PATEL ENGINEERING CO LTD Vs. INDIAN OIL CORPORATION LTD

JUDGEMENT

(1.) MISCELLANEOUS Appeal No. 373 of 1970 by Messrs Patel Engineering Company Ltd. (hereinafter referred to as 'the Company') is directed against the judgment and order dated the 29th of September, 1970 of the Second Subordinate Judge, Patna setting aside the Award filed in that Court by the Umpire on an application made under Sections 30 and 33 of the Indian Arbitration Act. 1940 (hereinafter referred to as 'the Act') by the respondent Indian Oil Corporation Limited (hereinafter referred to as 'the Corporation'). The appellant Company is also the petitioner in the connected Civil Revision No. 1515 of 1970, in which it has challenged the order dated the 16th of September, 1970, passed by the learned Subordinate Judge overruling a preliminary objection raised by the appellant company to the maintainability of the application under Sections 30 and 33 of the Act. Since the order on the preliminary objection already stands merged in the final order on merits, which is the subject-matter of the appeal, specific grounds have also been taken in the appeal itself challenging the aforesaid order. I propose to deal with this part of the appellant's case, which is the subject-matter of the civil revision application, last of all.

(2.) IT may be mentioned at the outset that the respondent Corporation is the successor-in-interest of the Indian Refineries Limited, which had entered into a contract with the appellant Company on the 1st of November, 1961. The said contract gave rise to the dispute which was referred initially to two Arbitrators Mr. N.D. Daftary and Mr. H.K. Choudhary. These Arbitrators having differed, the matter was referred to Mr. J.N. Talukdar, the Umpire who submitted his Award dated the 2nd of June, 1969 before the learned Subordinate Judge. Notices were duly issued to the parties by the Court below. The respondent Corporation on receipt of the notice filed its objection challenging the Award by an application dated the 26th of June. 1969. The Court below by the impugned judgment and order held that the reference in question to the Arbitrators and umpire was not a specific reference and that there was error of law apparent on the face of the Award. On these findings the learned Subordinate Judge set aside the Umpire's Award

(3.) APROPOS the first point, there is no dispute, nor could there indeed be any, between learned counsel for the appellant Company and the learned Solicitor General for the respondent Corporation, regarding the principle of law which is firmly established that if a specific question of law is submitted to the Arbitrator and he answers it, the fact that the answer involves an erroneous decision in point of law, does not make the Award bad on its face so as to permit of its being set aside (Alopi Parshad v. Union of India, AIR 1960 SC 588: Kapoor Nilokheri v. Union of India, AIR 1973 SC 1338; Government of Kelantan v. Duff Development Co. Ltd., 1923 AC 395 (HL) and Rajmani Sinha v. Basant Sinha. AIR 1973 Pat 26). It is also equally well settled that the question of construction of any agreement, document, or term of the contract is a question of law. Even in such cases, however, there is high authority both of Indian and English Courts for the view that the Courts are not powerless to interfere if it appears from the Award that the Arbitrator has proceeded illegally in reaching his decision for example, he has decided on evidence which is inadmissible or on principles of construction which the law does not countenance or some thing of that nature. (Thawardas Pherumal v. Union of India, AIR 1955 SC 468; Government of Kelantan's case (Supra)). In the instant case, therefore, it will have to be seen as to whether, in fact, there was a specific question of law referred for arbitration or not. Learned counsel for the appellant Company urged that since there was no agreement of reference reduced into writing, we should look to the correspondence between the parties culminating in the reference to find out what the dispute was about. In this connection, learned counsel drew our attention to a letter dated the 18th of April, 1962 (Ext. 4) from the Chief Engineer of the appellant Company to the Chief Engineer of the respondent Corporation saving-