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TMI Blog1966 (9) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... ember 2, 1959. The arbitrator found that the contract no. A. T. 1000 was for the supply of 4700 bins at Rs. 107/2/6 per bin inclusive of the price of steel. In respect of the supply of bins under this contract the Government agreed to pay an extra Rs. 4/12/6 per bin for extra partition. The contract no. A. T. 1048 was for the supply of 2000 steel bins at Rs. 132/8/- per bin inclusive of the price of steel. The arbitrator found that on February 20, 1946 the parties agreed to a modification of the contracts and the agreed modification was that the supply under contract no A. T. 1000 would be reduced to 1805 bins and the supply under contract no. A. T. 1048 would be reduced to 367 bins, so that the total supply under the two contracts would be 4700 bins. The arbitrator further found that only 1805 bins had been manufactured under contract no. 1000 and 367 bins had been manufactured under contract no. 1048 and that in all 2172 bins were manufactured by the appellant and were accepted by the Government and the appellant was en- titled to the price of 2172 bins so supplied inclusive of the price of steel amounting to Rs. 2,42,044/-. The arbitrator held that the Government wrongfully canc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parts. By way of compensation for the wrongful termination of the contract by Government as aforesaid I give the company the amount representing the value of the steel used up in making the said component parts which had not been assembled into completed bins. I therefore do not allow the Government credit for the value of the steel used up in manufacturing those component parts." The Government made an application to the Calcutta High Court for setting aside the award of Sir R. C. Mitter on the ground that the arbitrator had failed to apply his mind and there was a mistake of law apparent on the face of the award in the estimation of damages for wrongful termination of the contract. Mallick, J. made a minor modification in the award with regard to a sum of Rs. 10,385/- and on July 27, 1960 the learned Judge pronounced his judgment in terms of the modified award. The Government look the matter in appeal before the Division Bench of the High Court, appeals nos. 13 and 131 of 1961. These appeals were allowed by Bachawat and Laik, JJ. who set a-side the award of the arbitrator in respect of the two contracts. On behalf of the appellant Mr. A. K. Sen put forward the argument that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw appearing on the face of it, the court is not entitled to draw any inference as to the finding by the arbitrator of facts supporting the award, but must take it at its face value. In my opinion,, the principle laid down by the Judicial Committee in Champsey Bhara and Company v. Jivaraj Balloo Spinning and Weaving Company Ltd.(50 I.A. 324.) and by Tucker, J. in James -Clark (Brush Materials), Ltd. v. Carters (Merchants), Ltd.([1944] 1. K.B. 566) has no application in the present case, for the arbitrator in the present case has expressly stated the reasons for the estimate of damages -to which the appellant was entitled for the breach of the contract. The claim of the appellant is stated by the arbitrator in the award -as follows : "the Company claims the price of 2528 bins by way of damages for the wrongful cancellation of the contract." Section 73 of the Indian Contract Act provides for the measure of compensation for loss or damage caused by breach of the contract. Section 73 states : "73. When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ference between the contract price and the market price of such goods at the time when the contract is broken. If there is no available market at the place of delivery, the market price of the nearest place or the price prevailing in the controlling market may be taken into consideration. It was argued for the appellant that this rule may not apply because the bins were not completely fabricated, but, in that case the measure of damages would be the difference between the contract price on the one hand, and the cost of labour and material required for the manufacture of the component parts of the 2528 unfinished bins on the other. In this case, the arbitrator found that the appellant produced no evidence with regard to the manufacturing cost of the component parts of the 2528 unfinished bins. In other words, the appellant failed to prove the resultant damage on account of breach of contract, but if in spite of this finding the arbitrator decided to award damages to the appellant the highest amount which he could award for non- acceptance would be Rs. 1,03,066/- which is the difference between the contract price at Rs. 107/2/6 per bin including the price for extra partition amountin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat after manufacturing the finished bins and component parts and unfinished bins, no surplus steel was left. The High Court, in setting aside the award, was of the view, that in this part dealing with compensation payable by the Government to the appellant, the learned Umpire had acted contrary to the principles recognised in law for assessing compensation. In our view, considering the principles which apply to the exercise of the power of a Court to set aside an award of an arbitrator, this order by the High Court was not justified. 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. In the present case, the Umpire held that the cancellation of the contract by the Government for the balance of the bins ..... X X X X Extracts X X X X X X X X Extracts X X X X
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