Om Prakash Nargotra vs Union of India and Others

This is an application filed by the respondent, Union of India, and its functionaries under sections 30 and 33 of the Arbitration Act for setting

aside an arbitration award dated 29.2.1992 passed by Col. M.P. Sikka, Deputy Chief Engineer Northern Command, the sole Arbitrator. Based

on the Contents of the application and the reply filed thereto by the petitioner. Om Prakash Nargotra, the following issues were framed for trail

vide the court order dated 28.10.1992:

(1) Whether the Arbitrator has misconducted himself and/or the proceedings, If so, what is its effect?

OPP

(2) Whether there is any error apparent on the face of the award or the record and if so what is the consequence thereof?

OPP

(3) Whether the award is otherwise invalid and deserves to be set aside?

OPP

(4) Relief.

Affidavits on behalf of the parties, pursuant to the aforesaid order were filed by way of their evidence.

The respondents have challenged the award and sought its being set aside primarily on the ground of misconduct by the Arbitrator, coupled with

the allegations that there are errors of law and fact apparent on the face of the award and the record. Another ground of challenge is based upon

the invalidity of the very reference order whereby the Arbitrator was appointed by the Court and the disputes between the parties were referred to

arbitration.

Before I proceed any further, it shall be desirable and profitable to take note of the history of the case as also the relevant facts.

The petitioner, O.P. Nargotra is a contractor by profession and has been registered as such with Military Engineering Service (MES for short).

In 1987 the petitioner was awarded a contract for the provision of marriage accommodation for officers at Sunjwan (Jammu) (Phases I, II and IV)

and contract agreement bearing No. CEUZ12/ 8788 came to be executed between the parties i.e. the petitioner and MES Department for and on

behalf of the Government of India. The total value of the contract work as originally awarded to the petitioner stood at Rs. 1,28,83,510.17.The

dateof commencement, of he work was scheduled to be 27.11.1987 and the scheduled date of completion was 26.11.1989, which appears to

have been extended to 31.12.1990. It appears that the final extension granted for the completion of the work was to expire on 31.12.1990. Even

while the contract was in force and admittedly the work had not stood completed, the petitioner appears to have been aggrieved of some actions

or acts attributable to the respondents and feeling that some disputes arising out of the contract in question accrued, filed an application under

section 20 of the Arbitration Act for appointment of an Arbitrator and for reference of the disputes to him in terms of the arbitration agreement

between the parties. It shall be worthwhile to note that the parties were governed, interalia, by an instrument called ""IAFW 2249"", the general

conditions of contract agreement, clause 70 where of constituted the arbitration agreement between them. This clause as it actually stood on the

day of the agreement came into force between the parties reads as under:

Arbitration: All disputes, between the parties to the contract (other than those for 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 both parties agree in writing such

references shall not take place until after the completion or alleged completion of the works or termination or determination of the Contract under

condition Nos. 55, 56 and 57 hereof.

Provided that in the event of abandonment of the works or cancellation of the Contract under condition Nos. 52, 53 or 54 hereof, such reference

shall not take place until alternative arrangements have been finalised by the Government to get the works completed by or through any other

contractor or contractors or Agency or Agencies.

If the Arbitrator so appointed resigns his appointment or vacates his office or is unable or unwilling to act due to any reason whatsoever, the

authority appointing him may appoint a new Arbitrator to act in his place.

The Arbitrator shall be deemed to have entered on the reference on the date he issues notice to both the parties, asking them to submit to him their

statement of the case and pleadings in defence. The Arbitrator may, for time to time with the consent of the parties, enlarge the time upto but not

exceeding one year from the date of his entering on the reference, for making and publishing the award. The Arbitrator shall give his award within a

period of six months from the date of his entering on the reference or within the extended time as the case may be on all matters referred to him

and shall indicate his findings, along with 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.

If the value of the claims or counter claims in an arbitration reference exceeds Rs. 1 lakh, the arbitrator shall give reasons for the award"".

On 21.12.1990, a learned Single Judge of this court vide order passed in A.A. No. 224/1990 referred the disputes arising out of this contract

agreement between the parties to the arbitration of Sh. M.P. Sikka, sole arbitrator. It shall be advantageous to refer to this short order of the court

which is reproduced as under:

In this petition petitioner has projected certain disputes arising out of a contract agreement entered into between the parties for provision of

married accommodation for officers at Sanjwan, Phase I, II, HI and IV job No. NC566567/568 of 198788. Respondents have filed objections

denying the allegations but they have admitted that action for appointment of arbitrator would be taken after the work is completed by the

petitioner.

I have heard the learned counsel for the parties. Parties were asked to file a panel of arbitrators so that the disputes between them is referred to

one of them. They have filed separate lists not agreeing on any particular arbitrator. In accordance with the agreement arbitrator is required to be

appointed by the EngineerinChief Army Headquarters, respondent No.2. Mr. Gupta, learned Standing counsel for Union of India has insisted for

only allowing respondent No.2 to appoint such arbitrator which has been disputed to by Mr. Mahajan on the ground that the respondent No.2 did

not take action despite the prayer made to him by the petitioner within the provisions of law. Any how in order to sort out the matter the disputes in

question are referred to the arbitration of Shri M.P. Sikka, Deputy Chief Engineer Northern Command, C/O 56 A.P.O. who shall adjudicate upon

the same and file his award within the statutory period of four months.

Respondents feeling aggrieved of the aforesaid order passed by the learned Single Judge challenged the same by filing a Letters Patent Appeal

No.6/1991, But the Division Bench of this court vide its judgment dated 13.9.191 refused to interfere in the order of the learned Single Judge

meaning thereby that the order of reference passed by the learned Single Judge was maintained in its entirety by the appellate bench. On a careful

reading of the judgment of the Division bench, it clearly is reflected that the respondent Union of India was aggrieved only with regard to

appointment of Shri M.P. Sikka, as the sole arbitrator by the Single Judge on the ground that the arbitration agreement specifically provided that

the EngineerinChief Army Headquarters was the only prescribed authority to appoint the arbitrator and by taking upon itself the task of appointing

an arbitrator, contrary to the specific provisions of the arbitration agreement, the learned Single Judge has committed an error. While dealing with

this sole ground, urged in the appeal, the Division Bench observed as under:

Since the appellants have themselves submitted a panel of arbitrators before the learned Single Judge, they have by their conduct forfeited their

right to the appointment of an arbitrator by EngineerinChief. Further more they have concurred in jurisdiction of the learned Single Judge to appoint

an arbitrator de hors the arbitration agreement.

Still remaining unsatisfied with regard to the question of appointment of arbitrator, the respondents filed a Special Leave Petition in the Supreme

Court against the aforesaid judgment of the Division Bench. This petition, being SLP No.7433/1992 was however dismissed by the Apex Court

on 18.12.1993. The dismissal order reads as under:

Delay condoned.

In an identical case SLP (C) No. 1507/93, between the same parties liberty was given to the petitioners to pursue certain pending proceedings in

which award stands questioned. The position is identical instantly. Thus, in line of that order we dismiss this Special Leave Petition and leave the

parties to abide by the terms thereof. Special Leave Petition is dismissed accordingly.

Since the reference to SLP No: 15079/ 93 was made in the aforesaid dismissal order, it shall be profitable to reproduce the order dated

19.11.1993 by which the aforesaid SLP had come to be dismissed by the Apex Court. This order reads as under:

We have heard learned counsel of both sides.

This matter arises from the stage at which the aribtrator was appointed. The petitioner Union of India assails the correctness of the order of

appointment and the choice of the arbitrator. ShriHarish N. Salve, learned Senior counsel appearing for the respondent, states that the Arbitral

proceedings have since been completed and have in fact culminated in an award; that the proceedings for making the award the rule of the court

are now pending; that in those proceedings petitioner has taken steps to question the validity of the award and that it is not now appropriate to go

into the question of the validity of the arbitrator's appointment itself.

In view of, what is stated, we decline to interfere. It is open to the petitioner to pursue the pending proceedings in which it has questioned the

award. The Special Leave Petition is dismissed accordingly.

As will be therefore evident from the chronology of the events, in the meantime the Arbitrator, Col. M.P. Sikka concluded the arbitration

proceedings and had infact filed the award in this court on 3.3.1992 which was registered as A.A. No.37/1992 by this Court's Registry, this

award dated 29.2.1992 and filed in the court on 3.3.1992 granted certain claims in favour of the petitioner and against the respondents. As many

as 27 claims of the petitioner were under adjudication before the arbitrator, out of which he allowed as many as 23 claims, disallowing four of

them. It is stated that in all the Arbitrator had awarded an amount in the range of 90 lakhs in favour of the petitioner. Since we shall be dealing with

the matter relating to the contents of the award and the recitals contained therein, it shall be unavoidable to escape its contents and recitals because

ignoring them shall be at the cost of overlooking and ignoring the basic points involved in the case. After referring to the background regarding the

reference of disputes to him and the fact that the respondents hadn't associated with the arbitration proceeding and that these were being therefore

held exparte against the respondents and noticing that he was due for retirement as on 29.2.1992, the arbitrator made the following relevant

recitals at pages 3 and 4 of the award:

Now I Col. M.P. Sikka in compliance to the directions of the Hon'ble court having taken upon the burden of reference and heard and examined

and considered the record and the pleadings, documentary and oral evidences produced and submitted before me and also oral submissions and

arguments do hereby make and publish my award in writing concerning the matter.

Reasons for award:

After considering the pleadings, documents and other evidences, documentary as well as oral and on the basis of site visit conducted by me, I am

of the opinion that the Claimant contractor has executed extra/additional work and incurred expenditure at the instance of the respondent and also

the delay in completion of work is attributable to respondent department on the basis of material on record and after the due application of mind I

direct Union of India represented by Chief Engineer, UdhampurZone, P.O. Ghashi, Udhampur (JandK) to pay to Sh. Om Prakash Nargotra S/O

Sh. Chaju Ram R/O C518 Sainik Colony now H.No.2, Sector 3 Trikuta Nagar Jammu amount set out in the AWARD COLUMN of respective

items showing against each.

After having done that, the Arbitrator proceeded to indicate, with reference to the item of each claim, the amount that was claimed by the

petitioner and which actually was awarded by him in his favour. For example in the very first item of claim pertaining to the additional work done

by the petitioner against theamount of Rs. 17,78,000/claimed by the petitioner, the Arbitrator awarded an amount of Rs. 17,47,173.00. The

format in which these 27 claims were dealt with after the aforesaid quoted recitals, can be indicated by reproducing Claim No. 1 which reads as

under

S.No. Description of claims, Awards

pf C; amount of claims (Rs)

ao, s and finding in brief.

Rs. 17,78,000/(Claim partly sustained)

Shri V.R. Reddy, learned counsel appearing for the respondents, as indicated in the beginning of this judgment, has raised a number of points

in support of his contentions that the award was bad in law and that in terms of the grounds contained in Section 30 of the Arbitration Act, it

deserved to be set aside lock, stock and barrel. Since I propose to dispose of this petition only with regard to one ground, namely the misconduct

of the Arbitrator and the error of law apparent on the face of the award, I would refrain from taking into account or consider other points of

challenge urged by Shri Reddy.

The main ground of attack on which this petition is being disposed of is indeed a very simple and short point urged by the learned counsel

appearing for the respondents. According to him the arbitration agreement contained a clear binding stipulation that in all those cases where the

value of the claims or counter claims in the arbitration reference exceeded Rs 1 lakh, the Arbitrator was bound to give reasons for the award.

According to the respondents, in the present case, because the arbitrator failed to give reasons for the award, the absence of reasons as per the

respondents being apparent on the face of the award, the Arbitrator committed legal misconduct and on that ground alone the award having been

vitiated deserved to be set aside lock stock and barrel.

Repelling the argument of Mr. Reddy, Mr. Anil Mahajan learned counsel appearing for the petitioner, in the process of defending the award

and urging that it be made Rule of the court, submitted that a plain reading of the recitals contained in the award clearly indicated that the Arbitrator

had given reasons for the award and that on this account one could not be permitted to say that the award had stood vitiated and therefor it

deserved to be set aside. My particular attention was drawn to the recitals in the award which have been reproduced a little earlier in this judgment

in support of the petitioner's contention that the arbitrator could not be accused of not giving reasons. It was specifically contended that the giving

of reasons for the award and indicating the reasons for each item of claim were two entirely different propositions of law and that a court should

distinguish between what is called 'a reasoned award' and 'a speaking award'. According to Mr. Mahajan even if the Arbitrator had merely

indicated bald reasons, supported or unsupported by anything else that was sufficient substantial compliance with the mandatory requirements of

law contained in the Arbitration agreement and that nothing more was required to be done.

Reacting to the submissions of Mr. Mahajan, Mr. V.R. Reddy drew a distinction between the reasons which the Arbitrator ought to have given

in the award and the conclusion that he finally arrived at and submitted that the 'reasons' and 'conclusions' could not be mixed together and that

both were vastly different in content, logic and legal compliance.

Law in India has been well settled that an arbitrator is not bound to give reasons in the award that he makes under the Arbitration Act, unless

and until either the arbitration agreement or the deed of submission or an order made by a court under sections 20, 21 or 34 of the Arbitration Act

or the statute governing the arbitration requires that the arbitrator should give reasons for the award. In the case of Raipur Development Authority

Vs. M/S Chokhamal Contractors reported in AIR 1990 SC1426, a Constitution Bench of the Supreme Court while tracing the entire history of

the law of arbitration with particular reference to the requirement of giving reasons for an arbitration award and after referring to several earlier

decisions of the Apex Court finally came to the conclusion that there was no need for an arbitrator to give reasons in an award that he passes

under the Arbitration Act, as the Act by itself does not require him to do so, unless of course, as noticed above, the agreement or the deed of

submission etc. require him to do so.

Para36 of the judgment which laid down the aforesaid legal proposition clearly and succinctly reads thus:

It is true that in two cases one decided by the High Court of Delhi and another decided by the High Court of Orissa there are some observations

to the effect that it would be in the interests of justice if the arbitrators are required to give reasons for their awards because in recent years the

moral standards of arbitrators are going down. But generally this court and all the High Courts have taken the view that merely because the reasons

are not given an award is not liable to be remitted or setaside except where the arbitration agreement or the deed of submission, or an order made

by the court such as the one under section 20 or Section 21 or section 34 of the Act or the statute governing the arbitration requires that the

arbitrator or umpire should give reasons for the award. The arbitrators or umpire have passed the awards which are involved in the cases before us

relying on the law declared by this court that the awards could not be questioned merely on the ground that they have not given reasons. At the

same time it cannot also be said that all the awards are contrary to law and justice. In this situation it would be wholly unjust to pass an order either

remitting or setting aside the awards, merely on the ground that no reasons are given in them, except where the arbitration agreement or the deed

of submission or an order made by the court such as the one under Section 20 or Section 21 or Section 34 of the Act or the statute governing the

arbitration required that the arbitrator or the umpire should give reasons for the award.

The operative part of the judgment which finally settled the issue reads thus:

Having given our careful and anxious consideration to the contentions urged by the parties we feel that law should be allowed to remains it is until

the competent legislature amends the law. In the result we hold that an award passed under the Arbitration Act is not liable to be remitted or

setaside merely on the ground that no reasons have been given in its support except where the Arbitration agreement or the deed of submission or

an order made by the Court such as the one under Section 20 or Section 21 or Section 34 of the Act or the statute governing the arbitration

requires that the arbitrator or the umpire should give reasons for the award. These cases will now go back to the Division Bench for disposal in

accordance with law and the view expressed by us in this decision.

Before parting, however, the Apex Court appeared to be concerned about one aspect of nonspeaking awards in nonstatutory arbitrations to

which government and government controlled authorities were made parties. The observations of the court contained in para37 of the judgment

may be reproduced as under :

There is, however, one aspect of nonspeaking awards in nonstatutory arbitrations to which Government and Governmental authorities are parties

that compel attention. The trappings of a body which discharges judicial functions and requires to act in accordance with law with their concomitant

obligations for reasoned decisions are not attracted to a private adjudication of the nature of arbitration as the latter, as we have noticed earlier, is

not supposed to exert the State's sovereign judicial power. But arbitral awards in disputes to which the State and its instrumentalities are parties

affect public interest and the matter or the manner in which Government and its instrumentalities allow their interest to be affected by such arbitral

adjudications involve larger questions of policy and public interest Government and its instrumentalities cannot simply allow large financial interests

of the State to be prejudicially affected by nonreviewableexcept in the limited way allowed by the Statutenonspeaking arbitral awards. Indeed, this

branch of the system of disputeresolution has, of late, acquired a certain degree of notoriety by the manner in which in many cases the financial

interests of Government have come to suffer by awards which have raised eyebrows by doubts as to their rectitude and propriety. It will not be

justifiable for Governments or their instrumentalities to entire into arbitration agreements which do not expressly stipulate the rendering of reasoned

and speaking awards. Governments and their instrumentalities should as a matter of policy and public interest if not as a compulsion of law ensure

that wherever they enter into agreements for resolution of disputes by resort to private aribtrations, the requirement of speaking awards is expressly

stipulated and ensured. It is for Governments and their instrumentalities to ensure in future this requirement as a matter of policy in the larger public

interest. Any lapse in that behalf mightily lend itself to and perhaps justify, the legitimate criticism that Government failed to provide against possible

prejudice to publicinterest.

The court, therefore, took a clear, unequivocal and unmistaken view that if an arbitration agreement provide that an award should contain

reasons and, if the arbitrator while making the award did not assign reasons, the award was bad because it suffered from the vice of an error

apparent on the face of award and additionally because the arbitrator by not giving reasons despite aforesaid requirement misconducted himself

and the proceedings, the award could be setaside on that ground alone. Mr. Anil Mahajan, learned counsel appearing for the petitioner relied upon

a judgment of the Supreme Court in the case of Goa, D. and DiuHusg Brd. Vs. Ramakant V.P. Darvotkar reported in Arbitration Law Reporter

1991 (2) 393. In support of his contention that an arbitrator need not give reasons, despite clear stipulation to that effect in the agreement and that

even in a case, an award did not contain reasons, the same could neither be remitted to an arbitrator u/ s 16 of the Arbitration Act nor it could be

setaside u/s 30 of the Act. On a careful perusal of the aforesaid judgment in Goa, D. and Housing Board Vs. Ramakant V.P. Darvotkar, I find

their Lordships of the Supreme Court did not consider the question regarding the setting aside of the award as such. In that case the only question

which was involved and which came up for consideration of the Apex Court was whether an award could be remitted to an arbitrator u/s 16 of the

Arbitration Act which did not contain cogent reasons. While dealing with this question in para9 of the judgment, it was held as under:

Section 16 empowers the court to remit the award to the Arbitrator for reconsideration only in three cases specified therein, Clause (c) of

Section 16(1) provides that the award shall be remitted to the Arbitrator by the Court where an objection to the legality of the award is apparent

on the face of it. Of course, the High Court has come to a finding that the Arbitrator was guilty of misconduct for his failure to give reasons as

required. There is, however, nothing to show that the Arbitrator misconducted himself or the proceedings in any other manner nor there is anything

to show that the awards have been improperly procured. There is no allegation, far less, any finding, that the Arbitrator was baised or unfair or he

has not heard both the parties or he has not fairly considered the submissions of the parties in making the awards in question. In our opinion, it is

evident from the four awards made by the Arbitrator that the Arbitrator has considered all the specific issues raised by the parties in the arbitration

proceedings and came to his findings after giving cogent reasons. The above awards cannot under any circumstances be considered to be made by

the Arbitrator without recording any reasons for the same. Therefore, in such circumstances, it is not proper to hold that the Arbitrator has

misconducted himself or in the proceedings in the matter of giving the awards.

It shall therefore, be clear on a perusal of para9 of the judgment that in that case, the arbitrator had given reasons after considering all specific

issues raised by the parties in the proceedings and had come to its finding on the basis of cogent reasons which had been given by him. When

therefore, Apex court took a clear view that the Arbitrator had considered all specific issues raised by the parties in the Arbitration proceedings

and had come to its finding after giving cogent reasons in support thereof, the law laid down by the court in that case or the observations made

therein are wholly not applicable and totally distinguishable to the facts of the present case because in the present case, we are dealing with this

important issue as to whether the Arbitrator has given reasons for making the award or not at all and, if the reasons are not given, what should be

the legal consequences. Goa, HOusing Board's case did not proceed on the premises that the Arbitrator had not given reasons. In fact is

proceeded on the premises that the award contained reasons. Not only it contained reasons, but as observed by the Apex Court, it contained

cogent reasons"". In any case, this judgment at best can be per in curaium.

In the present case, the only part of the award which can be said to contain any reference with regard to the aspect relating to the giving or

nongiving of the reasons is that part which styles itself under the caption and heading ""reasons for award."" When one looks at it carefully, one finds

that the Arbitrator has adopted a general, vague and equivocal approach in dealing with the adjudication of claims preferred before him by the

petitioner. All that he has said with regard to the entitlement of the petitioner is that the petitioner had executed extra/additional work and incurred

expenditure at the instance of respondent and that the delay in completion of the work was attributable to respondent on the basis of material on

record. Merely saying, in the opening part of the award that the petitioner had executed extra/additional work and incurred expenditure at the

instance of the respondent or merely saying that the delay in completion of the work was attributable to respondent is one thing and assigning

cogent valid reasons in respect of these two issues involved in the case is quite another. I am in full agreement with the contention of Mr. Reddy

that these can hardly be called as reasons. These at best could be called as ""conclusions"" of the arbitrator which he may have arrived at by some

mental process to which the court cannot have access nor can it be probed because of absence of reasons in respect of these conclusions. It is no

doubt true that the arbitrator has indicated in the aforesaid parts of the award his two conclusions, viz, that the petitioner executed extra/ additional

work and incurred expenditure at the instance of respondent and that the delay in completion of the work was attributable to

respondentDepartment and because of these two conclusions, the arbitrator went on to award the claims in favour of the petitioner. Before the

arbitrator^ the issues were clear and unequivocal as to whether the petitioner had in fact and actually executed any extra/additional work and

incurred expenditure thereupon at the instance of respondent and as to whether the delay in completion of work was attributable to the respondent

or the petitioner. These were in fact the issues involved in the case and these two issues were the subject matter of adjudication in the arbitration

proceedings. Merely saying, in a bald statement, any one like recital that the petitioner had executed extra/additional work etc. and that the delay

was attributable to respondent is one thing and supporting these bald assertions or this bald conclusion with clear cogent reasons is quite another.

When the agreement required that the arbitrator should give reasons for the award, it clearly meant that he must give reasons, validly and cogently

in support of the conclusions that he arrived at while giving his award and additionally that in respect of each item of claim, and the finding returned

with regard thereto, he also must indicate his reasons in a clear and categorical manner. In the present case, as noticed above the arbitrator has not

given any reasons as to how and in what manner he arrived at the conclusions regarding the execution of extra/additional work and the incurring of

expenditure at the instance of the respondent and regarding delay of completion of work being attributable to the respondent. It was the duty of the

arbitrator to have indicated the reasons, with reference to the material on record as to how he arrived at these two conclusions. He having failed to

do so, the award cannot be said to be free from the aforesaid error of law apparent on the face of award because, admittedly on a plain reading

the award does not contain reasons for these two conclusions and thus there is an error of law apparent on the face of award.

Apart from giving reasons in arriving at conclusion as indicated above, the arbitrator also was required and obliged in terms of the agreement to

give reasons for each item of claim that he awarded in favour of the petitioner especially when huge amounts against most of the items were

awarded by him. Merely saying ""claim sustained"" or ""claim partly sustained"" cannot be a substitute for giving reasons for the finding record by the

arbitrator. ""Claim sustained"" or ""claim partly sustained"" can at best be the intention of arbitrator with regard to each such claim as was allowed or

not allowed or these can be the conclusions of the arbitrator regarding such claims as that deserved to be allowed, partly allowed or not allowed.

How and why he did allow a particular claim to what extent and on what basis was the obligation of the arbitrator to indicate in the award because

by that alone he could reveal in the award, on its very face his mental process and reasoning which impelled him to deal with the claims in the

manner that he thought he should do. For example, with reference to first item of claim which has been reproduced earlier in this judgment, which

dealt with the additional work done for provisions of servant quarters and garages and which contained a claim to the tune of Rs. 17,78,000, the

arbitrator was required to indicate in the award itself as to whether any additional work was actually done by the petitioner and as to how much of

this work was done and whether this construction was over in excess of the work stipulated originally in the agreement and if so how did the

contractor base his claim for Rs. 17,78000 and with reference to what material on record. The quantity of work, the rates applicable thereto and

the amounts spent by the petitioner were all relevant factors and considerations and which should have weighed in the mind of the Arbitrator in

adjudicating this claim and in arriving at the figure of Rs. 17,47,173.00 which he ultimately awarded in favour of the petitioner. Only if the arbitrator

had indicated all these factors and considerations against the first claim of the petitioner, could it be considered that he had given reasons for the

award and by that alone the legal requirements of giving reasons would have been satisfied. The same would apply in respect of other items of

claims, because as noticed in none of these claims awarded by the Arbitrator, he could give reasons whatsoever and he has proceeded to award

all these claims in favour of the petitioner unsupported by any reasons or reasoning or any indication of his mental process.

The contention of Mr. Mahajan that the recital contained in the opening part of the award under the caption ""reasons for the award"" should be

construed as the reasons given by the Arbitrator in arriving at his conclusion is not wholly misconceived, but wholly fallacious and without any legal

force. Equally fallacious is his submission that a ""reasoned award"" and ""speaking award"" are two different things and that what the agreement

provided was that the aribtrator should pass a ""reasoned award"". According to Mr. Mahajan, the agreement did not provide for the Arbitrator to

pass a ""speaking award"" and therefore, the court should not construe the agreement in such a manner as to import the concept of ""speaking award

into the actuality of ""reasoned award"". Mr. Mahajan is wrong in his submission on this question. When one carefully considers the two expressions,

reasoned award"" and ""speaking award"", one finds that both the expressions are not wholly similar and identical, but speak of same meanings as

well as the consequences. ""Speaking award"" is a general expression which only means that the award should speak, which in effect and substance

means that it should contain the reasons as to why the arbitrator has returned a particular finding and as to why, if at all, he had awarded a

particular sum of money in favour of a party and against another. The Arbitrator or the award, if one may say, so should speak, which means that it

should contain reasons. Both therefore, are not only same, similar and identical expressions, but in effect and substance both have same meaning.

The purpose of providing a stipulation in the agreement that the aribtrator, in agiven situation (like the one in our case where he is supposed to

give reasons if the amount of claim exceeds Rs. One Lakh) must give reasons for the award is to compel him to disclose his mind in arriving at a

particular conclusion and in deciding a particular issue, one way or the other, as also in returning a particular finding in favour or against a particular

party. The purpose also is to compel the arbitrator to equally disclose his mind as to how, on what calculations, which parameters and on what

basis has he arrived at a particular figure of claim, whether by allowing it or not allowing it or partly allowing it in favour or against a party. How did

the arbitrator come to arrive at that magical figure of a few lakhs Rupees against one claim and again few lakhs more against another claim. He

must not only disclose in the award, but disclose it cogently and properly by supporting that finding with appropriate reasons. Th purpose,

therefore, in its entirety is clear and unambiguous. It is this: give reasons, give enough of them, and give them properly and cogently; so that the

court can probe into your mental process, the court can find out by scrutining all reasons, the court can exercise its power of judicial review, do it

all to either agree or disagree with your finding, calculations and conclusions and consequently to either uphold the award or set it aside or even

remit it, as the situation may warrant in a given case. If, therefore, despite a stipulation in the agreement about the requirement of giving reasons, the

arbitrator either completely ignores the requirement and does not assign any reasons or assign reasons in such a slipshod manner, in such a casual

way or in a design to camouflage the process of reasoning, he must be held guilty of misconduct and that by itself is enough to vitiate the award and

the arbitration proceedings. In the present case before us, I can safely say, and with absolute degree of certainty, that what Mr. Mahajan wanted

me to construe as reasons in the opening part of the award could not at all be considered as reasons for the award. They at best as already

indicated could be taken to be the arbitrator's ""conclusion"" with regard to the subject matter of the controversy between the parties. The

conclusions cannot take the place of the process of reasoning nor can these be a substitute for valid and cogent reasons.

Based on the aforesaid reasoning, therefore, and in the light of discussion on the subject, I have no hesitation in holding that in the present case,

the award deserves to be setaside on both grounds of the aribtrator having misconducted himself and the proceedings and there being an error of

law apparent on the face of the award.

In a given situation, the court could have taken recourse to section 16 of the Arbitration Act for remitting the award to the Arbitrator for

assigning reasons, as has been observed in Raipur Development Authority's case (supra) or as was the subject matter of controversy in Goa D.

and Diu Housing Board case (supra). There is no doubt that course of action was available to the court. In the present case, however, I am very

clear in my mind that the facts and circumstances do not warrant taking recourse to section 16 of the Arbitration Act by directing the remittance of

the award to the Arbitrator. I am saying so because of very serious allegations of misconduct on other counts having been levelled by the

respondent against the arbitrator, even though these have not been made the subject matter of the grounds for setting aside the award by me. I am

not commenting upon the merits of these allegations. I am referring to them only to show and indicate that the respondent does not and cannot have

confidence and faith in the impartiality and fairness of the Arbitrator. The manner in which the arbitrator conducted the arbitration proceedings as

alleged by the respondent, especially when one looks at the fact that the award was passed exparte against the respondent by arbitrator and the

manner in which the exparte proceedings were actually in fact initiated by him earlier are all circumstances which can cast a shadow of doubt about

this course of action being adopted by the court in the present case. Coupled with all this is also fact that the arbitrator had passed the award just

immediately before his retirement from the government service, as if he was to finish this incomplete task before his retirement. Additionally one

cannot ignore the fact that the arbitration proceedings were going on and the Award was passed when the very appointment of the arbitrator and

the reference of disputes to him was seriously under challenge in court after court. Even though there was no stay of arbitration proceedings, yet

the aribtrator on moral or ethical grounds could have taken note of these proceedings in the courts and acted in all fairness to both the parties.

Admittedly, the arbitrator now is not any more in the service of the government. I would, therefore, have no hesitation in totally ruling out the

possibility or the option of remitting the award to the arbitrator under section 16 of the Arbitration Act. That being the case, the only course of

action left open to me, therefore, under law as well as on the facts and circumstances of this case, is to setaside the award.

The award is being setaside only on the ground of nondisclosure of reasons for the award and on no other grounds of challenge to the award are

not being dealt with by me at all and therefore, I should not be deemed or construed to have decided any one of them. The Arbitration Agreement,

continuous to remain valid and operative. That being the case, the petitioner cannot be deprived of the chance of taking recourse to fresh

Arbitration Proceedings. He has a right to have fresh proceedings conducted so that his claims are adjudicated. Respondent equally has a right of

not only defending the claims of the petitioner, but also to agitate its own claims, if any.

I, therefore, for the foregoing reasons allow this petition and setaside the award. The matters in dispute between the parties relating to the

contract agreement in question are directed to be referred to arbitration in accordance with the terms and conditions of the arbitration agreement

between the parties referred to in greater details in the opening parts of this judgment. In accordance with the Arbitration agreement, therefore,

EngineerinChief, Army Headquarters New Delhi, is directed to appoint an arbitrator within a period of three months from today. The arbitrator

newly appointed shall enter upon the reference immediately and pass the award within the statutory period. The parties are at liberty to file the

claims/counterclaims before the arbitrator. No order as to costs.