Subhash Aggarwal Agencies Vs. Bhilwara
Synthetics & Ors [1994] INSC 672 (13 December 1994)
MOHAN, S. (J) MOHAN, S. (J) AHMADI A.M. (CJ)
MANOHAR SUJATA V. (J)
CITATION: 1995 AIR 947 1995 SCC (1) 371 JT
1995 (1) 392 1994 SCALE (5)228
ACT:
HEADNOTE:
The Judgment of the Court was delivered by
MOHAN, J.-
1.
The
facts in brief leading to this civil appeal are as follows.
2.
The
appellant is a member of the Delhi Hindustani Mercantile Association. By a
claim petition dated 11-8- 1979, the appellant had claimed a sum of Rs
4,51,246.50 under various heads of accounts including commission from the first
respondent up to the period of 30-6-1979. The claim related to transactions
which took place between appellant and first respondent. In turn, the first
respondent was also a member of Delhi Hindustani Mercantile Association. It
also made a counter-claim against the appellant. As per the rules of the
association, the dispute was referred to an Arbitrator.
3.
By
an order dated 20-11-198 1, the learned Single Judge of Delhi High Court
directed in terms of the concession made on behalf of the Association and the
sole Arbitrator, a reasoned award shall be passed by the Arbitrator.
4.
The
sole Arbitrator (Mohan Lal) entered upon the reference. On 19-7-1983, by a
reasoned award, he awarded a sum of Rs 1,97,891.81 in favour of the appellant
against the first respondent. This amount was also to carry interest @ 18% per
annum from the date of the award till the date of payment. Aggrieved by this
award the first respondent preferred an appeal as per Rule 37 Regulation 7 of
Delhi Hindustani Mercantile Association Rules and Regulations (hereinafter
referred to as 'the Rules'). The appeal was heard by the Tribunal. By an order
dated 24-2-1984, the Tribunal confirmed the award of the Arbitrator without
assigning any reasons. 373
5.
Against
this order, the appellant preferred Suit No. 498- A/84 for making the award a
rule of the court. The first respondent filed objections against the Award.
Inter alia, it was urged by it that the award was not a reasoned award.
A learned Single Judge of the High Court of
Delhi by an order dated 5-4-1990 allowed the objections and set aside the award
of the Appellate Tribunal and remitted the award to Tribunal for
reconsideration and for giving reasons for the Award within four months from
the date of the judgment.
6.
Assailing
the correctness of this judgment, the appellant preferred Appeal FAO(OS) 113/90
before the High Court. The said appeal was dismissed in limine by the impugned
order dated 17-7-1990.
7.
The
learned counsel for the appellant would argue that insofar as the award dated
19-7-1983 is concerned it is a reasoned award. That is enough compliance with
law.
Generally speaking, when the Appellate
Tribunal merely confirms that reasoned award, it is not necessary again to give
reasons. Therefore, the High Court erred in setting aside the order of the
Appellate Tribunal on the ground that no reasons were given in that order. The
principle of merger did not apply to the present proceedings where the parties
had consented to a reasoned award by the sole Arbitrator. In any event, the
High Court erred in requiring reasons to be given even at the appellate stage
overlooking the fact that the Award dated 19-7-1983 is a reasoned award.
8.
In
opposition to this, the learned counsel for the respondent would urge that in
law as laid down in Commercial Arbitration by Mustill and Boyd, 2nd Edn. at pp.
364-65 when the Appellate Tribunal has made an award either confirming or
reversing the original award, it is the award of the Tribunal which defines the
rights of the parties.
9.
The
appellate award once made completely replaces the original award. Therefore, a
party is entitled to know the reasons as to why the appellate authority has
come to such a conclusion. Once the award of the sole Arbitrator was subject to
an appeal, the award of the appellate authority supersedes the original award
and it is only that award which exists in law. Such an award must contain
reasons for its decision. This Court in Indian Oil Corpn. Ltd. v. Indian Carbon
Ltd.1 has stressed the requirement of the Arbitrator to give reasons in the
Award.
10.
The
first respondent filed OMP No. 37 of 1980 before the High Court of Delhi. That
was a petition under Sections 5 and 12(2) of Arbitration Act, 1940. The prayer
was that the authority granted in favour of Delhi Hindustani Mercantile
Association and the Arbitrator (Mohan Lal) be revoked; a sole arbitrator be
appointed in their places and that a direction may be issued that the
arbitration agreement shall cease to have any effect. By order dated
20-11-1981, the said petition was dismissed with the following directions:
1 (1988) 3 SCC 36: (1988) 3 SCR 426 374
"In the circumstances, I would, therefore, dismiss the petition subject,
however to the direction to the Arbitrator, in terms of the concession made on
behalf of the Association and the Arbitrator, that the Arbitrator would hear
the matter after giving reasonabl e opportunity to the petitioner of being
heard, and to make a reasoned award on the conclusion of the proceedings. The
petitioner would be at liberty to raise before the Arbitrator, as indeed in any
proceedings, subsequent to the award any question of law or fact, irrespective
of whether they have been raised and/or dealt with in the present proceedings,
including the question as to the effect of the petitioner's resignation on the
arbitration agreement and the arbitration proceedings." (emphasis supplied)
Consequent to this direction, the matter was taken up by the sole Arbitrator
and by his reasoned Award dated 19-7-1983, he ultimately held as under:
"Thus, for the above reasons, I do
hereby award a sum of Rs 1,97,891.81 (Rupees one lakh ninety-seven thousand
eight hundred and ninety-one and paise eighty-one only) against Respondent 1
(M/s Bhilwara Synthetic Limited, who are the principal respondents in this
case, as agreed by themselves also) in favour of the claimant (M/s Subhash
Aggarwal Agencies). I further give my award. that respondent is liable to pay
interest at 18% p.a. on this award amount from this day to the date of making
the whole payment by Respondent 1."
11.
This
Award fully conforms to the order dated 20-11-1981 of the High Court made on
concession between the parties.
Aggrieved by the same, as per Regulation 7 of
Rule 37 of the Rules, the matter was taken up in appeal to the Tribunal by the
first respondent. It may be relevant at this stage to quote Regulations 7 and
10 of Rule 37 of the Rules. The said Regulations read as under:
"7. If any of the parties is not agreed
with the decision of the Arbitrator, the party may file the appeal against the
decision within 30 days from the date of decision. The cost of the appeal's
documents will be Rs 20.
Note : The holiday will not be counted for
the period of expiry of aforesaid time-limit.
10. If any of the parties files the appeal
against the decision of the Arbitrator, the appeal will be heard by the
Tribunal consisting of three members and its decision will be final."
12.
On
24-2-1984, the Tribunal dismissed the appeal of the respondent and confirmed
the award of the sole Arbitrator. That order reads as under:
"We have heard the arguments for both
the parties and also taken into consideration their objections raised by them.
The appeal of the appellant is dismissed and the award of the Arbitrator, Shri
Mohan Lal dated 19-7-198 3 is hereby upheld. Parties to bear their own costs.
Order be pronounced." This was set aside by the learned Single Judge by
his order dated 5-4-1990 on the ground that as the award given by the Tribunal
is bereft of reasons, it 375 cannot be made a rule of the court. In his opinion
the award given by the Tribunal is the final award and this award is to be made
a rule of the court. No reasons had been given at all. Only the conclusion has
been stated.
The award does not indicate as to how the
Tribunal have arrived at the conclusion. The award of the Appellate Tribunal is
directly in conflict with the direction given by this Court by order dated
20-11-1981 which specifically provided that the Arbitrator should make a
reasoned award.
No reasons whatsoever have been assigned.
This is the final award. It should have contained the reasons. Thus, it cannot
be legally sustained and has to be set aside. The order of the learned Single
Judge was confirmed in FAO(OS) 113/90 when the Division Bench dismissed the
same laconically saying: "Dismissed."
13.
On
a perusal of the award dated 19-7-1983 of the sole Arbitrator, it cannot be disputed
that it contained reasons as to why an award of Rs 1,97,891.81 was made in
favour of the appellant. Therefore, that is fully in conformity with the
direction given by the High Court on 20-11-1981. Now, the High Court holds that
the appellate order of the Tribunal dated 19-7-1983 must also give reasons.
This finding is arrived at on two grounds:
(i) The award of the Tribunal is the final
award which has to' be made a rule of court;
(ii) The failure to give reasons runs counter
to the directions of the High Court dated 20- 11-1981.
14.
We
can shortly dispose of the second ground before we take up the first. The
direction dated 20-11-1981 does not envelop the appellate authority. Before we
proceed further, we will consider the relevant law on this aspect. That the
Arbitrator should give reasons, is beyond dispute.
15.
Russell
in Law of Arbitration (20th Edn.) at p. 291 says:
"In order that an appeal (if it takes
place) may be effective, the Court has power to order an arbitrator or umpire
to give reasons for his decision in sufficient detail to enable the Court to
consider any question of law arising out of the award. Where the arbitrator or
umpire gives no reason for making the award, the Court must not make an order
unless it is satisfied either that before the award was made, one of the
parties gave notice to the arbitrator or umpire that a reasoned award would be
required; or that there was some special reason why such notice was not given,
or unless all the parties to the arbitration consent to the order being made.
... All that is necessary under the Act of 1979 is that the arbitrators should
give a 'reasoned award', i.e., the arbitrators should set out what, in their
view of the evidence, did or did not happen, and should explain succinctly why
in the light of what happened they had reached their decision and what that
decision was. They are not expected to analyse the law and the
authorities." Again at p. 335 it is stated:
376 "An arbitrator does not normally
have to state his reasons in his award, but, of course, may be ordered by the
Court to do so, or to amplify those already given.".
16.
An
illuminating passage is found in Arbitration Law by Robert Merkin, 1991 Edn. It
is stated in the following paragraphs as under:
17.
English
arbitration law does not impose any general duty upon arbitrators to give
reasons for their award, although the parties are of course free to agree that
the award should contain reasons. The provision of a reasoned award is
nevertheless of great significance under English law as, presented with a
reasoned award, it becomes possible for the High Court to determine whether the
arbitrators have made any error of law in reaching their conclusions. In order
to ensure that the possibility of an appeal on point of law is not defeated by
the failure of the arbitrators to provide a reasoned award, the 1979 Act
provides a mechanism whereby sufficient reasons may be obtained to facilitate
judicial review: if reasons are not available, the High Court has no
jurisdiction to hear any appeal based on error of law.
19.23 : It would seem that where arbitrators
do determine to give reasons for their award, or are ordered to do so by the.
High Court or the parties themselves, no great obligation is involved; this is
by way of contrast to the old special case procedure. The often repeated
guidelines were laid down by Donaldson, L.J. in Bermer Handelsgesellschaft mbH
v. Westzucker GmbH (No. 2)2:
It is of the greatest importance that trade
arbitrators working under the 1979 Act should realise that their whole approach
should now be different. At the end of the hearing they will be in a position
to give a decision and the reasons for that decision. They should do so at the
earliest possible moment.... No particular form of award is required.... All
that is necessary is that the arbitrators should set out what on their view of
evidence, did or did not happen, and should explai n succinctly why in the
light of what happened, they have reached their decision and what that decision
is.... Where a 1979 Act award differs from a judgment is in the fact that the
arbitrators will not be expected to analyse the law and the authorities. It
will be quite sufficient that they should explain how they reached their
conclusion.... The point which I am seeking to make is that a reasoned award,
in accordance with the 1979 Act, is wholly different from an award in the form
of a special case. It is not technical, it is not difficult to draw and above
all it is something which can and should be produced promptly and quickly at
the conclusion of the hearing.
The courts have, consistently with this
passage, stressed that awards are not legal judgments and thus must not be
viewed in a pedantic or overcritical fashion. Equally, the fact that an award
is 2 (1981) 2 Lloyd's Rep 130, 132 377 short does not mean that it is
inadequately reasoned. In particular it is not necessary for arbitrators to set
out lists of rival submissions or factual propositions and to choose between
them. It is enough that the award demonstrates why the arbitrators have found
for one party rather than the other.
Situations in which reasons may be ordered
19.24 : The operation of Section 1(5)-(6) of the Arbitration Act, 1979 is most
easily explained by separate consideration of each of the situations in which
it may be required. These are as follows:
(a) The parties have agreed that a reasoned
award is required, or have otherwise asked the arbitrators for a reasoned
award.
(b) The parties have agreed that no reasons
are to be given, or have otherwise asked the arbitrators not to include reasons
in their award.
(c) There is no agreement as to reasons, but
neither party has asked for reasons.
(d)There is no agreement as to reasons, and
one party has requested a reasoned award.
(e) There is no agreement as to reasons, and
one party has requested an award not containing reasons."
17. The Indian Law is stated by N.D. Basu on
Arbitration (8th Edn.) at para 2228 at pages 835-836. It reads:
"2228. Whether arbitrators should give
reasons for decisions.- An award of arbitrators is not a reasoned judicial
decision and the arbitrators need not give reasons for their decisions, and
even ignore any proposition advanced by the parties. The court in filing an
award wherein the arbitrators have failed to give a decision on any matter, the
subject of dispute cannot be deemed to have exercised a jurisdiction not vested
in it by law or to have failed to exercise a jurisdiction vested in it by law.
An arbitrator is not bound by the technical
rules of procedure which the court must follow, nor need he record separate
findings on the various points on which the parties are at issue or write a
reasoned judicial decision. All that he is required to do is to give an
intelligible decision which determines the rights of the parties in relation to
the subject-matter of the reference. While it is not necessary for an
arbitrator to give reasons for his own conclusions or to give separate finding
on each and every issue involved in the dispute, every party that appoints an arbitrator
has right to expect an intelligible decision which determines the rights of the
parties in the various important points which are at issue. Mere omission to
give reasons does not vitiate the award. It is not open to the court to
speculate where no reasons have been given by the arbitrator as to what
impelled him to arrive at a conclusion and to determine whether the conclusion
was right or not." (emphasis supplied) 378
18. A few rulings of this Court may now be
seen. In Bungo Steel Furniture (P) Ltd. v. Union of India3 this Court observed
thus:
"It is now a well-settled principle that
if an arbitrator,in deciding a dispute before him, does not record his reasons
and does not indicate the principles of law on which he has proceeded, the
award is not on that account vitiated. It is only when the arbitrator proceeds
to give his reasons or to lay down principles on which he has arrived at his
decisions that the Court is competent to examine whether he has proceeded
contrary to law and is entitled to interfere if such error in law is apparent
on the face of the award itself." (emphasis supplied)
19. Again, in Firm Madanlal Roshanlal Mahajan
v. Hukumchand Mills Ltd.4 it is stated:
"In the present case, the arbitrator
gave no reason for the award. We do not find in the award any legal proposition
which is the basis of the award, far less a legal proposition which is
erroneous. It is not possible to say from the award that the arbitrator was
under a misconception of law. The contention that there are errors of law on
the face of the award is rejected." (emphasis supplied)
20. A reference may be made to the decision
of Indian Oil Corpn. 1 it is held as under:
"In India, there has been a trend that
reasons should be stated in the award. The reasons that are set out must be
reasons which will not only be intelligible but also deal with the substantial
points that have been raised.
When the arbitration clause required the
arbitrator to give a reasoned award, the sufficiency of the reasons depend upon
the facts of the particular case. He is not bound to give detailed reasons.
The Court does not sit in appeal over the
award and review the reasons. The Court can set aside the award only if it is
apparent from the award that there is no evidence to support the conclusions or
if the award is based upon any legal proposition which is erroneous.
The reasons that are set out must be reasons
which will not only be intelligible but also deal with the substantial points
that have been raised. When the arbitration clause required the Arbitrator to
give a reasoned award and the Arbitrator does give his reasons in the award,
the sufficiency of the reasons depend upon the facts of the particular case.
He is not bound to give detailed reasons. The
Court does not sit in appeal over the award and review the reasons. The Court
can set aside the award only if it is apparent from the award that there is no
evidence to support the conclusions or if the award is based upon any legal
proposition which is erroneous." (emphasis supplied)
21. In Raipur Development Authority v.
Chokhamal ContractorS5 a five Judge Bench of this Court discussed the entire
law on this aspect elaborately.
3 AIR 1967 SC 378: (1967) 1 SCR 633 4 AIR
1967 SC 1030: (1967) 1 SCR 105 5 (1989) 2 SCC 721 : AIR 1990 SC 1426 379
Therefore, it is enough that we refer to this ruling. It is stated in following
paragraphs as under: (SCC pp. 725-75 1) "3. A brief history of the English
Law of Arbitration, is given in the learned treatise The Law and Practice of
Commercial Arbitration in England by Sir Michael, J .
Mustill and Stewart C. Boyd. For centuries
commercial men preferred to use arbitration rather than the courts to resolve
their business disputes on account of the inherent advantages in the settlement
of disputes by arbitration. They preferred this alternative method of
settlement of disputes to the ordinary method of settlement through courts
because arbitration proceedings were found to be cheap and quick. It was no
doubt true that the courts repeatedly expressed doubts as to the wisdom of this
preference as reflected by the current opinion that arbitration was an
ineffective procedure, not that it was undesirable in itself. The commercial
community, has been however, insisting on the right to arbitration and has always
exhibited an interest in seeing that the system is made to work as well as
possible. This led to repeated statutory intervention. Accordingly laws were
passed from time to time to make the arbitration proceedings effective. The
English Arbitration Act of 1950 and the English Arbitration Act, 1979 are the
two major pieces of legislation which now control the arbitration proceedings
in England. The legal requirements of an award under English Law are succinctly
given in the 'Hand Book of Arbitration Practice' by Ronald Bernstein (1 987).
English Law does not impose any legal requirement as to the form of valid award
but if the arbitration agreement contains any requirement to the form of the
award the award should meet those requirements. The award must be certain. It
could be either interim or final. An award without reasons is valid.
'The absence of reasons does not invalidate
an award. In many arbitrations the parties want a speedy decision from a
tribunal whose standing and integrity they respect, and they are content to
have an answer Yes or No; or a figure of X. Such an award is wholly effective;
indeed, in that it cannot be appealed as being wrong in law it may be said to
be more effective than a reasoned award.'
4. Section 1 of the English Arbitration Act,
1979, however, provides that if it appears to the High Court that an award does
not or does not sufficiently set out the reasons for the award in sufficient
detail to enable the court to consider any question of law arising out of it,
the court has power to order the arbitrator or umpire to give reasons or
further reasons.
5. In the United States of America as a
general rule an arbitration award must contain the actual decision which
results from an arbitrator's consideration of the matter submitted to them but
the arbitrator need not write opinion with any specificity as a court of law
does unless otherwise provided by a statute or by the submission itself.
Arbitrators are not required to state in the
award each matter considered or to set out 380 the evidence or to record
findings of facts or conclusions of law. They need not give reasons for their
award and conclusions or the grounds which form the basis for the arbitration
determination, describe the process by which they arrived at their decision or
the rationale of the award.
Although such matters are not required, the
award is not necessarily invalidated because it sets out the reasons or the
specific findings, matters, or conclusions on which it is based and faulty
reasoning if disclosed does not by itself vitiate the award. (See Corpus Juris
Secundum, Vol. VI, pp. 324-325)
6. In Australia too an arbitrator, unless
required under Section 19 of the Australian Arbitration Act, 1902 to state in a
special case a question of law is under no obligation in law to give his
reasons for his decision (vide University of New South Wales v. Max Cooper
& Sons P Ltd.6).
21. Thus it is seen that the Law Commission
did not recommend the inclusion of a provision in the Act requiring the
arbitrator or umpire to give reasons for the award.
22. It is not disputed that in India it had
been firmly established till the year 1976 that it was not obligatory on the
part of the arbitrator or the umpire to give reasons in support of the award
when neither in the arbitration agreement nor in the deed of submission it was
required that reasons had to be given for the award (vide Firm Madanlal
Roshanlal Mahajan v. Hukumchand Mills Ltd.4, Bungo Steel Furniture (P) Ltd. v.
Union of India3 and N. Chellappan v. Secy., Kerala State Electricity Board7. It
is, however, urged by Shri Fali S. Nariman who argued in support of the
contention that in the absence of the reasons for the award, the award is
either liable to be remitted or set aside, that subsequent to 1976 there has been
a qualitative change in the law of arbitration and that it has now become
necessary to insist upon the arbitrator or the umpire to give reasons in
support of the award passed by them unless the parties to the dispute have
agreed that no reasons need be given by the arbitrator or the umpire for his
decision.
Two main submissions are made in support of
the above contention. The first submission is that an arbitrator or an umpire
discharges a judicial function while functioning as an arbitrator or an umpire
under the Act, and, therefore, is under an obligation to observe rules of
natural justice while discharging his duties, as observed by this Court in
Payyavula Vengamma v. Payyavula Kesanna8. This Cour t relied in that decision
upon the observations made by Lord Langdale, M.R. in Harvey v. Shelton9 at page
462 which read thus:
6 35 Aus LR 219 7 (1975) 1 SCC 289 : AIR 1975
SC 230 8 AIR 1953 SC 21 : (1953) 1 MLJ 97 9 (1844) 7 Beav 455 : 49 ER 1141 381
`It is so ordinary a principle in the administration of justice, that no party
to a cause can be allowed to use any means whatsoever to influence the mind of
the Judge, which means are not known to and capable of being met and resisted
by the other party, that it is impossible, for a moment, not to see, that this
was an extremely indiscreet mode of proceeding, to say the very least of it. It
is contrary to every principle to allow of such a thing, and I wholly deny the
difference which is alleged to exist between mercantile arbitrations and legal
arbitrations. The first principle of justice must be equally applied in every
case. Except in the few cases where exceptions are unavoidable, both sides must
be heard, and each in the presence of the other. In every case in which matters
are litigated, you must attend to the representations made on both sides, and
you must not, in the administration of justice, in whatever form, whether in
the regularly constituted courts or in arbitrations, whether before lawyers or
merchants, permit one side to use means of influencing the conduct and the
decisions of the Judge, which means are not known to the other side.' (emphasis
supplied) 23. This Court also relied on the decision in Haigh v. Haigh10, which
required an arbitrator to act fairly in the course of its duties. The two well
recognised principles of natural justice are (i) that a Judge or an arbitrator
who is entrusted with the duty to decide a dispute should be disinterested and
unbiased (nemo judex in causa sua); and (ii) that the parties to dispute should
be given adequate notice and opportunity to be heard by the authority (audi
alteram partem) (see Administrative Law by H.WR. Wade, Part V and Judicial
Review of Administrative Action by S.A. de Smith, Third Edition, Chapter 4).
Giving reasons in support of a decision was not considered to be a rule of
natural justice either under the law of arbitration or under administrative
law.
33. The people in India as in other parts of
the world such as England, U.S.A. and Australia have become accustomed to the
system of settlement of disputes by private arbitration and have accepted
awards made against them as binding even though no reasons have been given in
support of the awards for a long time. They have attached more importance to
the element of finality of the awards than their legality. Of course when
reasons are given in support of the awards and those reasons disclose any error
apparent on the face of the record people have not refrained from questioning
such awards before the courts. It is not as if that people are without any
remedy at all in cases where they find that it is in their interest to require
the arbitrator to give reasons for the award. In cases where reasons are
required, it is open to the parties to the dispute to introduce a term either
in the arbitration agreement or in the deed of submission requiring the
arbitrators to give reasons in support of 10 (1861) 31 LJ Ch 420: 3 De GF&J
157 382 the awards. When the parties to the dispute insist upon reasons being
given, the arbitrator is, as already observed earlier, under an obligation to
give reasons. But there may be many arbitrations in which parties to the
dispute may not relish the disclosure of the reasons for the awards. In the
circumstances and particularly having regard to the various reasons given by the
Indian Law Commission for not recommending to the Government to introduce an
amendment in the Act requiring the arbitrators to give reasons for their awards
we feel that it may not be appropriate to take the view that all awards which
do not contain reasons should either be remitted or set aside. A decision on
the question argued before us involves a question of legislative policy which
should be left to the decision of Parliament. It is a well-known rule of
construction that if a certain interpretation has been uniformly put upon the
meaning of a statute and transactions such as dealings in property and making
of contracts have taken place on the basis of that interpretation, the Court
will not put a different interpretation upon it which will materially affect
those transactions. We may refer here to the decision of the Court of Appeal
rendered by Lord Evershed, M.R. in Brownsea Haven Properties v. Poole Corpn. in
which it is observed thus:
`... there is well established authority for
the view that a decision of long standing on the basis of which many persons
will in the course of time have arranged their affairs should not lightly be
disturbed by a superior court not strictly bound itself by the decision.'"
(emphasis supplied) In the present case, the arbitrator was directed to give a
reasoned award by an order dated 20-11-1981 of the High Court. That he is bound
to do.
22. But the question is, where the arbitrator
had given sufficient reasons is it incumbent upon the Appellate Tribunal also
to give reasons more so, while confirming the same? When an award is subject to
an appeal, what is the position?
23. In Commercial Arbitration by Mustill
& Boyd, (2nd Edn.) it is stated at pp. 364-365 as under:
"When the appeal tribunal has made an
award, whether confirming, reversing or varying the decision of the original
arbitrators, it is the award of the appeal tribunal which defines the rights of
the parties.
The appellate award, once made, completely
replaces the original award of the arbitrators."
24. In the case on hand, the Appellate
Tribunal has confirmed the award in the manner set out as above. When the
Tribunal upheld the award dated 19-7-1983 of the sole arbitrator, it stands to
reason that it has come to be confirmed for the same reasons as prevailed with
the sole Arbitrator. To insist upon such reasons to be repeated by the
appellate authority will only be superfluous. An arbitration procedure should
be quick. Such proceedings 11 1958 Ch 574: (1958) 1 All ER 205 : (1958) 2 WLR
137 383 cannot be equated to court proceedings nor do they partake the
character of trial. To insist upon the Appellate Tribunal to furnish reasons
for its confirmatory order is not warranted.
25. From the above extract it is manifest
that:
1. Non-reasoned award is not violative of
natural justice.
2. Equally, such an award would not put a
party under a disadvantage, in that, he is unable to question the same by
discerning the error apparent on the face of the record.
The plea of the respondents for which
reliance is placed on the above-quoted passage from Mustill & Boyd (2nd
Edn.) is when an arbitrator's award is subject to an appeal the final award is
the appellate award and the original award is replaced. Therefore, it is the
appellate award that is made the rule of the court. Hence, reasons must be
given by the appellate authority. This contention cannot be accepted in view of
what we have held above.
26. Of course, if the Appellate Tribunal
reverses the arbitrator's award, it may be required to give reasons but that is
not the position here.
27. The essence of arbitration is to avoid
cumbersomeness of the court procedure to have a fair settlement. It is true
that the award of the Appellate Tribunal is the final award and it is that
which is to be made the rule of court.
The court, by looking at the original award
as confirmed by the order of the Appellate Tribunal, can always discern the
reasons which in this case are fully contained in the award dated 19-7-1983 of
the sole Arbitrator.
28. In this view, we find great difficulty in
upholding the impugned judgment. Accordingly, it is set aside. The civil appeal
stands allowed. However, there shall be no order as to costs.
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