State of Kerala and Another vs Sainulabdeen

P.A. Mohammed, J.—This appeal has been filed by the Respondents in O.P. (Arb.) No. 291 of 1986 against the judgment and decree passed by the Sub Court, Trivandrum in the above arbitration O.P. By the said judgment, the Court below accepted the award in Arbitration Case No. F5-8568/1985 dated 24th July 1986 made by the Arbitrator who was a retired Superintending Engineer. The Respondent in the appeal is a contractor who had undertaken a contract for the construction of a Court building at Punalur. An agreement was executed on 21st March 1981 between the Appellants and the Respondent. Even though the time was extended for the completion of the contract, it was not fulfilled even within the extended time. Consequently, the contract was terminated on 15th September 1984 at the instance of the Government. Certain dispute arose between the parties in respect of the above construction of the building and the contractor filed the suit O.S. (Arb.) No. 188/84 u/s 8 of the Arbitration Act, 1940 (for short the ''Act''). Accordingly, an Arbitrator was appointed by the Court. The Arbitrator filed the award in Court. The objections were filed by the Appellants and thereafter the Court below accepted the award and passed a decree in terms of the award.

The main contention advanced by the Government Pleader before this Court is that the Arbitrator misconducted himself in awarding the claims. In other words, his plea is that there is legal misconduct. Before considering this contention it would be worthwhile to examine the scope of interference of this Court in the present appeal. This appeal is against the judgment accepting the award and passing a decree thereon. The Arbitrator after specifying claims, has shown the amount awarded against each. No doubt it was not a speaking award. When the award is not a speaking award, the interference by this Court is very much limited. The Supreme Court in N. Chellappan Vs. Secretary, Kerala State Electricity Board and Another, held thus:

The umpire as sole arbitrator was not bound to give a reasoned award and if in passing the award he makes a mistake of law or of fact that is no ground for challenging the validity of the award. It is only when a proposition of law is stated in the award and which is the basis of the award, and that is erroneous, can the award be set aside of remitted on the ground of error of law apparent on the face of the record.

What is held by the Supreme Court is that the Arbitrator is not bound to give reasons for his conclusions. Only when, the award is sepaking award or reasoned award, the objections against can be taken on any grounds aforementioned. The Supreme Court in Trustees of The Port of Madras Vs. Engineering Constructions Corporation Limited, in paragraph 20 of the judgment observed to the following effect.

In the case of a reasoned award, the Court can interfere if the award is based upon a proposition of law which is unsound in law. The erroneous proposition of law must be established to have vitiated the decision. The error of law must appear from the award itself or from any document or note incorporated in it or appendod to it. It is not permissible to travel beyond and consider material not incorporated in or appended to the award.

That would necessary indicate that the Court while appreciating the correctness or otherwise of a reasoned award, it cannot go into the matters which are not contained by way of reasons in the award. When the award is not a speaking award, the Court cannot go into the correctness or otherwise of the conclusions contained therein unless a wrong proposition of law is adopted as a basis for passing the award. No such questions arise in this case.

What is urged by the Government Pleader is that the State has filed an objection before the Court below and in that objection it has raised a point that the Arbitrator has legally misconducted himself and that said objection shall be treated as a petition u/s 30 of the Act. Section 30 of the Act prescribes what are the grounds for setting aside the award. An award can be set aside under the said provision on any of the three grounds mentioned hereunder:

(a) that an arbitrator or umpire has misconducted himself of the proceedings;

(b) that an award has been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid u/s 35;

(c) that an award has been improperly procured or otherwise invalid.

In the present context, we arc only concerned with the first reason as alleged by the Government Pleader. As observed by the Supreme Court in K.P. Poulose Vs. State of Kerala and Another, the misconduct u/s 30(a) has not a connotation of moral lapse. It comprises legal misconduct which is complete if the arbitrator on the face of the award arrives at an inconsistent conclusion even on his own finding or arrives at a decision by ignoring very material document which throw abundant light on the controversy to help a just and fair decision. In substance, the ground would be a legal misconduct and probably in view of the above decision, the Government Pleader has projected before us that there is a legal misconduct on the part of the Arbitrator. Apart from the ipse dixit contained in the objection there is absolutely no evidence before us in order to examine whether there is any misconduct much less legal on the part of the Arbitrator.

Even assuming the above ground is available the question is whether the Appellant has filed any petition u/s 33 of the Act to set aside the award. Section 33 prescribes that any party to an arbitration agreement or any person claiming under him desiring to challenge the existence or validity of an arbitration agreement of an award or to have the effect of either determined shall apply to the Court and the Court shall decide the question on affidavit. Admittedly, no such petition has been filed before the Court below seeking to set aside the award passed by the Arbitrator. When a petition as required u/s 33 is presented before the Court, the Court can deal with the petition and if it is just and expedient, the Court may set down the application for hearing on other evidence also and it may pass such order for discovery and particulars as it may do in a suit. Even in that proceeding the evidence can be adduced for setting aside the award by filing affidavits. The default committed by the State for not filing the application as required u/s 33 of the Act for setting aside the award is very fatal to their case. In this context, it is apt to observe that even the objections filed by the State has been considered by the Court below and those objections were rejected.

The Government Pleader also pointed out a decision of the Orissa High Court in Narayan Panda Vs. The State of Orissa and Another, That was a case where an objection to the award was taken in the written statement merely on the ground of non-fulfilment of the formality of verification required under Rule 3 of the Orissa Arbitration Rules. The objection appears to have been not in conformity with the verification as required under the above Rules. There, the objection is only with regard to the formality of the verification under the Rules prevalent in Orissa. We cannot take the said decision as an authority for the proposition that the objection contained in the written statement can always be treated as a petition to set aside the award u/s 33 of the Act. In Madan Lal Vs. Sunderlal and Another, what the Supreme Court said was that in appropriate cases an objection to an award in the written statement may be treated as an application u/s 30 of the Act if it is filed within a period of limitation. We are not prepared to say that this is an appropriate case where the said principle can be applied. The requirenmet of limitation has to be satisfied and that is a matter to be found on facts. We have also anxiously perused the conclusions on the objections entered by the Court below. Those conclusion are found to be correct and legal. In the result, we do not find any reason to interfere with the judgment and decree passed by the Court below. The appeal is accordingly dismissed.