West Bengal Pharmaceutical and Phytochemical Development Corporation Ltd. vs Mira Sen

Monoranjan Mallick, J.—This is an application filed by the West Bengal Pharmaceutical and Phytochemical Development Corporation Ltd. u/s 30 read with Section 33 of the Indian Arbitration Act for setting aside the award of the Joint Arbitrators, Buddhadeb Brahmachari and Pratap Chandra Chander, dated November 29, 1989.

The facts are briefly as follows:

The original Respondent, since deceased, was given the contract by the Petitioner company for certain construction work in connection with their factory at Kalyani. The contract value was to be of a sum of Rs. 12,08,081-85 and the requirement of steel and cement would be supplied by the Petitioners. The contract was executed on or about March 10, 1983, and the Respondent actually commenced the construction on and from December 27, 1982. Although the original Respondent was to complet the construction within 8 months he failed to complete it even after the four consecutive extensions were given. As a result thereof the Petitioner was compelled to terminate the contract by the letter dated January 31, 1985.

The original Respondent thereafter filed Title Suit No. 223 of 1985 in the City Civil Court, Calcutta, and prayed for interim injunction restraining the Petitioners from giving effect or further effect to the order of termination and obtained interim order. The Petitioner prayed for vacating the interim order and the order was vacated by Court by the order dated April 11, 1985. Being aggrieved the original Respondent preferred appeal to the High Court and Chittatosh Mukharjee and Samsuddin Ahmed JJ. in F.M.A.T. No. 307 of 1985 by the order dated June. 12, 1985, referred the disputes and differences to the arbitration of Joint Arbitrators in terms of the arbitration clause of the agreement. Pursuant to the said order Joint Arbitrators were appointed and they entered into reference. The Joint Arbitrators held as many as 101 meetings between December 16, 1985 and March 4, 1989. The claimant examined himself alone and the Petitioner examined five witnesses. On November 27, 1989, the Joint Arbitrators made add published a purported award.

From the purported award and the analysis of evidence it will be apparent that the Joint Arbitrators have misconducted the proceedings in deciding the issues.

The Petitioner in para. 23 has set out the various acts of misconduct of the Joint Arbitrators and has urged that the award is liable to be set aside.

On behalf of the Respondents who have been substituted on the death of the original Respondent all the above contentions have been refuted.

It is submitted that the Joint Arbitrators on considering the evidence produced by both the parties have passed a non-speaking award, that there is no error apparent on the face of the award, that the award is not also otherwise invalid and that the contention of the Petitioner that there was no evidence before the Joint Arbitrators to make and publish the award is not correct, that there was sufficient evidence and that this Court cannot sit in appeal over the award more so when it is a non-speaking award and that the Petitioner''s contention is not acceptable that the Joint Arbitrators have misconducted themselves in making and publishing the award.

The first point for decision is whether the award of the Joint Arbitrators is a speaking award or a non-speaking award.

On behalf of the Petitioner it is seriously urged that the Joint Arbitrators framed issues and passed their findings in each of the issues separately giving reasons in answering each of the issues and reasons whatsoever short may be are the reasons of the award and in the circumstances the award should be held to be a reasoned award and the Court can look into the reasons, and if it is found that there was no legal basis for each of the findings then the Court should hold that the Joint Arbitrators committed legal misconduct.

On carefully perusing the award, I am of the view that the Joint Arbitrators framed several issues no doubt and made separate findings regarding each of the issues. But I am unable to hold that the Joint Arbitrators gave any reason for each of the findings. Only the issues were framed and were answered. The award cannot be treated as a reasoned award.

It is well-settled principle of law that the matter of non-speaking award the jurisdiction of the Court is very much limited. The Court has to decide on the perusal of the award as to whether the Arbitrators committed any misconduct or not, or whether there is any error apparent on the face of the award or whether the award on the face of it is otherwise invalid.

On behalf of the Petitioner the reference has been made to the decisions in Alwaye Municipality Vs. K.A. Kochunny and Company and Another etc., and Delhi Development Authority v. Alkaram AIR 1982 Del. 365 to urge before me that when finding of the Arbitrators is based on no evidence, there is error apparent on the face of the award.

But the Petitioner in the petition has stated that the original Respondent examined himself and the Petitioner also produced five witnesses. It is also not disputed that the documents were produced before the Arbitrators. The Joint Arbitrators in their award have specifically stated that they have considered the evidence and documents produced before them. In such case it cannot be said on the face of the award that there was no evidence before the Joint Arbitrators to come to the findings arrived at by them. On behalf of the Respondents several decisions of the Supreme Court have been cited to urge before me that in case of non-speaking award it is not open to the Court to prove the mental process of the Arbitrator and speculate when no reason was given as to what impelled the Arbitrators to arrive at the conclusion.

The decision of Sudarsan Trading Co. Vs. Government of Kerala and Another, clearly shows that only in a speaking award the Court can look into reasoning of the Arbitrator and it is not open to it to probe the mental process of the Arbitrator and speculate as to what impelled the Arbitrator to come to the finding in the case of non-speaking award.

In Puri Construction Pvt. Ltd. Vs. Union of India (UOI), the Supreme Court has also observed that when a Court is called upon to decide the objection raised by a party against an award the jurisdiction of the Court is limited and it has no jurisdiction to sit in appeal and examine the correctness of the award on merits.

In Food Corporation of India Vs. Joginderpal Mohinderpal, the Supreme Court has also laid down that it is not misconduct on the part of the Arbitrator to come to an erroneous finding, whether the error is one of fact or of law and whether or not his finding of fact is supported by evidence.

In view of the above clear decisions of the Supreme Court on coming to the conclusion that the award of the Joint Arbitrators is a non-speaking award, I am of the view that on the face of the award there does not appear to be any legal misconduct of the Arbitrator, nor is there any error apparent on the award nor is the award otherwise invalid.

Mr. Chatterjee, Learned Counsel appearing for the Petitioner at the time of hearing, has submitted that in view of the recent trend of the Supreme Court decisions the award of interest of the Joint Arbitrators from the date of the award to the date of the passing of the decree must be held to be illegal as the Arbitrator has no jurisdiction except in some exceptional circumstances to grant pendentilite interest. It is also submitted that there is no reason assigned in the award as to why the interest from the date of the award to the date of the decree has been granted by the Joint Arbitrators and he, therefore, prays that even if the main part of the award cannot be interfered with the award being a non-speaking award then at least this portion of the award amounting interest from the date of award to the date of decree be set aside, the portion regarding the grant of interest is severable from the other portion of the award.

On behalf of the Respondents, the above submission has been seriously contested. In the Executive Engineer (Irrigation), Balimela and Others Vs. Abhaduta Jena and Others, the Supreme Court has held that the Arbitrator in ca_se of arbitration without the intervention of Court has no jurisdiction to grant pendente lite interest and interest prior to reference can be awarded only when he could grant it u/s 3(l)(a) of the Interest Act, 1978, or under trade usage. On perusing the said judgment it is quite clear that the Supreme Court in that decision did not grant any special leave to the Appellant as regards the grant by the Arbitrator interest from the date of the award to the date of the decree and has only considered the question of the jurisdiction of the Arbitrator to award interest prior to the date of the reference and the pendente lite interest, that is, the interest in course of the proceeding with the Arbitrator.

This principle has been re-iterated in State of Orissa and Others Vs. Construction India, But the Supreme Court in the above two decisions did not specifically decide as to whether the Arbitrator could grant interest on the award from the date of this award to the date of the decree. In a later decision of the Supreme Court in Gujarat Water Supply and Sewerage Board Vs. Unique Erectors (Gujarat) (P) Ltd. and Another, the same question again came up before the Supreme Court and Sabyasachi Mukherjee J. (as His lordship then was) presiding over the Division Bench decided the question among others as to whether the arbitration could award interest from the date of award to the date of this decree. However, Sabyasachi Mukherjee J. in that decision only approved the award of interest for the period prior to the arbitration proceeding and did not approve the grant of pendenti lite interest. Regarding the grant of interest from the date of award till the decree, the learned Judge has observed that interest should be allowed for this period on the principle that the Supreme Court can, once proceedings Under Sections 15 to 17 have been initiated, grant interest pending, the litigation before it i.e. from the date of award to the date of decree u/s 3(l)(a) of Interest Act read with Section 29 of the Arbitration Act.

In view of the legal position stated in the above the Supreme Court does not appear to have specifically expressed about the legal authority of the Arbitrator to grant interest from the date of the award to the date of the decree and has held that Court has much power. Therefore award of interest by the Joint Arbitrators from the date of award to the date of decree is hereby deleted. In the result the application u/s 30 read with Section 33 of the Arbitration Act is allowed in part. The part of the award of the Joint Arbitrators awarding interest from the date of award to the date of decree is hereby deleted. No order for costs is, however, passed.

The award case be now fixed on Monday next for passing judgment and decree on the award as modified by this Court.