Narayan Panda v. The State Of Orissa And Another

1. The plaintiff has preferred this appeal.

2. The plaintiff executed certain work relating to the Minor Irrigation Project at Sittagunda. After the completion of the work the plaintiff claimed certain amount as his dues from the above-named defendants for the work done by him in connection with the said Project and as the defendants did not pay the said amount he filed Title Suit No. 78 of 1969 in the court of the Subordinate Judge, Aska to pass a decree directing the defendants to file the agreement between him and Government in the court, and also appointing an arbitrator to adjudicate the claims of the plaintiff in respect of the said work and to pass an award in accordance therewith. That suit was decreed against the defendants and they were directed to file the agreement in court, and an arbitrator was appointed to decide the dispute and to pass an award. The arbitrator in his award dated 5-12-73 directed the defendants to pay a sum of Rs. 13,356.48 to the plaintiff with interest thereon at 6 per cent per annum from 4-2-74 till full payment was made. The plaintiff thereupon filed the award signed by the arbitrator in the court below with a petition under the provisions of Section 14(2) of the Arbitration Act (hereinafter referred to as the ‘Act’) read with S. 26 and O. 7, R. 1 of the CPC. On the said petition Original Suit No. 1 of 1974 was registered in the court below. Before receiving notice of the said case defendant no. 2 (Executive Engineer, R.E.O, Phulbani), on behalf of both the defendants filed the written statement in the suit by way of an objection petition for modification of the said award on the ground of obvious errors in the said award. The court below, on hearing the counsel appearing for both the parties, has, by the impugned judgment, modified the amounts awarded in respect of the first, second and the ninth items in the award, and on that basis has passed a decree for a lesser amount than that awarded by the arbitrator in favour of the plaintiff. The plaintiff has preferred this appeal against the said judgment of the court below. Mr. Ramdas, the learned counsel for the appellant, contends that the court could not have assumed jurisdiction to correct the award u/Section 30 of the Act as the defendants did not make an application to that effect as per Rule 3 of the Orissa Arbitration Rules, 1963 framed by the High Court under Section 44 of the Act; and that a portion of the award cannot be corrected under the said section. According to Mr. Ramdas, the objection filed by the State in their written statement cannot be treated as an application to correct the award under the provisions of Section 30 of the Act. The said written statement has been styled as an objection petition, it has been stamped, and there is a prayer at the end of it to modify the award in the light of the objections taken therein. Excepting the non-compliance of the requirement of verification as provided in the aforesaid Rule 3, it satisfies all the other requirements of that Rule. All the pages of the said written statement have been signed by the Advocate of the defendants, and the Executive Engineer, filing that written statement by way of an objection petition on behalf of the defendants, has signed the same at the end.

3. In Madan Lal's case (AIR 1967 SC 1233) it has been held that there is no specific form prescribed for making an application u/Section 30 of the Act, and that in an appropriate case an objection to an award in the written statement may be treated as such an application if it is filed within the period of limitation. Mr. Ramdas could not show that the said petition was barred by limitation. As the objection to the award was taken in the written statement, merely on the ground of non-fulfilment of the formality of verification required under Rule 3 one cannot discard out of consideration the objections taken and the prayer made in the said written statement. So this written statement which contains the objections to the award and a prayer to modify the same, can be treated as an application for setting aside the award u/Section 30 of the Act.

4. Moreover, it is well settled that when an error occurs in an award in a distinct and separate portion of it and that distinct and separate portion is severable from the rest of the award, then that distinct and separate portion can be corrected without setting aside the award in its entirety. In this connection the decision reported in (1973) 1 SCC 254 : AIR 1973 SC 683 (Upper Ganges Valley Electricity Supply Co. Ltd. v. U.P Electricity Board) may be seen. Thus the court u/Section 30 of the Act has jurisdiction to correct an award in part without setting aside the same in its entirety.

5. On the above considerations the above contentions of Mr. Ramdas fail and are rejected.

6. It is next contended, by Mr. Ramdas that the court cannot correct any mistake in the award unless the complained of mistake is apparent on the face of it.

7. It is well settled that when parties constitute an Arbitrator as a sole and final judge of any dispute between them, they bind themselves as a rule to accept the award as final and conclusive. Such an award is not ordinarily liable to be set aside on the ground that either on facts or in law it is erroneous. The award can, of course, be corrected, modified or set aside only under the limited scope of the provisions made under Ss. 15 and 30 of the Act. It is also well settled that mistakes, if any, in the award can be corrected only if the same are evident on the face of the award or upon some paper accompanying and forming part of the award. Their Lordships of the Supreme Court have held that an award can be set aside only if there is an error of law on the face of the award.

8. In the decision reported in AIR 1967 SC 1030, (Firm Madanlal Roshanlal Mahajan v. Hukumchand Mills Ltd.) it has been held that the court cannot review an award and correct any mistake in the Arbitrator's adjudication unless an objection to the legality of the award is apparent on the face of it. Their Lordships of the Supreme Court have accepted with approval the following view expressed by the Privy Council in the case reported in AIR 1923 PC 66 (Champsey Bhara and Co. v. Jivraj Balloo Spinning and Weaving Co. Ltd.):—

“An error in law on the face of the award means, in their Lordships' view that you can find. In the award or a document actually incorporated thereto, as for instance a note appended by the arbitrator stating the reasons for his Judgment, some legal proposition which is the basis of the award and which you can then say is erroneous.”

9. In the present case, the court below has corrected certain items in the award on the basis of the fact that the Arbitrator without giving any reason allowed the plaintiff something extra than the scheduled rates mentioned in the terms of the agreement. The agreement does not form a part of the award, nor are the terms of the said agreement quoted in the award. So, from the award itself if is not possible to say as to whether the sums awarded under the different items are in accordance with the terms of the agreement or not. Moreover, no reason for awarding the sums under those items has been ascribed in the award. In the award in respect of item no. 1 it is stated:

“After thorough examination of the measurement recorded and other relevant documents, I am convinced that the claimant had blasted 962.42 cum of sheet rock and for this he is entitled to a rate Rs. 280/- per 100 cum over and above the scheduled rate of Rs. 1400/- per 100 cum already paid to him.”

10. It is also stated that the claimant is also entitled to receive Rs. 70/- for the extra lead and lift. On that basis the amount has been calculated on the work shown to have been done under the said item of claim. The Arbitrator has not given any reason as to why he has settled the claim under the said item at a higher rate over and above the scheduled rate.

11. As the agreement is not included in the award, it was not possible for the court to say on the perusal of the award itself that the plaintiff, on no account, was entitled to a higher rate, or that the amounts awarded were not in accordance with or against the terms of the agreement between the parties. As the law stands at present, an Arbitrator while settling a claim need not state the reasons for deciding a matter in a particular manner (See AIR 1965 SC 214 and AIR 1967 SC 378). So, one cannot find fault with the Arbitrator for not stating the reasons for settling the claim at a rate higher than the usual rate. Moreover, it is not for the court to assess the correctness of the award by looking into some other papers, not forming a part of the award. The court has no jurisdiction to examine the documentary or oral evidence adduced before the Arbitrator for the purpose of ascertaining whether or not the Arbitrator has committed any such error as complained of in this case.

12. In Item no. 2, the Arbitrator merely states:—

“After thorough examination of the measurements recorded and other relevant documents I am convinced that the deduction of Rs. 1182.66 towards cost of 788.44 cum of blasted stone from the bill of the claimant is to be refunded to him. I do hereby award Rs. 1182.66 for payment to the claimant by the respondent against this claim no. 2”.

13. A reading of the said award does not at all disclose a mistake, and so it cannot be said that there is any mistake apparent on the face of the award. The court below finds fault with the award on this item by not only probing into the terms of the agreement but also taking into consideration some other matters which do not appear on the face of the award. If also finds fault with the amount awarded on this item as the Arbitrator has not given all the reasons which actuated him to award the said amount. That again cannot be a ground for finding fault with the award.

14. As the court below has gone beyond its jurisdiction to interfere with the amounts awarded under items 1 and 2 of the award by probing into materials and matters which do not form part of the award, its findings and conclusions on these items cannot be upheld.

15. The court made correction in respect of item no. 3 of the award merely because it made corrections in items nos. 1 and 2 of the award. As the corrections under items nos. 1 and 2 cannot be upheld for reasons stated above, the correction made under item no. 3 has also to be set aside.

16. On the above discussions and considerations I hold that the court was not within its jurisdiction to make the amendments, modifications and corrections made by it in the award, and accordingly its findings and conclusions on those aspects cannot be upheld and are hereby set aside. The award of the Arbitrator is thus confirmed in its entirety.

17. The appeal accordingly is allowed, but in the circumstances each party will bear his own costs of this appeal.

18. Appeal allowed.