State of Orissa vs J.N. Choudhury

B.K. Behera, J.—The State of Orissa is in appeal against the judgment and order passed by the learned Subordinate Judge, Bhubaneswar, in Original Suit No. 179 of 1981-1 making an award in favour of the respondent for a sum of Rs. 3,85,200 a rule of the court and decreeing the suit. The respondent had been entrusted with the work ''Distribution system of Nandini M.I.P.'' and had entered into an agreement with the Executive Engineer, M.I. Division, Phul-bani, under agreement No. 97 F-2 of 1974-75. As disputes arose between the parties, the Chief Engineer, Rural Engineering Organisation, appointed an Arbitrator who entered into the reference, called upon both the parties to put in their statements of claims and documents and after hearing the parties, made an award of Rs. 3,85,200 in favour of the respondent directing its payment within fifteen days from the date of the award and further directing that failing such payment, future interest on the amount awarded at six per cent per annum from 23-7-1981 would be payable till the date of actual payment. After overruling the objections raised on be-half of the appellant, the learned Subordinate Judge made the award a rule of the court.

Mr. R. K. Patra, the learned Additional Government Advocate appearing for the appellant, has raised two contentions. His first contention is that the Arbitrator had no jurisdiction to make an award in respect of additional works. Secondly, he contends, he had no jurisdiction to grant interest. As has rightly been submitted by Mr. Devananda Misra, the learned counsel for the respondent, the same questions have been raised and answered against in a number of decisions of this Court.

It is not disputed at the Bar that the entire dispute had been referred to the Arbitrator. The agreement had not been made a part of the award. On the principles laid down by this Court in the cases of State of Orissa Vs. Gokulachandra Kanungo, and State of Orissa v. Harikrishna Sahu (1982) 53 CLT 35, the Arbitrator did have jurisdiction to make an award in respect of additional items of work and also for interest payable to the respondent. It has been laid down by this Court in Executive Engineer, Rural Engineering Organisation, Khurda Vs. D.N. Senapati and Another, . relying on the principles laid down by the Supreme Court and by this Court in earlier decisions, that unless there is a specific clause in the agreement prohibiting award of interest, the Arbitrator has jurisdiction to award interest. The Arbitrator has power to award interest when it is an implied term of reference and in the absence of prohibition in the agreement, interest may be awarded from the due date till the date of the award and the award allowing interest is not vitiated on that ground. I, therefore, see no force in the contention raised on behalf of the appellant that the Arbitrator went legally wrong in making an award for interest.

This Court has, in Executive Engineer, Deburi Expressway Division, Kendrapara Vs. Hemalata Singh and Others, , laid down (at p. 79):--

"It is further contended on behalf of the appellant that the award is vitiated as the arbitrator has allowed extra items claimed by the contractor. I have already held that the agreement has not been made a part of the award, nor is the award based on the terms of the agreement. The entire dispute was referred to the arbitrator and in view of the findings made above about the limited jurisdiction of the Court, the award cannot be set aside, in absence of an error of law apparent on the face of the record. When the documents have not been made part of the award, the award cannot be set aside and the aforesaid contention of the appellant has no legs to stand."

In State of Orissa Vs. Gokulachandra Kanungo, , it has been held that the Arbitrator has jurisdiction to decide matters relating to additional works as in dealing with those matters, disputes on questions arising out of the contract may have to be considered and decided by the Arbitrator. The Court observed (at p. 165):--

"..... Relying on the decisions in A. C. Parija and Hindusthan Steel cases (1970) 36 CLT 1089 and ILR (1973) Cut 1218 (referred to above), this Court has held in State of Orissa Vs. G.C. Kanungo, that the arbitrator has jurisdiction to decide matters regarding additional work, as in deciding those matters, disputes and questions arising out of the contract may have to be considered and decided by the arbitrator. This view has been reiterated in a recent decision of this Court reported in State of Orissa Vs. B.N. Agarwala, (referred to above). The consistent view of this Court in four previous decisions from 1970 to 1981 have been followed which include the cases of A. C. Parija, Hindusthan Steel and G. C. Kanungo. The Hon''ble the Chief Justice has also reiterated the same view in M. A. Nos. 29, 30 and 62 of 1981 disposed of on 7-5-1981 : (Reported in Executive Engineer, R.E. Division, Dhenkanal and Another Vs. J.C. Budharaj, (referred to above)." The entire dispute had been referred to the Arbitrator and, therefore, it was open to him to allow claims for additional works. In view of the principles laid down in the cases referred to above, the award cannot be set aside on the ground that some claims for additional works have been awarded.

The jurisdiction of a court in respect of setting aside an award is limited to the grounds enumerated in Section 30 of the Arbitration Act. In the instant case, the award is not a reasoned one and it is a non-speaking award and the details of the claims cannot be called in question with reference to the materials placed before the Arbitrator. I do share the grave concern expressed by H. L. Anand, J. in the case of Bhilwara Synthetics Ltd., New Delhi v. Delhi Hindustani Mercantile Association AIR 1982 Delhi 155, that in the expanding horizon of natural justice and the development of administrative law when every judicial, quasi-judicial, executive and administrative body, charged with duty to make a decision affecting rights and obligations, is under a duty to give reasons for its decision, it is quite anachronistic that an Arbitrator in India is still immune from any such obligation. In England, right to know the reasons hag been given statutory recognition and an award by an Arbitrator without reasons would be bad in law, but not so in our country. In international arbitration, the convention recognises the obligation to give reasons. As rightly noticed by the learned Judge of the Delhi High Court, the power to make a non-speaking award may have given undue protection to incompetence, arbitrariness and even dishonesty in the arbitral process. However, it is for the Legislature to think of the change in the system. After all, a Judge is to administer the law as it is and not as he thinks, it should be. He cannot enact a law; he can only interpret it.

For the reasons recorded by me, none of the contentions raised on behalf of the appellant shall prevail.

The appeal fails and the same is dismissed with costs. Hearing fee is assessed at Rs. 100 (Rupees one hundred).