SUDARSAN TRADING CO. v. GOVT. OF KERALA & ANR

Citation: [1989] 1 S.C.R. 665

Court: Supreme Court of India

Bench: SABYASACHI MUKHERJI, S. RANGANATHAN

Case summary

These appeals arise from the, judgment and order of the High Court of Kerala, dated 5th May, 1~8. was held that there was no jurisdiction to investigate into the merits of the case and to examine the documentary and oral evidence for the purpose of finding out whether or not...

Judgment text

The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. Leave granted. .. These appeals arise from the, judgment and order of the High Court of Kerala, dated 5th May, 1~8. The High Court by the impugned judgment and order in M. F. A; Nos. 72, 346 and 380 of 1983 allowed the appeals of the respondent-the Govt. of Kerala, against the judgment and decree dated 25th September, 1982 passed by the principal Sub-Judge, Trivandrum in· S. P. (Arbitration) Cases Nos. 184, 185 and 186 of 1982 by which the learned Sub-Judge had upheld the awards by the arbitrator on the ground that it was not open to the court to sit in appeal over the decision of the arbitrator and the court 0 could not adjudicate upon the justification for the conclusions arrived at by the arbitrator unless such awards were the result of corruption, fraud or when there were errors apparent on the face of the award.

The learned Sub-Judge further held that there was no error apparent on the face of the record and there was no allegation of corruption or fraud. The High Court reversed the said decision. The questions involved in these appeals are: how should the court examine an award to find out whether it was a speaking award or not; and if it be a non-speaking award, how and to what extent the court could go to determine whether there was any error apparent on the face of the award to be liable for interference by the court. The other question that arises in this case is, to what extent can the court examine the contract in question though not incorporated or referred to in the award. It may be noted that on 23rd December, 1976 the agreement No. 25/SESPC/1976-77 was entered into between the appellant and the respondent herein for construction of masonary dam across Siruvani river. Certain disputes arose between the appellant and the respondent.

These disputes were referred to the arbitrator named in the agreement. The arbitrator passed the awards dated 12th, 16th and 23rd April, 1982, which were filed before the Sub-Judge and the appellant prayed for passing of decree in terms of the awards. The respondents filed petitions seeking to set aside the awards. The learned Judge refused to set aside the awards and passed decrees in terms of the awards. The Trial Court held that there was no merit in the contention regarding limitation; and that the claims under the award were not barred by limitation. It was further held by the learned Trial Judge that the arbitrator had not incorporated in the award any material for his conclusion nor had he incorporated the terms of contract between the parties. Under such circumstances the award could not be set aside, especially when there was no error apparent on the face and that ..

there was nothing to show that the arbitrator had mis-conducted the proceedings or that the award had been improperly procured. So the objection to the passing of the award was turned down. Aggrieved thereby, the respondent filed appeals before the High Court. The High Court by the impugned judgment dated 5. 5. 1988 set aside the awards and the decree of the Trial Court on the ground that there were errors of law apparent on the face of the awards. It is contended that the High Court in the circumstances of this case and in view of the settled principles of law, exceeded its jurisdiction by acting in the manner it purported to do. It is, therefore, necessary to refer to the award to determine how has the arbitrator proceeded and what ~ ~ actually . ;1e arbitrator has decided.

The arbitrator has noted in the first award that the dispute related to the work of 'Siruvani drinking Water Supply Project-Construction of an Intak Tower and allied structures'; and observed that an estimate amounting to Rs. 17. 45 lakhs was sanctioned for the work and it was entrusted on contract to the SUDARSAN TRADING CO. v. GOVT. OF KERALA [MUKHARJI, J. ] 671 claimant-appellant herein, on tenders. The value of the work arranged on contract was Rs. 14. 45 lakhs as per the departmental estimate which the appellant undertook, as understood by the arbitrator, to carr;1 out works at a total amount of Rs. 19. 15 lakhs as per their tender. The contract was embodied in agreement No. 18/SC/SPS/1977-78 dated 17. 3. 78 between the claimants on ! he one side and the respon- . ~. )! '. dent No. 2 on behalf of the State of Kera! ~ cited as respondent No. 1 on the other, in these proceedings.

The work had been taken up as part of the scheme for augmenting the drinking water supply to Coimbatore city from the yield of the Siruvani river and due to acute scarily of water in the city, work was taken up on an urgent footing and it was understood by both the parties that time was of utmost importance in the execution of work. The site for the work was handed over to the claimants on 17th December, 1977 and the work had to be completed ~ ).. by 15. 6. 1978. Accordingly to the arbitrator, however, it was clear that the work could not be completed within the stipulated period due to various reasons for which each party blamed the other. It was noted in the award that according to the respondents, after carrying out the work to the tune of Rs. 3. 46 lakhs (approx. ) against the accepted probably estimate of contract of Rs. 19.

15 lakhs, the appellant refused to proceed with the balance work in spite of specific notices to them and so the respondents were constrained to terminate the contract at the ··j. risk and cost of the appellant. Several efforts were made to re-arrange the balance works and finally as per the situation obtaining then these works were to be expected to be completed at an excess cost of Rs. O. 97 lakhs over the amount that would have been payable to the appellant as per the terms of the original contract. The arbitrator, thereafter, noted that the appellant had raised in respect of the dispute which is ·. \ the subject-matter in the first award, specific claims for an amount of \fRs. 5. 97 lakhs in addition to release of their retention sum of Rs. 32, 139 ...... _,, and the security deposit of Rs. 38,400 payment of final bill for the work done including the above claims, interest on amounts awarded and cost of the arbitration proceedings.

It seems from the award of the arbitrator that the contention of the respondents had been that as per the terms of the contract, they were entitled to realise the excess cost on re-arrangement of the -ic '* balance works estimated at Rs. 0. 87 lakhs from the claimant and so they proposed to appropriate the retention sum of Rs. 32, 139 lying in their hands, the Security Deposit of Rs. 38,400 and the sums due to the claimant by way of final bill on other works as well. It was noted by the arbitrator that there was a prayer by the appellant for inspection of the site and the same was inspected on 9. 12. 80. It was conterided on behalf of the claimant that the site of work was situated on the Western Ghats far away from human habitation in dense forest infected with wild animals at an elevation of about 600 M and subject to heavy precipitation of upto 400 ems. annually and that access to the site was only from Coimbatore side in Tamil Nadu.

Several obstacles for access to the site were highlighted before the arbitrator. Another important point on which considerable stress was laid was the compensation for losses occasioned to them on account of the unsatisfactory law and order situation coupled with labour unrest, stoppages and threats and even physical violence on the agents of the appellant. It was further highlighted that the termination of the contract at their risk despite the yfrustration and impossibility of performance was :. Clearly illegal and unjustified. In the premises compensation was demanded for loss of equipments. The arbitrator noted that the main point of defence of the respondent was that the time for the completion of the work forming 1 • part of the time-bound programme was six months from the date of handing over the site. As the site was handed over on 16. 12. 77, the date of completion should have been 15. 6. 1978.

Of the difficulties arising out of the location of the site of the W\Jrk, it was emphasised by the respondent that the conditions under which the contract had to,be performed were within the knowledge of the parties, and there could not be any ground for claiming any addition than those contemplated in the contract. It was definitely further stated that the additional haulage was due to the alternate route via Thachampara which was opened on 15. 2. 1977 and that any claim on this account subsequent to the above date was unjustified. Furthermore, that materials like sand, cement and steel were all issued in time and there could hardly be any justification regarding delays on these account. Regarding interruptions in power supply the respondents' case was that . such interruptions (. were not unexpected at a site to which the power lines passed through-\-.

virgin reserve area, and at any rate the claimants were not assured by , the respondents of uninterrupted power and there was hardly any items of machinery belonging to. the appellant which had remained idle for want of power. It was further stated that the various extra items of works including the work on the quarries had been adequately paid for by them and no further payments were due to the appellant; that there was no ~ ;. serious deterioration of the law and order situation; and that the losses were due to the conduct of the claimant and the materials left over by the claimant at the end of the second working seasons that had been taken over by them, duly accounted for and the credit thereof given in the final bill. It was further reiterated by the respondent that the work SUDARSAN TRADING CO. v. GOVT. OF KERALA IMUKHARJI, J.

] 673 was not completed within the period agreed and, therefore, the respondent issued notice to resume the work and on the failure of the claimant to re-start the work, there was no other alternative except to terminate the contract as the work itself was part of a time-bound programme; and they had to make alternate arrangements and that would have cost Rs. 0. 87 lakhs additionally which was sought to be recovered from the appellant appropriating the retention money and security deposit. It was, therefore, claimed that the claims of the appellant should be rejected. Considering all these contentions and noting the several respective claims, the arbitrator awarded as follows: "Claims Nos. (1), (2) (a & b) and (3) These claims are declined. Claim No. 4 The Respondents shall pay the Claimants a sum of Rupees Ninety Six Thousand only (Rs. 96,000) in satisfaction of this claim including the various Sub Claims under the same. Claims No.

5(a), (b) & (c)-The Respondents shall pay an amount of Rs. five thousand only (Rs. 5,000) to the Claimants in satisfaction of this claim. Claims Nos. (6), (7), (8) and (9)-These four Claims are declined. Claim No. (10)-The retention moneys recovered from the Claimants in regard to this work shall be refunded to them by the Respondents. Claim No. 11-The f. oo. for the workShall be paid to Claimant for the sums awarded under Claims (4) and (5) Supra resulting in a net payment of Rupees one Lakh and One thousand only (Rs. 1,01,000). €! aim No. 12-The Respondents shall refund the security deposit held by the Claimants for this work subject to the rules regarding tax clearance. Claim No. 13-The Claim for interest. is declined. Ciaim No. 14-The parties shall suffer their respective costs in these proceedings.

" Regarding the counter-claims it was held that the order of the 2nd respondent terminating tne contract in favour of the appellant was valid and as such, the respondents were free to arrange for the balance work in the manner they thought fit. The counter claim for costs of the respondents was also held by the arbitrator to be covered by other claims. The award was passed on 12th April, 1982. There was another award dated 16th April, 1982 which was with regard to the dispute that arose for controlling the work of "Siruvani Drinking Water Supply Project-Constructing a Masonry dam across Siruvani·River Block Nos. I, II and III from Ch. 13 to 60 up to level + . 883. 00 metres and Block No. III from ch. 60 to 82 upto level + 870 metres". In respect of the aforesaid, an estimate amounting to Rs. 71. 5 lakhs had been sanctioned for the work and it was entrusted on contract to the appellant. It appears that the value of the work airanged on contract was Rs.

67 ,72,760 as per departmental estimate which the appellant undertook to carry out at a total amount of Rs. 76,55,300 as per their tender. The contract was embodied in the aforesaid agreement of 23rd December, 1976. The arbitrator recited the original claim and noted that the work could not be completed during the scheduled time and the respective contentions of the parties were, more or less, identical with the one made in the previous case. There was inspection of documents and the parties were heard in person, it was noted. Aft1>r noting the respective contentions the arbitrator awarded as follows; "Claim No. (l)(A)-The Claim for additional payment on account of aslar work is declined. ( Claim No, (l)(B)-The Respondents shall pay the Claim- t''i--ants an additional amount of Rupees One Lakh only (Rs. l,00,000) in satisfaction of this claim over and above the amounts already paid by them in the various part bills. Claim No.

(l)(c)-This claim for compensation on account of loss in hire charges and shortage of rubble is declined. Claim No. 2-The Respondents shall pay the Claimants a sum of Rupees three lakhs and thirty six thousand only (Rs. 3,36,000) in satisfaction of this claim. Claim Nos. 3 & 4-These two claims are declined. SUDARSAN TRADING CO. v. GOVT. OF KERALA [MUKHARJI, l. J 675 ...... ,_ Claim No. 5---,The Respondents shall pay the Claimants an increase of forty (40) per cent in the agreed rates for agreed items and rates derived from the agreement for the extra items for all work paid for after CC2 and part, such increase being worked out on the cost of the work excluding the value of the materials supplied by the Respondents. ·. )' Claim No. 6-The Claimant shall be entitled to a payment of Rupees twenty five thousand only (Rs. 25,000) in satisfaction of this claim and the Respondent shall pay it accordingly. Claim No.

7(a)(b) & (c)-The Claimants shall be entitled to a consolidated payment of Rupees fifty thousand only (Rs. 50,000) from the Respondents in satisfaction of these claims and the same shall be paid accordingly in addition to the payments already made. The Claimants on receipt of such payment shall have no lien whatsoever on the sheds, goods of whatever description and materials lying at the site of the work and said to belong to them. Claims 8, 9, 10, 11 & 12-These five claims are declined. Claim No. 13-The retention amounts from the bills of the Claimants lying in the hands of the Respondents shall be released to them. Claim No. 14-An amount of Rupees two lakhs only (Rs. 2,00,000 shall be paid to the claimants in settlement of the final claims on the work in addition to the specific items referred to in th~ other claims as per this award. . :i-· Claim No.

15-The Security offered by the Claimants for this work ·shall be released to them sμbject to the rules regarding tax clearance, Claim No. 16-The claim for interest is declined. Claim No. 17-The parties shall suffer their respective costs in these proceedings. " Regarding the counter claims, it was reiterated by the arbitrator that the respondents were entitled to arrange for the balance work in any manner they deemed fit on the termination of the contract by them. But the appellant should not be responsible for any loss that might be sustained for this re-arrangement. The counter claim for costs of the respondents was also dealt with. There was a third award dated 23. 4. 1982 which was in respect of the sum due to Blocks Nos. 7, 8 & 11. In respect thereof an estimate of Rs. 69. 7 lakhs had been sanctioned for the work and it was entrusted to the appellant. The value of the work arranged on that contract was Rs. 63.

68 lakhs as per the departmental estimate which the claimants undertook to carry but at a total amount of Rs. 71. 96 lakhs as per their tender. After reiterating that time was of the essence of the contract, the difficulties that arose in carrying out the contract and the respective contentions, which were identical with those in respect of the first two . contracts were discussed. In respect of interruptions in power supply the case of the respondent was that such interruptions were not unexpected at a site through which the power lines passed through virgin reserve forest and tii~t the claimants had not been assured by the respondents of uninterrupted power and in any case there was hardly any item of machinery belonging to the claimant which could have reinained idle for want of power.

In respect of the medical facilities it was submitted by the reSpondents that according to the terms of the contract it was the primarylduty of the appellant to provide for medical assistance to their work force. After setting out the rival contentions the arbitrator awarded as follows: "Claim No. (l)(A)-The claim for additional payment on account of ashlar work is declined. Claim No. (l)(B): The respondents shall pay the claimants an additional amount of rupees seventy five thousand onl) (Rs. 75,000) in satisfaction of this claim over and above the amounts already paid by them in the various part bills. Claim No. (l)(C): The claim for compensation on account of loss of hire charges and shortage of rubble is declined. Claim No. 2: The respondents shall pay the claimants a sum of Rupees three lakhs and seventy five thousand only (Rs. 3,75,000) in satisfaction of this claim. Claim Nos. 3 & 4: These two claims are declined. Claim No.

5: The respondents shall pay the claimants an SUDARSAN TRADING CO. v. GOVT. OF KERALA (MUKHARJI, J. J 677 increase of Forty (40) per cent in the agreed rates for agreed items and rate derived from the agreement for extra items for all work paid for after CC 2 and part, such increase being worked out on the cost of the work excluding the value of materials supplied by the respondents. Claim No. 6: the claimants shall be entitled to a payment of rupees twenty five thousand only (Rs. 25,000) in satisfaction of this claim and the respondents shall pay it accordingly. Claim No. 7(a)(bj & (c): The claimants shall be entitled to a consolidated payment of rupees fifty thousand only (Rs. 50,000) from the respondents in satisfaction of these _'}.. claims and the same shall be paid accordingly in addition to ·' the payments already made.

The claimants on receipt _of such payment shall have no lien whatsoever on the sheds, goods of whatever description and materials lying at site of the work and said to belong to them. Claims Nos. 8, 9, 10, 11 & 12: These five claims are declined. Claim No. 13: The retention amounts from the bills of the claimant lying in the hands of the respondents shall be released to them. Claim No. 14: An amount of rupees fifty thou. sand only (Rs. 50,000) shall be paid to the claimants in settlement of the final claims on the work in addition to the specified items as per this award. Claim No. 15: The security offered by the claimants for the work shall be released to them subject to the rules regarding tax clearance. Claim No. 16: The claim for interest is declined. Claim No. 17: The parties shall suffer their respective costs in these proceedings.

" About the counter claims it was also stated that the claimants would not be responsible to carry out the balance work which the (" respondents might arrange in any manner they thought fit on termination of the contract, but it should not be at the risk of the claimants. Upon these awards, an application was made before the Court of the Principle Sub-Judge, Trivandrum, for passing decrees·in terms of the award. Objections were also filed. The learned Judge by his judgment and order dated 25th September, 1982 dealt with the objections. He rejected the contention that the claims were barred. He further held that it was not necessary for the arbitrator to give reasons for his award; and that there was no provision under the law which required that the arbitrator should furnish reasons for the award. It was submitted before him that the arbitrator ought to have given separate findings for the issues under claim No. 4 as the issues raised were entirely independent of each other.

It was submitted that under subclaim (a) in claim No. 4 the appellant had claimed loss on account of the pressure tactics adopted by the labourers. Under sub-claim (b) the appellant had claimed compensation for the ~xtra works done. In the statement of defence filed by the respondents it was more or less conceded that the claim for extra works would lie, and stated that the actuals should be accounted and paid along with the final bill. The learned judge noted that the arbitrator could only give a lump sum award with respect to various claims and that he need not quantify the sum awarded under each claim separately. It was contended before the \· learned Sub-Judge that in respect of claim No. 5, there was no evidence to support the claim. Under that claim the app~llailt had detailed the value of tools, plants and materials etc. that were left by him at the site.

In the defence statement itself the respondent admitted that some materials belon5ing to the appellant were taken possession of by them and the value thereof would be paid in the final bill. Tthherehfore, accordingdto the lea rnfed judge. ' it w~s nNot correFct tho sa! . ( ·. _ at t ere was no ev1 ence at a11 or a owmg c aim11 1 o. 5. urt er01t . ,. --... _.. was held that there was no jurisdiction to investigate into the merits of the case and to examine the documentary and oral evidence for the purpose of finding out whether or not the arbitrator had committed an error of law or fact. The learned judge reiterated that the arbitrator had not incorporated in the award any materials for his conclusion nor did he incorporate the terms of the contract between the parties.

Under such circumstances the award could not be set aside especially when there was no error apparent on the face of it; and there was nothing to show that the arbitrator had misconducted the proceedings or that the award had been improperly procured. So the objection was repelled. In the premises the judgment in terms of the award was passed. In respect of the three awards, three different judgments were SUDARSAN TRADING CO. v. GOVT. OF KERALA (MUKHARJI, J. J 679 ' delivered incorporating more or less the same reasons. Being aggrieved thereby the respondent preferred appeals before the High Court. The Division Bench of the High Court by the judgment under appeal in F. M. A. Nos. 72, 346 and 380 of 1983 disposed of the appeals. Being aggrieved thereby, the appellant is before this Court. In the judgment under appeal, the Division Bench of the High Court has set out the claims and noted the rival contentions and·referred to the ...

various clauses and the conditions of the contract, though the contract itself was made no part of the award. The Division Bench referred to the decision of the learned Sub-Judge. Before the Division Bench, the main contention which succeeded was that there were errors apparent :t-· on the face of award, and further that the arbitrator had misconducted · himself and travelled beyond the terms of the contract. On behalf of the appellant, however, it was contended that the award was a nonspeaking award and, hence, it was not open for the court to go into the correctness of the reasons of the award. The High Court referred to the several decisions of this Court and other relevant decisions ofihe Kerala High Court. In order, however, to appreciate . the contentions, it is necessary to refer in detail to the judgment under appeal. The .. ;/. : High Court referred to the various clauses of the contract which were produced before the High Court.

The submissions were made on behalf of the respondents that the claims allowed were beyond and contrary to the agreement between the parties. The High Court noted that the arbitrator had allowed claims Nos. l(b), 2, 5, 7(a), 7(b), 7(c), 13; 14 2 15 and had passed an award for payment of an amount . of Rs. 31. 15 lakhs to the claimant towards his claim under the several . l~eads mentioned therein. The High Court noted the judgment of the ·-y. reamed Sub-Judge. It was heldby the learned Sub·Judge that the court ·could set aside an award only when it was the result of corruption, fraud or there were errors apparent ~n the face of the award. According to the learned Sub-Judge there was no error-apparent on the face of the award and there was no allegation of fraud. Thereafter, the different points on which the learned Sub-Judge rested his decision, were noted by the High Court.

It was contended before the High Court on behalf of the respondents that there were errors apparent on :Jr the face of the award, and that the arbitrator had misconducted him· self and travelled beyond the terms of the contract. The first contention urged on behalf of the respondents, however, was that the award was a non-speaking award and, there- fore, it was not open to the court to go into the correctness or reason- ). ableness of the award. The High Court held that when the arbitrator was constituted the sole and final judge of all questions both of law and of facts, normally his decision should stand final and it was only when there was any error apparent on the face of the award either because a question of law arose on the face of the award or upon some paper accompanying or forming part of the award, it could be interfered ·1'. with.

Thereafter, the High Court in para 8 of its judgment observed that in the light of several decisions it could say that there were any errors apparent on the face of the award, and that the arbitrator had misconducted himself and had travelled beyond his power. The High. -~ Court referred to the decision of the Division Bench of the Kerala High Court in State of Kera/av. Poulose, [1987] 1KLT781. The High Court, thereafter, observed that it was not open to the arbitrator or ·the umpire to arrogate fo himself jurisdiction and answer a question -f not referred to him. In this connection, reference was made by the High Court to several decisions, namely, Attorney General for Manitoba v. Kelly and Ors. , [1922] 1 AC 268; Upper Ganges Valley Electricity Supply Co. Ltd. v. U. P. Electricity Board, [1973] 3 SCR 107; Mis Alopy Parshad & Sons, Ltd. v. The Union of India, [1951] 2 SCR 793 and Jivarajbhai Ujamshi Sheth & Ors. v. Chintamanrao Balaji &Ors. , [1964]5SCR480. Regarding claim No.

l(b) it was the contention of the respondent that the award was over and above the amounts already paid under various part bills. It was argued before the High Court that the Department had measured and paid for all quantities of earth work and ruble work and the same had been entered in the measurement. book and accepted by the contractor. Hence, the award of additional amount was unwarranted. It was also argued that as per clause 10 of ( Form No. 83 (Notice inviting tender) which formed part of the agree--t'T ment, every tenderer was expected to inspect the site of the proposed work and quarries, and satisfy himself about the quality and availability of materials. It was also notified in the same clause that the Govt. would not, after acceptance of the contract rate, pay any extra charges for lead or any other reason in case the contractor was found later on to have mis-judged the materials available.

It was also notified that the Department would not be liable for any claim raised later on the plea of non-access to the site. Ext. R2 was a copy of extract of Clause 10 of * Form No. 83. It was argued that the award of Rs. 75,000 under claim l(b) was beyond the powers of the arbitrator. The High Court held that the award on this asepct was beyond the provisions of the agreement, and therefore there were errors apparent on the face of the award. SUDARSAN TRADING CO. v. GOVT. OF KERALA [MUKHARJI, J. ] 681 -{ Similarly, in respect of the claim for Rs. 3,75,000 under claim No. 2, it was contended on behalf of the respondents that this was beyond the powers of the arbitrator and, as such, there were errors apparent on the face of the award. It was argued by him that clause No. 2 of the general specification and special conditioris of the contract clearly notified to the tenderers the site of the dam. It was also . ;zr contended by the Govt.

Pleader that the period during which the B: contractor had conveyed sand through Madukkarai, the claimant had been actually paid additional conveyance charges. Hence, after construing clause 10 of Form No. 83, namely, notice inviting tender, the . -. High Court held that it was necessary for the contractor to have inspected _the site before t_ender. Th. erefore, in awarding, the ~mount as the arbitrator did on this head, there was error apparent on 1ts face and such award was liable to be set aside. The High Court did so * accordingly. With regard to claim No. 5, it was contended that the claim was beyond the powers of the arbitrator and reference. was made to clause 6(6)III of the General Specification and Special Conditions which stated that the Department was not responsible for supply "' uninterrupted electric supply, so any damage on that basis was also unwarranted. The finding on this issue found in the award was set aside: i ;Jr Similarly, in connection with claim No.

6, there was a claim for Rs. 24,000 towards expenses for providing a permanent doctor. It was, E: held to be contrary to Clause 7 of (IV) of the contract dealing with camp facilities-medical aid etc. which, according to the high Court, indicated that the contractor himself was responsible for providing medical facilities to the contract labourers and that the respondents iwere not bound to pay any additional medical expenses. The claim on ·· Y ri:his construction and view of the contract, was held to be not sustainable. The arbitrator had awarded Rs. 50,000 by way of damages for sheds and other materials left by the contractor at the site under claim No. 7. It was held by the High Court that it was the duty of the contractor to remove the sheds and materials brought by him and-, therefore, the award allowing such claim was definitely ag,Unst the provision of the contract..

On this head,it was held that the award by the arbitrator was contrary to the provision of the agreement and as such bad. Regarding claim No. 14 for an· additional amount of Rs. 50;~! it was held that it was unsustainable and due to the misconduct of the arbitrator that it was awarded. It was further observed that it was beyond the power of the arbitrator as it was against the provisions of the contract. While dealing with that part of the award which exonerated the contractor from the risk after holding that the termination of the contract by the respondent was valid, it was held that the same was opposed to the provisions of the agreement. The direction to release the amount and release of security deposit without taking into account the liability to account for the loss on re-arrangement of work amounted to errors apparent on its face. In the aforesaid light, the High Court held that the award under claims Nos. l(b), 2, 5, 6 & 7 and also the award of an additional sum of Rs.

50,000 under claim No. 14 over and aboYe the claim allowed was against the terms of the contract and, therefore, liable to be set aside. Similarly, in M. F. A. No. 346/82, the High Court went into the details of the claims and on the construction of the contract, came to the conclusion that the termination of the contract was legal and that the exoneration of the contractor from the risk and losses was opposed to that finding. In the aforesaid light, the High Court set aside several claims as mentioned in the judgment on the award. On similar or, ). urt held that 0- the award was liable to be set aside because of an error apparent on the face of the award. An arbitration award might be set aside on the ground of an error on the face· of it when the reasons given for the decision,. eitherin the award" or in any document incmporated with it, are based upon a legal prnposition which. is erroneous_ But where a >.

, specific question is referred, the award is not liable to be set aside on the ground. of an. euor on the face of the award even if the answer to the question. involves an errnneous decision on a point of law.. But an award which ignores express terms of the contract, is bad.. Similarly, in ,. Jivarajbhai Ujamshi Sheth & Ors.. v.. Chintamanrao Balilji & Ors: (supra), this Court reiterated that an award by an arbitrator is conch1sive as a Judgment betweerr the· pru;ties and the court is entitled td set aside an award if the arbitrator has miscooducted himself in t~--'·-r----. proceeding m_when the award has. been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings have become__\nvalid nnder section 35 of the Arbitration Act or where an award has been improperly procured or is otherwise invalid under section 30 of the Act. An award may be set aside on the ground of error on the face of the award, but an.

award is not iflvalid merely because by a process of inference and argument it may be demonstrated that the arbirtrator has committed some mistake in arriving at his conclusion. The Court,. however, went into the question whether the arbitrator had included depreciation and appreciation of certain assets in the value of the goodwill which he was incompetent to include by virtue of the limits placed upon his authority by the deed of I SUDARSAN TRADING CO. v. GOVT. OF KERALA ! MUKHARJI, J. J 685 { -reference. The ~ authorities of England. In a decision of the House of Lords in F. R. Absalom, Ltd. v. Great Western (London) Garden Village Society, Ltd. , (1933] AC 592 it was held that the arbitrat,r had erred in his construction of clause 30 of the contract.

But as the judgment of Lord _,, Warrington at page 600 of the report, made it quite clear that the arbitrator had recited the terms of clause 32 of the contract in the award, and thereafter on the construction of that clause, the court _j decided that the arbitrator had misconstrued the effect thereof. That ~·y Vwas a case where dispute was not within the contract. In Heyman & Anr. v. Darwins, Ltd. , (1942] AC 356 the controversy was entirely different. Similarly, in Attorney General for Manitoba v. Kelly & Ors. , (supra), upon which the High Court in the judgment under appeal referred was again in a different context. There, in an action in Manitoba against building contractors to recover sums improperly paid to them under a contract, and for damages, a judgment by con- . , Jr.

sent was entered whereby it was provided, inter alia, that the plaintiff should recover, among other sums, "all loss to the plaintiff by reason of defective workmanship and materials", and that these should be set off against the sums recovered by the plaintiff the fair value of the work done and materials provided at fair contractor's prices. The judgment, however, provided further that the sums to be debited and credited were to be determined by two appraisers, and that any matter )-upon which they differed was to be referred to a named umpire whose decision thereon was to be final; and that the Manitoba Arbitration A:ct should not apply. The defendants moved to set aside or vary an award. It was held that under the words "all loss" there was jurisdiction to award to the plaintiff not only sums actually expended, but also . a sum estimated as being necessary to make good the defects, and that .

:\ • ·extrinsic evidence was not admissible to show that the sum allowed to the defendants as set-off had been reduced in respect of defectiv1~ work for which they had also been debited. Further, it was held that the award being within the jurisdiction conferred by the submission, and . ---. /. -: ther. e being no error apparent on its face, it could not be questioned l either on the facts oron the law. In the instant case, the High Court seems to have fallen into an ·-f ·error of deciding the question on interpretation of the contract. In the aforesaid view of the matter, we are of the opinion that the High Court was in error. It may be stated that if on a view taken of a contract, the decision of the arbitrator on certain amounts awarded, is a possible view though perhaps not the only correct view, the award cannot be examined by the court in the manner done by the High Court in the instant case. In light of the above, the High Court, in our opinion, had no .

E jurisdiction to examine the different items awarded clause by clause by the arbitrator and to hold that under the contract these were not sustainable in the facts found by the arbitrator. - These appeals are, therefore, allowed. The judgment and order of the High Court are set aside and the orders of the learned Sub- I Judge are restored. In the facts and the circumstances of the case,--;---y-- · however, the parties will bear their own costs. P. S. S. Appeals allowed.