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The Union Of India Petitions v. M/S. D.S Narula & Co. Opp. Party.

Gauhati High Court
Apr 6, 1990
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Structured Summary of the Opinion

Factual and Procedural Background

This Revision Petition was filed by the Union of India through the Chief Engineer, Shillong Zone, challenging the judgment and order of the learned Additional Deputy Commissioner, East Khasi Hills District, Shillong, which had affirmed the decision of the Assistant to the Deputy Commissioner.

On 1 May 1973 the parties entered into a contract for the construction of the main sewers at Dinjan in the district of Dibrugarh. The agreement was executed at Shillong. After completion of the work a dispute arose and, pursuant to the agreement, the matter was referred to a sole arbitrator.

The arbitrator issued a non-speaking award in favour of the contractor (the opposite party) for a sum of about five lakhs. During the arbitration proceedings the petitioner filed a petition under Sections 5 and 11 of the Arbitration Act, 1940 seeking leave of the court to remove the sole arbitrator. A request for stay of further proceedings before the arbitrator was rejected by the learned lower appellate court. While that petition was pending, the award was published.

The opposite party then filed a petition before the Assistant to the Deputy Commissioner to make the award a rule of the court. The petitioner filed a petition under Section 30 of the Arbitration Act seeking to set aside the award; that petition was rejected. An appeal against that rejection was also rejected by the learned Additional Deputy Commissioner. The present revision petition followed.

Legal Issues Presented

  1. Whether the present revision petition is maintainable in view of Section 39 of the Arbitration Act, 1940 (i.e., whether avenues of revision/appeal outside the Act are available).
  2. Whether para 27 of the Khasi Siemships (Administration of Justice) Order, 1950 (which confers revisional power on the High Court) can be invoked to challenge an award or order made under the Arbitration Act.
  3. Whether a non-speaking award (an award without reasons) is invalid or liable to be set aside merely because it contains no reasons.
  4. Whether the High Court may or should exercise its powers under Article 227 of the Constitution to interfere with the arbitration award or related orders of the subordinate courts in this matter.

Arguments of the Parties

Opposite Party's Arguments (represented by Mr. J.P. Bhattacharjee)

  • The revision petition is not maintainable because Section 39 of the Arbitration Act prescribes the appealable orders and limits remedies; an appeal shall lie only as provided by the Act and a second appeal shall not lie.
  • The Arbitration Act is exhaustive (a self-contained code) and therefore provisions of the Khasi Siemships (Administration of Justice) Order, 1950 (specifically Rule/para 27) are not applicable to proceedings under the Act.

Petitioner's Arguments (represented by Mr. Chetia)

  • Para 27 (Rule 27) of the Khasi Siemships (Administration of Justice) Order, 1950 permits the High Court to call for proceedings and exercise revisional jurisdiction, and thus the present revision petition is maintainable under that Order.
  • Preliminary: Because the award is a non-speaking award (no reasons recorded) and the petitioner's counter-claim was rejected, the award is bad in law.
  • The award was published while the petition for removal of the arbitrator was pending, which the petitioner contends makes the award invalid.
  • By disallowing the counter-claim of about Rs. 1 lakh the arbitrator committed misconduct in law.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Raipur Development Authority v. Chokhamal Contractors, (1989) 2 SCC 721 Held that an award under the Arbitration Act is not liable to be remitted or set aside merely because no reasons are given, except where the arbitration agreement, deed of submission, or a court order/statute requires that reasons be given. The court used this authority to reject the petitioner's preliminary contention that a non-speaking award (one without recorded reasons) is per se bad in law and must be set aside.
Union of India v. Mohindra Supply Co., AIR 1951 SC 255 Established that the Arbitration Act is a consolidating/amending statute forming a self-contained code regarding arbitration; Section 39 codifies appeal rights and a second appeal under Letters Patent is not maintainable. The court relied on this decision to conclude that the Arbitration Act is a self-contained code and that appeal/revisional rights outside the Act (including under other procedural orders) cannot be invoked to challenge awards or orders under the Act.
Union of India v. R.D. Gupta (Civil Appeal 163 of 1965; decided 24 Mar 1965) ALR 1969 SC 40 Addressed the maintainability of certain proceedings under the Act and indicated limits on challenging orders made under the Act before courts like the Assistant to the Deputy Commissioner. The court cited this authority to support the conclusion that orders passed under provisions of the Arbitration Act before subordinate forums are not maintainable by invoking other jurisdictions (thus reinforcing the self-contained nature of the Act).

Court's Reasoning and Analysis

The court proceeded in a series of analytical steps:

  1. Preliminary objection on non-speaking award: The court first considered the petitioner's contention that the non-speaking award was bad in law, especially since the petitioner's counter-claim was rejected. The court observed that the question whether unreasoned awards are invalid has been authoritatively decided by a Constitutional Bench of the Supreme Court in Raipur Development Authority v. Chokhamal Contractors (1989), which held that an award under the Arbitration Act is not liable to be set aside merely because reasons were not given, unless the agreement, deed, or a court order/statute requires reasons. The court applied that principle and rejected the preliminary contention that the non-speaking award was per se invalid.
  2. Applicability of the Arbitration Act and local judicial rules: The court confirmed that the Arbitration Act, 1940 applies to the State of Meghalaya and that the agreement being executed at Shillong places the dispute within the jurisdiction of the Shillong courts. The court then described the local judicial framework (Khasi Siemships (Administration of Justice) Order, 1950 and related rules), including the structure of appellate and revisional powers (para 24: appeals from Assistant to the Deputy Commissioner to the Deputy Commissioner or Additional Deputy Commissioner; para 27: revisional power of the High Court).
  3. Central question whether para 27 of the Khasi Siemships Order could be invoked: The court then examined whether the High Court could exercise the revisional power under para 27 in respect of disputes governed by the Arbitration Act. It analyzed the issue against the backdrop of authoritative Supreme Court decisions.
  4. Reliance on precedent concerning the self-contained character of the Arbitration Act: The court relied on Union of India v. Mohindra Supply Co. (AIR 1951 SC 255) and Union of India v. R.D. Gupta to conclude that the Arbitration Act is a self-contained code. Those authorities were cited to show that the Act codified appeal and review rights (notably Section 39) and that those provisions must be given their full effect. As a result the court held that since the Act does not provide for invoking the revisional jurisdiction of the High Court under para 27 of the Khasi Siemships Order, the High Court cannot interfere by exercising para 27 powers in respect of disputes under the Act.
  5. Consequences for other procedural avenues: The court further held that, because the Arbitration Act is a self-contained code and the Code of Civil Procedure does not apply in that area, the present petition was not maintainable either under para 27 of the Khasi Siemships Order or under Section 115 of the Civil Procedure Code.
  6. Consideration of Article 227: The petitioner also invoked Article 227 of the Constitution. The court reiterated the settled principle that powers under Article 227 must be exercised sparingly and are limited to ensuring that subordinate courts and tribunals function within their authority (not to correct mere errors). The court observed that the scheme of the Arbitration Act is to provide a domestic forum for speedy and substantial justice and that awards may be set aside only on the limited grounds stated in Section 30 of the Act. The court rejected the petitioner's contentions based on (a) publication of the award during the pendency of the removal petition (noting that a stay of arbitration proceedings had been refused) and (b) alleged misconduct by the arbitrator in disallowing the counter-claim—holding these matters were not appropriate grounds for exercise of Article 227 in the circumstances.
  7. Deference to domestic tribunal: The court emphasized that this was a non-speaking award given by a domestic tribunal appointed by the Government of India through its officer, and stated that the High Court should not interfere with such an award within the limited scope of supervisory jurisdiction.

Holding and Implications

Holding: REJECTED — The present revision petition was held to have no merit and was accordingly rejected. The court also ordered that there be no costs.

Implications:

  • The direct effect is that the impugned judgments and orders of the Assistant to the Deputy Commissioner and the Additional Deputy Commissioner (which refused to set aside the award and/or to grant the reliefs sought by the petitioner) stand affirmed and the revision petition is dismissed.
  • The court concluded that the Arbitration Act, 1940 is a self-contained code in respect of appeals and revisions arising under it; consequently, para 27 of the Khasi Siemships (Administration of Justice) Order, 1950 could not be invoked to exercise revisional jurisdiction in respect of disputes governed by the Act.
  • The court held that Article 227 of the Constitution cannot be used in this instance to correct the matters raised by the petitioner because its supervisory jurisdiction is limited to ensuring subordinate courts act within their authority and not to reappraise or retry arbitration determinations that are subject to the limited statutory grounds for setting aside under Section 30 of the Arbitration Act.
  • The opinion does not purport to establish any novel legal proposition beyond applying the cited authorities; it confines itself to the direct effect on the parties and the limited points discussed above.

Note: This summary is derived exclusively from the provided opinion and does not add or infer information beyond what appears in that text.

Show all summary ...

This Revision Petition is by the Union of India through the Chief Engineer, Shillong Zone against the judgment and order of the learned Addl. Deputy Commissioner, East Khasi Hills District Shillong, by which the learned lower appellate court affirmed the judgment of the learned Assistant to the Deputy Commissioner.

2. On first of May, 1973 a contract was entered into between the parties herein for construction of the main sewers at Dinjan within the district of Dibrugarh. The agreement was executed at, Shillong. After completion of the work a dispute was raised by the contractor viz., the opposite party herein and as per the terms of the agreement it was referred to the sole arbitrator. The arbitrator gave a non-speaking award awarding a sum of rupees five lacs and odd in favour of the contractor. It may be mentioned that during the arbitration proceeding the petitioner herein filed a petition under Section 5 & 11 of the Arbitration Act, 1940, for short “the Act” praying for leave of the court to remove the sole arbitrator. Stay of further proceeding before the arbitrator was rejected by the learned lower appellate court. During the pendency of the above petition the award was published. The opp. party filed a petition before the court of the Assistant to the Deputy-Commissioner praying for making the award a rule of the court and the present petitioner also filed a petition under Section 30 of the Act praying for setting aside the award which was rejected. As stated above, the appeal was also rejected by the learned lower appellate court. Hence, the present petition.

3. The main contention of Mr. J.P Bhattacharjee, learned counsel for the opposite party is that the present revision petition is not maintainable in view of Section 39 of the Act. The Section provides for appealable orders and reading sub-section (1) it is clear that an appeal shall lie against the original decree of the court setting aside or refusing to set aside the award. Sub-section (2) provides that no seconds appeal shall lie under this Section, but shall not affect or take away any right to appeal to the Supreme Court, Mr. Chetia learned standings counsel appearing for the petitioner has urged that in view of Rule 27 of the Khasi Siemships (Administration of Justice) Order, 1950 the present revision petition is maintainable. In reply Mr. Bhattacharjee has urged that as the Act is an exhaustive one and the present proceeding not being a civil proceeding, the provision of the above Order is not applicable to the case in hand.

4. Before I consider the contentions raised at the bar I would like to dispose of one preliminary point raised by Mr. Chetia. According, to Mr. Chetia as the present award is a non-speaking award it is bad in law more particularly as the counter-claim of the petitioner was rejected. The controversy, whether a non-speaking award i.e an award where no reasons are recorded is bad in law or not also being agitated before the apex court and various other High Courts from time to time and the question has been settled by the Constitutional Bench of the apex court in Raipur Development Authority v. Chokhamal Contractors, (1989) 2 SCC 721, wherein it was inter alia held that an award passed under the Arbitration Act, is not liable to be remitted or set aside merely on the ground that no reasons have been given in its support except where the arbitration agreement or deed of submission or an order made by the court such as one under Section 20 or 21 or 34 of the Act or the statute governing the arbitration requires that the arbitrators or the empires should give reasons for the award. Their Lordships observed that this position is firmly established in India and remitting or setting aside an award solely because it is unreasoned would mean virtually introducing by a judicial verdict an amendment to the Act when it is not been in the law for nearly 7 or 8 decades.

5. Before I proceed further to consider the contentions regarding maintainability of the present petition I may state the legal position regarding judicial system in the State of Meghalaya and also the applicability of the Act. There is no dispute that the Act viz. the Arbitration Act, 1940 applies to the State of Meghalaya and as the present agreement was executed at Shi Hong, the Shillong courts have jurisdiction to decide dispute under the Act. In the State of Meghalaya in the ‘partially excluded areas’ under the Govt., of India Act, 1935 the Administration of Justice is governed by the Rules viz. Rules for Administration of Justice and Police in the Khasi and Jayantia Hills, 1937. These rules were framed under Section 6 of the Scheduled Districts Act, 1874. After the merger of the erstwhile Khasi States, the Khasi Siemships (Administration of Justice) Order, 1950 was framed under the provisions of the Extra Provincial Jurisdiction Act, 1947 for Administration of Justice, by courts in these areas. For deciding disputes between members of Scheduled Tribes by the courts constituted under VI Schedule to the Constitution, the Governor framed rules under sub-para (4) of para 4 of VI Schedule to the Constitution and these Rules are called the United Khasi - Jayantia Hills Autonomous District (Administration of Justice), 1953. Similar sets of rules were also framed for such courts for the undivided district of Garo Hills. In the entire district of Garo Hills was partially excluded areas and for the purpose of courts constituted by the Government, similar rules were also framed under the Scheduled District Act and these rules were known as Rules for Administration of Jastice and Police in Garo Hills District. There is no dispute at the bar that as the present agreement was executed at Shillong, the Khasi Siemships (Administration of Justice) Order, 1950 applies to the cases in hand. Under this order, the Administration of Civil Justice is entrusted to the courts of Deputy Commissioner, Addl. Deputy Commissioner and Assistant to the Deputy Commissioner and Siems. The Assistant to the Deputy Commissioner has get unlimited pecuniary jurisdiction and under para 24 of the Order an appeal shall lie to the Deputy Commissioner or the Addl. Deputy Commissioner from the decision of Assistant to the Deputy Commissioner, and this para further provides that High Court shall be the court of appeal from an original decision of the Deputy Commissioner or Addl. Deputy Commissioner. Para 27 of the order give revisional power to the High Court and this order provides that High Court may, on application or otherwise call for the proceedings of any case decided by the Deputy Commissioner or Addl. Deputy Commissioner, Assistant to the Deputy Commissioner and the Siems Courts and pass such order as High Court may deem fit.

6. Now the question is whether under para 27 of the said Order High Court can exercise powers in respect of dispute under the Act.

7. Mr. J.P Bhattacharjee has placed reliance in the Union Of India v. Mohindra Supply Co. , AIR 1951 SC 255. In that case the question was whether in view of the provisions of section 39 of the Act a second appeal under Letters Patent is maintainable. Their Lordships held that the Arbitration Act which is consolidating and amending Act, being substantially in the form of a Code relating to arbitration must be construed without any assumption that it was not intended to alter the law relating to appeals. Their Lordships further observed that words of the Act the plain and explicit and they must the given their full effect and must be interpreted in their natural meaning uninfluenced by any assumptions derived from the previous state of law and without any assumption that the legislature must have intended to leave the existing law unaltered. Their Lordships also observed that the legislature has made a deliberate departure from the law prevailing before the enactment of the Act by codifying the law relating to appeals in Section 39 of the Act. Their Lordships held that a second appeal under letters Patent is not maintainable.

8. Mr. Bhattacharjee has also drawn my attention to a decision of the apex court in Union of India v. R.D Gupta (Civil Appeal 163 of 1965 decided on 24th day of March, 1965) ALR 1969 SC 40. In this case an application was filed under Section 8(1) of the Act before the court of the Assistant to the Deputy Commissioner, Shillong and against the order of the Assistant to the Deputy Commissioner an appeal was filed before the Deputy Commissioner. Their Lordships also held that to view of the provisions the order of the Assistant to the Deputy Commissioner passed under Section 8 of the Act is not maintainable.

9. In view of the above ratio laid down by the apex court it follows that Arbitration Act is a self contained code and as in the Act there is no provision for invoking the revisional jurisdiction of this court against the order passed by the lower appellate court, by exercising revisional jurisdiction under any other law, this court cannot interfere with the said judgment of the lower appellate court. The Act being a self contained code, this court cannot exercise powers under para 27 of the Khasi Siemships (Administration of Justice) Order, 1950. It may be stated that Code of Civil Procedure is not applicable to this area and only power of revision is under the said para 27, I, therefore, hold that the present petition is not maintainable either under para 27 of the above Order or under Section 115 Civil Procedure Code.

10. This petition has also been filed under Article 227 of the Constitution. It is well settled that powers under Article 227 of the Constitution is to be exercised sparingly and only in appropriate cases to keep the subordinate courts and tribunals within the bounds of his authority and not for correcting mere errors and in exercising powers under this Article this court is only to see that the tribunal functions within the limits of its authority. The scheme of the Arbitration Act is to provide a domestic forum for speedy and substantial justice without following the legal technicalities by getting the dispute resolved by a person on whom the parties have full faith and confidence. Thee award given by such a person under the Act can be set aside only on very limited ground mentioned in Section 30 of the Act. Mr. Chetia, learned Central Govt. Standing Counsel has urged that though petition for removal of the arbitrator was pending, the award is bad in law as it was published during the pendency of the petition. I do not find force in his contention as the prayer for stay of the proceeding before the arbitrator was rejected. Mr. Chetia has further urged that by disallowing the counter claim of Rs. 1 lac and odd the arbitrator has misconducted in law. I am afraid this matter cannot be gone into by exercising power under Article 227 of the Constitution as the scope is limited. That apart, this being a non-speaking award given by a domestic tribunal appointed by Govt. of India through its officer, this court should not interfere with the award.

11. For what has been stated above the present petition has no merit and is accordingly rejected. No cost.