Kanpur Nagar Mahapalika Vs. M/S Narain
Das Haribansh [1969] INSC 191 (20 August 1969)
20/08/1969
ACT:
Arbitration-Award of Arbitrator-When bad for
error apparent on the face of the award-If Arbitrator required to deal with
legal contentions in his award-Consequence of his not doing so.
HEADNOTE:
The appellant entered into a contract with
the respondent for certain construction work at Kanpur. The contract contained
an arbitration agreement between the parties.
The respondent filed a suit in 1946 claiming
certain monies due from the appellant against its final bills but, at the
instance of the appellant, the suit was stayed and the matter referred to
arbitration. The arbitrator made an award in March 1960' in favour of the
plaintiffs determining the amount payable by the appellant. Thereafter the
appellant made an application for setting aside the award on the ground that
the arbitrator mis-conducted himself in not properly considering that the claim
of the respondent was barred by limitation under s. 326 of the U.P. Act 2 of
1916.
Although the trial court set 'aside the
award, the High Court, in appeal, reversed this decision.
In appeal to this Court it was contended for
the appellant that the award was' bad by reason of an error apparent on the
face of the award.
HELD: Dismissing the appeal, In the present
case, it could not be predicated of the award that there was any proposition of
law forming the basis of the award, and, therefore, it could not be said that
there was any error apparent on the face of the award.
The arbitrator was under the agreement in the
present case to decide the questions which were within the province of the
arbitrator's jurisdiction. It could not be said on the face of the award that
the arbitrator has decided on any principle of construction which the law does
not countenance. [30 G--H; 31 A--B] It is sufficient if the arbitrator gives an
award on the whole case and he need not deal with each issue separately.
It was open to the arbitrator to decide on
the rival contentions of the parties as to limitation. In doing so if an
arbitrator makes a mistake either in law or on fact and if such mistake does
not appear on the face of the award, the award will not be bad notwithstanding
any mistake. [31 B--C] Messrs. Alopi Parshad and Sons Ltd. v. Union of India,
[1962] S.C.R. 793; Champsey Bhara & Co. v. Jivraj Balloo Spinning and
Weaving Co. Ltd., [1923] A.C. 480 and Dr. S. Dutt v. University of Delhi,
A.I.R. 1958 S.C. 1050;
referred to.
CIVIL APPELLATE JURISDICTION': Civil Appeal No.
1749 of 1966.
Appeal from the judgment and decree dated May
3, 1962 of the Allahabad High Court in F.A.F.O. No. 330 of 1960.
29 J.P. Goyal and G.N. Wantoo, for the
appellant.
N.C. Chatterjee and Ganpat Rai, for the
respondent.
The Judgment of the Court was delivered by
Ray, J. This is an appeal from the judgment dated 3rd May, 1962 passed by the
High Court at Allahabad reversing the order of the Civil Judge setting aside an
award.
The appellant was formerly known as Municipal
Board, Kanpur and thereafter as Kanpur Nagar Mahapalika. The appellant in the
former name of Municipal Board, Kanpur and the respondent entered into, a
contract in writing for construction of zone pumping stations and reservoirs at
Kanpur. One of the clauses in the said agreement in writing contained an
arbitration agreement between the parties.
The respondent filed original suit No. 45 of
1946 in the Court of Civil and Sessions Judge, Kanpur, against the Municipal
Board, Kanpur and claimed a sum of Rs. 60, 802-4-9 representing the claims on
account of balance sum due according to the final bills, interest on the amount
due, refund of security deposit and interest thereon. The suit was instituted
in the year 1946. The Municipal Board, Kanpur thereafter made an application
under section 34 of the Arbitration Act, 1940 for stay of the suit contending
that the suit related to a matter agreed to be referred to arbitration. On 9th
August, 1952, the Court ordered stay of the proceedings. The plaintiff
preferred an appeal against the order. By an order dated 4th November, 1957 the
High Court at Allahabad directed that since the appeal was not pressed by the
plaintiff the Court should proceed with the matter of reference. Thereafter on
17th May, 1958 the Court of Additional Civil Judge, Kanpur sent the matter to
Shri A.K. Roy, Superintending Engineer, who was appointed an arbitrator on the
reference.
The arbitrator on 8th March, 1960 made an
award in favour of the plaintiff respondent for the sum of Rs.
42,772-2-9 on account of final bill, a sum of
Rs. 9,705/- on account of refund of security deposit and interest on the
security deposit.
The appellant thereafter made an application
for setting aside the award on the ground that the arbitrator mis-conducted
himself in the proceedings by not properly considering and deciding that the
claim of the plaintiff was barred by section 326 of the U.P. Act 2 of 1916. The
Additional Civil Judge, Kanpur by judgment dated 31st May, 1960 set aside the
award by holding that the arbitrator wrongly decided the point of limitation
and thereby mis-conducted himself.' The High Court referred to two lines of
decisions of the Allahabad High Court on the question as 30 to whether the
claim by the contractor for money due on account of the work done by him for
the Municipal Board was governed by section 326 of the U.P. Act prescribing six
months as the period of limitation or by the period of limitation for three
years under the Limitation Act. The High Court came to the conclusion that if
the arbitrator had decided it in favour of the plaintiff and did not accept the
prescribed period of limitation under section 326 of the Municipalities. Act,
it would not be an error of law apparent on the face of the Award.
Counsel for the appellant contended that the
award in the present case was bad by reason of an error apparent on the face of
the award. If an error of law appears on the face of the award it is a ground
for remitting it or setting it aside. An exception arises where the parties
choose specifically to refer a question of law to arbitration. This Court in
the case of Messrs. Alopi Parshad and Sons Ltd. v. Union of India(1) pointed
out the distinction between a general reference on the one hand and the
specific reference on the other on any question of law.
In the present case, the award does not lay
down any proposition of law on the question of limitation. The award does not
put any construction on section 326 of the Municipalities Act. Lord Dunedin in
Champsey Bhara & Co. v. Jivraj Balloo Spinning and Weaving Co. Ltd.(2) said
"an error of law on the face of the award means ...... that one can find
in the award, or in 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 is the basis of the
award and which one can then say is erroneous". The award in the present
case cannot be impeached either for stating the reasons for the judgment or for
stating any legal proposition which is the basis of the award.
This Court in the case of Dr. S. Dutt v.
University of Delhi(3) said "in our view all that is necessary for an
award to disclose an error on the face of it is that it must contain either in
itself or in some paper intended to be incorporated in it, some legal
proposition which on the face of it and without more, can be said to be
erroneous".
In the present case, it cannot be predicated
of the award that there is any proposition of law forming the basis of the
award, and, therefore, it cannot be said that there is any error apparent on
the face of the award. The arbitrator is under the agreement in the present
case to decide the questions which were within the (1) [1962] S.C.R. 793. (2)
[1923] A.C.
480. (3) A.I.R. 1958 S.C. 1050.
31 province of the arbitrator's jurisdiction.
It cannot be said on the face of the award that the arbitrator has decided on
any principle of construction which the law does not countenance.
Counsel for the appellant contended that the
arbitrator should have specifically dealt with the question of limitation. It
is sufficient if the arbitrator gives an award on the whole case and he need
not deal with each issue separately. It was open to the arbitrator to decide on
the rival contentions of the parties as-to limitation.
In doing so, if an arbitrator makes a mistake
either in law or on fact and if such mistake does not appear on the face of the
award, the award will not be bad notwithstanding any mistake. We must not in
the present case be understood to express any opinion that there was however
any mistake.
The High Court was correct in refusing: to
set aside the award. For the reasons mentioned above, the appeal fails and is
dismissed with costs.
R.K.P.S. Appeal dismissed.
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