of a large quantity of the cigarettes but owing to the peculiar conditions at Calcutta at that time when there were communal disturbances and proper arrangements were difficult he had to take delivery somewhat hurriedly and without having the opportunity for even the limited inspection which he was allowed under the terms of the contract. He claimed in fact that the stock of cigarettes should have been properly surveyed by the Government before any deliveries were taken and that on a proper inspection of the cigarettes he found that a very large quantity of them were mildewed or in fact infected with insect or otherwise in a poor condition.

3. His protests led to the holding of a survey by a Board appointed by the Government of the undelivered cigarettes, the result of this survey being a report to the effect that cigarettes amounting to Rs. 6,58,453-2-0 were wholly unfit for issue at all, these being classified under the heading A while a quantity of the cigarettes fell into the category B on which a reduction of 37 1/2 per cent in price was recommended, and a further quantity in category C was recommended to be sold at 25 per cent reduction. This, however, was not acceptable to the claimant who suggested to the Food Member on the 19th of February, 1947 that a flat reduction of 50 per cent should be allowed on the stocks already taken by him as well as those still lying with the Government, or in the alternative the Government should take back from him the cigarettes of which he had already taken delivery at cost. The Government decided to cancel the contract altogether in respect of the undelivered cigarettes and to take back from him such delivered cigarettes as were in the original packing and could be identified, and even in the case of unidentifiable stocks the contract was also to be cancelled provided that the claimant was not responsible for the deterioration during their custody with him and subject to the condition that no claim would be made by the claimant in respect of freight, storage, and landing charges incurred by him in connection with the stock taken back by the Government. These terms were accepted by the claimant except that he reserved his right to claim incidental expenses. This led to the referring of the dispute between the parties to arbitration. The arbitration proceedings culminated in the award by the Umpire to whom the disputes were referred after the disagreement between the arbitrators dated the 30th of January 1950. The award contains a detailed discussion covering 14 pages and by it the Government was ordered to pay the contractor a sum of Rs. 3,26,251-6-3, (1) Rs. 68,833-12-3 on account of interest, (2) Rs. 1,32,417-10-0 on account of loss suffered by the purchaser with respect to 6,34,270 packets and (30 Rs. 1,25,000