G.N.K.Das, J -
(1.) THIS appeal is directed against an order under Section 30 of the Arbitration Act rejecting the objections raised by the present appellants against the award passed by the arbitrator in the matter of a dispute between the respondent- contractor and the State Government. By consent of parties before the Supreme Court, Justice A. Misra, a retired Judge of this Court was appointed as the arbitrator.
(2.) PLAINTIFF-respondent is a registered special class contractor under the State Government. He took up the work covered by F-2 Agreement for construction of up-stream and down-stream lock chamber at Munduli. His tender, being the lowest, was accepted by the State Government. Work order was issued to him and agreement was executed between the parties on 29-5-65 for execution of the work. Various disputes arose between the parties in course of execution of the work and also in respect of payments due to the plaintiff-respondent under the agreement. Ultimately, defendant No. 1 directed the plaintiff to take recourse to arbitration, as contemplated in the agreement. On 11-1-74, the plaintiff addressed a letter to defendant No. 2 asking for appointment of an arbitrator, as envisaged in the agreement. As there was no response, plaintiff made an application under Section 8 read with Section 20 of the Arbitration Act to court for appointment of an arbitrator. The said application was allowed by the court and Mr. Mumtaz Alli, a retired Chief Engineer, was appointed as the sole arbitrator. While the arbitration proceeding was pending before Mr. Alli, the defendants filed an application in court for revocation of the reference and for removal of Mr. Alli, This application for revocation of reference was allowed by the learned Subordinate Judge and the said order was also confirmed by this Court. The matter was thereafter carried to the Supreme Court in Civil Appeal No. 940 of 1976. The Supreme Court, on agreement, of both parties, appointed Justice A. Misra, a retired Judge of this Court, as the sole arbitrator to adjudicate upon the disputes of the parties by order dated 23-8-76. In compliance with the order passed by the Supreme Court, reference was made to Justice A. Misra. After completion of the arbitration proceeding, he submitted the award on 20-12-77.
The defendants raised objections under Section 30 of the Act challenging the validity of the award on grounds that the appointment of the arbitrator was a nullity and the reference made to him was without jurisdiction because according to the terms of the agreement, one of the Superintending Engineer of the State un-connected with the work was to be appointed and in case of non- availability of such engineer, the Chief Engineer ought to be the sole arbitrator. It was also averred that the arbitrator violated the principles of natural justice in not giving adequate opportunity to the defendants and he exceeded the scope of reference and award of interest was also illegal. It was further alleged that the arbitrator misconducted himself in awarding an amount in excess of what was claimed by the plaintiff. The claim was also alleged to be barred by limitation. On the aforesaid grounds, the defendants sought to set aside the award,
The plaintiff countered the aforesaid allegations and contended that the award was legal and valid; the objections raised by the defendants were not tenable in law and thus prayed for rejection of the objections and for passing a decree in terms of the award.
The learned Subordinate Judge has negatived all the objections raised by the defendants and has ordered that the award passed by the arbitrator on 20-1277 be made the rule of the Court and decree be passed accordingly. He has further held that the plaintiff is entitled to costs of the suit along with future interest on the principal amount from the date of the decree till the date of payment, at the rate of six per cent per annum.
Mr. Misra, the learned counsel for the appellants, contends that the arbitrator was appointed under Section 8 of the Act and the reference of disputes to him by the court was illegal and for this reason the award passed by the arbitrator was a nullity. Admittedly, the reference to the first arbitrator Mr. Alli was made under Section 20 of the Act. During pendency of the proceeding before Mr. Alli, the defendants applied for revocation of the reference and for cancellation of the appointment of the arbitrator. This matter went up to Supreme Court and in the Supreme Court, on agreement of both parties, Justice A. Misra, a retired Judge of this Court, was appointed as arbitrator to decide the disputes between the parties, To this extent, there is no dispute between the parties. The application of the plaintiff was under Section 8 read with Section 20 of the Act and the reference was originally made under Section 20 of the Act. When Justice A. Misra was appointed as arbitrator by the Supreme Court, the disputes referred to Mr, Alli were again referred to Justice A, Misra. The reference made to Justice A. Misra by the court also shows that he had to arbitrate upon the disputes which were referred to Mr. Alli. In the application filed by the plaintiff for reference, it was pleaded that defendant No. 1 by his letter dated 20-12-73 directed the plaintiff to take recourse to arbitration. It is mentioned in para 6 of the plaint that it is filed with a prayer for directing the defendants to file the agreement in court and for appointment of an arbitrator and also for reference of the disputes specifically stated in the schedule appended to the application. The disputes have been set out in paragraph 6. The cause of action is mentioned in para. 8 which is founded on the letter dated 20-12-73 and the notice of arbitration dated 12-1-74. The prayer in the plaint was to direct the defendants to file the agreement in court and after hearing the parties to appoint an arbitrator and to refer the disputes mentioned in the schedule to the said arbitrator. The learned Subordinate Judge by his order dated 4-4-74 stated that on a perusal of the pleadings and on a consideration of the arguments advanced by the counsel for both parties, he was convinced that there was existence of disputes between the parties as envisaged in Clause 23 of the agreement and, therefore, a direction should be issued to file the agreement in court and reference is to be made to the arbitrator to decide the disputes between the parties. He, accordingly, directed the defendants to file the agreement in court and appointed Mr. Alli as arbitrator. The reference to Mr. Alli was under Section 20 of the Arbitration Act. By order dated 10-1-77, the learned Subordinate Judge directed Justice A. Misra to decide the disputes as mentioned in order dated 44-74, which were referred to Mr. Alli. Justice A. Misra also proceeded with the arbitration basing on a reference under Section 20 of the Act. The defendants-appellants contend that subsequent to the reference made to Justice A. Misra, the learned Subordinate Judge has again made a reference to the arbitrator under Section 8 of the Act. The learned Subordinate Judge also has held that this was a reference under Section 8 of the Act. On examination of the records, I find that in fact the reference was under Section 20 of the Act. The substance of the reference is to be looked to in order to find out what was the nature of reference. Because the court has made the reference subsequently in a wrong form (form J-48), it cannot be said that the reference was under Section 8 of the Act. The nature of reference is contained in the original order dated 10-1-77. From the orders of the aforesaid dates, it is clear that the reference was actually under Section 20 of the Act. Justice A. Misra was directed to adjudicate upon all the disputes referred to Mr. Alli and there is no ambiguity in the same. When admittedly the reference to Mr, Alli was under Section 20 of the Act, it cannot be said that the reference subsequently made to the arbitrator Justice Misra by the court is to be construed to be under Section 8 of the Act. It is apparent from the record that the reference to Justice Misra was under Section 20 of the Act. Moreover, the order of the Supreme Court is clear. Justice A. Misra was appointed as arbitrator in the arbitration proceeding to adjudicate upon the disputes of the parties and it can invariably mean he has to adjudicate upon the disputes which were referred to Mr. Alli. I, therefore, hold that the reference to Justice A. Misra was under Section 20 of the Act and not under Section 8 and, as such, the arbitrator had full jurisdiction to arbitrate upon the disputes referred to him. Accordingly, the reference made to the arbitrator cannot be said to be illegal and the award cannot be said to be void.
The award is the decision of a domestic tribunal chosen by the parties and the civil courts which are entrusted with the power to facilitate arbitration and to effectuate the awards, cannot exercise appellate powers over the decision. The decision of the arbitrator, wrong or right, is binding if it be reached fairly after giving adequate opportunity to the parties to place their grievances in the manner provided by the arbitration agreement (See Union of India v. A.L. Rallia Ram) AIR 1963 SC 1685. It is well established that if parties constitute an arbitrator as the sole and final judge of he disputes arising between them, they bind themselves as a rule to accept the award as final and conclusive and the award is ordinarily not liable to be set aside on the ground that either on facts or in law it is erroneous. The arbitrator is a judge of the choice of the parties and his decision should not be set aside even if the court as a court of law would come to a different conclusion on the same facts, unless there is an error apparent on the face of the record which makes it unsustainable (See Smt. Ratnamani Dei v. Jaganath Sahu (1974) 40 Cut LT 1229). This Court has also held in the case of Executive Engineer, Ganjam (Roads & Buildings) Division v. Sri Sankar Maharana, 45 Cut LT 443 : (AIR 1978 Orissa 121) that it is well settled that when the arbitrator is the sole and final judge of any dispute between the parties, the parties bind themselves as a rule to accept the award as final and conclusive, The award is liable to be corrected, modified or set aside only under limited scope of the provisions made under Section 15 and 30 of the Act. Unless the mistake is evident on the face of the award or in some paper accompanying and forming part of the award, the court has no jurisdiction to touch the award. It has also been held in State of Orissa v. R.S. Das, (1977) 44 Cut LT 666, that if the mistake complained of does not appear on the face of the award, the award cannot be remitted or set aside and the court has no jurisdiction to enter into the merits cf the case, or to examine the documents and oral evidence on record for the purpose of finding out whether or not the arbitrator has committed an error of law or of fact. The Supreme Court has also held in Firm Madanlal Roshanlal Mahajan v. Hukumchand Mills Ltd., Indore, AIR 1967 SC 1030, that the award passed by the arbitrator both on law and facts is final and there is no appeal from his verdict and the court cannot review his award and correct any mistake in his adjudication, unless an objection to the legality of the award is apparent on the face of it. The Supreme Court has also observed that the court should approach the award with a desire to support it, if that is reasonably possible, rather than to destroy it by calling it illegal (See Smt. Santa Sila Devi v. Dhirendra Nath Sen, AIR 1963 SC 1677). This Court has also decided in Union of India v. Kalinga Construction Co. (Pvt.) Ltd., (1965) 31 Cut LT 412, to the above effect. In the case of N. Chellappan v. Secy., Kerala State Electricity Beard, AIR 1975 SC 230, the order was passed on consent of parties and it was held that in such a case where the parties submitted to the jurisdiction of the umpire and took part in the proceeding without any demur, the parties will be precluded by other acquiescence from challenging the award for lack of jurisdiction. So also it has been held by this Court in Union of India v. Radhanath Nanda, AIR 1961 Orissa 143, that where a party having submitted to the jurisdiction of the arbitrator subsequently challenges his jurisdiction on the ground that he did not possess the qualification required by the arbitration clause, it must be held that there was estoppel by conduct and that it was not open to the party to contend otherwise. So also in State of Orissa v. Bhagabat Prasad Bal, 1972 (1) Cut WR 951, it has been held that when parties submit to the jurisdiction of the arbitrator, it is no longer open to either of the parties to resile on the plea that the dispute does not come within the purview of the agreement clause and it is not open to challenge the validity of the award on the ground that the arbitrator had no jurisdiction to decide the dispute and to pass the award,
It is contended by the appellants that the arbitrator has awarded under item No. 2 (claim for dewatering --Ri. 6,37,517.88 and interest as against a claim of Rs. 3,54,375.00) and as such misconducted itself as the amount granted is in excess of the claim. Item No. 2 is in para 6 of the plaint filed by the plaintiff, which is as follows:-
"For the appreciation of the nature of the dispute involved part of the disputed claim under this head up to 2-1-68 is stated herein. Under this head further claims beyond this date are in dispute."
The claim as well as the award included the amount for the subsequent years under this head. It is thus clear that the disputes indicated in paragraph 6 are merely indicative of heads of claim without any reference to the monetary value. In the plaint, the valuation has been given as tentative. All the schedules of disputes excepting a portion of item No. 2 have not at all been valued and a part of the claim under item No. 2 has been valued only up to a particular time. This is not a case of claim of specific amount, but as would appear from the contents of the plaint the amount of claim of all the heads is to be decided by the arbitrator and the plaint also has been tentatively valued. Reliance has been placed by the appellants on the case of Orissa Mining Corporation Ltd. v. P. V. Rawal-ley, 45 Cut LT 246 : (AIR 1977 SC 2014) This case has no application to the present case, inasmuch as the heads of claim were specifically valued with exactitude in that case,. On the other hand, the facts and circumstances of this case come squarely under the case of Messrs. Ashok Construction Co. v. Union of India, 1970 SCC 530. In that case, the claims were not valued and the heads of disputes were merely set out without specifying the amount claimed under each head. The Supreme Court held that under such circumstances no inference can be raised because the claims made before the arbitrator did not aggregate the amount decreed. Considering the claims made by the plaintiff in the present case according to the dictum laid down by the Supreme Court, it cannot be said that the arbitrator has exceeded his jurisdiction in awarding the amount under item 2 of the schedule of claims.
It is contended by the appellants that the arbitrator has misconducted himself and has misconstrued the evidence in the present case. It is well settled that the arbitrator can arrive at his conclusion by use of his discretion and the court has no jurisdiction to go into the question of lack of evidence. It has been consistently held by the Supreme Court as well as this Court that the court has no jurisdiction to touch the award if the award is without reasons. The legal position is that the arbitrator is the final judge on facts and law and his decision is not open to scrutiny by the court. Where reasons have not been given, it is indeed difficult to sustain objections as to a mistake said to be apparent on the face of the award (See (1978) 45 Cut LT 443 : (AIR 1978 Orissa 121) (supra)). The Supreme Court has also held in the case reported in AIR 1967 SC 1030, referred to above, that when arbitrator has given no reason for award, nor there is any legal position as basis of award, contention that there are errors of law on face of award must be rejected. In Alien Berry & Co. (Pvt.) Ltd. v. Union of India, AIR 1971 SC 696, it has been observed that even when an arbitrator commits a mistake either in law or in facts in determining the matters referred to him, but such mistake does not appear on the face of the award or in a document appended to or incorporated in it so as to form part of it, the award will neither be remitted nor set aside notwithstanding the mistake and mere reference to the contract in the award is not to be held as incorporating it. The Supreme Court has also held in Jivarajbhai v. Chintamanirao, AIR 1965 SC 214, that it is not open to the court to speculate, where no reasons are given by the arbitrator, as to what impelled the arbitrator to arrive at his conclusion. On the assumption that the arbitrator must have arrived at his conclusion by a certain process of reasoning, the court cannot proceed to determine whether the conclusion is right or wrong and it is not open to the court to attempt to probe the mental process by which the arbitrator has reached his conclusion where it is not disclosed by the terms of the award. What is an error of law on the face of the award has been described by the Supreme Court in AIR 1963 SC 1685, referred to above. It is observed :--
"It does not mean that if in a narrative a reference is made to a contention of one party that opens the door to setting first what that contention is and then going to the contract on which the the parties' rights depend to see if that contention is sound."
This Court also in State of Orissa v. Govinda Choudhury and Sons, 1974 (2) Cut WR 917, has held that it is not open to the court to interfere with the award on questions relating to appreciation of evidence by the arbitrator. Determination of these questions is exclusively within the jurisdiction of the arbitrator and unless there is an error of law apparent on the face of the record, the court is not entitled to substitue its own opinion for that of a private judge appointed by the parties. The Supreme Court has further observed in Union of India v. Kalinga Construction Co. (P) Ltd., AIR 1971 SC 1646, that in a proceeding to set aside award, the High Court cannot sit in appeal over the conclusion of the arbitrator by re-examining and reappraising the evidence considered by the arbitrator and hold that the conclusion reached by the arbitrator is wrong. In State of Orissa v. Gangaram Chapolia, (1977) 44 Cut LT 603, it has been held that in the absence of the award showing that an erroneous view of law has been taken, which is the basis of the decision, it cannot be said that there is a mistake in the award on the very face of it. This position has been clarified by the Supreme Court in a recent decision reported in AIR 1975 SC 230 (supra). It has been observed that the umpire as sole arbitrator was not bound to give a reasoned award and if in passing the award he makes a mistake of law or of fact, that is no ground for challenging the validity of the award. It is only when a proposition of law is stated in the award and which is the basis of the award, and that is erroneous, can the award be set aside or remitted on the ground of error of law apparent on the face of the record. This question has been answered by quoting a portion from "Russell on Arbitration" 17th Edition, page 322, to the following effect :--
"Where an arbitrator makes a mistake either in law or in fact in determining the matters referred, but such mistake does not appear on the face of the award, the award is good notwithstanding the mistake, and will not ba remitted or set aside. The general rule is that, as the parties choose their own arbitrator to ba the judge in the disputes between them, they cannot, when the award is good on its face, object to his decision, either upon the law or the facts."
The Supreme Court explained the meaning of the expression "error of law on the face of the award" as "You can find in the award or a document actually incorporated thereto, 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 which you can then say is erroneous." The Supreme Court relied on Lord Dunedin in Champsey Bhara and Co. v. Jivraj Balloo Co., AIR 1923 PC 66 and Union of India v. Bungo Steel Furniture Pvt. Ltd., AIR 1967 SC 1032. The Supreme Court further observed that the civil court has no jurisdiction to investigate into the merits of the case and to examine the documentary and oral evidence on the record for the purpose of finding out, whether or not the arbitrator has committed an error of law.
(3.) IN the instant case, the arbitrator has not appended any document, nor he has stated that he has based his decision on any particular point of law. Therefore, it cannot be said by any stretch of imagination that the award suffers from any error of law or fact apparent on the face of record, so as to warrant interference by the court. The arbitrator has stated :-
"As the claimant-petitioner has formulated his claims itemwise under different heads, the O.Ps also filed their counter itemwise. The parties addressed elaborate arguments in support of their respective contentions and referred to the documents and other materials item by item of the claims made. During the course of arbitration I visited the site of work at Munduli along with both the parties, inspected both the up-stream and down-stream lock chambers, the lay-out and the general alignment of the area in which the work was originally intended to be executed and subsequently partially shifted to facilitate proper appraisal and apprecia-tion of the claims and contentions of the respective parties and the documents referred to. Having given my full and careful consideration to the claims and contentions contained in the respective written statements submitted by the parties, the documents and other evidence produced and the arguments advanced in detail in respect of each item of claim, I proceed to record my conclusions and findings as detailed below. For sake of convenience I record below the claims made by the claimant- petitioner itemwise and my findings thereon in respect of each item."
Thereafter, the arbitrator has dealt with each item of claim. From the records of the arbitrator, it appears that he has given ample opportunity to the parties to make their respective submissions. It is also contended by counsel for parties that written notes of arguments were also filed before the arbitrator. It is thus evident that the arbitrator has come to his conclusions having all necessary materials as well as notes of arguments with him. Simply because he has not assigned reasons for his conclusions, it cannot be said that the award suffers from error of law or fact apparent on record, in view of the principles discussed above, The appellants have relied on Hindustan Construction Co. Ltd. v. State of Jammu and Kashmir, 1977 Kash LJ 162. That was case where the arbitrator had referred to certain documents and after considering those documents had come to a conclusion. Therefore, that case is not applicable to the present case. The consistent view of the Privy Council, the Supreme Court and of this Court has been mentioned above and in view of those principles, the award of the arbitrator does not suffer from any error of law or fact apparent on the face of record and, as such, it cannot be said that the award is made without any evidence in support of the finding and cannot be said to be vitiated on such ground.
The next point raised by the appellants is that on 20-12-73 the defendants directed the plaintiff to take recourse to arbitration by notice which was served on 11-1-74 and, as such, the application having been filed on 4-2-74, it was barred by limitation. It is well settled and beyond any pale of controversy that the question of limitation is for the arbitrator and non-dealing of the same in the award or even an erroneous decision is not amenable to the jurisdiction of this Court. In the aforesaid Chellappan case (AIR 1975 SC 230), the findings of the umpire did not show that the claims were barred by limitation. Therefore, the Court did not want to interfere on that ground. So also in Kanpur Nagar Mahapalika v. Narain Das Haribansh, (1969) 2 SCC 620: (1970 All LJ 740), it has been held that the arbitrator under agreement is to decide the questions which are within the province of his jurisdiction, It cannot be said on the face of the award that the arbitrator has decided on any principle of construction which the law does not countenance. It is sufficient if the arbitrator gives the award on the whole case and he need not deal with each issue separately. It is open to the arbitrator to decide on the rival contentions of the parties as to limitation. In doing so, if the arbitrator makes a mistake either in law or on facts, and if such mistake does not appear on the face of the award, the award will not be bad notwithstanding any mistake. Belying on the aforesaid Kanpur Nagar Mahapalika case (1970 All LJ 740) and also Chellappan case (AIR 1975 SC 230), this Court also held in State of Orissa v. Gangaram Chhapolia, (1977) 44 Cut LT 603, that when the question of limitation has not been dealt with in the decision of the arbitrator, and the award does not contain any erroneous proposition of law on the basis of which it has been made, the bar of limitation even assuming that it was raised before the arbitrator, might have been met by the arbitrator by referring to evidences led by parties. For example, the arbitrator might have accepted the acknowledgment made by appellant to meet the plea of limitation. In the absence of the award showing that erroneous view of law has been taken which is the basis of the award, it cannot be said that there is a mistake in the conclusion on the very face of it. So also, relying on the Chellappan, (AIR 1975 SC 230), Shampsey Bhara (AIR 1923 PC 66) and Bungo Steel (AIR 1967 SC 1032) cases (supra), this Court has held that the court has no jurisdiction to investigate into the merits of the case and to examine the documentary and oral evidence on record for the purpose of finding out whether or not the arbitrator has committed an error of law. In view of the aforesaid position of law, the contention of the appellants is not sustainable.
The next contention of the appellants is that the arbitrator has no jurisdiction to award pendente lite and future interest till the date of the decree. Section 29 of the Act is clear on the point. This position is no longer res integra. It has been consistently held by the Supreme Court that it is within the jurisdiction of the arbitrator to award pendente lite and future interest till the date of the decree (See AIR 1967 SC 1032; 1970 SCD 530 and 1974 (2) CWR 917 (supra) and Secy. CPWD v. Smt. Janaki Dei, 46 Cut LT 171 : (AIR 1978 NOC 294)).
A question was raised by the appellants that there was no proper notice for initiation of the proceeding in court for arbitration. The argument is based on the contention that notice was given only to the Additional Chief Engineer. It is not disputed that after receipt of notice, Government agreed for appointment of arbitrator. After the application was filed by the respondent, arbitrator was also appointed. Before the Supreme Court, the arbitrator was appointed on agreement of parties. It is no longer open to the appellants to raise such a contention. This position has also been decided by this Court in Fertiliser Corporation of India Ltd. v. Ravi Kumar Ohri, (1978) 46 Cut LT 315 : (AIR 1979 Orissa 19).