Union of India (UOI) vs Tekno Trading Co.

Nirmal Singh, J.—This appeal is arising out of an order passed by the learned District Judge, Jammu, dated 7th of Aug'2000, vide which the

award dt. 16th of Aug'94, passed by the arbitrator has been made rule of the court.

Respondent was allotted a contract bearing No. CWEK-3/84-85 for the provision of water supply at Kupwara. This agreement was executed

on 24th of May'84. The execution of the work was to commence on 6th of Aug'84 and the date of completion was 5th of Aug'86. A dispute arose

between the parties and the matter was referred to the arbitrator. The arbitrator adjudicated the dispute and passed an award dt. 16th of Aug'94.

The same was filed in the court of learned District Judge, Jammu for making rule of the court. The learned District Judge, Jammu, vide order

impugned made the award rule of the court as it is and without any modification, aggrieved by which the appellant-Union of India has preferred this

appeal.

Learned Counsel for the respondent has raised a preliminary objection that this appeal is not maintainable. He submitted that under Clause 70 of

the Agreement, the arbitrator was to give the award within six months from the date of his entering into reference or within the extended time as the

case may be. u/s 14 of the Arbitration Act, 1940 (hereinafter referred to as the Act), the arbitrator is to file the award in the court for making the

same rule of the court. If the court finds no cause to remit the award or any of the matter referred to arbitrator for consideration or to set aside the

award and the court makes the award rule of the court as it is, then no appeal will lie u/s 39 of the Act.

On the other hand, Mrs Seema Shehkhar, learned Counsel appearing for the appellant submitted that the appeal is maintainable. She submitted

that when the court makes the award rule of the court as it is, it is refusal to set aside the award and the appeal lies u/s 17(6) of the Act.

I have given my thoughtful consideration to the submissions made by the learned Counsel for the parties and perused the record.

Before considering the rival contentions, it would be appropriate to note the relevant provisions of the Act.

Sections 14,17 and 39 of the Act are relevant and are being reproduced below:

Award to be signed and filed.-(l) When the arbitrators or umpire have made their award, they shall sign it and shall give notice in writing to the

parties of the making and signing thereof and of the amount of fees and charges payable in respect of the arbitration and award.

(2) The arbitrators or umpire shall, at the request of any party to the arbitration agreement or any person claiming under such party or if so directed

by the Court and upon payment of the fees and charges due in respect of the arbitration and award and of the costs and charges of filing the

award, cause the award or a signed copy of it, together with any depositions and documents which may have been taken and proved before them,

to be filed in Court, and the Court shall thereupon give notice to the parties of the filing of the award.

(3) Where the arbitrators or umpire state a special case under clause (b) of Section 13, the Court, after giving notice to the parties and hearing

them, shall pronounce its opinion thereon and such opinion shall be added to, and shall form part of, the award.

Judgment in terms of award. - Where the Court sees no cause to remit the award or any of the matters referred to arbitration for

reconsideration or to set aside the award, the Court shall, after the time for making an application to set aside the award has expired, or such

application having been made, after refusing it, proceed to pronounce judgment according to the award, and upon the judgment so pronounced a

decree shall follow and no appeal shall lie from such decree except on the ground that it is in excess of, or not otherwise in accordance with, the

award.

Appealable order. - (1) An appeal shall lie from the following orders passed under this Act (and from no others) to the Court authorized by

law to hear appeals from original decree of the Court passing the orders:

An order-

(i) Superseding an arbitration;

(ii) On an award stated in the form of a special case;

(iii) Modifying or correcting an award;

(iv) Filing or refusing to file an arbitration agreement; staying or refusing to stay legal proceedings where there is an arbitration agreement;

(v) Setting aside or refusing to set aside an award:

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

(2) 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.).

A Division Bench of this Court in the case reported as 1978 KLJ 255, Managing Director v. Syed and Co., while interpreting the aforesaid

provisions has held as under:

...Appeal can be filed against any one of the orders specified in Section 39 of the Act. According to this Section no appeal lies from any other

order made under the Arbitration Act, and no appeal is provided against the decree that follows the award. Equally Section 17 of the Act prohibits

the filing of the appeal against the decree. We, therefore, hold that the appeal is not competent.

Similar view has been taken by the Punjab and Haryana High Court in the case reported as Union of India (UOI) and Others Vs. Shibboo Mal

and Sons, Chandigarh and Another, , Chandigarh and Anr.. In para 6 of the judgment, it has been held as under:

...The appeal could only lie if the decree was not in accordance with the award. The learned Counsel submits that in view of the mandatory

provision of the award the appeal is not competent. There is a substance in the plea raised. Section 39 of the Act provides that all orders of the

nature specified in the section will be open to appeal irrespective of the fact whether they are final orders in the case and dispose it of finally, or are

merely interlocutory. Against an order u/s 17 of the Act passing a decree in terms of the award no appeal lies u/s 39 the Act but it lies under the

last part of Section 17 on only two grounds viz. -(i) that the decree is in excess of the award; and (ii) that the decree is not in conformity with the

award.

In the instant case, the learned District Judge has passed the decree in consonance with the award without any modification. u/s 17 of the Act,

the appeal lies only on two grounds-(i) that the decree is in excess of the award and (ii) if the decree is not in conformity with the award. In the

present case, no such ground is available to the appellant. Therefore, taking into consideration the said facts, I am of the view that the appeal

against the impugned order in the present case is not maintainable.

I have also considered the case on merits. The contention raised by the learned Counsel for the appellant is that the award is not sustainable as

it is not a speaking award. She contended that the arbitrator has not given any reasoning whatsoever in awarding the claim of the respondents and

rejecting that of the appellant. She contended that the arbitrator was under a legal obligation to give reasons for passing the award in favour of the

respondent. In support of her submission, she placed reliance on a judgment of the Apex Court reported in AIR 2004 SC 4956, Gora Lal v.

Union of India.

Before considering the submission made by the learned Counsel for the appellant, it will be appropriate to examine the arbitration agreement.

Under Clause 70 of the Agreement, the arbitrator has to indicate his findings, along with sums awarded, separately on each individual item of

dispute.

In Sudarsan Trading Co. Vs. Government of Kerala and Another, the Apex Court in para 29 of the judgment has held as under:

...It is not open to the court to probe the mental process of the arbitrator and speculate, where no reasons are given by the arbitrator, as to what

impelled the arbitrator to arrive at his conclusion...In absence of any reasons for making the award, it is not open to the court to interfere with the

award. Furthermore, in any event, reasonableness of the reasons given by the arbitrator cannot be challenged. Appraisement of evidence by the

arbitrator is never a matter which the court questions and considers. If the parties have selected their own forum, the deciding forum must be

conceded the power of appraisement of the evidence. The arbitrator is the sole judge of the quality as well as the quantity of evidence and it will

not be for the Court to take upon itself the task of being a judge on the evidence before the arbitrator...

In Gora Lal's case (supra), their Lordships of the Apex Court in para 6 of the judgment have held as under:

A perusal of the aforesaid clause would show that the Arbitrator is required to indicate a finding along with the sum awarded separately on each

individual item of the dispute. While giving a finding, the Arbitrator necessarily has to take into consideration the disputes, claims and counter claims

of the parties and after considering the evidence on such claims and the legal position, has to record his finding on each disputed item....

In the present case, the arbitrator has taken into consideration the evidence led before it by the parties. It has been observed as under by the

arbitrator:

Now I, Col. RN Malhotra, having taken upon the burden of the reference, and heard and examined and considered the pleadings submitted by

and on behalf of the parties and the documentary and oral evidence produced before me by them as also their oral submission and arguments.

I do hereby make and publish this my FINAL AWARD in writing of and concerning the matters referred to me....

After considering the submissions and the evidence led before the arbitrator by the parties documentary and oral, the arbitrator considered the

claim of the respondent as also of the appellant. A perusal of the award shows that the arbitrator has considered the claim item-wise and passed

the award. Therefore, in view of the law laid down in Gora Lal's case (supra), the arbitrator having awarded the sum on each item of dispute

separately, it can be said that the arbitrator has taken into consideration the evidence led by the parties before it and passed the award in

accordance with the contract agreement.

It is, however, pertinent to mention here that the arbitrator is not to pass an award in the manner in which the civil court is passing a decree.

The arbitrator has to appreciate the evidence and oral submissions made before it by the concerned parties which has been done by the arbitrator

in the present case.

For the reasons mentioned above, I am of the opinion that the learned District Judge has not committed any legal error in making the award

rule of the court. Therefore, this appeal is found to be without merit and is dismissed.

Parties to bear their own cost.