MAHESH PRAKASH Vs. UNION OF INDIA

JUDGEMENT

(1.) K. N. Singh, J. This First Appeal from Order is directed against the judgment of the Additional Civil Judge, Bareilly, dated 12. 2. 1975 rejecting the appellant's objection under Sections 30 and 33 of the Indian Arbitration Act against the award and making the same rule of the Court. The appellant is an approved Government contractor and has been doing contract work for the Government for several years. The appellant made tender for the supply of two pumping sets to the C. W. E. Bareilly. His tender was accepted and a contract agreement was entered into between the appellant and Union of India through the C. W. E. , M. E. S. Bareilly. The appellant deposited the requisite security amount under the contract and in stalled two sets of pumps in the month of May, 1966. According to the appellant, both the pumping sets were new and they were purchased from a reliable firm. On installation both the pumps were found in good working order. A completion certificate was issued to the appellant by the G. E. M. S. Ranikhet under his letter dated 25. 10. 1966 after he was fully satisfied with the working conditions of the sets. In November, 1966, the officers of the Union Government complained that the pumping sets supplied by the appellant were not working properly. According the defendant-respondent, defects in the pumping sets were pointed out to the appellant who acknowledged the defects and agreed to set them right. The appellant according to the respon dents agreed to bear the repair and handling charges, whereupon the respon dents sent the two pumping sets to M/s Super Diesel for repairs. After the repairs were carried out they were received but even thereafter their perfor mance was not satisfactory. The respondent had to replace the two pump ing sets by purchasing new sets for Rs. 26,750/ -. It appears that thereafter the respondents withheld the amount payable to the appellant and refused to refund the security amount deposited by hint. The appellant's claim was that he bad fulfilled the contract according to the terms and conditions of the contract agreement and yet the respondents were wrongly withholding pay ments. The respondents on the other hand made counter-claims and refused to accept the appellant's request for payment. Thus a dispute between the parties arose which was referred to the artibrator in terms of the Arbitration Agreement as contained in clause 70 of the Contract Agreement. Both the parties appeared before the Arbitrator. Before the Arbitrator the appellant claimed Rs.- 11,760/50 paise from the respondent with interest at the rate of 12% per annum. He also claimed Rs. 1000/- as costs of the pro ceedings. The respondent also filed statement of its case before the Arbitra tor wherein it raised counter-claim against the appellant on different counts. Both the parties adduced evidence before the arbitrator. On the conclusion of the proceedings the Arbitrator gave his award on 24. 7. 1970. The Arbi trator rejected three claims out of six claims made by the appellant under different heads and for the remaining three the Arbitrator held that the amount under those heads shall be paid to the appellant on his fulfilling the claim of the respondent's claim for Rs. 3724. 19 paise towards repair charges of the Two Diesel Engines including packing, loading, unloading and freight etc. He further allowed the defendant-respondent's claim against the appell ant for a sum of Rs. 26,750/- towards the replacement of the two pumping sets. Thus in all the arbitrator directed the appellant to pay a sum of Rs. 30,474/-to the respondent, whereupon the appellant's security could be released. The appellant thereupon filed objection under Sections 30/33 of the Arbitration Act before the Civil Judge, Bareilly. The learned Additional Civil Judge by his order dated 12. 2. 1975 held that the appellant's objections were without any merit and the award was perfectly legal and valid. On these findings the Civil Judge made the award rule of the Court. Aggrieved, the appellant has approached this Court by filing appeal. Learned counsel for the appellant made only one submission before us. He urged that the Arbitrator committed legal misconduct in awarding lump sum amount on each claim without giving reasons, as such the award was vitiated and is liable to be set aside. The lower Court committed error in making the award rule of the Court. Learned counsel for the respondent contested the correctness of the submission made on behalf of the appellant and urged that the Arbitrator was not required to record reasons and absence of reasons did not vitiate the award. There is no dispute that the Arbitrator considered each item of claim and counter-claim made by the parties before him separately and he awarded lump sum amount to the respondent in respect of certain items of dispute. While awarding the lump sum amount on each claim separately the Arbitrator did not record any reasons. The question arises whether the award is vitiated on account of absence of reasons. It is to be borne in mind that the parties had voluntarily made reference to the Arbitrator in accordance with clause 70 of the Contract Agreement. Clause 70 is as under; "70. Arbitration: All disputes between the parties to the contract (other than those on which the decision of the C. W. E. or any other person is by the contract expressed to be final and binding) shall, after written notice by either party to the contract to the other of them be referred to the sole arbitration of an Engineer Officer to be appointed by the authority mentioned in the tender documents. Unless the parties otherwise agree such reference shall not take place until after the completion or alleged completion or abandonment of the works or the determination of the contract. If the Arbitrator so appointed resigns his appointment or vacates his office or is unable or unwilling to act due to any reason whatsover the authority appointing him may appoint a new arbitrator to act in his place. The Arbitrator shall be deemed to have entered on the date he issued notice to both the parties fixing the date of hearing. The Arbitrator may, with the consent of both the parties to the con tract enlarge the time for making the award. The Arbitrator shall give his award on all matters referred to him and shall indicate his findings, along with the sums awarded, separately on each individual item of dispute. The venue of Arbitration shall be such place or places as may be fixed by the Arbitrator in his sole discretion. The award of the Arbitrator shall be final and binding on both parties to the contract. " Under the above clause the parties agreed to refer the dispute to the sole arbitration of an Engineer Officer for adjudication of the dispute. The Arbitrator was required to give his award on all matters referred to him and he was further required to give his findings along with the sums awarded separately on each individual item of dispute. Under the said agreement the parties further agreed that the award of the Abitrator shall be final and bind ing on them. The parties thus constituted the Arbitrator as the sole and final judge of all the questions referred to him. Where the parties voluntarily refer the dispute to an arbitrator and they agree to abide by the award given by the Arbitrator the power of the Court to interfere with the award is restricted to great extent. The Courts do not interfere with the award except in cases where the award is the result of corruption, fraud or where a question of law necessarily arisen on the face of the award which may have been erroneously decided by the Arbitrator. See Champsey Bhara and Co. v. Jivraj Balloo Spinning and Weaving Co. Ltd. (A. I. R. 1923 P. C. 66 ). The law laid down by the Privy Council was quoted with approval by the Supreme Court in Jivaraj Bhai Ujamshi Sheth v. Chintamanrao Balaji (A. I. R. 1965 S. C. 214.) and it was observed- "the Court in dealing with an application to set aside an award has not to consider whether the view of the arbitrator on the evidence is justified. The arbitrator's adjudication is generally considered binding between the parties for he is a tribunal between the parties and the power of the Court to set aside the award is restricted to cases set out in Section 30 of the Arbitration Act, 1940. 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 pro cess of reasoning, the Court cannot proceed to determine whether the conclusion is right or wrong. It is not open to the Court to attempt to probe the mental process by which the arbitrator has reached his con clusion where it is not disclosed by the terms of the award. " Similar view was taken by the Supreme Court In Bungo Steel Furniture (Pvt) Ltd. v. Union of lndia. ( A. I. R. 1967 S. C. 378) Firm Madan Lal Roshan lal Mahajan v. Hukum Chand Mills Ltd (A. I. R. 1967 S, C. 1030) and Union of India v. Bungo Steel Furniture Pvt Ltd. ( A. I. R. 1967 S. C. 1032.) Generally, an award of the Arbitrator is not vitiated on account of absen ce of reasons. It is open to the Arbitrator to record his conclusion or finding without giving any reasons. It is well settled that the award of an Arbitrator is not a judgment and as such no reasons are necessary to be recorded by the Arbitrator and he is entitled to award a consolidated sum without dealing with each item of claim separately unless he is required to do so by the Arbi tration agreement itself. In Smt. Santa Sila Devi v. Dhirendra Nath Sen (A. I. R. 1963 S. C. 1677) it was held 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. Unless the reference to arbitration specifically so requires the arbitrator is not bound to deal with each claim or matters separately but can deliver a con solidated award. The award given by the Arbitrator in the instant case is in consonance with the principles laid down by the Supreme Court as findings have been recorded on each item of dispute separately. In Union of India v. Prem Chand Satram Dass (A. I. R. 1951 Patna201) a Division Bench held that absence of reasons does not vitiate the award and it is not open to judicial review. In State of Orissa v. P. C. Chandra (A. I. R. 1962 Orissa 91) another Division Bench held that there was no special form, in which the award of an arbitrator should be made. The arbitrator is also not bound to give his reasons or to state why he came to the conclusion. Even if the award is badly stated without giving reasons for it, it cannot be assailed even if it be agreed on facts or repugnant to law. In Rustomjee Dorabsha v. Manmal Prabhu Dayal (A. I. R. 1964 M. P. 15) it was held that an arbitrator need not give any reasons for his decision, instead he is required only to set down his decision in clear and unambiguous manner. In case of voluntary reference to arbitrator he gets juris diction by consent of parties and his decision on facts is not even subject to scrutiny by Courts except on the ground of corruption or fraud or where a question of law necessarily arises on the face of the award. In Ram Gopal v. Commonwealth Assurance Co. the findings recorded by the arbitrator were held to be valid even though no reasons were assigned In support of findings and it was observed that absence of findings does not amount to error on the face of the award. In Jay Kumar v. Om Prakash, ( A. I. R. 1975 Delhi 215.) it was held that when the parties have chosen their own arbitrator to be judge in the disputes between them they must accept the award as final for good or bad and the arbitrator's failure to give reasons for his decision is no ground for setting aside the award. In Jiwan Industries v. H. B. Madhusudan (12) the Court refused to set aside the award on the ground of absence of reasons. In Union of India v. M. S. Karsandass Jethabhai (A. I. R. 1977 Gujarat 183)a Division Bench of Gujarat High Court held that the arbitrators are not expected to deal with the problems assigned to them in the manner in which judicial authorities do. The award is not vitiated merely because the arbitrator has not stated his reasons for his findings. In Jullunder Ex-Service men Motor Co-oprative Society v. General Assurance Society (A. I. R. 1978 Punjab and Haryana 336) it was held that the award cannot be set aside because the arbitrator did not give reasons. Apart from these decisions, the Supreme Court has also taken the similar view. In Bungo Steel Furniture v. Union of India (A. I. R. 1967 S. C. 378.) the Supreme Court held that if an arbitrator, in deciding a dispute does not record his reasons and does not indicate the principles of law on which he has proceeded, the award is not on that account vitiated. Again in Firm Madan Lal Roshan Lal v. Hukum Chand Mills (supra) the Supreme Court held that even if the arbitrator gave no reasons for the award, it could not be set aside under Section 30 of the Arbitration Act. There is thus no room for any doubt that absence of reasons does not vitiate an award. Rationale behind these decisions appears to be that when parties voluntarily choose the arbitrator and make him the sole judge of the dispute, it is not open to them to find fault with his decision. There is no appeal against the verdict of the arbitrator and his award both on facts and law is final. The Court cannot review his award and correct any mistake in his adjudication. Unless an objection to the legality is apparent on the face of it. Since the Courts have no power to review the findings of the arbi trator, there is no necessity for the arbitrator to give reasons. In this view the award of the arbitrator was valid and the Court below rightly rejected the appellant's objection against the award. Learned counsel for the appellant, however, contended that under the arbitration agreement the arbitrator was required to record reasons in respect of each item of claim, even though the arbitrator has recorded separate find ings in respect of each item of claim but he has failed to record reasons. Consequently the award is vitiated. He drew our attention to the follow ing sub-clause of the arbitration agreement in support of his contention. "the arbitrator shall give his award on all matters referred to him and shall indicate his findings along with the sums awarded separately on each individual item of dispute. " Learned counsel emphasised that under the aforesaid clause the Arbitrator was required to record his findings on each item separately. The findings according to the learned counsel require reasons. We are unable to accept the contention, While it is true that the arbitration agreement required the Arbitrator to give his award on all matters referred to him and it further required him to indicate his findings along with the sum awarded on each item of dispute but the agreement did not expressly or impliedly require the Arbitrator to give reasons in support of his findings. The Arbitrator was only required to indicate his findings. There is difference between findings and reasons. The expression 'finding' means a decision upon questions of fact reached as a result of judicial examination or investigation by Court, jury, referee or tribunal. A finding generally is not a judgment but is only ex pression as to what the Court considers the judgment should be. In legal parlance "findings" generally implies decision. See Words and Phrases, Permanand Edition, 117. 'reasons' on the other hand indicate mental process through which a finding or decision is reached. There is marked difference between conclusion and reasons. The expression 'finding' is therefore not synonymous to reasons. A finding may be given without recording reasons. A finding is conclusion of final determination of dispute whereas reasons relate to the mental process leading to the final conclusion, The arbitration clause in the instant case merely required the arbitrator to record his conclu sions on each item of dispute separately, it did not require the arbitrator to give speaking award or to record reasons. The award given by the Arbitrator was in consonance with the arbitration agreement and it was not vitiated on the ground of absence of reasons. In view of the above discussion, we hold that the Arbitrator committed no misconduct and the award was given in accordance with the arbitration agreement which finally adjudicated the dispute between the parties and the Court below rightly made the same rule of the Court. The order of the Court below does not suffer from any error warranting interference by this Court. In the result, the appeal fails and is accordingly dismissed with costs. .