Order
1. In these two appeals, the question arises as to whether the arbitrators could have awarded freight charges in respect of steel and handling transportation charges. The arbitrators made two awards in respect of claims for variation in freight charges for steel brought from Puna to Dehradun and also awarded interest at the rate of 8 per cent on the said amount from the date of award up to the date of decree. These awards were challenged in the Court of District Judge, Dehradun. The learned District Judge held that the award in each case was not sustainable inasmuch as the claimant was not entitled to such freight charges and, therefore, question of payment of variation in freight charges would not arise. The matter was carried in appeal to the High Court. The High Court set aside the order made by the learned District Judge taking the view that the award was a non-speaking one and the contract in question had not been made part of the award and, therefore, it is not open to the District Judge to have examined the scope of the contract in setting aside the award. Hence these orders are in appeal before us.
2. The learned counsel for the appellant submitted that the award clearly spelt out the nature of the dispute and that pertained to payment of the freight charges and variation thereof. This aspect is clearly covered by the agreement entered into between the parties on 18-2-1966 which was varied by subsequent agreement dated 27-4-1971. In that agreement, the relevant clause reads as follows:
“Now therefore it is hereby agreed between the parties to enter into this first supplemental deed to vary the principal agreement as follows:
The steel plates as aforesaid shall be delivered to the contractor FOR Puna instead of FOR Dehradun and the cost of transport including transport of handling etc. of the fabricated materials from Puna to the worksite shall be borne by the contractor.”
3. He submitted that when the agreement itself did not provide for payment of the freight charges, the question of variation in the freight charges could not be given attention at all and thus he submitted that the arbitrators had exceeded their jurisdiction. Learned counsel for the respondents drew our attention to clause 12.07 which is part of the original agreement. He submitted that the effect of these two clauses had to be considered and the arbitrators were within their jurisdiction in examining the scope of these clauses in arriving at a conclusion one way or the other; that even if the conclusion reached by them may be illegal, the said award cannot be stated as one not without jurisdiction; that inasmuch as the award being a non-speaking one, the learned District Judge could not have interfered and the High Court rightly reversed the order to the contrary and was justified in confirming the award. He brought to our notice a decision of this Court in Sudarsan Trading Co. v. Govt. of Kerala (1989) 2 SCC 38 to impress upon us, that it is only in a case where the arbitrators act without jurisdiction the courts can review the award and not any other cases; that it is not open to the court at all to appreciate the reasoning, particularly, when such reason is not set out in the award.
4. We have examined the contract in question and the award made by the arbitrators. The award clearly spells out that the dispute referred to the arbitrators is one with reference to the variation in freight charges with reference to the contract, out of which this dispute arises. In the circumstances, it is certainly permissible to examine the scope of the clauses thereto and particularly when the modified contract dated 27-4-1971 stated that it was in variation of earlier agreement and clearly excluded the payment of transport or handling charges. Hence the question of payment of variation of such charges would not arise at all. Thus the award of such variation in freight charges was beyond the scope of the contract. Hence the arbitrators exceeded their jurisdiction in passing the awards in question.
5. In the circumstances, we set aside the order of the High Court and restore that of the learned District Judge. The appeal is allowed accordingly. However, in the circumstances of the case, there shall be no order as to costs.