Sharat and Co. vs State of Jammu and Kashmir

K.K. Gupta, J.—A dispute arose between the parties in regard to forest lease in compartment No. 29-G & M Dachan forest, Marwah

forest division, and on petition filed by the petitioner herein u/s 20 Arb. Act, same was referred to the arbitration of Chief Conservator of forest.

Later on said arbitrator was removed and the matter was referred to S. Sohan Singh, Ex.-Chief Conservator of forest, for adjudication. The

arbitrator made award on Nov. 27, 1989. Petitioner has not objected to the award but State of Jammu and Kashmir, respondent, has filed

application u/s 30/33 Arb. Act for setting aside the same on the following grounds:--

a) That the award has been filed after expiry of statutory period of limitation and being time barred is liable to be set aside;

b)That the award is not properly stamped and as such liable to be set aside;

c)That the arbitrator has mis-conducted himself and the proceedings in making the award and same is liable to be set aside;

d) That there are apparent errors of law and facts on face of record and as such award is liable to be set aside;

e)That the matter remained with the arbitrator for about two years and he had thus no authority to pass the award;

f)That the arbitrator has not acted as a Judge of choice of the parties but has acted in most arbitrary manner by not considering the documents

produced before him;

g)That the award is otherwise invalid because it is based on no documents and record;

h) That the arbitrator has not afforded full opportunity to the State-respondent and award is liable to be set-aside;

i)That the state had produced record duly prepared and maintained by the department and the petitioner was liable to pay interest and surcharge

on the royalty which fact was not considered by the arbitrator and made the award in haste; AND

j)That the timber was lying with the petitioner and question of any loss to the firm could not arise at all which fact was not considered by the

arbitrator.

Petitioner-firm has filed objections controverting the abovesaid pleas of the state-respondent and he further stated that even if the averments

made in the objections were taken to be correct no case made out for either setting aside the award or reversing it. According to it the arbitrator

has applied his mind to the questions and disputes after hearing the parties and their counsel and considering evidence led by the parties. It has also

been averred in the objections that there is no error apparant on face of the award and no misconduct of the proceedings has been done by the

arbitrator who is a man of repute and integrity.

This Court on May 7, 1990 framed the following issues for consideration :--

Whether the award has been filed after expiry of period of limitation, if so what is its effect? OP State.

Whether the award is not properly stamped? OP State.

Whether the arbitrator has misconducted himself and the proceedings? OP State.

Whether the award is otherwise invalid? OP State

Relief.

State-respondent has filed affidavits of Sh. D.N. Sharma, Junior Assistant and Sh. P.P. Patnaik Conservator of forest, Chenab Circle Jammu

whereas petitioner has filed affidavit of Sh. Sharat Chander partner of petitioner-firm.

I have heard the learned counsel for the parties and perused the record. The issues framed in the case are discussed separately below:

ISSUE No. 1.

Admittedly the arbitrator has filed award after expiry of period of four months allowed to him by the Court. He has filed separate application CMP

611 of 1989 alongwith the award stating therein that he entered upon the reference on Nov. 11, 1988 and completed arbitration proceedings on

22-9-1989 and prayed for extension of time in making the award. State-respondent in objections filed about this application has objected to the

prayer of the arbitrator. The only point for consideration is whether extension of time in filing the award can be granted at this stage. Section 28 of

Arb. Act is the relevant provision in such matters. It reads as under:--

(i) The Court may, if it finds fit, whether the time for making award has expired or not and whether award has been made or, not, enlarge from

time to time for making the award;

(ii) Any provision in an arbitration 'agreement whereby the arbitrator's or empire may, except with the consent of all the parties to the agreement,

enlarge time for making the award, shall be void and of no effect.

The words used in Sub-Section (1) of Section 28 ""whether the award has been made or not"" are most pertinent. Certainly the Court has powers

to enlarge the time for making the award by the arbitrator. Sub-Section (i) thus allows the Court even to enlarge time after making of the award. It

cannot be denied that the arbitrator is negligent in not applying earlier for enlargement of time but he has taken sufficient care for it by filing

application alongwith filing of award. Such point came for consideration before the Division Bench of Allahabad High Court in two cases Radha

Kishen Vs. Madho Krishna and Another, and B. Bhagwan Din Gupta Vs. B. Bisheshwar Nath and Others, and it has been held that extension of

time could be made even after the award had been filed. The language of Section 28(i) Arb. Act indicates that the Court has powers to grant such

extension, even at a later stage. I find no reason not to grant Such extension, in view of the circumstances explained by the arbitrator. As such time

is enlarged for making the award by the arbitrator and delay is condoned. This issue is decided accordingly.

ISSUE No. 2.

The award has been written by the arbitrator on plain paper and not on the stamp paper as required under law. Petitioner has filed separate

application CMP 276/90 for allowing it to pay the necessary stamp fee which plea has been objected by the State Government. This Court has

time and again held in so many cases that award cannot be set aside merely on the point that stamp duty has not been paid by the arbitrator. Main

aim of law is that such award should be properly stamped. If the arbitrator omits to perform such obligation that cannot be made basis for setting

aside the award which would amount nothing but to penalise the party in whose favour the award has been made. The purpose could be, achieved

by issuing direction to the party in, whose favour award is to pay the requisite, stamp duty. Stamp duty for such award is Rs. 110/-. A direction is,

therefore, issued to the petitioner-firm to file, within one week, abovesaid stamps in the form of non-judicial stamp. This issue is decided

accordingly.

ISSUES Nos. 3 & 4

Mr. Sharma learned counsel appearing for the State-respondent has argued that the arbitrator wrongly allowed an amount of Rs. 12.50 lacs on

account of timber belonging to the petitioner detained by respondent, particularly when the same was lying with the petitioner-firm itself and no loss

could have thus occurred. Mr. Gupta learned counsel for the petitioner has replied said argument by contending that petitioner-firm had paid whole

amount of royalty but on the pretext of getting interest for a particular amount petitioner was prevented from disposing of the timber which was

completely damaged and the arbitrator after obtaining objections and documents in this regard and hearing the parties decided the said question. I

have considered these contentions raised by either side. The award in this case is non-speaking one. It is now well settled proposition of law that

where an award is non-speaking it is open for the Court to investigate into it or to probe into material facts involved in the case. It is not considered

misconduct of the arbitrator to give; an erroneous decision, whether on fact or law. In Union of India (UOI) Vs. Bungo Steel Furniture Pvt. Ltd., it

has been held that the Court has no jurisdiction to investigate into merits of the case and to examine the documentary and oral evidence on record

for the purpose of finding out whether or not the arbitrator has committed an error of law and that the award of the arbitrator can be set aside on

the ground of error of law on face of award only when in the award or in a document incorporated with it, as for instance a note appended by the

arbitrator stating reasons for his decision, there is found some legal proposition which is the basis of the award and which is erroneous. In the

present case the award is non-speaking one. It is also silent in regard to any document nor has any document been incorporated. I also could not

find out from record that there is any error of law on face of the award. In Laxmi Narain Gauri Shankar Vs. Gopal Krishna Kanoria alias Gopi

Krishna and Another, their lordships have held that under law arbitrator is made final arbitor of the disputes between the parties and his award is

not open to challenge on ground that he has reached a wrong conclusion or has failed to appreciate facts. The allegation of the State-respondent

that the arbitrator did not consider the facts and came to a wrong conclusion cannot be made basis for setting aside the award.

Mr. Sharma has also pleaded that in fact State-respondent was entitled to have interest for the delayed payment of royalty for which the

arbitrator also framed an issue but he wrongly disallowed that amount to the respondent. I think in view of above discussed law propounded by the

highest judicial forum this plea cannot be allowed to prevail. It was entirely for the arbitrator to consider such facts and Court cannot interfere in

such proceedings.

Mr. Sharma also wanted to take into consideration the fact that the arbitrator did not yisit the petitioner and, according to him, he wrongly

assessed the same. I fear this point is also beyond the scope of this Court. The arbitrator is Judge of choice of the parties and he was required to

look into it. The affidavits filed by S/Shri D.N. Sharrna Junior Assistant and P. Patnaik Conservator of forest only point out that the arbitrator did

not afford full opportunity to the department and travelled beyond the scope of reference. But I think these facts pointed out in these affidavits did

not come out to be true as it appears from record that full opportunity was afforded to both the sides during the proceedings and counsel of both

the sides were heard before passing the award. I also could not find out from record that the arbitrator has, in any manner, travelled beyond the

reference. Both these issues are, therefore, decided against the State-respondent.

In view of decision in abovesaid issues the award is made rule of the Court and a decree in terms of the same shall follow. Mr. Gupta

appearing for the petitioner has made a prayer for grant of interest from the date of filing of petition but I think that cannot be allowed but in the

interest of justice interest is allowed @ 12% per annum on the awarded amount from today till payment is made.