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Western Coalfields Ltd. v/s N. Kumar Construction Co.

    FIRST APPEAL NO.180 OF 1990

    Decided On, 09 October 2009

    At, In the High Court of Bombay at Nagpur


    Shri Ramesh Darda, Advocate for the appellant. Shri H.D. Dangre, Advocate for Respondent.

Judgment Text



This is an appeal against the Judgment and decree dated 18-4-1989 passed by the learned Civil Judge, Senior Division, Nagpur in Special Civil Suit No.677 of 1987, whereby the award passed by the Arbitrator was made the rule of the Court except the award in respect of the interest given by the Arbitrator. Accordingly, the appellants were directed to pay to the Respondent a sum Rs.36,95,000/- together with interest at the rate of Rs.10% per annum on the said sum from the date of award till the date of realization.

2.Briefly, the facts of the case are that on 30-12-1983, the appellant and the Respondent entered into an agreement (No.36/83-84) at Nagpur for the construction of 7,000 metric tonnes capacity Coal Handling Plant at Umrer Colliery at Umrer. It was, inter alia, agreed that any dispute in connection with the said agreement would be referred for adjudication through arbitration. In October 1987, the Respondent served a notice of appointment of an Arbitrator, and accordingly, Shri J.P. Das was appointed as a Sole Arbitrator by the Chairman-cum-Managing Director of the appellant. A claim was submitted by the Respondent for 15 items and a counter claim was also made against the Respondent by the appellant for a sum of Rs.52,47,000/- for failure to complete the work. The counter claim filed by the appellant was dismissed by the said Arbitrator while allowing the claim of the Respondent. All claims of the Respondent except the claim at item no.8, 10 & 11 which were outside the terms of the agreement were allowed by the Arbitrator. As such an amount of Rs.36,95,000/- was awarded to the Respondent. Thereafter, on 13-10-1987, the Respondent filed an application under Section 17 of the Arbitration Act which was registered as Special Civil Suit No.677 of 1987 and the parties agreed for an extension. On 9-11-87, the Arbitrator issued the corrections to the award consisting of accidental omissions therein. On 3-12-1987, the appellant filed a reply to the said application filed by the Respondent disputing the claim of the Respondents. It was contended in the said reply that the sole arbitrator had no authority whatsoever to effect any change to the arbitration award dated 4-10-1987. It was further pleaded by the Appellant that the amount awarded was not correct and contrary to the evidence on record.

3.After considering the submissions advanced by the appellant and the Respondent, by the judgment dated 18-4-89, the learned Civil Judge, Senior Division, Nagpur rejected the contentions of the appellant and made the award the rule of the Court, except the award in respect of the interest given by the Arbitrator. The appellants were accordingly directed to pay to the Respondent the said sum of Rs.36,95,000/- along with interest at the rate of 10% per annum on the said amount from the date of award till the date of realization. Being aggrieved by the said judgment and decree, the present appeal has been preferred by the appellant.

4.The learned Counsel appearing for the appellant has submitted that the impugned judgment and decree deserves to be quashed and set aside as according to him, the learned Judge has not considered the matter in dispute in the proper perspective. It is further his contention that the award passed by the Arbitrator is vitiated as no reasons were given in the award, and consequently, the decision making process to arrive at the findings by the Arbitrator were not known to the appellant, which consequently deprived the appellant of knowing the mind of the arbitrator. The next contention raised by the learned Counsel was that once the final award was passed by the Arbitrator, he had become functus officio and consequently, he had no powers to submit the clarifications on 9-11-1987 when the final award was already passed.

5.On the other hand, the learned Counsel appearing for the Respondent disputed the contentions raised by the appellant and submitted that in the original agreement entered into between the parties, there was no clause which required that the Arbitrator had to give the reasons for making the award. It is further his contention that non furnishing of the reasons does not amount to any misconduct, nor the same invalidates the award. He further submitted that the learned Judge has considered all the contentions raised by the appellant and valid reasons have been given for the purpose of coming to the conclusion that the award is to be made the rule of the Court. He has further submitted that there is no irregularity of any kind in furnishing the clarifications as the same does not, in any way, affect the conclusions arrived at in the award, but the same are merely clarificatory, and typing omissions which had inadvertently not appeared in the final award. In any event, it was his contention that under Section 13(d) of the Arbitration Act 1940, the Arbitrator has powers to correct in an award any clerical mistake or error arising from any accidental slip or omission. In support of his contention, the learned Counsel relied upon the judgments reported in 1984 Maharashtra Law Journal page 491 Rashtriya Chemicals & Fertilizers Ltd., Vs. Mohindersingh & Co., & another, AIR 1987 SC 81 M/s Hindustan Tea Co. V. M/s K. Sashikant & Co. & another and AIR 1988 SC 1791, State of Orissa Vs. Dandasi Sahu. He has also relied upon the judgment reported in AIR 1955 page 126, Chouthmal Jivarajjee Poddar V. Ramchandra Jivarajjee Poddar & other.

6.Having heard the learned Counsels, we find that the following points for determination arise in the present appeal.


1) Whether the award stands invalidated in view of the fact that no reasons were given by the Arbitrator?

2) Whether the Arbitrator had powers to give the said clarifications after the final award was passed?

7.Dealing with the first point for determination, we find that there is no dispute that the arbitration agreement did not provide for the Arbitrator to give reason while passing the award. In 2007 (7) SCC Page 679 Markfed Vanaspati & Allied Industries v. Union of India, the Apex Court has said that the Arbitration is a mechanism or a method of resolution of disputes that unlike Court takes place in private, pursuant to agreement between the parties. The parties agree to be bound by the decision rendered by a chosen arbitrator after giving a hearing. The endeavor of the court should be to honour and support the award as far as possible. It has been further held that an Arbitrator is neither more or less than a private judge of a private court (called an Arbitral Tribunal) who gives a private judgment (called an award). He is a judge in that a dispute is submitted to him; he is not a mere investigator but a person before whom material is placed by the parties, being either or both of evidence and submissions; he gives a decision in accordance with his duty to hold the scales fairly between the disputants in accordance with some recognized system of law and rules of natural justice.

It has further been held at para 15 that the scope of interference in a non-speaking award is extremely limited. The Court cannot probe into the mental process of the arbitrator. The Court should endeavor to support a non-speaking arbitration award provided it has adhered to the parties' agreement and was not invalidated due to arbitrator's misconduct.

In AIR 1988 Supreme Court page 1791, State of Orissa v. Dandasi Sahu, the Hon'ble Apex Court has held at para 4 that the award without reasons are not bad per se. Indeed, an award can be set aside only on the ground of misconduct or on an error of law apparent on the face of the award.

In 1988 SC 2018, State of Orissa and others v. M/s Lall Brothers, the Hon'ble Apex Court held that the fact that there is an unreasoned award, is no ground to set aside an award. Lump sum award is not bad per se, as such, an award is conclusive as a judgment between the parties, and the Court is entitled to set aside an award only if the arbitrator has misconducted himself in the proceedings or when the award has been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid.

8.The learned Civil Judge, while passing the impugned judgment has given cogent findings to come to the conclusion that merely because no reasons have been furnished, the award cannot be set aside, as the same has been passed after going through all statements, evidence, arguments and considered all matters concerning the references.

9.In view of the judgments of the Apex Court referred to herein above, it is well settled that merely because no reasons have been furnished, an award cannot be said to be invalid. The Court should endeavour to support non speaking award as the arbitrator is under no obligation to give reasons to support the decision reached by him considering the facts of the present case. As such, the first point for determination is answered accordingly.

10.Dealing with the next point for determination, Section 13(d) of the Arbitration Act, 1940 provides that the Arbitrator shall have the power to correct in the award any clerical mistake or error arising from an accidental slip or omission. It is an admitted fact that the clarifications, which were made to the award, do not in any way affect the monetary claim of the Respondent, nor does it after the basic award passed by the

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Arbitrator. The Arbitrator has done nothing more than in corporation of the portions omitted by the typist through mistake while typing from the manuscript. The learned Civil Judge, after perusing the manuscript and original award came to the conclusion that the Arbitrator has rightly effected the omissions made by the typist. As such, considering the said provision of Section 13(d) of the Arbitration Act 1940, there can be no dispute that the Arbitrator had powers to correct the accidental omission in the award and give clarifications as has been done by him on 9-11-1987, and consequently the question of the Arbitrator being functus officio does not arise at all. The second point for determination is answered accordingly. 11.In view of the above, we found that no interference is called for in the impugned judgment and decree as the same is well reasoned after considering all the material on record. 12.We find that there is no merit in the present appeal and consequently, the above appeal is dismissed with no order as to costs.