Union of India (UOI) vs G.D. Engineering Construction

H.K. Sema, J.—This appeal is directed against the judgment & Decree dated 26.3.93 passed by the learned District Judge, Sonitpur, Tezpur in MS (Arb) No. 25/92. By the aforesaid judgment and Decree, the learned Court below has rejected the objection of the Appellant and made the award as rule of the Court.

We have heard Mr. K.N. Choudhury, the learned Senior Central Govt. Sanding Counsel for the Appellant as well as Mr. T.C. Khatri, the learned Counsel for the opposite party.

Two contentions have been raised by Mr. K.N. Choudhury. These are:

a) That the Arbitrator has misconducted himself in making the award; and

b) That the award made by the Arbitrator was erroneous is apparent on the face of the record.

Before we advert on the points raised by the Appellant, we may, at this stage dispose of the preliminary objection raised by Mr. TC Khatri, the learned Counsel for the Respondent with regard to maintainability of the appeal. This appeal has been filed u/s 39 Clause-I & VI of the Arbitration Act, 1940 (hereinafter referred to as the Act). It is contended by Mr. T.C. Khatri that none of the grounds mentioned in Section-39 are available in the present appeal and, therefore the appeal is not maintainable. To answer this question, it is necessary to look into the provisions of Section-39 of the Act. Section-39 of the Act reads:

An appeal shall lie from the following orders passed under this Act (and from no others) to the Court authorised by law to hear appeals from original decrees of the Court passing the order:

An order:

i) superseding an arbitration;

ii) on an award stated in the form of a special care

iii) modifying or correcting an award;

iv) filing or refusing to file an arbitration agreement;

v) staying or refusing to stay legal proceedings where there is an arbitration agreement;

vi) setting aside or refusing to set aside an award:

(emphasis supplied)

Provided that the provisions of this section shall not apply to any order passed by a Small Cause Court.

No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court.

It is contended by Mr. T.C. Khatri that the order under appeal is not from original decrees of the Court passed in the order as mentioned in Clause-I to VI as quoted above and, therefore, the appeal is not maintainable. We are unable to appreciate this contention of Mr. T.C. Khatri. In the instant case the Appellant filed an objection before the learned court below for setting aside the award made by the Arbitrator and the same has been refused by the learned Court below in the judgment & Decree under appeal. We are, therefore, of the clear view that the present appeal is entertainable u/s 39 Clause-VI of the Act as quoted above.

Having resolved the preliminary objection, a copy of the award made by the Arbitrator has been made available before us and the same has been perused. Although, it is now settled principle of law that an Arbitrator need not give reasons for making the award, it clearly appears from the award that the same is cryptic and has no basis whatsoever as to why the Arbitrator has come to that conclusion. We agree that the Arbitrator need not give reasons, but there must be some basis on which the conclusion is reached. To support our conclusion, we may refer to one of the clauses of the award made by the Arbitrator. It is extracted:

2(a) Amount of claim Rs. 15,95,600.00. The claim is partly sustained. Hence I award Rs 4,22,292.00.

Thus the award itself would show that there is absolutely no basis on which the conclusion is reached. If that is so, the Arbitrator has misconducted himself and the award made by the Arbitrator is clearly erroneous apparent on the face of the record.

In the facts and circumstances as stated above, the judgment & Decree dated 26.3.93 passed by the learned District Judge, Sonitpur, Tezpur in MS (Arb) No. 25/92 is not sustainable in law and, is accordingly set aside. Consequently, the award made by the Arbitrator are also set aside. We, however, remand the case to the Arbitrator to consider afresh after giving an opportunity to both sides.

With the aforesaid direction, this appeal is allowed.

No costs.