United Builders vs Union of India

M.M. Kumar, C.J.—A short issue raised in this appeal is whether the Arbitrator is required to a pass a reasoned award by virtue of

arbitration Clause 70 of the IAFW 2249 or such an award could be without reason. The matter is no longer res integra. The arbitration clause 70

of IAFW 2249 came up for consideration of their Lordships of Hon'ble the Supreme Court in the case of Gora Lal Vs. Union of India (UOI), .

The expression 'finding' used in arbitration Clause 70 of IAFW 2249 has been interpreted in para 7 of the judgment, which is set out below in

extenso:--

The point for determination in this case is: Whether the Arbitrator ought to have given reasons in support of his findings, along with the sums

awarded, on each items of dispute. To decide this point, we have to go by the text and the context of Clause 70 of the arbitration agreement

quoted above. Under the said Clause, the Arbitrator was required to identify each individual item of dispute and give his findings thereon along with

the sum awarded. In this context, one has to read the word ""findings"" with the expression ""on each item of dispute"" and if so it is clear that the

word ""finding"" denotes ""reasons"" in support of the said conclusion on each item of dispute. The word ""finding"" has been defined in Words and

Phrases, Permanent Edition 17, West Publishing Co. to mean ""an ascertainment of facts and the result of investigations"". Applying the above test to

Clause 70, we are of the view that the ""Arbitrator was required to give reasons in support of his findings on the items of dispute along with the

sums awarded. We make it clear that this order is confined to the facts of this case and our interpretation is confined to clause 70 of the arbitration

agreement in this case.

(emphasis added)

The aforesaid view taken by Hon'ble the Supreme Court in M/s Gora Lal's case (supra) has also been followed by this Court in the case of Union

of India (UOI) and Another Vs. Wazir Chand Bhatia, .

In the present case, Clause 70 of IAFW 2249 is also the arbitration clause and the view taken by Hon'ble the Supreme Court in respect of the

aforesaid Clause is obviously binding. As the issue goes to the roots of the matter and the fate of the award dated 22.09.1975 has to be decided in

accordance with the law laid down by Hon'ble the Supreme Court, it would be necessary to consider whether the award is a reasoned award or it

is a non-speaking award. In that regard, a part of the award is set out in extensor as a sample which represents the nature of the award announced

by the Arbitrator and the same reads as under:

Dealing with each claim separately, I award and direct as under: A. Claims of the Claimant:

A. Claims of the Claimant:

Claim no. 11 to 18..........................................

B. Claims of the Respondent

Claim no.11 to 22................................

A perusal of the aforesaid award made by the Arbitrator makes it evident that after noticing the claim made by the appellant, the Arbitrator has

merely recorded his decision allowing or rejecting the claim. In some items he has partially accepted the claim as against the whole claim made by

the appellant, whereas in another cases he has completely rejected the claim. The reasons which are necessary links between the evidence

adduced and the findings recorded on each item of dispute are obviously missing. Therefore, it is necessarily hit by the vice of Section 30(a) of the

Jammu and Kashmir Arbitration Act, 1945 (for brevity the Act). It has to be concluded that the Arbitrator has misconducted the proceedings and

has not passed a reasoned award as per the judgment of Hon'ble the Supreme Court in M/s Gora Lal's case (supra).

The learned Single Judge has primarily taken the view that no misconduct has been committed and it cannot constitute a ground for setting aside

the award. It is obvious that the aforesaid view was expressed by the learned Single Judge on 31.05.2001 while delivering the impugned judgment

and the view taken by Hon'ble the Supreme Court in 2002 in M/s Gora Lal's case (supra) was not available at that time. Obviously same could not

have been applied to hold that the Arbitrator misconducted the proceedings within the meaning of Section 30(a) of the Act. The law laid down by

Hon'ble the Supreme Court in M/s Gora Lal's case (supra) goes to the roots of the matter and necessary consequence is that the award is liable to

be set aside by virtue of the provisions of Section 30(a) of the act.

Mr. Choudhary, learned counsel for the respondents has, however, argued that a plea of this nature should have been raised by the appellant

before the learned Single Judge and having failed to raise the same it would not be available before the appellate Court in the instant appeal filed

Section 39(i)(vi) of the Act.

Mr. Ajay Pal Singh, learned counsel for the appellant has on the other hand pointed out that the plea was set up in para 54 of the application

filed u/s 30 while challenging the award, which reads thus:

The Arbitrator has not only misconducted the proceedings but also did not comply with the mandatory provisions of clause 70 of General

Conditions of Contract which provides that the Arbitrator shall give his award on all matters referred to him and shall indicate his findings along

with the sums awarded separately on each individual item of dispute.

A perusal of the aforesaid para would show that specific plea in fact has been set out in the application. Even otherwise, this is a purely legal

issue which does not involve appreciation of facts. The award dated 22.09.1975 is on the record. The issue raised before us goes to the roots of

the matter as already observed. Therefore, we do not find any merit in the objection raised by Mr. Choudhary.

As a sequel to the above discussion, we find that the view taken by the learned Single Judge in the judgment and order dated 31.05.2001 is set

aside. Consequently, the award dated 22.09.1975 is also set aside. The Engineer-in-Chief who is competent authority shall appoint a new

Arbitrator in accordance with the provisions of the Arbitration Agreement. The needful shall be done within a period of one month from today.

Appeal stands disposed of in the above terms.