District Podu Thozillar Samgamrepresented by Its V. Bala Subramania Foundry
& Ors  INSC 208 (11 August 1987)
SABYASACHI (J) MUKHARJI, SABYASACHI (J) OZA, G.L. (J)
1987 AIR 2045 1987 SCR (3) 852 1987 SCC (3) 723 JT 1987 (3) 273 1987 SCALE
INFO : RF 1989 SC 268 (17) RF 1989 SC 606 (6)
Act, 1940: Section 14(1)--Award of arbitrator-Interference--When arises.
were disputes between the partners of the respondent firm and several legal
proceedings were taken in the courts below, which ultimately came to this
Court. This Court by an order dated 2nd of November, 1982 referred the disputes
to an Arbitrator. An application for appointment of Receiver was also directed
to be disposed of by the trial court.
Arbitrator duly filed the award dated 3rd of April, 1985 in this Court under
Section 14(1) of the Arbitration Act.
petitioner in the special leave petitions filed an affidavit alleging that the
Arbitrator was guilty of legal misconduct, and that there were errors which
were amenable to correction by this Court, that the award was inconsistent and,
therefore, the award should be set aside so far as it was against the
behalf of the Respondent-Workers an application was filed and it was contended
that their claims have not been fully protected, and that the workers' claim on
account of gratuity would come to about Rs.7 lakhs while the Arbitrator had
estimated it erroneously at Rs.4 lakhs, and had also made no sufficient
provision in respect thereof.
of the Civil Miscellaneous Petitions, the Court,
There is no legal proposition either in the award or in any document annexed
therewith which was erroneous.
alleged mistake or alleged errors, if there be any, of which grievances are
made, are mistakes of fact, if at all.
grievances, even if true, do not amount to an error apparent on the face of the
record. [857A, B, D] 853 Sufficient provisions have been made in the award for
the existing liabilities of the workers and for any further contingencies is
respect of their claims. The right of gratuity has been recognised. It cannot,
therefore, be said that the award of the arbitrator is left incomplete and this
dispute left undetermined. [855C-D] The objection to the award cannot be
sustained. There will, therefore, be judgment in terms of the award. There will
be no interim interest. There will, however, be interest on judgment at 9%.
[857E] Union of India v. A.L. Raffia Ram,  3 S.C.R. 164;
Bhara and Company v. Jivraj Balloo Spinning and Weaving Company Ltd., 
L.R. 50 I.A. 324; Kanpur Nagar Mahapalika v. M/s Narain Das Haribansh,  2
Berry and Co. (P) Ltd. v. Union of India, New Delhi,  3 S.C.R. 282 and
Hindustan Tea Co. v. K. Sashikant Co. and another,  Suppl. S.C.C. 506,
Appellate Jurisdiction: C.M.P. No. 46931 of 1985.
W.P. Nos. 11361-62 of 1983 etc. (Under Article 32 of the Constitution of
Ganguli and K. Swami for the Petitioners. Shankar Ghosh, S. Padmanabhan, K.K.
Venugopal, C.S. Vaidyanathan, A.T.M. Sampath, P. Choudhary, S.R. Setia and S.R.
Bhatt for the Respondents.
Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. There were
disputes between the partners of the firm Balasubramania Foundry (hereinafter
called 'the firm') and several legal proceedings were taken in the courts of
Coimbatore, these ultimately came to this Court. This Court by an order dated
2nd of November, 1982 referred the disputes to the Arbitrator. The order stated
that the disputes were referred to the sole Arbitrator, Justice K.S.
Palaniaswamy failing him Justice C.J.R. Paul and the respective parties
including the firm were directed to file their 854 joint memos in all the
courts where the suits/proceedings were pending before the Arbitrator. The
Arbitrator was directed1 to proceed in accordance with the Arbitration Act.
order to complete the narration, there was an application for appointment of
Receiver which was directed to be pro- ceeded with in the trial court. This
Court, however, by the said order directed the trial court to dispose of that
the said order as mentioned hereinbefore in the absence of Justice K.S.
Palaniaswamy, Justice C.J.R. Paul duly heard and considered the matter and
published the award on 3rd April, 1985.
is claimed by Mr. Ghosh, appearing on behalf of respondent no. 1 as well as Mr.
Venugopal, appearing on behalf of other respondents supporting that the said
award be made a rule of the court and the judgment in terms of the said award
be passed. It may be mentioned that the Coimbatore District Podu Thozillar
Munnetra Samgam represented by its Secretary being a union of the workers filed
writ petitions in this Court being writ petitions Nos. 11361-62 of 1983. Later
on another special leave petition being special leave petition No. 2271 of 1983
was filed by the firm against the order of the High Court confirming the order
of appointment of Receiver of the firm. In those proceedings the Court was
pleased to pass an order on 17th of February, 1984 that all the claims of the
workers for their past dues would be referred for arbitration to the Arbitrator
and considered by him. On 27th of July, 1984 this Court was pleased to refer
the money claims of one Velmurugan Factory and the money claims of the workers
who were members of the Coimbatore District Engineering and General Workers
Union to the Arbitrator for adjudicating by arbitration.
Arbitrator has duly filed the award dated 3rd April, 1985 in this Court under
section 14(1) of the Arbitration Act.
Rangaswamy, the petitioner herein for whom Mr. Ganguly is appearing has filed
an affidavit alleging that the arbitrator was guilty of legal misconduct and
there were errors which were amenable to corrections by this Court. It was
contended on behalf of the workers also that their claims had not been fully
protected. Mr. Sampath, appearing on their behalf has contended that the claims
of the workers would amount to about rupees seven lakhs while provision had
been made only for rupees three lakhs and even, then there was not sufficient
provision. The workers, gratuity, it was contended would come to about rupees
seven lakhs while the Arbitrator had really estimated 855 erroneously rupees
four lakhs and provisions had been made only for Rs.3,10,000 which according to
Mr. Sampath have been further diminished by payments made by the Receiver in
the meantime. There is also an application on behalf of the workers' union on
appears, however, that this objection on behalf of the workers on ground of
imperfect protection of workers was under a misconception on behalf of the
respondents. It was stated and brought before us that in the last two years
there had been sufficient profit to cover the claims of the workers. Indeed it
appears that of the 27 workers whose claims had to be settled on account of
gratuity, 14 had received the same and a document indicating the payments to
them was sought to be filed before us. We are satisfied that sufficient
provisions have been made for the existing liabilities of the workers and for
any further contingencies in respect of the workers' claims. It cannot be said,
there- fore, that the award of the Arbitrator is incomplete and left undetermined
this dispute. The right to gratuity has been recognised and provision for the
same has been made.
respondents Nos. 2, 3, and 5 pleaded before us through counsel that they had no
objection to the award being made the rule of the court. The respondent no. I
as mentioned hereinbefore is arguing that the award be made the rule of the
court. Respondent no. 4 is also supporting that claim.
is only the petitioner A. Rangaswamy who is the only party opposing the award.
It was submitted by Mr. Ganguly in support of his objection that the Arbitrator
while holding that the lease in favour of the firm was bad had awarded
substantial sum on the basis of the lease. It was further submitted that the
Arbitrator while noting the reasons and recording the formal award had applied
a reasoning altogether unconnected with the merits of the controversy which
amounted to legal misconduct. It was further alleged that the award was
inconsistent. In those circumstances, it was submitted that the award so far as
it was against the applicant. A. Rangaswami should be set aside. It was
submitted that in spite of the alleged lapses in the illegal leases it was
Palaniappan who was continuing to manage the business, sometimes as the
Managing Partner of the firm and at other times as the proprietor or partner of
the lessee company and recognition and rewarding him on that basis was
perverse. It was further submitted that reliance placed on Exhibit A-46 for the
purpose of allotting the articles was perverse and a grave error apparent on
the face of the record. It was submitted that the Arbitrator committed a grave
error in rejecting the claim of the applicant for a sum of Rs.39,27,940.11
which was due from Palaniappan and Doraiswa- my as suppressed profits. It was
submitted by Mr. Ganguly 856 that at least rupees nine lakhs should have been
left out in item No, 9. This was not duly noted. On the other hand, it was
urged that the alleged errors were not amenable to be corrected in this
application by this Court. Mr. Ganguly submitted that on the whole the award
was wholly inequitable.
law on this aspect is, however, settled. In Union of India v. A.L. Rallia Ram,
 3 S.C.R. 164, this Court reiterated that in order to make arbitration
effective and the awards enforceable, machinery was devised by the Arbitration
Act for lending the assistance of the ordinary courts. The Court was also
entrusted with .the power to modify or correct the award on the ground of
imperfect form or clerical errors, or decision on questions not referred, which
were severable from those referred. The Court had also power to remit the award
when it had left some matters referred undetermined, or when the award was
indefinite, where the objection to the legality of the award was apparent on
the face of the award. The Court might also set aside an award on the ground of
corruption or misconduct of the ' arbitrator, or that a party had been guilty
of fraudulent concealment or willful deception. But the Court could not
interfere with the award if otherwise proper on the ground that the decision
appeared to it to be erroneous. The award of the arbitrator was ordinarily
final and conclusive, unless a contrary intention was disclosed by the
award was the decision of a domestic tribunal chosen by the parties, and the
civil courts which were entrusted with the power to facilitate arbitration and
to effectuate the awards, could not exercise appellate powers over the
decision. Wrong or right the decision was binding, if it be reached fairly
after giving adequate opportunity to the parties to place their grievances in
the manner provided by the arbitration agreement. This Court reiterated in the
said decision that it was now firmly established that an award was bad on the
ground of error of law on the face of it, when in the award itself or in a
document actually incorporated in it, there was found some legal proposition
which was the basis of the award and which was erroneous. This view had been
enunciated' by the Judicial Committee in Champsey Bhara and Company v. Jivraj
Balloo Spinning and Weaving Company Ltd.,  L.R. 50 I.A. 324. This view
was again reiterated and emphasised by this Court in Kanpur Nagar Mahapalika v.
M/s. Narain Das Hari  2 S.C.R. 28, where Ray, J. as the learned Chief Justice
then was observed at page 30 of the report relying on Champsey Bhara's case
(supra) "an error of law on the face of the award meant that one could
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 was the basis of the award and which one
can say is erroneous." In the instant case there is no legal proposition
either in the award or in any document annexed with the award which was
erroneous. In Allen Berry and Co. (P) Ltd. v. Union of India, New Delhi, 
3 S.C.R. 282, this Court reiterated that the principle was that an award could
only be set aside where there is an error on its face.
the instant case, the alleged mistakes or alleged errors, if there be any of
which Mr. Ganguly made grievances are mistakes of fact if at all. Mr. Ganguly's
grievances have a ring of similarity with the grievances which were agitated
before this Court in Hindustan Tea Co. v. K. Sashikant Co. and another, 
Suppl. S.C.C. 506, and this Court reiterated that it was an error of law and
not mistake of fact committed by the arbitrator which was justiciable in the
application before the court. It was an error of law and not mistake of fact
committed by the arbitrator which was amenable to corrections by this Court.
The grievances of Mr. Ganguly's client even if true, which as at present
advised we are not inclined to accept, do not amount to error apparent on the
face of the record.
the aforesaid view of the matter we are unable to sustain, the objections to
the award. There will, therefore, be judgment in terms of the award, there will
no interim interest. There will, however, be interest on judgment at 9%. The
objections are dismissed and the workers' objections are disposed of by stating
that there are sufficient provisions in the award to meet the claim of the
gratuity of the workers and they should have the right to be met out of the
award. In that view of the matter the award is made the rule of the Court and
the judgment be in terms of the award. No order as to costs.
Petitions disposed of.