BOMBAY AMMENIA PRIVATE LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) ORDER:

(2.) THE respondent Union of India invited tenders for an air-conditioning plant for telephone exchange building at Manglore in June, 1964. M/s Bombay Ammonia (P) Ltd. petitioner submitted a tender dated 15th July, 1964. THE Union of India issued acceptance of tender dated 10th November, 1964. Disputes arose between the I parties and Mr. S. K. Bahadur, Joint Secretary and Legal Advisor to the Government of India, Ministry of Law, and Justice was appointed as sole arbitrator by the Director General of Supplies and Disposal. THE petitioner submitted his claim. THE respondent Union of India filed its counter claim. THE arbitrator by his award dated 28th July, 1980 rejected the claims of the petitioner and the respondent. THE Union of India in its objections has alleged that the arbitrator misconducted himself and the proceedings, that there is an error apparent on the face of the Award, that the arbitrator has misread and mis-interpreted the relevant conditions of the contract especially Clause No. 12 of the Conditions of Contract governing supplies of plant and machinery (Form No. DGS and D 71). THE petitioner/claimant has also filed objections (I.A. No. 3135 of 1981) raising various questions on merits of the controversies between the parties. THE petitioner also alleges that the arbitrator misconducted himself and the proceedings, that the award is based on no evidence, that the arbitrator has not applied his mind to the matters before him, that there is an error apparent on the face of the award. (contd. on col. 2)

(3.) LEARNED counsel for the parties submit that the instant award dated 28th July, 1980 is the result of non application of mind by the arbitrator. The argument is that if the claimant had not executed the contract in terms of the agreement, the respondent Union of India would be entitled for the refund of Rs. 1,67,743.50 under issue No. 4 and if the Union of India is not entitled for the refund of the said amount the arbitrator ought to have held that the contract was executed by the claimant/contractor in terms of the agreement. In short, the argument is that the decision of the Arbitrator on issues Nos. 1 and 4 is contradictory. There is an error apparent on the face of the award. Under issue No. 1, the Arbitrator has held that the contract was not executed by the claimant in terms of the agreement, and therefore, under issue No. 4 he ought to have held that the respondent was entitled for the refund of the amount claimed by it. The arbitrator has held under issue No. 4 that the respondent was not entitled for the refund of the amount claimed by it and, therefore, he ought to have held under Issue No. 1 that the contract was executed by the claimant in terms of the agreement. The decision of the arbitrator on the two issues, namely, issue Nos. 1 and 4 is contradictory which is the result of non application of mind to the facts and matters placed before the arbitrator. An award which is the product of non application of the mind of the arbitrator cannot be permitted to be sustained in law. This ground for setting aside the award would be covered within the expression "otherwise invalid" used in S. 30 of the Arbitration Act. Non application of mind to the materials on record suggests absence of fair play and indicates that the arbitrator did not function in a manner befitting his role.