LALIT MOHAN SHARMA J.

(1.) This appeal under S.39 of the India Arbitration Act, 1940 is directed against the decision of Additional Subordinate Judge, Patna, making the Award of an Arbitrator a rule of the Court after certain modification.

(2.) The parties to the appeal entered into a contract for making certain constructions. The respondent-firm undertook to execute the work as per the agreement dt/- 12-9-1969. The work commenced in Sept. 1969 but could not proceed after a few months. Certain differences arose between the respondent and the appellant-Electricity Board, the other contracting party, and the dispute was, as per the agreement, referred to the arbitration of Sri P.R. Guha, Chief Engineer (Retired), River Valley Project Department, Bihar. The parties filed their written statements and fully participated in the proceeding before the Arbitrator. Ultimately, an Award was made and filed in court in Aug. 1972. The appellant raised several objections against the Award, and a suit was, therefore, registered in the court below in which the contract or respondent was described as the plaintiff and the appellant-State Electricity Board as the defendant.

(3.) The plaintiff made a total claim of about Rs. 34 lacs and the Board, a counter, claim of over Rs. 1 crore 23 lacs. The Arbitrator accepted the claim of the plaintiff to the tune of Rs. 12,67,057.00 and the counter claim of the defendant for a sum of Rs. 66,054.00 and directed the Board therefore to pay a sum of Rs. 12,01,003.00. The court below modified the amount by reducing the sum of Rs. 12,67,057.00 to Rs. 10,38,087.00 and substituting the sum of Rs. 66,054.00 by Rs. 81,386.00. It held that the items of claim and counter claim were severable and the modifications were thus legally permissible without setting aside the entire Award.

(4.) The defendant-Board has appealed and the plaintiff has filed a cross-objection.

(5.) In view of the points urged by Mr. R.P. Katriar in support of the appeal it is not necessary to give in detail all the objections mentioned in the petition of the appellant filed in the court below. The Arbitrator has not given any reason in support of his Award but has dealt with the claims of the parties item-wise. The break up of the claim and counter claim as also the Arbitrator's decision thereon are mentioned item-wise in the Award. For appreciating the points taken on behalf of the parties before us, reference may be made to the impugned judgement and certain papers included in the paper book prepared by the appellant. The documents do not appear to have been formally marked as exhibits but the learned counsel have not taken any objection to their being treated as evidence in the case; rather, both sides have referred to the same before us. I am, therefore, proceeding to deal with the arguments of the learned advocates accordingly.

(6.) Mr. Katriar contended that the contracts remained only partially executed not on account of any fault on the part of the defendant-appellant, and the plaintiff, therefore, is not entitled to any compensation by way of loss of profits. He also argued that although the Arbitrator has not given a speaking Award, the same should be set aside on account of inconsistent conclusions impliedly but necessarily arising out of the decision in the Award on the different items of claim and counter claim. The learned counsel placed great reliance on the observations in para 6 of the judgement in K.P. Poulose v. State of Kerala, AIR 1975 SC 1259 in support of his point that the Court is under a duty to examine the controversy on the merits of the dispute, and pass proper orders in accordance with its conclusion. It is claimed that since on account of the default on the part of the plaintiff the work remained unexecuted which had to be given to another contractor for completion, the plaintiff was liable to re-compensate the defendant with respect to the extra expenditure the Board had to incur.

(7.) The plaintiff claimed a sum of Rs. 12,15,900.00 for loss of profits and the Arbitrator has granted a sum of Rs. 4,50,000.00. The argument which was pressed in the court below and reiterated here is that the agreement between the parties did not empower the Arbitrator to allow such a claim. I do not find any substance in this argument. The relevant clauses of the Arbitration agreement including the arbitration clause have been mentioned in the judgement under appeal, and there does not appear to be any scope for holding that in case of a breach of contract the guilty party shall not be liable for the loss necessarily arising out of such a breach. I accept the finding of the court below on this point as well-founded. Mr. Katriar strenuously argued that the defendant is entitled to invite the court to examine the materials produced before the Arbitrator and come to a decision that the defendant was not responsible for the breach of the contract. He relied on K.P. Poulose v. State of Kerala, AIR 1975 SC 1259, and Ardeshar Irani v. State of Madhya Pradesh, AIR 1974 Madh Pra 199. I do not agree with the learned counsel that it is open to the court to re-examine the merits for finding out whether the Award is justified by the weight of evidence led by the parties. I have already stated that the Arbitrator has not given any reason in support of his decision, and the jurisdiction of the court to examine its correctness is limited by the provisions of the Arbitration Act, which are based on the general principle applicable to arbitration proceedings. An arbitrator is a tribunal selected by the parties, and his adjudication is binding on them. If it were permissible for the court to re-examine the correctness of the Award, the entire proceeding would amount to an exercise in futility. The grounds on which an Award can be set aside are limited by statute and S.30 of the Act in mandatory terms declares that an Award shall not be set aside on other grounds. It is also not open to the court to speculate, where no reasons are given by the Arbitrator as to the reasons which led him to his conclusion. The court cannot proceed to determine whether the conclusion is right or wrong on an assumption that the Arbitrator must have proceeded by a certain process of reasoning. It has been observed by the Supreme Court in Jivarajbhai Ujamshi Sheth v. Chintamanrao Balaji, AIR 1965 SC 214 that it is not open to the court to attempt to approach the mental process by which the Arbitrator has reached his conclusion, where it is not disclosed by the terms of his Award. The court cannot sit in judgement on the Arbitrator and a reappraisal of the evidence is not permissible. The decision in Poulose's case (supra) does not help the appellant as in that case the Award was speaking one and reasons were given for the decision against the contractor. The Supreme Court by examining the reasons of the Arbitrator held that the Award suffered from a manifest error apparent ex facie. The Madhya Pradesh case also does not support Mr. Katriar. There the Arbitrator, who was a Government servant, demanded exorbitant fee (four times what the court ultimately fixed) and the matter was referred to the court under S.38 of the Act at the instance of one party. The other party offered to pay the entire amount, which was accepted by the Arbitrator without waiting for the court's decision. The Arbitrator gave his Award in his favour and included the amount in the Award to be realised from the losing party. In that background the High Court held that it was a case where the Arbitrator was guilty of misconduct within the meaning of Cl.(a) of S.30. The main argument addressed on behalf of the appellant must, therefore, be rejected.

(8.) The next argument of Mr. Katriar is that since the claim of the plaintiff for a sum of Rs. 1,77,538.00 for earth work as per item (i) at page 89 of the paperbook was not allowed, it must be inferred that the Arbitrator rejected the plaintiff's case about the alleged failure of the defendant in providing water as per stipulation. The entry reads as follows :-

"CLAIMS AMOUNT AWARD (i) For earth work in placing the soil in embankment which was available from item No. 2(a) but could not be utilised due to failure of the department in providing water as per stipulation. Therefore, less in this account for 12,68,129 cft. @ 200/- loss Rs. 60/- for Rolling, watering extra lead Rs. 140/- per % cft. Rs. 1,77,538/- Nil."

On that basis the claims as per items 2(a) to 5(a) at page 88 of the paperbook should also have been rejected. Mr. K.D. Chatterjee, the learned counsel for the plaintiff respondent, replied that the decision of the Arbitrator in not allowing the claim as per item (i) aforementioned does not necessarily lead to the conclusion that the plaintiffs case about the failure on the part of the defendant to provide water has been rejected. In view of the facts and circumstances of the case, it is just possible that the Arbitrator did not allow the claim as according to the case there was only a partial default in supply of water as is demonstrated by the fact that the plaintiff was able to execute the work in part. The fact that the plaintiff has been given a lump sum for the breach of contract has been suggested as another possible ground for the Arbitrator to reject the claim in item (i). The counsel said that the rejected item referred to an additional compensation claimed separately and the inference sought to be drawn by Mr. Katriar is not permissible. The argument of Mr. Chatterjee appears to be correct.

(9.) Mr. Katriar also challenged the Arbitrator's decision in rejecting the defendant's counter claim as per item 7 at page 92 of the paperbook. The defendant demanded compensation for the extra cost incurred for getting the unfinished work completed through another contractor. He placed before us the evidence of Sri Guha, the Arbitrator, who was examined in the court below as a witness. His statements in paras 5 and 7 of the recorded deposition relied on by Mr. Katriar do not give any support to the defendant's case. Besides, I do not think the oral evidence can be admissible for interpreting the written Award. The oral statement of the Arbitrator indicates that he had accepted the plaintiff's case of non-supply of water, but I am not relying upon the same for my view about the Award. In support of the counter claim Mr. Katriar relied on Cl.3(c) of the arbitration agreement, which has been quoted in page 13 of the judgement of the court below. The court has rejected the argument, and in my view rightly, on the ground that the decision of the Arbitrator on the merits of the claim was not subject to the court's scrutiny. It cannot be legitimately suggested that the defendant could be entitled for any compensation on this count in absence of failure on the part of the contractor to execute the work, and it was for the Arbitrator to decide as to where the responsibility lay for non-completion of the work.

(10.) Mr. Katriar next challenged the Award with reference to certain other items. He said that the amount at the rate of 2 per cent, as mentioned at the bottom of page 88 of the paperbook, has been wrongly calculated and this amounts to an error apparent on the face of the Award. The rate 2 per cent is an obvious mistake for 2 per thousand, as has been discussed in para 13 of the judgement placed before us by Mr. Chatterjee and in his final reply Mr. Katriar did not further pursue the matter. The learned counsel also said that although the contractor claimed Rs. 15/- per cent by way of loss of profit only on unexecuted work the Arbitrator awarded compensation on the total work executed or unexecuted. He was, however, not able to substantiate his interpretation of the Award, as mentioned above. The judgement of the court below, which was placed by the learned Advocates for both sides, specially para 10 (page 46 of the paperbook), does not suggest such an interpretation of the Award and no other material has been relied upon before us. Lastly, Mr. Katriar faintly argued that the Arbitrator must be held to have been partial in favour of the contractor. No such ground was urged in the court below or taken in the memorandum of appeal in this Court and it cannot be entertained now.

(11.) For the reasons mentioned above, I do not find any merit in the appeal which is accordingly dismissed.

(12.) The plaintiff-respondent has filed a cross-objection contending that the court below has illegally reduced the amount allowed under the Award by a total sum of more than 2,44,000.00. The claim in the cross-objection has been split up item-wise, as detailed in the memorandum.

(13.) So far maintainability of the cross-objection is concerned, Mr. Chatterjee contended that since the Arbitration Act has provided for the remedy arising out of an Arbitration proceeding, before the court of ordinary civil jurisdiction, the provisions of the Civil Procedure Code which included R.22 of O.41 must be held to apply, unless any particular provision thereof appears to be inconsistent with the Act. He relied on the following observation of Viscount Haldane L.C. in National Telephone Company v. Postmaster General, 1913 AC 546 at 552.

"When a question is stated to be referred to an established court without more, it, in my opinion, imports that the ordinary incidents of the procedure of that court, are to attach, and also that any general right of appeal from its decisions likewise attaches."

He has also referred to the decisions in Ramanbhai Ashabhai Patel v. Dabhi Ajit Kumar Fulsinji, AIR 1965 SC 669; Bhanu Kumar Shastri v. Mohanlal Sukhadia, AIR 1971 SC 2025, and Ramasray Singh v. Bibhisan Sinha, AIR 1950 Cal 372. The Supreme Court cases arose under the Representation of the People Act, 1951 and the Calcutta case under the Bengal Money Lenders Act. The observations made in these cases support the principle on which Mr. Chatterjee is relying. So far the Arbitration Act is concerned, the view in favour of the maintainability of a cross-objection appears to be stronger inasmuch as S.41 of the Act says that subject to the provisions of, and the rules made under the Act, the Civil Procedure Code shall apply to all proceedings before the court and to all appeals under the Act. There does not appear to be any provision inconsistent with the application of the Civil Procedure Code. The decision of the Court so far it has gone against the plaintiff respondent is clearly appealable under S.39, and I, therefore, hold that the cross-objection is maintainable.

(14.) With reference to the merit of the cross-objection, Mr. K.D. Chatterjee placed his argument with reference to a typed chart, which was placed before us during the hearing of the appeal, dealing with the claims, as mentioned under items 2(a) to 4(a) at page 88 of the paperbook, item III at page 89 and item No. 9 at page 92 of the paperbook. The figures mentioned in the chart were challenged by Mr. Katriar as not correct. The statement of claims of the petitioner allowed by the Arbitrator and included in his Award indicates that the claim of the plaintiff under item 2(a) was only Rs. 88,769.00, but the plaintiff was awarded Rs. 1,47,994.00 under the Award. The court below has reduced the figure to the amount claimed dud I do not find any error in the judgement.

(15.) So far item No. 3(a) is concerned the Arbitrator allowed Rs. 4,95,898.00 against the claim of the contractor to, Rs. 7,12,885.00 and under item No. 4(a) a sum of Rs. 2,09,161.00 was allowed against the claim of Rs. 2,76,161.00. In para 6 of the judgement of the court below, it has been pointed out as to how on the admitted facts the amount of Rs. 4,95,898.00 was wrongly mentioned in place of Rs. 4,86,174.00 due to an arithmetical error. Similarly, a sum of Rs. 2,09,161.00 has been entered in the Award due to a clerical mistake in place of Rs. 1,49,140.00. These amounts allowed under the Award when scrutinised with reference to the admitted position, clearly show that the Award was excessive and that the error was apparent on the face of the Award and has been rightly corrected.

(16.) The Arbitrator allowed the claim of Rs. 1,00,000.00 under item (iii) at page 89, which has been struck down by the court below on the ground that it amounted to double payment. The said sum was recovered by the Board from the running bill and it was certainly included in the compensation claimed for breach of contract. The court has elaborated this point in para 9 of the judgement and I agree with the reasoning. The remaining claim under the cross-objection refers to item No. 9 at page 92 of the paperbook whereby the Arbitrator rejected the counter claim of the defendant to a sum of Rs. 15,332.00; and has been dealt with in the judgement under appeal in para. 14. The court has allowed the amount for reasons discussed therein and which appear to be correct Mr. Chatterjee contended that the decision of the court below is erroneous inasmuch as this amount was never claimed by the defendant at all. I do not find any merit in this contention as the statement of counterclaims clearly includes this amount as the 9th item.

(17.) On a consideration of the entire materials on which the parties have relied on in this case, I agree with the court below that the Arbitrator had made such errors on the face of the record, which were fit to be corrected by the Court, as has been done. Since the amounts covered under these heads are severable from the remaining part of the Award, which has been confirmed by the court below, there is no difficulty in making the modification without setting aside the entire Award.

(18.) In the result, although the cross- objection has been held to be maintainable the same is dismissed on merits. The parties shall bear their own costs.

(19.) S. SHAMSUL HASAN, J. :- I agree. Appeal dismissed.