State of Orissa vs R.S. Das

S. Acharya, J.—The appeal has been filed against the order dated 20-12-1976 passed by the Subordinate Judge, Bhubaneswar in Misc. Case No. 136/76 (Arb.). A cross-objection has also been filed by the Respondent.

Certain matters between the Appellant and the Respondent had been referred to an Arbitrator and after his award was received by the Court below objections against the same were filed both by the Appellant and the Respondent in that Court. When that matter was taken up for hearing in the Court below the Appellant confined its objections only to item Nos. 1 and 2 of the award mainly on the ground that the amounts awarded by the Arbitrator in respect of the said items of claim were outside the scope of the terms and conditions of the contract between the patties in respect of these items, and hence the Arbitrator could not have awarded the amounts as done by him in respect of the said items. The objection which was filed by the Respondent was against the refusal of the Arbitrator to grant interest on the amount awarded for the period from the alleged due date of payment upto the date of the passing of the a ward by the Arbitrator. The Court below dismissed both the objections.

The Arbitrator in assessing the amounts in respect of the aforesaid items of claim has not stated any reasons for the same. Law is well settled that the Arbitrator is not bound to give reasons for passing an award or for fixing the amounts to be paid in respect of a claim. It is only when an erroneous legal position forms the basis of the award and that can be found in the award or a document actually incorporated thereto, then one can say that the award is erroneous and a Court may then interfere with the award if it finds convincing reason for the same. Otherwise the Court has no jurisdiction to enter into the merits of the case or to examine the documents and oral evidence on record for the purpose of finding out whether or not the Arbitrator has committed an error of law or of fact. It is well settled that if the complained of mistake does not appear on the face of the award, the award cannot be remitted or set aside. In the decision in Champsey Bhara Company v. The Jivraj Balloo Spinning and Weaving Company Ltd. AIR 1923 P.C. 66, it has been held that

An error in law on the face of the award means, in their Lordships'' view, that you can find in the award or a document actually incorporated thereto, as for instance, a note appended by the arbitrator standing the reasons for his judgment, some legal proposition which is the basis of the award which you can then say is erroneous.

The Appellant wants to challenge the amounts granted by the Arbitrator in respect of item Nos. 1 and 2 on the ground that the said amounts were fixed on considerations which were outside the scope and ambit of the agreement between the parties to that effect. The agreement between the parties does not form a part of the award. The terms of the agreement between the parties in respect of the said items have not been stated in the award; So from the award itself it is not possible to know as to whether the amounts awarded under the said two items are or are not in accordance with the terms of the said agreement. As stated above, it is not for this Court to probe into other documents on record to see whether the amounts awarded are correct or not. As from the award itself it is not possible to know whether the amounts awarded and in accordance with the terms of the contract or not, it is not for this Court to interfere with the amounts awarded by the Arbitrator. No legally permissible ground for interference with the award has been made out in this case. The Court below accordingly was justified in dismissing the objection raised by the State against the award passed by the Arbitrator in this case. Accordingly the appeal preferred by the State has to be dismissed.

The Respondent in his cross-objection prays that he should be granted interest on the amounts awarded by the Arbitrator for the period between the due date of payment of his dues as mentioned in the agreement and the passing of the award by the Arbitrator. In this case the Arbitrator has directed payment of interest at the rate of 6 percent per annum on the amount awarded, to be calculated from the date of expiry of 30 days after the passing of the award, if the amount awarded is not paid within the said period of 30 days. The Arbitrator in his award has specifically disallowed interest, compensation or damages on any other account. As the written contract is not a part of the award it is not possible to ascertain the ''due date'' from the award itself. Apart from the above considerations there is no provision in the Arbitration Act enabling the Court to grant interest for the period claimed by the Respondent. The parties on agreement referred the Respondent''s money claim on the Appellant to the Arbitrator. The Arbitrator by his award has finally settled the said claim by direction payment of a certain amount to the Respondent with interest as specifically mentioned in the award. The Arbitrator was appointed the sole and final judge to settle the dispute between the parties regarding the Respondent''s claim, and so they bound themselves to accept the award as final and conclusive in respect of all matters referred to him. The question of payment of interest is certainly a matter incidental to the final settlement of such claim. The very fact that the Arbitrator has specifically disallowed payment of interest for the aforesaid period clearly indicates that the Arbitrator considered that matter and then passed that order. As reasons for disallowing the same have not been mentioned it is not for this Court to probe into that matter. this Court cannot also add to or subtract anything from that award. Accordingly, the Respondent''s claim for interest for the aforesaid period was rightly refused by the Court below. The cross appeal filed only for the said claim is accordingly dismissed.

In the result, therefore, the appeal and the cross appeal both are dismissed, but in the circumstances there will be no order as to costs of this Court.

Appeal dismissed.