BALASORE TECHNICAL SCHOOL Vs. ORISSA STATE ELECTRICITY BOARD

JUDGEMENT

(1.) This is an appeal under 5ec. 39 of the Arbitration Act directed against the order of the Subordinate Judge setting aside an award passed by the arbitrator on the objection of the respondents.

(2.) THE appellant had entered into an agreement with the respondents in relation to supply of electrical energy. The respondents enhanced the tariff rate unilaterally and submitted the bills to the appellant at such enhanced rate. The appellant protested against such bills and requested that the bills should be prepared in accordance with the rate agreed upon. The respondents, therefore, threatened to disconnect the electric supply and ultimately disconnected the line on 30 -12 -1976. The appellant filed an application under Section 20 of the Arbitration Act invoicing the arbitration clause of the agreement and the said application was numbered as O. S. No. 127 of 1977. Before the learned Subordinate Judge the appellant also prayed for restoration of the electric line pending final adjudication by the arbitrator to be appointed. The Subordinate Judge having allowed the prayer of the appellant, the respondent preferred a miscellaneous appeal against the said order being Miscellaneous Appeal No. 120 of 1978. In the said miscellaneous appeal, a joint memo was filed and without prejudice to the rights and contentions of the parties, re -connection was given and the appellant paid at the new tariff rate and further the appellant agreed that if ultimately the arbitrator decided that the appellant was liable to pay arrear at the new tariff rate, then he would pay the same and Justice H. Mohapatra retired Judge of the Patna High Court, was appointed as arbitrator. The learned arbitrator entered into the reference and the respondents filed their statement of claims, Certain evidence was also taken before the learned arbitrator. After hearing both parties, the arbitrator passed an award on 19 -2 -1983. Against the said award, the respondents filed objection under Sections 30 and 33 of the Arbitration Act. The learned subordinate Judge came to the conclusion that the award if the arbitrator contained error apparent on the face of the award so far as reference No. 3 is concerned inasmuch as the arbitrator held that the whole of the demand raised by the defendants prior to 17th May, 1979, was barred by {limitation. The Subordinate Judge further held that in view of the provisions of Orissa Act 19 of 1981, which came into force before the arbitrator passed the award, the proceeding before the arbitrator stood abated and, therefore, the award was illegal on that score. The learned Subordinate Judge also held that the finding of the arbitrator that Orissa State Electricity Board is not entitled to receive any claim from the plaintiff in respect of their agreement dated 28th of April, 1951, was erroneous and beyond the scope of the reference since there was no reference on this score. Having come to the aforesaid conclusion, the learned Subordinate Judge by the impugned order set aside the award in exercise of his powers under Section 30 of the Arbitration Act. Hence the present appeal.

(3.) IN reply to the aforesaid submissions, Mr. C. Rath, the learned counsel for the respondents submits that an award which runs contrary to the agreement is liable to be set aside and the Courts of law are to give effect to the agreement. The award in derogation of a binding contract between the parties is par no illegal and, therefore, it was within the jurisdiction of the Subordinate Judge to find out whether any portion of the award is contrary to the terms of the contract and for that purpose a Court can look into the contract. In that view of the matter, the conclusion of the Subordinate Judge cannot be held to be illegal. Mr. Rath, the learned counsel for the respondents, relies on the decision of the Supreme Court in the case of M/s. Alopi Parshad and Sons Ltd. v. Union of India, A. I. R. 1960 S. C. 588. On the question of limitation, it is contended that the inference drawn from the facts by the Arbitrator is a clear question of law and therefore, the award of the arbitrator regarding the same being on the face of it erroneous, the Court was justified in setting aside the said conclusion. On the question of applicability of Orissa Act 19 of 1981, Mr. Rath, the learned coursel submits that in view of Section 3 of Orissa Act 19 of 1981, the arbitration proceeding stood abated and, therefore, it is the duty of the Court to see that an arbitrator follows and applies the law. The award of the arbitrator on this score ignoring the statutory provisions is manifestly erroneous and the Subordinate judge was justified in setting aside the award on that ground. In this connection, reliance has been placed on the decisions of the Supreme Court in Thawardas Pherumal and another v. Union of India, A. I. R. 1955 S. C. 468 and Iiftikhar Ahmed and others v. Syed Meharban Ali and others, A. I. R. 1974 S. C, 749. Coming to the last ground, i.e., with regard to the conclusion of the arbitrator that nothing is payable by the appellant, Mr. Rath submits that it was not a point of reference to the arbitrator and, therefore, the conclusion of the arbitrator on that score is vitiated by legal misconduct. It is well -settled that an award cannot be sustained in law if it exceeds the scope of reference; Reliance has been placed on the decisions of the Supreme Court in Orissa Mining Corporation Ltd. v. M/s. Prannath Vishwanath Rawliey A.I.R. 1977 S. C. 2014 ; Gobardhan Das v. Lachmi Ram and others, A. I. R. 1954 S. C, 689, and the decisions of this Court in Chairman, The Orissa State Electricity Board and another v. M.s Jayashree Chemicals Ltd. and others, A. I. R. 1980 Orissa 20 and M/s. Industrial Development Corporation of Orissa Ltd. v. Jajodia Overseas (P.) Ltd., A. I. R. 1980 Orissa 66.