SABYASACHI MUKHARJI - (1.) THIS petition under Art. 136 of the Constitution challenges the judgment and order of the Division Bench of the High Court of Bombay dated 21/03/1988. The petitioner in this case on 23/06/1961, had agreed to sell to the predecessor of respondent raw petroleum coke. There was a second agreement on 22/04/1971. The said agreement was arrived at between the parties whereunder it was provided that in case the respondent failed to lift raw petroleum coke as agreed, the petitioner would have right to shift raw petroleum coke at the risk and expense of the respondent. There was a third agreement providing that in case of delay in payment, the respondent would pay interest at 4 per cent over the I.O.C. Bank borrowing rate, on the value of the stock not uplifted. It appears that on 5/08/1982, the respondent wrote a letter to the petitioner showing inability to pay the arrears of the price against delivery of raw petroleum coke. On 4/10/1982 there was a stock of about 13,760 M.Ts. of saleable raw petroleum coke lying at Gauhati Refinery. The petitioner on 18/10/1982 wrote to the respondent that unless the outstandings as on 1/09/1982 and interest were paid, the petitioner would not make further supplies. Thereafter the petitioner filed Suit No. 2187 of 1982 for payment and for attachment before judgment. On 21/12/1982, it appears that there was an order of attachment of stocks of raw petroleum coke to the extent of Rs. 6 crores of the respondent. The order was confirmed after notice. Respondent filed Appeal No. 858 of 1983. Thereafter respondent on 20/10/1983 filed an application for stay of the suit under S. 34 of the ARBITRATION AND CONCILIATION ACT, 1940 (hereinafter called 'the Act'). The petitioner on 11/07/1983 terminated the agreement with effect from 31-8-83. The respondent thereafter filed Suit No. 122 of 1983 and applied for an order compelling the petitioner to make supplies. The learned District Judge passed an order on 28/04/1984 for restoration of supplies. On 7/05/1984 in petitioner's appeal viz., Civil Appeal No. 2476 of 1984, this Court stayed the above order. On 24/05/1984 this Court's order setting aside the order of the learned District Judge dated 28/04/1984 and recorded the compromise terms (sic). Pursuant to the compromise, all proceedings were withdrawn by the parties. On 11/12/1984 matter relating to the petitioner's claims in respect of interest on stocks held from 1/10/1982 onwards and expenses of shifting raw petroleum coke from 1/10/1982 up to 31/08/1983, were referred to arbitration of Shri A. K. Sarkar, a former Chief Justice of India. On 21/08/1986 an interim award was passed by the learned arbitrator. Interim award was filed in the High Court of Bombay and the petitioner challenged the said award. The learned single Judge of the High Court dismissed the petition challenging the interim award. The Division Bench of the High Court of Bombay upheld the order of the learned single Judge. Hence this petition under Art. 136 of the Constitution.
(2.) THE main contention urged before us was that it was necessary in the present trend of law for the learned arbitrator to have given a reasoned award. THE Arbitration Act, 1979 in England so enjoins. THE arbitrator, according to the petitioner has failed to do so. Hence the award was bad and as such the decision of the High Court was wrong and leave should be granted from the said decision and the matter be referred to the Constitution Bench as several cases are pending on this point. The learned single Judge of the High Court in his decision had observed that the award was undoubtedly not an elaborately reasoned award setting out all the reasons which prompted the learned arbitrator to arrive at the conclusion he did reach, but it was a speaking award. The learned Judge however, held that it was not necessary to examine this aspect since even if it was a speaking order, it was not bad in law. It is true that the law as it stands up to date since the decision of Champsey Bhara and Company v. Jivraj Balloo Spinning and Weaving Co. Ltd., AIR 1923 PC 66 is that it was not necessary that all awards should be speaking awards. See in this connection the observations of this Court in Hindustan Steel Works Construction Ltd. v. C. Rajasekhar Rao, (1987) 4 JT 239.
(3.) PREVIOUSLY the law both in England and India was that an arbitrator's award might be set aside for error of law appearing on the face of it, though the jurisdiction was not lightly to be exercised. Since questions of law could always be dealt with by means of a special case this is one matter that could be taken into account when deciding whether the jurisdiction to set aside an award on this ground should be exercised or not. The jurisdiction was one that existed at common law independently of statute. In order to be a ground for setting aside the award, an error in law on the face of the award must be such that there could be found in the award, or in any document actually incorporated with it, some legal proposition which was the basis of the award and which was erroneous. See Halsbury's Laws of England, 4th edition, paragraph 623, page 334. The law has undergone a sea change in England. It is obligatory in England now after the Arbitration Act, 1979, that the award should give reasons.;