B L NISHAD Vs. MARSONS ELECTRICALS LTD

JUDGEMENT

(1.) By this order I would dispose of the above two petitions i. e. CS (OS) No. 848a/2000 and 894a/2000, both filed by the respective parties to the suit under Section 14 and 17 of the Arbitration Act, 1940 (hereinafter referred to as 'the Act') along with IA NO. 11298/2000 filed on behalf of the Contractor/objector under Section 16, 30 and 33 of the same Act. The parties had entered into an agreement/contract dated 17th June, 1982. This contract contained an arbitration clause. Certain disputes arose between the parties which were referred to the Arbitrator. The said Arbitrator, Sh. B. N. Mani, the then Additional Legal Advisor to the Government of India, Ministry of Law, had pronounced his award. This award was set aside by the High Court vide its order dated 26.10. 1999 passed in CS (OS) No. 1383a/1988. The award was remitted to the Arbitrator for determination of the issues particularly whether there was complete contract between the parties. In that award, the Arbitrator had awarded a claim of Rs. 76,896/ -. It was the case of the Objector before the Court that there was no concluded contract, it suffered from mutual mistakes in regard to the basic terms of the contract and as such the provisions of Section 20 of the Indian Contract Act were attracted. The defendants had done risk-purchase at the cost of the Objector and had raised the claim of Rs. 1,28,908/- in the subsequent arbitration proceedings. After the case was remitted to the newly appointed Arbitrator Sh. B. L. Nishad in the same Ministry, he made and published the award on 9th March, 2000 and awarded the enhanced claim to the Union of India to the extent of Rs. 1,28,908.80 along with interest @ 18% per annum from 18th April, 1988. Both the parties filed petitions requiring the Arbitrator to file the award and the proceedings before the Court. The Arbitrator filed his award in this court, to which only the contractor filed objections praying that the award is liable to be set aside on the following grounds:- (a) The Arbitrator has exceeded the reference as well as the jurisdiction, as he has determined on the merits which were not covered by the order of remittance passed by the High Court in earlier proceedings being Suit No. 1383a/1988. (b) The Arbitrator has still failed to decide the vital issue in regard to existence of a valid and proper contract. (c) Lastly, it is stated that the Arbitrator could not have given the interest to the claimants and even otherwise, the award is not based on any evidence.

(2.) However, these objections of the Objector are countered by the Counsel appearing for the Union of India, as it is contended that in terms of the order dated 26.10. 1999, the High Court had remanded the matter and the Arbitrator was having complete jurisdiction to entertain the claim and pass a fresh order. It is further stated that the award is based on records, and claim of the claimant has been rightly allowed.

(3.) There is no dispute to the fact that the earlier award made by Dr. B. N. Mani dated 18th April, 1988 was set aside by this Court with particular emphasis on whether there was a valid existing contract between the parties or not The objector claims to have filed objections before the Arbitrator specifically on this ground. During the course of hearing, the learned counsel appearing for the Objector even filed written submissions wherein more specific objections have been raised on the following grounds:- (a) The Arbitrator has drawn the personal knowledge at the back of the petitioner and based his findings on such knowledge. (b) The Arbitrator has exceeded the reference. (c) Under the terms of the contract, the Arbitrator is required to give the reasons, but while making the award, the Arbitrator has not given any reasons and the award suffers from an error apparent on the face of the award, as well as non-application of mind. Resultantly, the Arbitrator has misconducted himself and the proceedings. In support of these contentions, it is stated that the Arbitrator was to examine the existence of a contract and find out whether already sum of Rs. 76,896/- was payable or not, but the Arbitrator in an arbitrary manner and without giving any reasons have enhanced the said amount to a sum of Rs. 1,28,908/- with interest @ 18% per annum from 18th April, 1988 till the award is made rule of the court. It is apparent that under the previous award, the claim of the Union of India in relation to risk-purchase loan was allowed to the limited extent of Rs. 76,896/- and no interest was awarded to the claimant. In the present award, the Arbitrator certainly has given no reasons as to why the claim of the claimant was enhanced and in absence of a specific reference why interest @ 18% per annum has been awarded in favour of the claimant. The award does not even refer to the facts of the case, particularly when the Arbitrator was acting on an order of remittance by the High Court with a specific query. He has also not recorded any findings as to whether there is an existing or binding contract between the parties or not All that has been stated is that the respondent had accepted the contract on 19th August, 1982 and therefore, a concluded contract has been reached between the parties. This was a finding without any basis and the detailed objections of the Contractor were not even referred to. Furthermore, the Arbitrator appears to have looked into the records/the purchase file of the Union of India, without even giving notice to the Contractor or even informing him that there was something in that file which was considered to be adverse to the claim of the Contractor. It has been recorded in the award I have also perused the Purchase Files brought before me, on my direction. " According to the Contractor, this was done in absence of the contractor, and definitely the arbitration records produced before the Court do not reflect in the orders or otherwise that the file was examined by the Arbitrator in presence of the parties and the contractor was put to notice with regard to any adverse factor which was to be considered by the Arbitrator in deciding the claim between the parties. This apparently shows that the Arbitrator has violated the principles of natural justice as well as has imported the knowledge which he received from the records of the Union of India without putting the same to the claimants. Reference in this regard can be made to the judgment of the Supreme Court in the case of Dewan Singh vs. Champat Singh and others AIR 1970 Supreme Court 967; G. L. Textiles Co. vs. Union of India 2004 (3) R. A. J. 685 (Del) and a judgment of Division Bench of Mumbai High Court in the case of M/s. Pancham International vs. UOI in Appeal No. 959/2000 in Arb. P. No. 216/2000.