TMI Blog1989 (2) TMI 401X X X X Extracts X X X X X X X X Extracts X X X X ..... Pujan Singh and Miss Niranjana For the Respondent: G. Vishwanath Iyer and K.R. Nambiar JUDGMENT: SABYASACHI MUKHARJI, J. Leave granted. These appeals arise from the judgment and order of the High Court of Kerala, dated 5th May, 1988. 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 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 SubJudge 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 sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 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 carry 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 the one side and the respondent No. 2 on behalf of the State of Kerala 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 scarcity 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 Decemb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsiderable 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 frustration 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 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 work, 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 v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 work shall 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). Claim 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. Claim 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 the 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 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the other claims as per this award. Claim No. 15--The Security offered by the Claimants for this 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." 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. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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)(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 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 thousand 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 Kerala v. Poulose, [1987] 1 KLT 781. The High Court, thereafter, observed that it was not open to the arbitrator or the umpire to arrogate tO himself jurisdiction and answer a question 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; M/s Alopy Parshad Sons, Ltd. v. The Union of India, [1951] 2 SCR 793 and Jivarajbhai Ujamshi Sheth Ors. v. Chint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 5, it was contended that the claim was beyond the powers of the arbitrator and reference was made to clause 6(6)111 of the General Specification and Special Conditions which stated that the Department was not responsible for supply of uninterrupted electric supply, so any damage on that basis was also unwarranted. The finding on this issue found in the award was set aside. Similarly, in connection with claim No. 6, there was a claim for Rs.24,000 towards expenses for providing a permanent doctor. It was 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 were not bound to pay any additional medical expenses. The claim on this 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, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diction in acting in the manner it did on these aforesaid aspects. The first question, therefore, that arises for consideration in this case is, whether the award in question was a speaking award or not. In our opinion, the award was not a speaking award. An award can also be set aside if the arbitrator had misconducted himself or the proceedings or had proceeded beyond his jurisdiction. These are separate and district grounds for challenging an award. Where there are errors apparent on the face of the award it can only be set aside if in the award there is any proposition of law which is apparent on the face of the award, namely, in the award itself or any document incorporated in the award. The Judicial Committee in Champsey Bhara Co. v. Jivraj Balloo Spinning Weaving Co, Ltd., L 1922 IA 324 has discussed this problem. It was held that an award of arbitration can be set aside on the ground of error of law apparent on the face of the award only when in the award or in a document incorporated with it, as for instance a note appended by the arbitrator stating the reasons for his decision, there is found some legal proposition which is the basis of the award and which is erroneou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e court to interfere with the award. Furthermore, in any event, reasonableness of the reasons given by the arbitrator, cannot be challenged. Appraisement of evidence by the arbitrator is never a matter which the court questions and considers. If the parties have selected their own forum, the deciding forum must be conceded the power of appraisement of the evidence. The arbitrator is the sole judge of the quality as well as the quantity of evidence and it will not be for the court to take upon itself the task of being a judge on the evidence before the arbitrator. See the observations of this Court in Municipal Corpn. of Delhi v. M/s Jagan Nath Ashok Kumar Anr., [1987] 4 SCC 497. The same principle has been stated in M/s. Alopi Parshad Sons, Ltd. v. The Union of India, (supra). There this Court held that 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, either in the award or in any document incorporated with it, are based upon a legal proposition which is erroneous. But where a specific question is referred, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d distinct grounds involved in many of the cases. One is the error apparent on the face of the award, and the other is that the arbitrator exceeded his jurisdiction. In the latter case, the courts can look into the arbitration agreement but in the former, it cannot, unless the agreement was incorporated or recited in the award. In Upper Ganges Valley Electricity Supply Co. Ltd. v. U.P. Electricity Board (supra), the respondent had taken over the appellant's undertakings, but as the parties were at variance on the true market value to be paid to the appellant, the matter was referred to arbitration. As the arbitrators were unable to agree on the question whether the appellant was entitled to compensation for the 'service lines' which were laid with the help of contributions made by consumers, they referred the question to the umpire. The umpire framed an issue and gave a finding that the appellant was not entitled to claim from the respondent the value of the position of the service lines which were laid at the cost of the consumers, for the sole reason that they were laid at the cost of the consumers. The appellant filed an application under section 30 of the Arbitration Act, 1940 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trator had acted contrary to the bargain between the parties. Whether a particular amount was liable to be paid or damages liable to be sustained, was a decision within the competency of the arbitrator in this case. By purporting to construe the contract the court could not take upon itself the burden of saying that this was contrary to the contract and, as such, beyond jurisdiction. It has to be determined that there is a distinction between disputes as to the jurisdiction of the arbitrator and the disputes as to in what way that jurisdiction should be exercised. There may be a conflict as to the power of the arbitrator to grant a particular remedy. See Commercial Arbitration by Sir N.J. Mustil and Stewart C. Boyd page 84. The High Court in the judgment under appeal referred to the decision of the Division Bench of the Kerala High Court in State of Kerala v. Poulose, (supra). Our attention was also drawn to the said decision by the counsel for the respondents that if an arbitrator or the umpire travels beyond his jurisdiction and arrogates jurisdiction that does not vest in him, that would be a ground to impeach the award. If an arbitrator, even in a non-speaking award decides c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 Act 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 defective work for which they had also been debited. Further, it was held that the award being within the jurisdiction conferred by the submission, and there being no error apparent on its face, it could not be questioned either on the facts or on the law. In the instant case, the High Court seems to hav ..... 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