PREMIER FABRICATORS, ALLAHABADversusHEAVY ENGINEERING CORPN. LTD., RANCHI

               PREMIER FABRICATORS, ALLAHABAD                                    A
                                      v.
           HEAVY ENGINEERING CORPN. LTD., RANCHI

                             MARCH 21, 1997

               (A.M. AHMADI CJI., M.M. PUNCH! AND                                B
                       K. RAMASWAMY, JJ.)

       Arbitration Act, 194(}-S.3(}-Non-speaking award of the Umpire passed
on nwits without deciding the preliminary question of arbitrability of the
claims-Held: Per majority,---lllegal---Umpire committed jurisdictional C
erro1~Without a separate order or statement on the preliminary issue of ar-
bitrability of the claims, it could not be discemed that umpire had decided
the preliminary issue-Remanded the award to the umpire to decide denovo
the arbitrability of the claims-Held, Per minority.~Award valid and
legal-From the facts and circumstances it must be presumed that umpire had D
considered and decided preliminary question of arbitrability of the
claims-Hence no error apparent on the face of the record.

      The appellant entered into a contract with the respondents for
execntion of certain works. Dispute arose between them during the coutse
of execution. Pursuant to clause 78 of the contract, disputes were referred      E
to two arbitrators. One of the disputes was whether claims referred to at
items 2-5 were referable to arbitrations iu terms of the contract. Both the
arbitrators held that the claims were referable to arbitration but they
could not come to an agreement on the merits of the claim. Therefore, they
appointed an umpire. The umpire made a non-speaking award directing
the respondent to pay a lumpsum amount of Rs. 80,000 besides interest.           F
On application made by the applicant the Civil Court made the award rule
of the Court.

      The respondent preferred an appeal in the High Court challenging
the award to be illegal interalia on the ground that the same was passed         G
by the Umpire on merits without deciding the preliminary question of
referabllity of the claims under items 2 to S. Both the judges of the Division
Bench concurrently agreed that the umpire must decide the preliminary
question of arbitrability before deciding the claims on merits.

      But difference of opinion arose as to whether the umpire bad decided       H
                                    161
    162                   SUPREME COURT REPORTS                  [1997] 3 S.C.R.

A the preliminary question of arbitrability of the claims before deciding them
    on merits. One of the judges held that umpire must be deemed to have
    decided the preliminary 11uestion in the affirmative and the award there-
    fore must be accepted as valid. The other judge differed starting that in
    the facts and circumstances of the case it was not possible to inferentially
    hold that the umpire must have decided the question of referability while
B   making the award. The matter was referred to a third judge, who con-
    curred with the latter view. As per the majority view, it was held that the
    umpire did not decide the preliminary issue of referability of items 2-5
    before deciding the claims un merits. Therefore, the award was set aside.

C        The appellant filed the present appeal against the judgment of the
    High Court.

          Allowing the appeal, this Court

          HELD : (Per K. Ramaswamy, J. for himself and Ahmadi, CJI.):
b
        1. The awarq is illegal as it was passed by the umpire on merits
  without deciding the preliminary question of arbitrability of the claims.
  The entire dispute including the arbitrability of the claims in items 2 to 5
  had been referred to the umpire. Before proceeding to adjudicate the
  claims on merits, the umpire was required to give his finding on the
E preliminary issue of arbitrability of the claims and reasons in support
  thereof. The umpire did not write a separate order nor indicated in the
  award .that he had applied his mind to the aspect that the claims were
  arbitrable. The award should have contained a statement that the claims
  were arbitrable and that he had given a consolidated award. In view of the
F admitted position that there was no statement or separate order in the
  non-speaking award regarding the arbitrability of the claims, it can not be
  construed by implication that the umpire had considered the same. The
  umpire is enjoined to consider a preliminary question of his jurisdiction
  as to arbitrability of claims in items 2 to 5. It being a jurisdictional issue,
G though the umpire can not conclusively clothe himself with his conclusion
  of arbitrability of the claims which is to be decided ultimately by the Civil
  Court as a condition to exercise his power to decide the claims on merits,
  the umpire is required to decide arbitrability of the claims and then to
  proceed to decide the claims on merit. (177-B-D; 167-H; 168-A-BJ

H         Raipur Development Authority v. Chokhmal Contractors, [1989) 2 SCC
      PREMIERFABRICATORS v. HEAVYENGG.CORPN.LTD.                      163

721; Champsey Bhara and Co. v. Sivraj Balloo Spinning and Weaving Co. A
Ltd., AIR (1923) PC 66; Hindustan Construction Co. Ltd. v. State of J & K.
[1992] 4 SCC 217; Tarapore and Co. v. Cochin Shipyard Ltd., [1984] 2 SCC
680; M/s. Sudarshan Trading Co. v. State of Kera/a, [1989] 2 SCC 38, U.P.
Rajkiya Ninnan Nigam Ltd. v. Indore Pvt. Ltd., [1996] 2 SCC 667; Union of
India v. G.S. Atwal and Co. (Asansole ), [1994] 3 SCC 568 and Gujarat Water B
Supply and Sewerage Board v. Unique Erectors, [1989] 1 SCC 532, referred
to.

      T.N. Electn'city Board v. Blidge Tunnel Constluctiom~ [1997] 4 SCC
121, relied on.
                                                                             c
     Anthony Walton; "Russel on A1bitration'~ (19th Edition) and R.S.
Bachwat: "law of Arbitration" (2nd Edn, 1987), Pages 154-155, referred to.

      1.2. Since the preliminary issue was not decided by the umpire, which
is a pre condition to proceed with adjudication of the claims or merits, he
committed misconduct in giving the award. Therefore, the matter will go D
back to the umpire for reconsideration of the same afresh. If for any
reason, the umpire is not available, the parties may choose a new umpire
and if the parties fail to do so, the Court may appoint a new umpire who
will decide the matter afresh, clearly expressing his views on the ar-
bitrability of claims 2 to 5 while deciding the matter. [177-F-H]           E

       Sudarshan Trading Co. v. Govt. of Kerala. [1989] 2 SCC 38; Union of
India v. G.S. Atwals Co. (Asansole), [1996] 3 SCC 568; Tarapore and Co.
v. State of M.P., [1994] 3 SCC 521 and T.N. Electlicity Board v. Bridge
Tunnel Constrnction, [1994] 4 SCC 121, relied on.
                                                                             F
     Per Minority by M.M. Punchhi, J.

      1. The award must be upheld as there is no error appeared on the
face of the record which would justify its vitiation. It is implied that the
umpire as a substitute of the arbitrators must be presumed to have known
that before he entered upon reference to decide the claims under item 2 to G
5 on merits, he would have to decide whether those items were arbitrable
but the same need not be in express terms. It can not be presumed that he
considered himself bound by the joint decision of the arbitrators regarding
the preliminary issue of referability of the claims, absolving him of the
duty from going into the question. It would thus in the circumstances be H
                                                                                  t
    164.                 SUPREME COURT REPORTS                  (1997] 3 S.C.R.

A seen that obligating the umpire to make a speaking award in so far as the
                                                                                      1
  question of referability in concerned, lest it vitiates his non-speaking
  award on merit, goes to the very root of the independence of arbitrator.
  This is impermissible in law and against the spirit of Arbitration Act, 1940.
  The award of the umpire, as is plain, is a nonspeaking award in entirety.
  He has preluded it with the recorded awareness that differences between
B the parties arose and the matter stood referred to arbitration in.pursuance
  of the contract. In doing so he is presumed to have read the terms of the
  contract, the terms of reference and scope of items 2 to 5 of the claims. He
  is also presumed to have examined whether those claims were referable to
  arbitration in terms of the contract. He is further presumed to have read
C the respective files of the two arbitrators and to have heard both parties
  at length screening all documents submitted, to come to the base finding
  that items 2-5 were referable. All the items were thus held to be arbitrable
  resulting in the award for a sum of Rs. 80,000/- in favour of the appellant.
  The award therefore, is valid and legal. [182-F -H; 183-A-D]
D           CIVIL APPELLATE JURISDICTION : Civil Appeal No 1852 of
    1981.

         From the Judgment and Order dated 19.12.79 of the Patna High
    Court in Appeal from original Order No. 240 of 1975.
E        Pramod Swarup, Praveen Swaroop and Mrs. Praveena Swaroop for
    the Appellant.

            Ranjit Kumar for the Respondent.

            The Judgment of the Court was delivered by
F
        K. RAMASWAMY, J. We have the advantage to read the proposed
  judgment by our esteemed brother Punchhi, J. Despite our deep and
  abiding personal respects, we express our regards for our inability to agree
  with the proposed judgment. Hence we are constrained to write this
G separate judgment.
           This appeal by special leave arises from the judgment and order
     dated December 19, 1979 made in A.0.0. No. 240of1975 by L.M. Sharma,
     J. (as he then was) agreeing with the dissenting opinion of one of the
     members of Division Bench of Patna High Court, viz., B. S. Sinha, J. The
H    Result was that the award of the umpire stood set aside.
     PREMIER FABRICATORS v. HEAVY ENGG. CORPN. LTD. (K RAMASWAMY, J.)   165

       The appellant had entered into an agreement with the respondent on A
May 2, 1971 for execution of certain works. During the course of their
execution, certain disputes had arisen between them. Clause 78 of the
contract provided resolution of the disputes by arbitration. In furtherance
thereof, the parties had referred the disputes in 1972 to two arbitrators.
One of the disputes referred to them "whether claims referred to at items B
2, 3, 4 and 5 of Annexure-A are or are not referable to arbitration in terms
of the contract". The total claim including ite~ 2 to 5 was for Rs.
2,55,600/-. The arbitrators held that the claim Nos. 2 to 5 were referable
under arbitration agreement but they could not come to an agreement on
the merits of the claims. Therefore, they had appointed an umpire by their C
letter dated November 2, 1973. The umpire made a non-speaking award
directing the respondent to pay a lump sum of Rs. 80,000/- besides interest.
On an application made by the appellant, the Civil Court made the award
rule of the court and the application under Section 33 of Arbitration Act,
1940 (for short, the "Act") to set aside the award was dismissed. The
reipondent preferred an appeal in the High Court.                            D

       When the matter came before the Division Bench consisting of B.P.
Jha and B.S. Sinha, JJ., both the learned Judges agreed that one of the
terms of the reference was that the arbitrators were required to decide as     E
to whether the claims referred to ~nder items 2 to 5 of Annexure-A are or
are not referable to arbitration in terms of the contract. They further held
that the finding by the arbitrators that the claims were arbitrable, was not
an interim award. The entire controversy including arbitrability of items 2
to 5 was at large and the umpire was to decide whether items 2 to 5 of
Annexure-A were arbitrable under contract. B. P. Jha, J. Held that when        F
the matter was referred to an umpire, the whole dispute which was referred
to the arbitrators by the parties stood referred to the umpire. If a part of
the dispute was decided by the arbitrators, the arbitrators could not refer
the other half of the dispute to the umpire. The learned Judge observed
that "In my opinion, the whole dispute is referred to the umpire for the       G
simple reason that the umpire acts in lieu of the arbitrators. The umpire is
entitled to give a consolidated award instead of giving the award on each
point. While setting aside an award the court can look at the award and
not on any other extraneous evidence on the record". Accordingly, the
learned Judge dismissed the appeal of the respondent. B.S. Sinha, J. held      H
    166                   SUPREME COURT REPORTS                  (1997) 3 S.C.R.

A if a dispute is capable of being split into different parts and the arbitrators
  agreed on one part and disagreed on the other part, "I can see no reason
  why the whole dispute must be referred to the umpire. An interim award
  can be made in terms of Section 27 of the Act. Of course, if the dispute is
  not capable of being split up and the arbitrators do not agree, the whole
B dispute will go to the umpire. In other words, as far as I can see, whether
  the whole dispute was referred to the umpire or not depends upon the facts
  and circumstances of each case for which no hard and fast rule can be laid
  down." He held that the whole dispute had been referred to the umpire.
  The arbitrators did not give an interim award to say that items 2 to 5 were
C arbitrable and then to further decide as to what amount was payable to the
  respondent. It was not necessary to express the decision in that behalf.
  "Therefore, the umpire had to consider firstly whether items 2 to 5 were
  arbitrable or not. There is no such statement in the award of the umpire.
  Therefore, to hold that items 2 to 5 were arbitrable would be speculative."
D Accordingly the learned Judge held that the judgment and decree of the
   Civil Court making the award as rule of court is invalid and illegal. The
   award was held to be illegal and on which could not be acted upon. When
   the matter was referred to L.M. Sharma, J. [as he then was], in the first
   instance, the learned Judge indicated that since the umpire could not
   clothe himself with jurisdiction to decide conclusively whether items 2 to 5
E were arbitrable or not, the question was whether the learned Judge could
   go into that question? Both the counsel had taken time and after consult-
   ation had stated before the learned judge that as the scope of reference
   was limited to the question whether the umpire had to decide the ar-
   bitrability of items 2 to 5, the learned Judge could not go into the question
F whether the claims could have validly been referred to the arbitrators or
   umpire and could conclusively decide the arbitrability thereof or whether
   they were within the scope of the agreement itself or within the scope of
   Section 36 of the Act. On the submission, the learned Judge had proceeded
   ort the basis that both the learned Judges constituting the Division Bench
G were agreed that it was for the umpire to conside.r and decide as the
   preliminary question of arbitrability of claims 2 to 5 under the contract.
   The inference that the umpire "chose to give an award allowing the claim
                                                                                     i
   partially" cannot be drawn. It was also held that unless it was possible to      _J
   draw only ?11~ inference from the impugned award, it was not permissible
H in law to arrive at a conclusion that on the basis of mere possibility of
    PREMIER FABRICATORS v. HEAVY ENGG. CORPN. LTD. [K RAMASWAMY, J.f   167

having arrived at the decision of preliminary question which was not stated   A
in the expressed terms in the award, to infer that he considered the
arbitrability of items 2 to 5. Therefore, the learned Judge concluded thus:
"I, therefore, hold that the respondent, the applicant in the court below,
has failed to show that the umpire had decided the preliminary question
in its favour before proceeding to consider the claims on merits. The award   B
must, therefore, be set aside. I accordingly agree with the conclusion
arrived at by Mr. Justice B.S. Sinha and regret to have taken a view
different from Mr. Justice B.P. Jha for whom I have great respect". The
learned Judge thus all-Owed the appeal and set aside the award.

       The question, therefore, is : whether the umpire must be deemed to C
have decided arbitrability of items 2 to 5 of Annexure-A while giving a
non-speaking consolidated award including the claim of item I? It is seen
that one of specific references to the arbitrators was whether items 2 to 5
of the claim of the appellant are arbitrable under the agreement. In view
of the finding recorded by all the learned Judges that there is no express D
finding recorded by the umpire on the arbitrability of the claims in items
2 to 5, the question emerges : whether the umpire must be deemed to have
decided arbitrability of items 2 to 5? It is seen that both the learned Judges
of the Division Bench came to a positive finding that the reference itself
is of the arbitrability of the claims in items 2 to 5 under the agreement. E
The arbitrators were required to decide the same as a further step to
decide them on merits. Though, the arbitrators concluded that the claims
2 to 5 were arbitrable, both the learned Judges held that it was not an
interim award. The third learned Judge also agreed with that conclusion.
The entire dispute including arbitrability of claims in items 2 to 5 had F
thereby been referred to the umpire. The reference clearly manifests the
intention of the parties, when they preferred their dispute for adjudication
by the arbitrators, that it was a condition precedent of the umpire to
proceed to decide the claims on merits to decide the arbitrability of claims
2 to 5. He did not write a separate order nor indicated in the award that G
he had applied his mind to that aspect that the claims are abritrable. The
award should have contained a statement that the claims were arbitrable
and that he had given a consolidated award. His finding on arbitrability is
not conclusive. It is for the court to ultimately decide the controversy. The
umpire is enjoined to consider a preliminary question of his jurisdiction as H
                                                                                     t1
                                                                                     I


    168                   SUPREME COURT REPORTS                   (1997] 3 S.C.R.

A   to arbitrability of claims in items 2 to 5 of Annexure-A. It being a jurisdic-
    tional issue, though the umpire cannot conclusively clothe himself with his
    conclusion of arbitrability of items 2 to 5 which decision is to be taken
    ultimately by the Civil Court as a condition to exercise his power to decide
    the claims on merits, he is required to decide arbitrability of the claims in
B   items 2 to 5 as preliminary issue and then to proceed to decide the claims
    on merits. The award cannot be split into two parts but should be one of
    integral whole, as was opined by the learned Judges constituting the
    Division Bench. In a way, L.M. Sharma, J. [as he then was] also agreed in
    that behalf.
c
          The sole question for consideration, therefore, is : whether the
    umpire having indicated the consolidated sum in his non-speaking award,
    could be deemed to have decided the preliminary issue of arbitrability of
    claims 2 to 5? We may, at the outset, state that the Constitution Bench in
D   Raipur Development Authority v. Chokhamal Contractors, [1989] 2 SCC 721,
    had held that unless the parties expressly agree, the arbitrator is not
    required to give reasons in support of his award. The Court pointed out
    the distinction between. the private award and the award touching the
    coffers of the public exchequer and observed that in case the contracts
    were entered into by and between the Government or instrumentality of
E   the State on the one hand and private party on the other, they should
    incorporate in the contract that the arbitrator should give reasons in
    support of the award. In other cases it may not be incumbent upon the
    arbitrator to give reasons in the award. In the Arbitration and Conciliation
    Act, 1996 repealing the 1940 Act, it is indicated in Section 31 (3) that the
F   arbitral award shall state reasons upon which it is based unless the parties
    agree that no reasons have to be given or the award is an arbitral award
    on agreed terms under Section 30 thereof. In other words, under the 1996
    Act, it is incumbent upon the arbitrator to give reasons in support of the
    award unless the parties otherwise agree or give consent to the terms under
G   Section 30.


          In Champsey Bhara & Co. v. Jivraj Ba/loo Spinning & Weavfng Co.
    Ltd., LR (1922) 50 IA 324 : AIR (1923) PC 66 the Privy Council held that
    "(A)n error is law on the face of the award means that you can find in the
H   award or a document actually incorporated thereto, as for instance a note
    t:f

              PREMIER FABRICATORS v. HEAVY ENGG. CORPN. LID. (K. RAMASWAMY, J.]     169

          appended by the arbitrator stating the reasons for the judgment, some legal      A
          proposition which is the basis of the award and which you can then say is
          erroneous. It does not mean that if in a narrative a reference is made to a
          contention of one party, that opens the door to seeing first what that

-         contention is, and then going to the contract on which the parties" right
          depend to see if that contention is sound. Here it is impossible to say, from
          what is shown on the face of the award, what mistake the arbitrators made.
                                                                                           B

          The only way that the learned judges have arrived at finding what the
          mistake was is by saying : ' inasmuch as the arbitrators awarded so and so,
          and inasmuch as the letter shown that the buyer rejected the cotton, the
          arbitrators can only have arrived at that result by totally misinterpreting
          Rule 52.' But they were entitled to give their own interpretation to Rule 52     C
          or any other article, and the award will stand unless, on the face of it, they
          have tied themselves down to some special legal proposition which then,
          when examined, appears to be unsound." Thus on the face of the award if
          an erroneous proposition of law or an indication in that behalf is found
          which under the law is not sustainable, it cannot be said that there is an       D
          error on the face of the award. This view was followed by this Court in
          Hindustan Construction Co. Ltd. v. State of J & K., [1992] 4 SCC 217.

                 In Tarapore and Co. v. Cochin Shipyard Ltd. Cochin, [1984] 2 SCC
          680, this Court was called upon to consider error of jurisdiction on the
          arbitrability of the claims as a question of law. A two-Judge Bench had E
          gone into the question of jurisdiction of the arbitrator to decide the
          arbitrability of the dispute and held in para 10 that undoubtedly the
          respondent proceeded to formulate the point in dispute between the
          parties'On which the arbitrator was to be invited to give his award without
                   \
          prejudice,to his right to contend that the dispute was not covered by the F
          arbitration clause and that the appellant was not entitled to any compen-
          sation in respect of the increase in the cost of imported pile driving
          equipment and technical know-how fees. At page 692, this Court con-
          sider~d whether the arbitrator committed error within his jurisdiction or
          exceeded his jurisdiction and pointed out thus :
                                                                                           G
                  "What is the effect of referring the specific question of law to
                  arbitration without prejudice to one's right to contend to the
                  contrary will be presently examined."

                      "If this issue specifically raises a question as to jurisdiction of H
    170                  SUPREME COURT REPORTS                    [1997) 3 S.C.R.

A           the arbitrator to arbitrate upon the dispute set out in Point No. 2,
            it appears to have been specifically referred to the arbitrator for
            his decision. Parties, therefore, agreed to submit the specific ques-
            tion even with regard to the scope, ambit width and the construc-
            tion of the arbitration clause so as to define its parameters and
            contours with a view to ascertaining whether the claim advanced
B           by the appellant and disputed by the respondent would be covered
            by the arbitration clause. Whether upon its true construction the
            arbitration clause would include within its compass the dispute
            thus raised between the parties was specifically put in issue because
            parties were at variance about it."
c
                "The arbitrator was thus required and called upon first to
            decide whether the dispute is arbitrable as falling within the width •
            and answer is in the affirmative, then alone the second point need
            be examined. If the answer to the first point of reference is in the
            negative in that if the arbitrator were of the opinion that the dispute
D           is not arbitrable as it would not fall within the scope, width and
            ambit of the arbitration agreement, it would not be necessary for
            him to determine whether the appellant was entitled to recover
            anything by way of compensation. This aspect is being analysed in
            depth to point out that the parties specifically referred the question
E           of construction of arbitration agreement, its width, ambit and
            parameters vis-a-vis the disputes raised so as to decide whether
            the dispute would fall within the purview of the arbitration agree-
            ment, in other words the jurisdiction of the arbitrator".


F         In para 12 of the judgment it was further elaborated that:

            "The first point extracted hereinbefore would clearly show that the
            specific question about the jurisdiction of the arbitrator to arbitrate
            upon the dispute set out in Points Nos. 2, 3 and 4 was specifically
            referred to the arbitrator. On the first point, the arbitrator had to
G           decide whether the claim made by the appellant and disputed by
            the respondent would be covered by clause 40, i.e. the arbitration
            clause. In other words, the specific question referred to the ar-
            bitrator was about his jurisdiction to arbitrate upon the disputes
            covered by Points Nos. 2, 3, and 4, if and only if, upon a true
H           construction of the arbitration clause that is first paragraph of
     PREMIER FABRICATORS v. HEAVY ENGG. CORPN. LTD. [K RAMASWAMY, J.]   171

         Clause 40, would cover the disputed claim for compensation he A
         can enter into the merits of the dispute and decide."

       In Mis. Sudarshan Trading Co. v. State of Kerala, [1989] 2 SCC 38 a
Bench of two Judges had held that in order to establish whether the
jurisdiction has been exceeded or not "it has to be reiterated that an
arbitrator acting beyond his jurisdiction - is a different ground from the B
error apparent on the face of the award. In Halsbruy's Laws of England
II, 4th edn., Vol. 2 para 622 one of the misconducts enumerated, is the
decision by the arbitrator on a matter which is not included in the agree-
ment or reference. But in such a case one has to determine the distinction
between an error within the jurisdiction and an error in excess of the C
jurisdiction. Whether ·a particular amount was liable to be paid or damages
liable to be sustained, was a decision within the competency of the ar-
bitrator in this case. But 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 realised that D
there is a distinction between disputes as to the jurisdiction of the ar-
bitrator and the disputes as to the exercise of that jurisdiction. There may
be a conflict as to the power of the arbitrator to grant a particular remedy.
Therein, it was held that the arbitrator !iad jurisdiction tq award the
amount and that, therefore, it was not a case of jurisdictional error but an
error within his jurisdiction.                                                E

       In. U.P. Rajkiya Ninnan Nigam Ltd. v. lndure Pvt. Ltd., [1996) 2 SCC
667 a bench of three Judges [to which one of us, K. Ramaswamy, J., was a
member] had gone into the question whether the arbitrator can go into the
question whether there emerged any concluded contract and the claims are F
arbitrable and whether he can get exclusive jurisdiction to decide those
questions by himself. It was held in para 13 that "the arbitrability of a claim
depends on the construction of the clause in the contract. The finding of
the arbitrator/arbitrators on arbitrability of the claim is not conclusive as
under Section 33, ultimately it is the court that decides the controversy. It
being a jurisdictional issue, the arbitrator/arbitrators cannot clothe them- G
selves with jurisdiction to conclusively decide the issue." In para 15 it was
held thus:

        "The clear settled law thus is that the existence of validity of an
        arbitration agreement shall be decided by the court alone. Ar- H
    172                  SUPREME COURT REPORTS                    [1997) 3 S.C.R.

A           bitrators, therefore, have no power or jurisdiction to decide or
                                                                                     --
            adjudicate conclusively by themselves the question since it is the
            very foundation on which the arbitrators proceed to adjudicate the
            disputes. Therefore, it is rightly pointed out by Shri Adarsh Kumar
            Goel, learned counsel for the appellant that they had by mistake
            agreed for reference and that arbitrators could not decide the
B           existence of the arbitration agreement or arbitrability of the dis-
            putes without prejudice to the stand that no valid agreement
            existed. Shri Nariman contended that having agreed to refer the
                                                                                     1
            dispute, the appellant had acquiesced to the jurisdiction of the
            arbitrators and, therefore, they cannot exercise the right under
c           Section 33 of the Act. We find no force in the contention. As seen,
            the appellant is claiming adjudication under Section 33 which the
            court alone has jurisdiction and power to decide whether any valid
            agreement is existing between the parties. Mere acceptance or
            acquiescing to the jurisdiction of the arbitrators for adjudication
            of the disputes as to the existence of the arbitration agreement or
D
            arbitrability of the dispute does not disentitle the appellant to have
            the remedy under Section 33 through the court. In our considered
            view the remedy under Section 33 is the only right royal way for
            deciding the controversy."

E         Accordingly, it was held that the arbitrator cannot decide the ar-
    bitrability of the claim by himself and it was to be decided by the court. In
    Union of India v. G.S. Atwal & Co. (Asanso/e), [1996) 3 SCC 568 a Bench
    of two Judges, to which one of us, K. Ramaswamy, J. was a member, the
    question was whether the arbitrator, when he enlarged his scope of the
F   award in a non-speaking award, could conclusively decide the dispute and
    award a consolidated sum. After elaborate consideration it was held in
    paragraph 6 thus:

            "To constitute an arbitration agreement, there must be an agree-
            ment that is to say the parties must be ad idem. Arbitrability of a
G           claim depends upon the dispute between the parties and the
            reference to the arbitrator. On appointment, he enters upon that
            dispute for adjudication. The finding of the arbitrator on the
            arbitrability of the claim is not conclusive, as under Section 33
            ultimately it is the court that decides the controversy. It can hardly
H           be within the arbitrator's jurisdiction to decide whether or not a
     PREMIER FABRICATORS v. HEAVYENGG.CORPN.LTD.[KRAMASWAMY,J.]         173

        condition precedent to his jurisdiction has been fulfilled. The A
        arbitrator had no power to decide his own jurisdiction. The ar-
        bitrator is always entitled to inquire whether or not he has juris-
        diction to decide the dispute. He can refuse to deal with the matter
        at all and leave the parties to go to the court if he comes to the
        conclusion that he has no power to deal with the matter, or he can
        consider the matter and if he forms the view that the contraction B
        upon which the claimant is relying on and from which, if estab-
        lished, he alone has jurisdiction, he can proceed to decide the
        dispute accordingly. Whether or not the arbitrator has jurisdiction
        and whether the matter is referred to or is within the ambit of
        clause for reference of any difference or dispute which may arise C
        between the parties, it is for the court to decide it. The arbitrator
        by a wrong decision cannot enlarge the scope of the submission.
        It is for the court to decide finally the arbitrability of the claim in
        dispute or any clause cir a matter or a thing contained therein or
        the construction thereof."
                                                                               D
     Accordingly, the award was found to be in excess of jurisdiction and
was set aside.

     In Tarapore Complex case (supra), the arbitrator had indicated his
mind in his non-speaking award thus:                                           E
        "It has to be seen whether the term of the agreement permitted
        entertainment qf the claim by necessary implication. It may be
        stated that we do not accept the broad contention of Shri Nariman
        that whatever is not excluded specifically by the contract can be
        subject-matter of claim by the contractor. Such a proposition will     F
        mock at the terms agreed upon. Parties cannot be allowed to
        depart from what they had agreed. Of course, if something flows
        as a necessary concomitant to what was agreed upon, courts can
        assume that too as a part of the contract between the parties."

       On that basis, this Court had held that he had decided the ar-          G
bitrability of the claims by his express indication in that behalf and that,
therefore, the award was held to be valid.

     In Tarapore & Co. v. State of MP., [1994] 3 SCC 521 it was held that
an award rendered by going beyond the terms of the arbitration agreement H
    174                   SUPREME COURT REPORTS                   [1997] 3 S.C.R.

A is without jurisdiction. On the facts in that case, it was held that the dispute
    was within the terms of the agreement and hence the award was not without
    jurisdiction. This Court pointed out latent and patent errors and that
    patent error was always amenable to correction. In Gujarat Water Supply
    and Sewerage Board v. Unique Erectors, [1989] 1 SCC 532 one of the
    questions referred was arbitrability of one of the items. T4i;: arbitrator in
B   his award had indicated thus:

             "In the instant case, the arbitrator by virtue of the terms mentioned
             in the order of this Court had to decide which of the disputes were
             arbitrable and which were not. It is true that the arbitrator has not
c            specifically stated in the award that he had to decide the question
             of arbitrability. The arbitrator has rested by stating that he had
             heard the parties on the point of arbitrability of the claim and the
             counter-claim. He has further stated that after 'considering all the
             above aspects' and 'the question of arbitrability or non-
             arbitrability' he had made the award on certain aspects."
D
         It was held that since the arbitrator had indicated his mind in the
    award by awarding consolidated sum the validity of the non-reasoned
    award was upheld.

E          In "Russel on Arbitration" [Nineteenth Edition] by Anthony Walton,
     page 99, it is stated as under:

              "It can hardly be within the arbitrato(s jurisdiction to decide
              whether or not a condition precedent to his jurisdiction has been
              fulfilled. It has indeed several times been said bluntly that an
F             arbitrator has no power to decide his own jurisdiction and in one
              case where rules of an institution prepared to conduct arbitrations
              gave the arbitrator such power, the court will ignore this when
              asked to enforce the award, and decide the question itself. How-
              ever, an arbitrator is always entitled to inquire whether or not he ·
              has jurisdiction. An umpire faced with a dispute whether or not
G             there was a contract from which alone his jurisdiction, if any, can
              arise can matter at all and lease the parties to go to court, or he
              can consider the matter and if he forms the view that the contract
              upon which the claimant is relying and from which, if established,
              alone his jurisdiction can arise is in truth the contract, he can
H.            proceed accordingly."
     PREMIERFABRICATDRS v. HEAVYENGG. CORPN.LTD.(KRAMASWAMY,J.]           175

     In "Law of Arbitration" by R.S. Bachawat (2nd (1987) Edition] at A
pages 154-55, it is stated thus:

         "An arbitrator cannot by mistake assume jurisdiction over a matter
         on which he has no jurisdiction. If it is shown by the terms of the
         submission or by extrinsic evidence that the arbitrator has adjudi-
         cated upon matters outside the scope of this authority the award        B
         cannot stand, however well meaning and honest the mistake might
         have been. An arbitrator cannot give himself jurisdiction by a
         wrong decision collateral to the merits as to facts on which the
         limits of his jurisdiction depends. Where it was a condition prece-
         dent to his jurisdiction that the dispute should have arisen during     C
         a tenancy between the plaintiff and the defendant or in the event
         of a collusion if certain works had been completed, the arbitrator
         could not clothe himself with jurisdiction by a wrong decision on
         the preliminary point. The question is not concluded against any
         party by a finding of the arbitrator that he has jurisdiction. It is
         for the court and not for the arbitrator to decide finally whether      D
         or not the arbitrator has jurisdiction and that is the law both in
         India and in England."

            "... The question whether the matters referred were within the
         ambit of the clause for reference of "any difference or dispute         E
         which may arise between the partners is for the court to decide."

            "... Disputes about the existence or validity of the contract and
        as to the existence of facts which render it illegal must be deter-
        mined by the court and not by the arbitrator. The arbitrator cannot
        by his own finding clothe himself with jurisdiction. Supposing he F
        finds that the arbitration agreement is valid such a finding cannot
        bind the parties."

       In Tamil Nadu Electricity Board v. Mis Bridge Tunnel Constructions
& Ors., (1997) 2 SCALE 653 a two-Judge Bench, to which one of us, K.
Ramaswamy, J., was a member, a similar question, as in the present case,         G
had directly arisen for consideration. Therein, in a dispute raised under
Section 33 of the Act, one of the contentions raised was as to the ar•
bitrability of the claims put up by the respondent. The Court left open that
question and held that in the event of the dispute raised by the appellant
therein, the arbitrator was required to go into the question and if it decided   H
    176                   SUPREME COURT REPORTS                   [1997] 3 S.C.R.

A   that question against it, it would be open to the appellant to have the award
    challenged in the civil Court. The arbitrators differed on the question of
    arbitrability and an umpire came to be appointed for decision on the point
    of arbitrability. The umpire without deciding the arbitrability of the claim
    gave consolidated sum in his non-speaking award. Considering the entire
B   case law, this Court held : "(T)hus, it could be seen that prior to the
    proceedings under Section 33, the court had left open the point of the non-
    arbitrability of the dispute and the umpire had to decide the dispute. In
    the event of the decision going against the Board, the same is also entitled
    to question the correctness of the award in a court of law". After consider-
    ing the question, this Court held: "(I)t would thus be clear that the
C   arbitrator cannot clothe himself conclusively with the jurisdiction to decide
    or omit to decide the arbitrability of a particular item or the claim made
    by the parties. When a specific reference has been made to the arbitrator
     and the parties raise the dispute of arbitrability, with the leave of the
     court/by a direction of the court in a proceedings under Section 33, he is
D    to decide the arbitrability of the dispute and make a decision while giving
    reasons in support thereof. The decision of the arbitrator in granting a
     particular sum by a non-speaking award, therefore, hinges upon the ar-
    bitrability of the dispute arising under the contract or upon a particular
    item claimed thereunder. He is required to give. the decision thereon. The
     question of decision by implication does not arise since his jurisdiction to
E    decide the dispute on merits hinges upon his jurisdiction to decide the
     arbitrability of the dispute. In this case, in view of the finding recorded by
     the court, which has become final, as referred to earlier, the arbitrator/um-
     pire was enjoined to decide the arbitrability of the claims set up by the
     respondent and disputed by the appellant. Admittedly, the award of the
p    umpire does not contain any decision on arbitrability of the claims". Since
     the award contains the claims, in a non-speaking award where the claims
     consist of arbitrable and non-arbitrable claims, it was held that it would be
     difficult to discern as to what extent the umpire had considered the
     admissible and inadmissible claims which he adjudged. In such a situation,
     it would not be possible to discern to what extent he had exercised his
G    jurisdiction vis-a-vis of the admissible claims and disallowed the non-ar-
     bitrable clai,rns. Thus it was not clear whether he exercised his authority in
     abdiction of or in excess of his jurisdiction. Therefore, it was held to be an
      error of jurisdiction, the very foundation for his decision. The award was
     held to be in excess of his jurisdiction and was accordingly set aside. The
H     umpire having been invested with jurisdiction to decide the arbitrability of
              PREMIER FABRICATORS v. HEAVY ENGG. CORPN. LTD. [K RAMASWAMY, J.]     177
_,____
         the claim, he has committed error of jurisdiction in not considering the         A
         arbitrability of the claims and passed a non-speaking award. Accordingly,
         the award was set aside.

                In view of the admitted position that the umpire in the present case


---      has not considered the arbitrability of items 2 to 5 of the claims in the B
         non-speaking award, it cannot be construed that by implication he had
         considered the arbitrability of the claims. The preliminary question raised
         by the parties was as to the arbitrability of items 2 to 5 of the claims and
         whether they are within the scope of the contract. Before proceeding to
         adjudicate the claims 2 to 5 on merits, the umpire was required to give his C
         finding on the issue of arbitrability of claims 2 to 5 and reasons in support
         thereof. The third learned Judge (L.M. Sharma, J. as he then was) and
         Sinha, J. have rightly held that the umpire cannot conclusively decide for
         himself in a non-speaking award of the arbitrability of the claims and that,
         therefore, the umpire was required to decide as a preliminary issue of the
         arbitrability of the claims 2 to 5. We agree with the learned Judges on that D
         finding that the award is illegal.


                The question, therefore, that remains to be considered is: what
         procedure in such a situation is required to be adopted? lnM/s Sudarshan         E
         Trading Company case, Tarapore Co. Case, G.S. Atwal case Tamil Nadu
         Electricity Board case (supra) this Court pointed out that in such a situation
         two courses are open to the court, viz., either to set aside the award in toto
         and relieve the parties from the arbitration or to remit the award to the
         umpire/arbitrator for de novo consideration. In G.S. Atwal case and Tamil
         Nadu Electricity Board cases this court had set aside the award and thereby      F
         put the list in quietus. But in view of the facts in this case we think that
         since the preliminary issue raised by the parties was not decided by the
         umpire which is condition precedent to proceed with adjudication of the
         claims on merits, he conunitted misconduct in giving the award. We,
         therefore, direct that the matter will go back to the Umpire for. recon-         G
         sideration of the same afresh in the light of what we have stated hercin-
         before. If for any reason, the Umpire is not available the parties may
         choose a new Umpire and if the parties fail to do so, the Court may appoint
         a new Umpire who will decide the matter afresh, clearly expressing his
         views on the arbitrability of claims 2 to 5 while deciding the matter.           H
                                                                                       t
    178                    SUPREME COURT REPORTS                   [1997) 3 S.C.R.

A            The appeal accordingly is allowed with the above directions. No
    costs.

          PUNCHHI, J. The sole and subtle question arising in this appeal is
    whether in the facts and circumstances, it was required of the Umpire                   Y1
    making the award to formally express in terms that items no. 2 to 5 of the
B   dispute were arbitrable on the terms of the contract?

          The appellant herein M/s. Premier Fabricators Allahabad is the
                                                                                            -
    contractor. The Respondent-Corporation engaged the contractor to ex-
    ecute some works. On May 25, 1971, a deed of agreement was executed in
c   writing between the parties. Clause 78 thereof made provision for settle-
    ment of disputes by arbitration. That clause reads as follows:

               "SETTLEMENT OF DISPUTES BY ARBITRATION

               78 (1) All questions, disputes or difference of any kind, what-
D              soever, arising out of, or in connection with, the contract, at any
               time, whether during the progress of work or after its completion,
               or whether before or after the determination of the contract, other
               than questions, disputes or differences for the decision of which
               specific provisions have been made in the foregoing clauses of
               these conditions (hereinafter referred to as "excepted matters")
E              and decisions on such "excepted matters" according to the said
               specific provisions shaU be final and binding on the contractor and
               shall not be re-opened or attempted to be re-opened on the ground
                                                                                            -
               of any informality, omission, delay or error in the proceeding in or
               about the sanie or on any other ground whatsoever, shall be
F              submitted in writing by the contractor to the employer, and the
               employer shall within a reasonable time, after the submissions of
               the same, make and notify its decisions thereon in writing.             ..   1
                  (2) If the contractor be dissatisfied with the decision of the             (

               employer on any matter in question, dispute or difference, on any
G              ground, or as to the withholding by the employer of any certificate
               to which the contractor may claim to be entitled to, or if the
               employer fails to make a decision within a reasonable time, then
               and in any such case but not including !11\Y of the excepted matters,
               the contractor may, within ten days ()f;the receipt of such decision
H              or after the expiry of a reasonable period of time, as the case may
PREMIER FABRICATORS v. HEAVY ENGG. CORPN. LID. [PUNCH!, J.]     179

be, demand in writing that such matter in question, dispute or A
difference be referred to arbitration. Such demand for arbitration
shall be delivered to the employer by the contractor and shall
specify the matters which are in question, dispute or difference
and only such question, dispute or difference of which the demand
has been made and no other shall be referred to arbitration.
                                                                       B
   (3) The further progress of any work under the contract shall,
unless otherwise directeq by the Engineer, continue during the
arbitration proceedings, and no payment due or payable by the
employer shall be withheld on account of such proceedings,
provided however that it shall also be open to the arbitrators, to     C
consider and decide whether or not such work shall continue
during the arbitration proceedings.

    (4) (a) Matters in question, dispute or difference to be sub-
mitted to arbitration as aforesaid shall be referred for decision to
two arbitrators, one to be nominated by the Chairman and the D
other to be nominated by the contractor. In the event of the two
arbitrators being divided in their opinion, the matter under dispute
shall be referred for decision to an umpire to be appointed by the
two arbitrators not later than one month from the latest date of
their respective appointment and, in any case, before they enter E
upon and proceed with the reference.

    (b) The arbitrators or the umpire shall have power to call for
such evidence by way of affidavits or otherwise as the arbitrators
or the umpire, as the case may be, shall think proper, and it shall
be the duty of the parties to do or cause to be done all such things   F
as may be necessary to enable the arbitrators or umpire to make
the award without any delay.

   (c) Unless otherwise agreed upon by the parties, the venue of
the arbitration proceedings under these conditions shall be at G
Ranchi in the State of Bihar.

    (d) Subject to aforesaid, the provisions of the Arbitration Act,
1940 or any statutory modification or enactment thereof and of the
rules made thereunder for the time being in force, shall apply to
all arbitration proceeding under this clause.                        H
                                                                                      -'r'
    180                   SUPREME COURT REPORTS                    [1997] 3 S.C.R.

A                Provided, however, that the arbitrators or, as the case may be,
             the umpire may, from time to time, with the consent of the parties,
             enlarge the time for making the award."

          The appellant-contractor laid claim for payments in terms of items
B nos. 1 to 5, as mentioned in its claim, from th~ Corporation which was
  . rejected by the later. Thereupon, the contractor asked for arbitration in
    terms of Clause 78. The Corporation denied arbitration in respect of items
    2,3,4 and 5 as being not referable to arbitration in terms of the contract.
    On the basis of the disputes and differences thus existing between the
    parties in respect of the claims of the contractor, the Managing Director
C of the Corporation nominated Shri K.N. Mehra, its Works Manager
                                                                                                 _j
    (Production) as an arbitrator to give a joint award on all the above claims
    after deciding whether claims referred to in items 2, 3, 4 and 5 were or
    were not referable for arbitration in terms of the contract. The contractor
                                                                                             I
    on its part nominated Shri S.B. Gadodia as the arbitrator to make a joint
D award in respect of the terms of the arbitration made by the Corporation.

           On entering upon arbitration, the arbitrators on 6-2-1973 recorded
    on their respective files their decision that items nos. 2, 3, 4 and 5 of the
    claim of the contractor were referable and could be decided by the
    arbitrators. This meant that all the items 1 to 5 were arbitrable. Proceeding
E   further went on but the joint arbitrators ultimately could not arrive at a
    joint award. Therefore by a joint letter dated November 2, 1973, they
    requested Professor G.B. Pant of Birla Institute of Technology, Ranchi to
    enter upon the reference as Umpire and give his award. As given out in
    their joint letter they forwarded separately their respective files for perusal
p   of the Umpire, as also rest of the record.

        The Umpire then went into the matter. As is evident from the record,
  he took into account the fact that the matter had come to him in pursuance
  of a contract dated May 25, 1971 executed between the parties and that
G the parties in terms thereof had referred to S/Shri Mehra and Gadodia by
  letter of reference the matters of difference between them concerning
  items 1 to 5 (as detailed out) and that since there was reported failure by
  the joint arbitrators to arrive at a joint award in respect of the referred
  matters, the case was referred to him as the Umpire. Therefore he ob-
  served in his award that having heard both the parties and having seen all
H the documents submitted and having given the matter a careful considera-
            PREMIERFABRICATORS v. HEAVYENGG.CORPN.LTD.[PUNCHI,J.)          181

    tion he would direct the Corporation to pay a sum of Rs. 80,000 to the A
    contractor bearing interest at the rate of 6 per cent per annum from the
    date of order till the date of decree.


-         The contractor applied for the award of the Umpire being made
    Rule of Court, which was registered as a suit in the Court of Third
    Additional Sub-Judge, Ranchi. The Corporation objected on a number of B
    grounds of the award being made Rule of Court. Despite objection the
    award, all the same, was made Rule of Court. The Corporation then went
    up in appeal before the High Court of Patna which was placed before a
    Bench of two Hon'ble Judges of the High Court. It was contended on
    behalf of the Corporation before the Bench that there was error of law C
    apparent on the face of the award because the Umpire, who was the
    substitute of the arbitrators, had not recorded the preliminary finding
    whether items nos. 2 to 5 of the claim could be subject matter of arbitration
    under the terms of the contract and, therefore, the award was vitiated. It
    was urged that the Umpire could give his award on merits only after D



-
    deciding the preliminary question as to whether claims under items nos. 2
    to 5 were arbitrable. Both the Hon'ble Judges of the High Court constitut-
    ing the Division Bench were in agreement that the order passed by the
    arbitrators on 6-2-1973 to that effect could not, on its,own, be said to have
    disposed of the preliminary question once for all and that on reference to
    the Umpire the entire dispute including the question of referability was E
    required to be decided by him. Upto this point the Hon'ble Judges were
    in concurrence but not thereafter. One Hon'ble Judge took the view that
    the Umpire must in the facts and circumstances be deemed to have
    decided the question of referability of items 2 to 5 in the affirmative and
    the award must therefore be accepted as valid. The other Hon'ble Judge
                                                                                  F
    differed by stating that in the facts and circumstances of the case, it was
    not possible to inferentially hold that the Umpire must have decided the
    preliminary question about referability while making the award to the tune
    of Rs. 80,000 only, a sum much below than what was claimed. The matter
    then had to be, and was, referred to a Third Hon'ble Judge of that High
    Court.                                                                        G

          The controversy before the Third Hon'ble Judge was thus narrowed
    to the facts and circumstances of the case, i.e. whether a deemed decision
    on referability should or should not be inferred? The Third Hon'ble Judge
    noticing that since the members of the Division Bench had agreed that it H
                                                                                     t
    182                   SUPREME COURT REPORTS                   [1997] 3 S.C.R.

A was for the Umpire to have considered and decided the preliminary
    question, went on to opine that the Umpire may not have appreciated the
    position as to his obligation and there was a possibility that he might not
    have considered it necessary to form his opinion on the point due to the
    decision of the Arbitrators. The Third Hon'ble Judge also was of the view
    that inference in favour of the contractor could not be drawn from the
                                                                                         .
B
    conclusion merely because an award in terms of money had been made,
    unless he had stated so in express terms in the award. On this basis, the
    Third Hon'ble Judge agreed with the view of one of the Hon'ble Judges of
    the Division Bench holding that the contractor had failed to show that the
    Umpire had decided the preliminary question in its favour before proceed-
C   ing to consider the claim on merits. It is on that account that the Award
    was set aside leaving it for the parties to move the court below to proceed          j
    further in the matter in accordance with the provisions of the Indian
    Arbitration Act.
                                                                                             •
D         As is evident, no abstract question of law or of legal import has arisen
  herein. It is from the facts and circumstances of the case that one would
  have to draw and record inferences. There are four reasons detailed
  hereafter which call to infer that (i) the Umpire was alive to his duties as
  such, knowing fully well that he was not a superior between the two
  arbitrators, but their sole substitute assigned their duties: (ii) The Umpire
E did not consider the decision of the joint arbitrators dated 6-2-1973 holding
  that claims under items 2 to 5 were referable to arbitration, as binding on
  him as if in the nature of an interim award, nor was it treated as such by
  the arbitrators by delivery and dispatch to the parties concerned; (iii) that
  since the said order was part of the proceedings recorded by the joint
F arbitrators, the Umpire on receiving the matter is presumed to have gone
  through the terms of the contract and the arbitration proceedings; and (iv)
  it is also implied that the Umpire as a substitute of the arbitrators must be
  presumed to have known that before he entered upon reference to decide
  item nos. 2 to 5 on their merits, he would have to decide whether those
  items were arbitrable but the same need not have been in express terms.
G To hold it otherwise would be to negate his independence. It may be true
  that the joint decision dated 6-2-1973 of the arbitrators regarding
  referability of those items might have been of some support to his view.
  Yet it cannot be presumed that he considered himself bound by those
  orders, absolving him of the duty from going into the question. It would
H thus in the circumstances be seen that obligating the Umpire to make a
         PREMIER FABRICATORS v. HEAVY ENGG. CORPN. LTD. [PUNCH!, J.)    183

speaking award in so far as the question of referability is concerned, lest A
it vitiates his non speaking award on merit, goes to the very root of the
independence of the arbitrator. This is impermissible in law and against
the spirit of the Arbitration Act, 1940. The award of the Umpire, as is plain,
is a non speaking award in entirety. He has preluded it with the recorded
awareness that differences between the parties had arisen, and the matter B
stood referred to arbitration in pursuance of the contract in writing dated
May 25, 1971. He is then presumed to have read the terms of the contract,
the terms of reference and scope of items· 2 to 5 of the claim. He is
presumed to have examined whether those claims were referable to arbitr:i-
tion in terms of the contract. He is further presumed to have read the
respective files of the two arbitrators and to have heard both parties at C
length, screening all the documents submitted, to come to the base finding
that items 2 to 5 were referable. All the five items were thus arbitrable,
resulting in the award for a sum or Rs. 80,000/- in favour of the contractor.
The award must therefore be upheld for the afore-reasons, holding that
there is no error apparent on the face of the record which would justify its D
vitiation.

      For the afore-going reasons, it must be held that the Third Hon'ble
Judge was in error in not agreeing with the view of one of the Hon'ble
Judges in the Division Bench who had held that there was a
deemed/presumed decision on referability inferable from the award of the       E
Umpire. Therefore, the impugned order of the High Court is set aside by
allowing this appeal, as a result of which appeal from original order No.
240 of 1975 in the Civil Appellate Jurisdiction of Patna High Court shall
stand dismissed with costs, maintaining that of the court of first instance.

H.K.                                                        Appeal allowed.