Union Of India v. Jai Narain Misra ., Supreme Court Of India, Judgment, Law, casemine.com

Citation Codes

Neutral Citations

1968 INSC 290

Equivalent Citations

citation codes

Case Number

Appeal from the Judgment and Decree dated 5th December, 1962 of the Allahabad High Court in First Appeal from Order No. 260 of 1952.,Civil Appeal No. 31 of 1966, decided on 31st day of October, 1968.

Disposition

allowed

Attorney(S)

R.M Mehta, and S.P Nayar, Advocates.
A.K Sen and S.V Gupte, Senior Advocates (S.S Shukla, Advocate, with them.).

Judges

Justice S.M. Sikri
Justice R.S. Bachawat

Acts

ss. 17 and 39 of the Arbitration Act, 1940
Section 5, Subsection 2 of the 1983 Income Tax Act
Section 39 of the Arbitration Act, 1940
The Arbitration Act, 1940

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Smart Summary

Factual and Procedural Background

The respondent, a building contractor, entered into Contract No. ES-2944 on 2 September 1944 with the Government of India for the construction of additional quarters at Kanpur. The contract contained an arbitration clause. Disputes arose, leading to a reference to Col. H. T. Faithful as arbitrator, who on 19 May 1947 awarded three sums to the respondent, totalling Rs 1,07,631/-5-0.

On 15 November 1947 the respondent applied to modify or remit the award and filed additional objections on 5 January 1948. The Second Civil Judge, Kanpur, rejected these objections on 26 May 1952 and made the award a rule of court. The Union of India appealed under section 39 of the Arbitration Act, 1940. On 5 December 1962 the Allahabad High Court allowed the appeal, setting aside the award as “vague and uncertain.” The Union of India obtained a certificate and appealed to the Supreme Court.

Legal Issues Presented

Whether the arbitral award was so vague and uncertain that it ought to be set aside in its entirety.
Whether, if any portion of the award suffered from error or was made under misapprehension, that portion could be struck out while sustaining the remainder.
(Raised but not decided) Whether the appeal before the High Court was maintainable under sections 17 and 39 of the Arbitration Act, 1940, and whether the respondent was estopped after having accepted payment.

Arguments of the Parties

Appellant (Union of India)

The award, read as a whole, finally and certainly determined all 29 claims and the counter-claim; the three figures merely represented how the total was calculated.
An arbitrator is entitled to award a lump sum and is not obliged to decide each item separately unless expressly required.
(Additional points, ultimately not adjudicated) The High Court’s appeal was not maintainable, and the respondent, having accepted payment, was estopped from challenging the award.

Respondent (Jai Narain Misra)

Supported the High Court’s view that the award was patently ambiguous, particularly as to why amounts of Rs 22,292/-5-0 and Rs 79,339/-0-0 were granted separately.
Contended that because 29 separate claims and a counter-claim were involved, the arbitrator should have dealt with them item-wise or given one global figure; failure to do so rendered the award uncertain.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Mays & Cannel, 24 L.J. Q.B. 41	Courts lean toward upholding an award as certain; the defendant bears the burden of proving uncertainty.	Applied to place the onus on the respondent to show the award was unintelligible.
Ghulam Khan v. Mohammad Hassan, I.L.R. 29 Cal 167 (P.C.)	An arbitrator may decide the whole case without dealing with every point separately.	Cited to validate the arbitrator’s lump-sum method.
Whiteworth v. Hulse, (1866) L.R. 1 Ex. 251	Permits a single global sum for all money claims unless the submission stipulates otherwise.	Used to confirm that separate itemisation was unnecessary.
Harrison v. Creswick, (1853) 13 C.B. 399	Presumption that the arbitrator considered all matters when making a final award.	Reinforced the inference that all 29 claims and the counter-claim were addressed.
Jewell v. Christie, (1867) 2 C.B. 296	Similar presumption of completeness and finality in an award.	Supported the finding of certainty.
Narsingh Narain Singh v. Ajodhya Prasad Singh, (1912) 15 C.L.J. 110	Court will not set aside an award at the instance of a party who suffers no detriment from the error.	Ground for declining to disturb the erroneously awarded security deposit, which favoured the respondent.

Court's Reasoning and Analysis

Justice R. S. Bachawat, delivering the judgment of the Supreme Court, held:

The award expressly stated it was “of and concerning” all matters referred; hence a presumption of completeness and certainty arises.
The three figures were intelligible:
- Item 1 (Rs 22,292/-5-0) represented the amount admitted by the Government.
- Item 3 (Rs 79,339/-0-0) represented the additional amount found due by the arbitrator.
- Item 2 (Rs 6,000) was the security deposit already returned; its inclusion was an error made under misapprehension.
An arbitrator need not decide each claim individually and may award a lump sum unless the arbitration agreement requires otherwise. Authorities such as Ghulam Khan and Whiteworth v. Hulse were relied upon.
The security-deposit item was clearly separable; that portion could be excised without affecting the rest of the award. The principle in Narsingh Narain Singh was invoked to decline setting aside the entire award, especially as the respondent had suffered no prejudice.
Objections based on ambiguity were raised for the first time in the High Court; the record showed no real difficulty in understanding the award.
Given the separability of the Rs 6,000 component and the certainty of the remaining portions, the High Court erred in annulling the entire award.

Holding and Implications

Appeal Allowed. The Supreme Court set aside the Allahabad High Court’s judgment and restored the decree of the Second Civil Judge, Kanpur, thereby upholding the arbitral award (with the Rs 6,000 component recognised as erroneously included but ultimately inconsequential).

Implications: The decision re-affirms that Indian courts should favour sustaining arbitral awards, construing them as certain where reasonably possible, and may sever and discard mistaken yet separable portions. It underscores that arbitrators may grant a global sum and need not itemise every claim absent a stipulation to that effect, thereby bolstering finality and efficiency in arbitration.

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Union Of India v. Jai Narain Misra .

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 4

PETITIONER:

UNION OF INDIA

Vs.

RESPONDENT:

JAI NARAIN MISRA

DATE OF JUDGMENT:

31/10/1968

BENCH:

BACHAWAT, R.S.

BENCH:

BACHAWAT, R.S.

SIKRI, S.M.

CITATION:

1970 AIR 753

ACT:

Arbitration-Award when vague and uncertain--Part of award based on mistake may be struck out if separable.

HEADNOTE:

The respondent, a building contractor, entered into a contract with the Government of India for the construction of certain flats. On disputes arising, they were referred to an arbitrator. the arbitrator made an award and directed certain sums to be paid by the Union of India to tile respondent. Rupees twenty-two thousand two hundred and ninety two, annas five were to be paid as the amount due to the respondent 'as calculated by the Union of India. Rupees six thousand were to be paid as the amount of security deposit made by the respondent with the Union of India. The third item was mentioned as Rupees seventy nine thousand three hundred and thirty nine. The. total amount payable was mentioned as Rupees one lakh seven thousand six hundred and thirty one, annas five. The respondent made an application for modifying the award and for remitting it to the arbitrator for reconsideration. The Second Civil Judge, Kanpur dismissed the objections and pronounced judgment according to the award. The appellant filed an appeal against the order under s. 39 of the Arbitration Act, 1940. The High Court allowed' the appeal and set aside the award on the ground that it was vague and uncertain. According to the High Court it was not clear why the arbitrator awarded the first item of Rs. 22,292/5/-and the third item of Rs. 79,339/- separately. Since the arbitrator found only the fir.st item of Rs. 22,922/5/to be due to the respondent, the High Court did not find it clear whether he intended also to award the 3rd item of Rs. 79,339/- to the respondent. As the dispute related to 29 items of claims and counter-claims the arbitrator, according to High Court, should have made an award in respect of all the items separately or in combination or should have made a lump sum award in respect of nil the items. Against the order of the High Court the Union of India appealed to this Court with certificate. HELD: The reasoning of the. High Court could not be accepted.

(i) The award on the face of it professed to be of and concerning all matters submitted for arbitration. In

respect of all such matters the arbitrator awarded a sum of Rs. 1,07,631/6/- to the respondent. This amount was made of three sums separately mentioned in the award. On the record there was nothing to show that the award was not intelligible to the parties. [590 G]

The court leans towards the construction that the award is certain. the evidence item No. 1 represented the sum admitted the sum due to respondent and item No. 3 represented the additional sum found by the arbitrator to be due to him. [590 H]

(ii) The arbitrator is not bound to give an award on each point. He can give his award on the whole case. An 'arbitrator may award one sum generally in respect of all money claims submitted to him. unless the submission requires him to award separately on some one or more of them.

589

The arbitrator can lawfully make an award of a sum admitted to be due and a lump sum in respect of the remaining claim. As the final award in favour of the respondent professed to be made of and concerning all the matters referred to him, it must be presumed that in making it the arbitrator had taken into consideration 'all the claims and counter claims. The award must be held to be a final and certain determination of all the disputes referred. [591 C, D]

(iii) The mention of the second item of Rupees six thousand in the award was a mistake. This part of the award being clearly separable must be struck out. The award of the sum of Rupees six thousand was to the advantage of the respondent and the court could not set aside an award at the instance of a party who had not suffered any injury. [591 F] Mays and Anr. v. Cannel 24- Law Journal Q.B. 41, 45; Ghulam Khan v. Mohammad Hassan I.L.R. 29 Cal. 167, 186 (P.C.); Whiteworth v. Hulse (1866) L.R. 1 Ex. 251; Harrison v. Creswick (1853) 13 C.B. 399, Jewell v. Christie (1867) 2 C.B. 296 and Narsingh Narain Singh v. Ajodhya Prasad Singh, (1912) 15 C.L.J. 110, 113, referred to.

JUDGMENT:

APPELLATE JURISDICTION: Civil Appeal No. 31 of 1966. Appeal from the judgment gad decree dated December 5, 1962 of the Allahabad High Court in First Appeal from Order No. 260 of 1952.

R.M. Mehta and S.P. Nayar, for the .appellant. A.K. Sen, S.V. Gupte and S.S. Shukla, for the respondent. The Judgment of the Court was delivered by Bachawat, J. The respondent Jai Narain Misra is a building contractor. On September 2, 1944, he entered into a contract (No. ES. 2944) with the Government of India represented by the Chief Engineer, Central Command, for the construction of additional quarters at T.P. 2 Kanpur. The contract contained an arbitration clause. Disputes between the parties relating to the contract were referred to Col. H.T. Faithful. The arbitrator made his award on May 19, 1947. On November 15, 1947 the respondent made an application for modifying the award and for remitting it to the arbitrator for re- consideration. On January 5, 1948, he filed additional objections. By his order dated May 26, 1952 the Second Civil Judge, Kanpur, dismissed the objections and pronounced judgment according to the award. The appellant filed an appeal against the order under s. 39 of the Arbitration Act, 1940. By an order dated December 5, 1962, the High Court allowed the appeal and set aside the award on

the ground that it was vague and uncertain. The present appeal has been filed by the Union of India on the strength of a certificate granted by the High Court. It appears that the respondent submitted 23 items of claim to the arbitrator. By his letter dated May 6, 1947 he' added 6 more items of claim. The Union of India made a counter-claim. The

4Sup. C.I./69-5

590

arbitrator was thus required to decide 29 disputed items of claim and the counter claim. The award recited that certain differences between the parties in respect of contract No. ES. 2944 of 1944 had been referred to the arbitrator for his decision and that a final award was being made of and concerning the matters referred to him. The relevant part of the award was as follows :--

"I award and direct that the following sums be paid by the respondent to the claimant.

Rupees twenty two thousand two hundred and ninety two annas five being the amount due to the claimant as calculated by the respondent.

(2) Rupees six thousand being the amount of security deposit paid by the claimant and now in possession of the respondent.

(3) Rupees seventy nine thousand three hundred and thirty nine.

The total amount to be paid by the respondent to the claimant is therefore one lakh seven thousand six hundred and thirty one annas five.

Each party to the dispute shall bear its own-costs, including the cost of the stamp duty on this award."

The High Court held that the award suffered from a patent ambiguity for the following reasons: It was not clear why the arbitrator awarded the first item of Rs. 22,292/5 and the 3rd item of Rs. 79,339 separately. The arbitrator found only the first item of Rs. 22,292/5 to be due to the respondent, it was not clear whether he intended also to award the 3rd item of Rs. 79,339 to the respondent. As the dispute consisted of 29 items of claims and a counter-claim, the arbitrator should have made an award in respect of all the items separately or in combination or should have made a lump award in respect of all the items. We are unable to accept this line of reasoning. The award on the face of it professes to be of and concerning all matters submitted to the arbitrator. In respect of all such matters the arbitrator awarded 'a sum cf Rs. 1,07,631/5 to the respondent. This amount was made up of three sums separately mentioned in the award. It was not the case of the respondent in the Trial Court that the award was uncertain or not intelligible. The objection was taken for the first time before the High Court. On the record there is nothing to show that the award was not intelligible to the parties.

The Court leans towards the construction that the award is certain. Prima facie the award is good, and it is for the defendant

591

10 show that it is uncertain. Per Jervis, C.J. in Mays & Anr. v. Cannel(1). There is no ambiguity about the first and the third items of the award. The uncontradicted evidence of S. Choudhry, the witness for the Government is

"Item no. 1 of the award is that which was calculated by us in the government bill. Item no. 3 is in respect of the remaining claim of the plaintiff." Item no. 1 thus represents the sum admitted by the government to be due to the respondent, and item no. 3 represents the additional sum found by the arbitrator to be due to him. The arbitrator is not bound to give an award on each point. He can make his award on the whole case, see Ghulam Khan v. Mohammad Hassan (1). An arbitrator may award one sum generally in respect of all money claims submitted to him, unless the submission requires him to award separately on some one or more of them, see Whiteworth v. Hulse(3). The arbitrator can lawfully make an award of a sum admitted to be due and a lump sum in respect of the remaining claim. As the final award favour of the respondent professes to be made of and concerning all the matters referred to him, it must be presumed that in making it the arbitrator has taken into consideration all the claims and counter claims, see Harrison v. Creswick (4), Jewell v. Christie (5). We hold that the award is a final and certain determination of all the disputes referred.

The arbitrator made an award in respect of the second item under some misapprehension. The security deposit of Rs. 6,000 had been returned to the respondent and there was no dispute about it before the arbitrator. In the circumstances, the arbitrator had no authority to award Rs. 6,000 to the respondent on account of the security deposit. This part of the award is clearly separable and may be struck out. Moreover, the award of Rs. 6,000 is to the advantage of the respondent; and the Court usually declines to set aside an award at the instance of a party who has not suffered any injury by the error, see Narsingh Narain Singh v.Ajodhya Prasad Singh(6). We find also that the award of Rs. 6,000 is now of no consequence. After the award was made, the respondent received a sum of Rs. 1,00,594/7 in full settlement of the award, presumably after giving the government credit for the sum of Rs. 6,000 already received by him.

We therefore hold that there is no ground for setting aside the award. The award is not vague and/or uncertain and does not suffer from any other infirmity.

(1) 24 Law Journal, Q.B. 41,45. (2) I.L.R. 29 Cal. 167, 186

(P.C.).

(3) (1866) L,R. I Ex. 251. (4) (1853) 13 C.B. 399.

(15) (1867) 2 C.B. 296. (6) (1912) 15 C.L.J. 110,

113.

592

Mr. Mehta also contended that (1) the appeal before the High Court was not maintainable under ss. 17 and 39 of the Arbitration Act, 1940 and (2) the respondent having received payment in full settlement of the award was estopped from challenging it. We do not find it necessary to decide these points in view of our conclusion that the award is not liable to be set aside.

The appeal is allowed with costs in this Court, and the High Court. The order of the High Court is set aside and the order and decree passed by the Second Civil Judge, Kanpur, is restored.

G.C. Appeal allowed.

593

Union Of India v. Jai Narain Misra .

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellant (Union of India)

Respondent (Jai Narain Misra)

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Union Of India v. Jai Narain Misra .

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