Holding

An arbitrator or umpire is not obligated to give reasons for an award unless the arbitration agreement, deed of submission, or a court order/statute expressly requires it; therefore, an award cannot be remitted or set aside merely for lack of reasons.

Summary

The Supreme Court examined whether an award under the Arbitration Act, 1940 could be remitted or set aside solely because the arbitrator or umpire did not give reasons. The Court held that unless the arbitration agreement, deed of submission, or a specific court order or statute requires reasons, an arbitrator is under no obligation to provide them, and lack of reasons alone cannot be a ground for remitting or setting aside an award. The Court rejected the argument that natural‑justice principles impose a duty to give reasons in private arbitrations. It also noted that while the government should, as a matter of policy, insist on speaking awards in its contracts, the law cannot be amended by judicial decision. Consequently, the appeals were dismissed and the matters remitted to the Division Bench for disposal in accordance with the established law.

Issues considered

Can an award under the Arbitration Act, 1940 be remitted under s.16(1)(c) or set aside under s.30(c) solely on the ground that no reasons were given?
Does the principle of natural justice require arbitrators in private arbitrations to give reasons for their awards?
Is there an implied statutory duty for arbitrators to provide reasons absent an express contractual or statutory provision?
Should the government and its instrumentalities be required, as a matter of policy, to ensure speaking awards in arbitration agreements?
To what extent may courts interfere with private arbitration awards for lack of reasons?

Legislation cited

Arbitration Act, 1940s. 14, s. 15, s. 16(1)(c), s. 17, s. 20, s. 21, s. 30, s. 39, s. 46
Army Acts. 164, s. 165
English Arbitration Act, 1950s. 21
English Arbitration Act, 1979s. 1(5), s. 1(6)
Indian Contract Act, 1872s. 28
Limitation Act, 1963s. Article 119
Mines & Minerals (Regulation and Development) Act, 1957
Tribunals and Inquiries Act, 1958s. 12

Subjects

ArbitrationArbitration Act 1940Reasons for awardNatural justiceGovernment contractsSpeaking awardRemittance of awardSetting aside awardLegislative policyFinality of arbitration

Judgment

RAIPUR DEVELOPMENT AUTIIORITY ETC. ETC.
A
v.
CHOKHAMAL CONTRACTORS ETC. ETC.

MAY 4, 1989

B [R.S. PATHAK CJ., E.S. VENKATARAMIAH, RANGANATH 'r
,
MISRA, M.N. VENKATACHALIAH AND N.D. OJHA, JJ.]
Arbitration Act, 1940: Sections 16(J)(c), 20, 21 and JO(c), 32-
A ward-Whether liable to be set aside on ground that no reasons have •
been given-Necessity to give reasons where statute or Court orders. ,.:
Government Contracts: Government and their instrumentalities-
c Should as matter of policy and public interest-Ensure that arbitration
clause provides for speaking awards by arbitrators.
Administrative Law: Natural Justice-Principles of-Furnishing
reasons in support of decision-Not applicable to cases arising under
the law of arbitration which is intended for settlement of private disputes.
D
Practice And Procedure: Courts should be slow in taking deci-
sions which will have effect of shaking rights/titles which have been
founded on particular interpretation of law.
The common question arising in the instant cases which was refer-
...l...
red to this larger Bench is whether an award passed under the provisions
E
of the Arbitration Act, 1940 is liable either to be remitted under section
16(1)(c) of the Act or liable to be set aside under section 30(c) thereof
merely on the ground that no reasons have been given by the arbitrator
or umpire, as the case may be, in support of the award.

F
It was urged that (i) subsequent to 1976 there has been a qualitative
change in the law of arbitration and that it has become necessary to insist
J--..
upon the arbitrator or the umpire to give reasons in support of the award
passed by him unless the parties to the dispute have agreed that no
reasons need be given by the arbitrator or umpire for his decision; (ii)
since under section 16(l)(c) of the Act the legality of an award can be
questioned in Court on the basis of an error apparent on the face of an
G award, the only way of ensuring that an award is in accordance with law
is by insisting upon the arbitrator or umpire to give reasons for the award
and (iii) an arbitrator or an umpire discharges a judicial function while
r
functioning as an arbitrator or an umpire under the Act, and, therefore,
is under an obligation to observe rules of natural justice while discharg-
ing his duties, (iv) that the concept of natural justice had undergone a
H great deal of change in recent years, and the requirement of giving
144
. R.D.A. v. CHOKHAMAL CONTRACTORS 145

reasons for a decision should be treated as a new rule of natural justice.
A
While answering the question in the negative and remitting the
cases to the Division Bench for disposal in accordance with law, this Court,
HELD: (I) The arbitrator or umpire is under no obligation
to give reasons in support of the decision reached by him unless
under the .arbitration agreement or in the deed of submission he is B
required to give such reasons, and if the arbitrator or umpire chooses
to give reasons in support of his decision it is open to the Court
to set aside the award if it finds that an error of law has been
committed by the arbitrator or umpire on the .face of the record on
going through such reasons. [161C-D]
(2) The arbitrator or umpire shall have to give reasons also c
where the court has directed in any order such as the one made
under section 20 or section 21 or section 34 of the Act that reasons
should be given or where the statute which governs an arbitration
requires him to do so. [161D-E]
(I) University of New South Wales v. Max Cooper & Sons Pty. D
Ltd. 35 Australian Law Reports p. · 219; (2) Hodgkinson v. Fernie
& Anr., [1857] 3 C.B. (N.S.) 189=140 English Reports p. 712; (3)
Champsey Bhara & Company v. Jivraj Ba/loo Spinning and Weaving
Company Ltd., A.LR. 1923 Privy Council 66, (4); Seth Thawardas
Pherumal v. The Union of India, [1955] 2 S.C.R. 48 (5) Jivarajbhai
Ujamshi Sheth & Ors. v. Chintamanrao Balaji & Ors., [1964] 5 E
SCR 480 (6) Bungo Steel Furniture Pvt. Ltd. v. Union of India,
[1967] I SCR 633, (7) State of Rajasthan v. Mis. R.S. Sharma & Co .•
[1988] 4 sec 353, referred to.
(3) The people in India as in other parts of the world such as
England, U.S.A. and Australia have become accustomed to the system
of settlement of disputes by private arbitration and have accepted F
awards made against them as binding even though no reasons have
been given in support of the awards for a long time. ·They have attached
more importance to the element of finality of the awards than their
legality. [178D]
. (4) Courts should be slow in taking decisions which will have the G
effect of shaking rights and titles which have been founded through
a long time upon the conviction that a particular interpretation of
law is the legal and proper one and is one which will not be departed
from. [179C-D] ·
Brownsea Havel Properties v. Pooje Corporation, [1958] Ch. 74
H
(C.A.), referred to. •
146 SUPREME COURT REPORTS [1989) 3 S.C.R.

A (5) Even after the passing of the English Arbitration Act, 1979
unless a court requires the arbitrator to give reasons for the award, an
award is not liable to be set aside merely on the ground that no reasons
have beeu given in support ofil. [JSOA-B)

(6) The foundation of any arbitration proceeding is the existence
B of an arbitration agreement between the persons who are parties to the
dispute. It is not as if people are without any remedy at all in cases
where they find that it is in their interest to require the arbitrator to
give reasons for the award. In cases where reasons are re11uired, it is
open to the parties to the dispute to introduce a term either in the
arbitration agreement or in the deed of submission requiring the
C arbitrators to give reasons in support of the award. But there may be
many transactions in which parties lo the dispute may not relish the
disclosure of the reasons for the award. [ISIE!

Firm Madan/a/ Roshanlal Mahajan v. Hukumchand Mills Ltd.
Indore, [1967] I S.C.R. 105; N. Chelapan v. Secretary, Kera/a State
D Electricity Board & Anr., [1975] 2 S.C.R. 811, referred to.

(7) The two well recognised principles of natural justice are (i)
that a Judge or an arbitrator who is entrusted with the duty to decide . a
dispute should be disinterested and unbiased (nemo judex in cause sua);
and (ii) that the parties to dispute should be given adeqnale notice and
E opportunity lo be heard by the authority (audi alteram partem). Giving
reasons in support of a decision was not considered to he a rule of
natural justice either under the law of arbitration or under administra-
tive law. [I7ICJ

(IO) Payyavula Vengamma v. Payyavule Kasanna & Ors., [1953)
F S.C.R. 119; (II) Harvey v. Shelton, [1844] 7 Beav. 455 at p. 462; (12)
Haigh v. Haigh, [1861] 31 L.J. Ch. 420; (13) Som Datt Datta v. Union
of India & Ors., [1969) 2 S.C.R. 177; (14) Bhagat Payyavu/a v. The Union
of India & Urs., [1967) J S.C.R. 302; (15) Siemens Engineering &
Manufacturing Co. of India Ltd. v. Union of India & Anr., [1976)
Supp. S.C.R. 489; (16) Associated Cement Companies Ltd. v. P.N.
G Sharma & Anr., [1965) 2 S.C.R. 366; (16) A.K. Kraipak & Ors. v.
Union of India & Ors., [1970) I S.C.R. 457, referred to.

(8) A distinction has to be made between statutory arbitrations
and private arbitrations. What applies generally to settlement of dis-
putes by authorities governed by public law need not be extended to all
H cases arising under private law such as those arising under the law of
R.D.A. v. CHOKHAMAL CONTRACTORS 147
-·-i-
\ arbitration which is intended for settlement of private disputes. [l 78A-B]
A

Rohtas Industries Ltd. & Anr. v. Rohtas Industries Staff Union &
Ors., [1976] 3 S.C.R. 12, referred to.

(9) It is no doubt true that in the decisions pertaining to Ad-
ministrative Law, this Court in cases has observed that the giving of B
reasons in an administrative decisions is a rule of natural justice by an
extension of the prevailing rule. It would be in the interest of the world
of commerce that the said rule is confined to the area of Administrative
Law. [1790-E]

(10) The trappings of a body which discharges judicial functions C
and required to act in accordance with law with their concomitant
obligations for reasoned decisions, are not attracted to a private adjudi-
cation of the nature of arbitration as the latter is not supposed to exert
the State's sovereign judicial power. [180F-G]

(11) It will not be justifiable for Governments or their instru- D
mentalities to enter into arbitration agreements which do not expressly
stipulate the rendering of reasoned and speaking awards. Governments
and their instrumentalities should, as a matter of policy and public and
private interest if not as a compulsion of law-ensure that wherever
they enter into agreements for resolution of disputes by resort to private
arbitration, the requirement of speaking awards is expressly stipulated E
and ensured. It is for Governments and their instrumentalities to
ensure in future this requirement as a matter of policy in the larger
public interest. Any lapse in that behalf might lend itself to or perhaps
justify the legitimate criticism that Government failed to provide
against possible prejudice to public-interest. [1818-D]
F
(12) A decision on the question involves a question of legislative
policy which should be left to the decision of Parliament. It is significant
that although nearly a decade ago the Indian Law Commission submitted
its report on the law of arbitration specifically mentioning therein that
there was no necessity to amend the law of arbitration requiring the arbi-
trator to give reasons, Parliament has not chosen to take any step in the G
direction of the amendment of the law of arbitration. [178H; I79G-H]

( 13) In the circumstances and particularly having regard to the
various reasons given by the Indian Law Commission for not recom-
mending to the Government to introduce an amendment in the Act
requiring the arbitrators to give reasons for their awards, it may not be H
148 SUPREME COURT REPORTS [1989) 3 S.C.R.

A appropriate to take the view that all awards which do not contain
reasons should either be remitted or set aside. [l78GI

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.
3137-39 of 1985 etc. etc.
B
From the Judgment and Order dated 10.4.1985 of the Madhya
Pradesh High Court in Misc. Appeal Nos. 176 to 178 of 1983.

F.S. Nariman, G.L. Sanghi, Aspi Chimoi, A.L. Pandiya, Rajan ~-

Karanjawala, S.C. Sharma, Ms. Meenakshi Arora, Manik Karanja-
wala, N. Nettar, G.S. Narayana, R.K. Mehta, Shri Narain, Sandeep
C Narain, D.P. Mohanty, Ashok Kumar Panda, R.K. Patri and Jatinder
Sethi for the Appellants.

Soli J. Sorabjee, A.K. Sen, M.H. Baig, Raja Ram Agarwalla,
P.A. Choudhary, A.K. Ganguli, M.C. Bhandare, S. Ganesh, P.S. ·
D Shroff, Randeep Singh, Shrjawala, R. Sasiprabhu, S.S. Shroff, S.A.
Shroff, Arnn Madan, R.K. Sahoo, J.D.B. Raju, M.M. Kshatriya,
T.V.S.N. Chari, T. Sridharan, Ms. Mridula Ray, S.K. Sahoo, N.D.B.
Raju, Aruneshwar Gupta, P.P. Juneja, S.K. Bagga, P.N. Mishra, H.J.
Zaveri and B.S. Chauhan for the Respondents. .l

E Milan Banerjee, P.P. Rao, A. Mariarputham, C.M. Nayar,
A.K. Chakravorty, Mrs. J. Wad. Mrs. Aruna- Mathur for the
Intervener.

The Judgment of the Court was delivered by
) ..._
F VENKATARAMIAH, J. The common question which arises for
consideration in these cases which are very neatly argued by learned
counsel on both the sides is whether an award passed under the provi-
sions of the Arbitration Act, 1940 (hereinafter referred to as 'the Act')
is liable either to be remitted under section 16( 1)(c) of the Act or liable
to be set aside under section 30(c) thereof merely on the ground that
G no reasons have been given by the arbitrator or umpire, as the case
may be, in support of the award.

Ordinarily all disputes arising under a contract have to be settled
by courts established by the State. Section 28 of the Indian Contract
Act, 1872 provides that every agreement by which any party thereto is
H restricted absolutely from enforcing his rights under or in respect of
R.D.A. v. CHOKHAMAL CONTRACTORS [VENKATARAMIAH, J.l 149

any contract, by the usual legal proceedings in the ordinary tribunals, A
or which limits the time within which he may thus enforce his rights, is
void to that extent. Exception 1 to the said section 28, however, pro-
vides that the said section shall not render illegal a contract by which
two or more persons agree that any dispute which may arise between
them in respect or any subject or class of subjects shall be referred to
arbitration, and that only the amount awarded in such arbitration shall B
'' be recoverable in respect of the dispute so referred.

A brief history of the English Law of Arbitration, is given in the
learned treatise~ The Law and Practice of Commercial Arbitration in
England by Sir Michael J .. Mustill and Stewart C. Boyd. For
centuries commercial men preferred to use arbitration rather than the C
courts to resolve their business disputes on account of the inherent
advantages in the settlement of disputes by arbitration. They preferred
this alternative method of settlement of disputes to the ordinary
method of settlement through courts because arbitration proceedings
were found to be cheap and quick. It was no doubt true that the courts
repeatedly expressed doubts as to the wisdom of this preference as D
refiected by the current opinion that arbitration was an ineffective
procedure, not that it was undesirable in itself. The commercial
community, has been however, insisting on the right to arbitration and
has always exhibited an interest in seeing that the system is made to
work as well as possible. This led to repeated statutory intervention.
Accordingly laws were passed from time to time to make the arbitra- E
tion proceedings effective. The English Arbitration Act of 1950 and
the English Arbitration Act, 1979 are the two major pieces of legisla-
tion which now control the arbitration proceedings in England. The
f legal requirements of an award under English Law are succinctly given
in 'the Hand Book ·of Arbitration Practice' by Ronald Bernstein
(1987). English Law does not impose any legal requirement as to the F
form of valid award but if the arbitration agreement contains any
requirement to the form of the award the award should meet those
requirements. The award must be certain. It could be either interim or
final. An award without reasons is valid. "The absence of reasons does
not invalidate an award. In many arbitrations the parties want a
speedy decision from a tribunal whose standing and integrity they G
respect, and they .are content to have an answer Yes or No; or a figure
of X. Such an award is wholly effective; indeed, in that it cannot be
appealed as being wrong in law it may be said to be more effective than
a reasoned award."

Section 1 of the English Arbitration Act, 1979, however, pro- H
150 SUPREME COURT REPORTS [1989] 3 S.C.R.

vides that if it appears to the High Court that an award does not or
A
does not sufficiently set out the reasons for the award in sufficient
detail to enable the court to consider any question of law arising out of
it, the court has power to order the arbitrator or umpire to give
reasons or further reasons.

B In the United States of America as a general rule an arbitration
award must contain the actual decision which results from an arbi-
trator's consideration of the matter submitted to them but the
arbitrator need not write opinion with any specificity as a court of law
does unless otherwise provided by a statute or by the submission itself.
Arbitrators are not required to state in the award each matter con-
sidered or to set out the evidence or to record findings of facts or
c conclusions of law. They need not give reasons for their award and
conclusions or the grounds which form the basis for the arbitration
determination, describe the process by which they arrived at their
decision or the rationale of the award. Although such matters are not
required, the award is not necessarily invalidated because it sets out
D the reasons or the specific findings, matters, or conclusions on which it
is based and faulty reasoning if disclosed does not by itself vitiate the
award. (See Corpus Juris Secundum, Vol. VI pp. 324-325).

In Australia too an arbitrator, unless required under section 19
of the Australian Arbitration Act, 1902 to state in a special case a
E question of law is under no obligation in law to give his reasons for his
decision (vide University of New South Wales v. Max Cooper & Sons
Pvt. Ltd., 35 Australian Law Reports p. 219).

An instructive survey of the Indian Law of Arbitration is to be
found in the learned lecture delivered by Nripendra Nath Sircar in the
F Tagore Law Lectures series of the Calcutta University entitled "Law
of Arbitration in British India". After referring to the provisions of the
Bengal Regulation Act and the Madras Regulation Act, the learned
lecturer traces the history of the Law o( Arbitration in India in detail
commencing with Act VIII of 1859 which codified the procedure of
civil courts. Sections 312 to 325 of Act VIII of 1859 dealt with arbitra-
G tion between parties to a suit while sections 326 and 327 dealt with
arbitration without the intervention of a court. These provisions were
in operation when the Indian Contract Act, 1872, which permitted
settlement of disputes by arbitration under section 28 thereof as stated
at the commencement of this judgment came into force. Act VIII of
1859 was followed by later codes relating to Civil Procedure, namely,
H Act X of 1877 and Act XIV of 1882 but not much change was brought ~
p:-,
R.D.A. v. CHOKHAMAL CONTRACTORS IVENKATARAMIAH, J.] 151

about in the law relating to arbitration proceedings. It was in the year
A
1899 that an Indian Act entitled the Arbitration Act of 1899 came to be
passed. It was based on the model of the English Act of 1889. The 1899
Act applied to cases where if the subject-matters submitted to arbitra-
tion were the subject of a suit, the suit could whether with leave or
otherwise, be instituted in a Presidency town. Then came the Code of
Civil Procedure of 1908. Schedule II to the said Code contained the B
provisions relating to the law of arbitration which extended to the
other parts of British India. The Civil Justice Committee in 1925
recommended several changes in the arbitration law and on the basis
of the recommendations by the Civil Justice Committee, the Indian
Legislature passed the Act, i.e., the Arbitration Act of 1940, which is
currently in force. The salient provisions of the Act which are relevant
for purposes of this case are these. c
The Act as its preamble indicates is a consolidating and amend-
•• ing Act and is an exhaustive code in so far as the law relating to
arbitration is concerned. An arbitration may be without intervention
of a court or with the intervention of a court where there is no suit D
pending or it may be an arbitration in a suit. Unless there is an arbitra-
tion agreement to submit any present and future differences to arbitra-
tion to which a person is a party, he cannot be compelled to have a
dispute in which he is concerned settled by arbitration. The foundation
of any arbitration proceeding is therefore the existence of an arbitra-
tion agreement between the persons who are parties to the dispute. E
Every arbitration agreement unless a different intention is expressed
therein, shall be deemed to include the provisions set out in the First
Schedule to'the Act in so far as they are applicable to the reference.
The parties to an arbitration agreement may agree that any reference
thereunder shall be to an arbitrator or arbitrators to be appointed by a
·----'· person designated in the agreement either by name or as the holder for F
the time being of any office or appointment. The authority of an
appointed arbitrator or umpire cannot be revoked except with the
leave of the court, unless a contrary intention is expressed in the
arbitration agreement. An arbitration agreement does not come to an
end by death of parties thereto but shall in such event be enforceable
by or against the legal representative of the deceased. The authority G
of an arbitrator does not stand revoked by the death of any party by
whom he was appointed. In any of the following cases (a) whe;e an
arbitration agreement provides that the reference shall be to one or
more arbitrators to be appointed by consent of the parties, and all the
parties do not after differences have arisen, concur in the appointment
or appointments; or (b) if any appointed arbitrator or umpire neglects H
'I
152 SUPREME COURT REPORTS [1989] 3 S.C.R.

A or refuses to act, or is incapable of acting, or dies, and the arbitration
agreement does not show that it was intended that the vacancy should
Ill)! be supplied and the parties or the arbitrators, as the case may be,
do not supply the vacancy; or (c) where the parties or the arbitrators &-
are required to appoint an umpire and do not appoint him any party
may serve the other parties or the arbitrators, as the case may be, with
B a written notice to concur in the appointment or appointments or in
supplying the vacancy. If the appointment is not made within fifteen
clear days after th.e service of the said notice, the court may on the
application of the party who gave the notice and after giving the other
parties an opportunity of being heard, appoint an arbitrator or
arbitrators or umpire, as the case may be, who shall have like power to
C act on the reference, and to make an award as if he or they bad been
'""
-
appointed by consent of all parties. The Court may on an application
of any party to a reference remove an arbitrator or umpire who fails to
use all reasonable dispatch in entering on and proceeding with the
reference and making an award. The court may remove an arbitrator
or umpire who has misconducted himself or the proceedings. Where
D the court removes an umpire who has not entered on the reference or
one or more arbitrators (not being all the arbitrators), the court may
on the application of any party to the arbitration agreement, appoint
persons to fill the vacancies. The arbitrators or umpire shall, unless a
different intention is expressed in the agreement have power to
administer oath to the parties and witnesses appearing; state a special
E case for the opinion of the court on any question of law involved, or
state the award, wholly or in part, in the form of a special case of such
question for the opinion of the court; make the award conditional or in
the alternative; correct in an award any clerical mistake'or error aris-
ing from any accidental slip or omission; and administer to any party to
the arbitration such interrogatories as may, in the opinion of the
F arbitrators or umpire, be necessary. Section 14 of the' Act provides
that when the arbitrators or umpire have made their award, they shall
sign it and shall give notice in writing to the parties of the making and
signing thereof and of the amount of fees and charges payable in
respect of the arbitration and award. While an award should contain
the decision of the arbitrators or umpire of the case, as the case may
G be, the Act does not say in express terms that an award should contain
the reasons in support of the decision. The arbitrators or umpire shall
at the request of any party to the arbitration agreement or any person
claiming under such party or if so directed by the court and upon
payment of the fees and charges due in respect of the arbitration and
award and of the costs and charges of filing the award, cause the award
H or a signed copy of it, together with any depositions and documents
R.D.A. v. CHOKHAMAL CONTRACTORS [VENKATARAMIAH, J.) 153
··--r·
\ which may have been taken and proved before. them, to be filed in
A
court, and the court shall thereupon give notice to the parties of the
"' filing of the award. Sections 15, 16, 17 and 30 of the Act which. are
relevant for purposes of this case read as follows:

15. Power of the Court to modify award.-The Court
may by order modify or correct an award- B

(a) where it appears that a part of the award is upon c
matter not referred to arbitration and such part'
can be separated from the other part and does noi
affect the decision on the matter referred, or

(b) where the award is imperfect in form, or contains C
any obvious error which can be amended without
affecting such decision; or

(c) where the award contains a clerical mistake or an
error arising from an accidental slip or omission. D

16. Power to remit award. (1) The Court may from time to
time remit the award or any matter referred to- arbitration
to the arbitrators or umpire for reconsideration upon such
terms as it thinks fit-
E
(a) where the award has left undetermined any of the
matters referred to arbitration, or where it
determines any matter not referred to arbitration
and such matter cannot be separated without
J. affecting the determination of the matters; or
F
(b) where the award is so indefinite as to be incap-
able of execution; or

(c) where an objection to the legality of the award is
apparent upon the face of it.
G
(2) Where an award is remitted under sub-section (1) the
Court shall fix the time within which the arbitrator or
umpire shall submit his decision to the Court.

(3) An award remitted under sub-section (1) shall become
void on the failure of the arbitrator or umpire to reconsider H
154 SUPREME COURT REPORTS [1989) 3 S.C.R.

it and submit his decision within the time fixed.
A
17. Judgment in terms of award. Where the Court sees no
cause to remit the award or any of the matters rekrred to
arbitration for reconsideration or to set aside the award,
the Court shall, after the time for making an application to
B set aside the award has expired, or such application having y
been made, after refusing it, proceed to pronounce judg-
ment according to the award, and upon the judgment so
pronounced a decree shall follow and no appeal shall lie
from such decree except on the ground that it is in excess
of, or not otherwise in accordance with, the award.
c 30. Grounds for setting aside award.-An award shall not
be set aside except on one or more of the following
grounds, namely:

(a) that an arbitrator or umpire has misconducted
D himself or the proceedings;

(b) that an award has been made after the issue of an
order by the Court superseding the arbitration or
after arbitration proceedings have become in- _..l
valid under section 35;
E
(c) that an award has been improperly procured or is
otherwise invalid.

Section 15 of the Act deals with the power of the Court to modify
award. Section 16 of the Act deals with its power to remit an award
F and section 30 of the Act deals with the power of the Court to set aside
an award. Section 17 of the Act provides that where the court sees no
cause to remit the award or any of the matters referred to arbitration
for recon~ideration or to set aside the award, the court shall, after the
time for making an application to set aside the award has expired, or .
such application having been made, after refusing it, proceed to pro-
G nounce judgment according to the award, and upon the judgment so
pronounced a decree shall follow and no appeal shall lie from such y
decree except on the ground that it is in excess of, or not otherwise in
accordance with, the award. The period for getting an award remitted
for reconsideration or for setting it aside is prescribed under Article 119
of the Limitation Act, 1963. Section 39 of the Act provides that an
H appeal shall lie from the following orders passed under the Act; (!)
R.D.A. v. CHOKHAMAL CONTRACTORS {VENKATARAMIAH, J.l 155

superseding an arbitration; (2) on an award stated in the form of a
A
special case; (3) modifying or correcting an award; (4) filing or refus-
ing to file an arbitration agreement; (5) staying or refusing to stay legal
proceedings where there is an arbitration agreement; and (6) setting
aside or refusing to set aside an award and from no others to the court
authorised by law to hear appeals from original decree of the court
' '(. passing the orders. Section 46 of the Act makes the Act applicable to B
statutory arbitrations, save in so far as is otherwise provided by any
law for the time being in force, the provisions of the Act apply to all
~ statutory arbitrations. These are broadly the provisions of the Act
;;:...__which govern an arbitration proceeding.

In many of the cases in which awards are passed by arbitrators
~-under auspices of institutions like Chambers of Commerce it may not C
be necessary for the parties to the disputes to go to the Court to get
rules issued in terms of the awards since persons against whom awards
are mad.e would be willingly complying with the awards for it would be
in their interest to do so in order to maintain their prestige iii the
business world. But in other cases where there is no guarantee of ready D
compliance with the awards by those against whom they are made it
becomes necessary to take appropriate steps under the Act to get the
awards filed in the Court under section 14 of the Act and to seek the
__,C. assistance of the Court in getting decrees passed in terms of the awards
· 'so that the decrees can be executed through court for the realisation of
the fruits of the award. At the same time the Act provides the neces- E
sary machinery for getting the award remitted to the arbitrators or the
umpire, _as the case may be, for reconsideration or for getting the
award set aside in cases falling under section 30 thereof. Under -the
1 Indian Arbitration Act, 1899 which applied to areas lying within the
_)Presidency towns section 14 provided as follows:
F
"14. Where an arbitrator or umpire has misconducted
himself, or an arbitration or award has been improperly
procured, the Court may set aside the award."

This section was couched in the same language in which section
11(2) of the English Arbitration Act, 1889 was couched. Para 15 of the G
'-'(·Second Schedule to the Code of Civil Procedure, 1908 which was
applicable to the rest of British India read as follows:

"15. . ...... But no award shall be set aside except on one
of the following grounds, namely:
H
156 SUPREME COURT REPORTS [1989] 3 S.C.R.

(a) corruption or misconduct of the arbitrator or
A
umpire:

(b) either party having been guilty of fraudulent con-
cealment of any matter which he ought to have disclosed,
or of wilfully misleading or deceiving the arbitrator or
B umpire; ·y ·
(c) the award having been made after the issue of an
order by the Court superseding the arbitration and pro- . ,.__
ceeding with the suit or after the expiration of the period 1',
allowed by the Court, or being otherwise invalid." '
c Then followed the Act, i.e., the Indian Arbitration Act, 1940~
which extended to the whole of the British India w.e.f. July 1, 1940
superseding the Indian Arbitration Act, 1899 and the Second Schedule
to the Code of Civil Procedure, 1908. Section 30 of the Act provides
that an award shall not be set aside except on one or more of the
D following grounds, namely:

(a) that an arbitrator or umpire has misconducted himself or the
proceedings;
,_,,l,
(b) that an award has been made after the issue of an order by
E the Court superseding the arbitration or after arbitration pro-
ceedings have become invalid under section 35; .

( c) that an award has been improperly procured or is otherwise
invalid.
.\
F It may be noticed that the general ground, namely, the award
being 'otherwise invalid' for setting aside an award which appeared for
the first time in the Second Schedule to the Civil Procedure Code, 1908
was not to be found either in the Indian Arbitration Act, 1899 or in the
English Arbitration Act, 1889 which contained inter alia two grounds
for setting aside an award, namely:
G
(i) that an arbitrator or an umpire had misconducted himself; y
and ·

(ii) the award had been improperly procured.

H In connection with the English Arbitration Act, 1889 and the Indian
R.D.A. v. CHOKHAMAL CONTRACTORS [VENKATARAMIAH, J.l 157
- "'(
, Arbitration Act, 1899 certain principles had become well-settled A
although neither of these statutes made reference to illegality or error
apparent on the face of the award. In one of the cases frequently
referred to in later decisions, namely, Hodgkinson v. Fernie and
another, [1857] 3 C.B. (N.S.) 189=140 English Reports. p. 712 it was
recognised that the principle had been firmly established that where an
·y error of law appeared on the face of the· award or upon some paper B
accompanying or forming part of the award that constituted a ground
for setting aside the award. Williams, J. who agreed with Cockburn,
,,:._., C.J. in the said decision observed thus:

"I am entirely of the same opinion. The law has for many
years been settled, and remains so at this day, that, where a
cause or matters in difference are referred to an arbitrator,
c
whether a lawyer or a layman, he is constituted the sole and
final judge of all questions both of law and of fact. Many
cases have fully established that position, where awards
have been attempted to be set aside on the ground of the
admission of an incompetent witness or the rejection of a D
competent one. The court has invariably n1et those applica-
tions by saying, 'You ha·;e constituted your own tribunal;
you are bound by its decision.' The only exceptions to that
_J__ rule, are cases where the award is the result of corruption
or fraud, and one other, which, though it is to be regretted,
is now, I think, firmly established, viz. where the question E
of law necessarily arises on the face of the award, or upon
some paper accompanying and forming part of the award.
Though the propriety of this latter may very well be
doubted, I think it may be considered as established."
J.
In Champsey Bhara & Company v. Jivraj Balloo Spinning and F
Weaving Company Ltd., A.I.R. 1923 Privy Council, 66 which was a
case arising from the High Court of Bombay, the Privy Council follow-
ing the decision in Hodgkinson v. Fernie, (supra) observed thus:

"Now the regret expressed by Williams, J., in Hodgkinson
v. Ferme, (2) has been repeated by more than one learned G
Judge, and it is certainly not to be desired that the excep-
tion should be in any way extended. An error in law on the
face of the award means, in their Lordships' view, that you
can find in the award or a document actually incorporated
thereto, as for instance, a note appended by the arbitrator
stating the reasons for his judgment, some legal proposi- H
158 SUPREME COURT REPORTS [1989] 3 S.C.R.
'y
tion which is the basis of the award and which you can then
A
say is erroneous."

The ground arising out of an error of law apparent on the face of
the award prima facie appears to fall either under section 16{l)(c) of
the Act, which empowers the Court to remit the award to the ar-
B bitrator where an objection to the legality of the award which is appa- y
rent upon the face of it is successfully taken, or under section 30(c) of
the Act which empowers the Court to set aside an award if it is
'otherwise invalid'. The following two decisions relied on the said two
provisions of law respectively. ,.,, ·""
r-

c [1955]This Court in Seth Thawardas Pherumal v. The Union of India,
2 SCR 48 approved the view expressed in the case of Champsey ·~
Bhara & Company (supra) in the following words at pages 53-54 thus:

"In India this question is governed by section 16( 1)( c) of
the Arbitration Act of 1940 which empowers a Court to
D remit an award for reconsideration 'where an objection to
the legality of the award is apparent upon the face of it'.
This covers cases in which an error of law appears on the
face of the award. But in determining what such an error is,
a distinction must be drawn between cases in which a ques- ).._
tion of law is specifically referred and those in which a
E decision on a question of law is incidentally material {how-
ever necessary) in order to decide the question actually
referred. If a question of law is specifically referred and it is '

evident that the parties desire to have a decision from the
arbitrator about that rather than one from the Courts, then
the Courts will not interfere, though even there, there is 1..
F authority for the view that the Courts will interfere if it is
apparent that the arbitrator has acted illegally in reaching
his decision, that is to say, if he has decided on inadmissible
evidence or on principles of construction that the law does
not countenance or something of that nature. See the
speech of Viscount Cave in Kelantan Government v. Duff
G Development Co., [1923] A.C. 395 at page 409. But that is
not a matter which arises in this case. y

The law about this is, in our opinion, the same in
England as here and the principles that govern this class of
case have been reviewed at length and set out with clarity
H by the House of Lords in F.R. Absalom Ltd. v. Great
R.D.A. v. CHOKHAMAL CONTRACTORS IVENKATARAMIAH, J.] 159
. '-(
Western (London) Garden Village Society, [1933] A.C. 592
A
and in Kelantan Government v. Duff Development Co.,
[1923] A.C. 395. In Durga Prasad v. Sewkishendas, 54
C.W.N. 74, 79) the Privy Council applied the law expoun-
ded in Absalom's case [1933] A.C. 592 to India: see also
-.,... Champsey Bhara & Co. v. Jivraj Balloo Spinning and
Weaving Co., 50 I.A. 324, 330 & 331 and Saleh Mahomed B
Umer Dossal v. Nathoomal Kessamal, 54 I.A. 427, 430.
The wider language used by Lord Macnaghten in Chu/am
Jilani v. Muhammad Hassan, 29 I.A. 51, 60 had reference
""-
~ to the revisional powers of the High Court under the Civil
Procedure Code and must be confined to the facts of that
case where the question of law involved there, namely limi-
''.>-· talion, was specifically referred. An arbitrator is not a con- c
ciliator and cannot ignore the law or misapply it in order to
do what he thinks is just and reasonable. He is a tribunal
selected by the parties to decide their disputes according to
law and so is bound to follow and apply the law, and if he
does not, he can be set.right by the Courts provided his D
error appears on the face of the award. The single excep-
tion to this is when the parties choose specifically to refer a
question of law as a separate and distinct matter."
~
In Jivarajbhai Ujamshi Sheth and Others v. Chintamanrao Balaji
and Others, [1964] 5 SCR 480 this Court held that an award can be set E
aside on the ground of error of law apparent on the face of the record
under section 30 of the Act but it qualified the above legal position by
saying that the Court while dealing with the application for setting
aside an award has no power to consider whether the view of the
I
) arbitrator on the evidence was justified according to this Couri. The
arbitrator's justification was generally considered binding between the F
parties for it was a tribunal selected by the parties and the power of the
Court to set aside the award was restricted to cases set out in section
30. The Court further observed that it was not open to it to speculate,
where no reasons are given by the arbitrator, as to what impelled the
arbitrator to arrive at his conclusion. The Court declined to recognise
the power of the Court to attempt to probe the mental process by G
·y which the arbitrator had reached his conclusion where it was not
' disclosed by the terms of his award. The relevant part of the above
decision reads thus:

"An award made by an arbitrator is conclusive as a
judgment between the parties and the Court is entitled to H
160 SUPREME COURT REPORTS [1989] 3 S.C.R

A set aside an award if the arbitrator has misconducted him-
self ih the proceedings or when the award has been made
after the issue of an order by the Court superseding the
arbitration or after arbitration proceedings have become
invalid under section 35 of the Arbitration Act or where an
award has been improperly procured or is othernise
B invalid: s. 30 of the Arbitration Act. An award may be set
aside by the Court on the ground of error on the face of the
.award, but an award is not invalid merely because by a
process of inference and argument it may be demonstra- _.,,,
ted that the arbitrator has committed some mistake in ar-
riving at his conclusion. As observed in Champsey Bhara
and Company v. JivrajBallo Spinning and Weaving Com-
c pany Ltd., L.R. 50 I.A. 324 at p. 331: ~

'An error in law on the face of the award means, in
their Lordships' view, that you can find in the award or a
document actually incorporated thereto, as for instance a
D note appended by ihe arbitrator stating the reasons for his
judgment, some legal 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 conten-
tion of one party, that opens the door to seeing first what .l_
that contention is, and then going to the contract on which
E the parties' rights depend to see if that contention is
sound.'

The Court in dealing with an application to set aside an
award has not to consider whether the view of the
arbitrator on the evidence is justified. The arbitrator's .\.._
F adjudication is generally considered binding between the
parties, for he is a tribunal selected by the parties and the
power of the Court to set aside the award is restricted to
cases set out in s. 30. It is not open to the Court to specu-
late, where no reasons are given by the arbitrator, as to
what impelled the arbitrator to arrive at his conclusion. On
G the assumption that the arbitrator must have arrived at his
conclusion by a certain process of reasoning, the Court y
cannot proceed to determine whether the conclusion is
right or wrong. It is not open to the Court to attempt to
probe the mental process by which the arbitrator has
reached his conclusion where it is not disclosed by the
H terms of his-award."
R.D.A. v. CHOKHAMAL CONTRACTORS IVENKATARAMIAH, J.] 161

The same view was expressed by this Court in Bungo Steel Furni- A
lure Pvt. Ltd. v. Union of India, [1967] 1 S.C.R. 633. There have been
a number of decisions of this Court on the above question and it is not
necessary to refer to all of them except to refer to a recent decision in
State of Rajasthan v. Mis. R.S. Sharma and Co., [1988] 4 S.C.C. 353
dedded by Sabyasachi Mukharji and S. Ranganathan, JJ.
B
It is now well-settled that an award can neither be remitted nor
set aside merely on the ground that it does not contain reasons j~
. support of the conclusion or decisions reached in it except where the
.,~arbitration agreement or the deed of subniission requires him to give
reasons. The arbitrator or umpire is under no obligation to give
reasons in support of the decision reached by him unless under the C
r arbitration agreement or in the deed of submission he is required to
give such reasons and if the arbitrator or umpire chooses to give
reasons in support of his decision it is open to the Court to set aside the
award if it finds that an error of Jaw has been committed by the ar-
bitrator or umpire on the face of the record on going through such
0
reasons. The arbitrator or umpire shall have to give reasons also where
the court has directed in any order such as the one made under section
20 or section 21 or section 34 of the Act that reasons should be given or
where the statute which governs an arbitration requires him to do so.

The Law Commission of India, however, had occasion to con-
sider the question whether it should be made obligatory on the part of E
the arbitrator or umpire to give reasons in support of the award in the
cou~se of its Seventy-sixth Report on Arbitration Act, 1940 which was
submitted in 1978. The relevant part of the report of the Law Commis-
sion on the above question reads thus:
) "4.42A. Before leaving section 14, it is necessary to deal F
with one suggestion that has been made to the effect that an
arbitrator must be required to give reasons for the award.
This suggestion was made by the Public Accounts Commit-
tee (1977-78), Sixth Lok Sabha, Ninth Report, dealing with
the Forest Department, Andaman. The suggestion has
been brought to our notice by the Ministery of Law. The G
Committee, after expressing its unhappiness over the man-
ner in which certain arbitration cases which formed the
subject-matter of the Report had been pursued, and after
noting the delay that took place in the disposal of cases,
made the following observations:
H
162 SUPREME COURT REPORTS [1989] 3 S.C.R.
y
'In this distressing story, Government has repeatedly
A
suffered loss. In the first arbitration case, Govern-
ment's claim for royalty on shortfall of extraction was
not upheld. As the arbitrator's award gave no
reasons, Government could not even find out why
their claim was rejected. It will be strange if Govern-
B ment really finds itself so helpless in such case. The 'r
Committee would like Government to make up its
mind and amend the law in such a manner that it
would be obligatory on the arbitrator to give reasons
for his award. Meanwhile, it should be ascertained ~
...
whether in an award which sets out no reasons the
aggrieved party would have no remedy whatever.'
c
4.43. We have also been informed that the Public
Accounts Committee (1975-76), in its 210 Report, has
observed as follows (Public Accounts Committee-197-
76, 210th Report, page 136, para 5.17):
D
'Incidentally, the Committee also find that under the
Arbitration Act, the Arbitrator is not bound tn give
any reason for the award. The result is that often it
becomes difficult to challenge such non-speaking
awards on any particular ground. The Committee are
E of the view that it should be made obligatory on
arbitrators to give detailed reasons for their awards so
that they may, if necessary, stand the test ofobjective
judicial scrutiny. The Committee desire that this
aspect should be examined and the necessary provi-
sion brought soon on the statute book.'
F
4.44. We· have given careful consideration to the sugges-
tion that the arbitrator should be required to give reasons.
And we appreciate the embarrassment that must be caused
to the Government by such awards in the cases referred to
by the Public Accounts Committee in its Report referred to
G above. We are also not unmindful of the fact that the public
interest might sometimes suffer by awards which are not Y"
supported by reasons. But we regret that we are unable to
persuade ourselves to accept the suggestion for amending
the law. Our reasons for this conclusion will be set out
presently. These reasons are, in our view, weighy enough
H to override other considerations.
R.D.A. v. CHOKHAMAL CONTRACTORS [VENKATARAMIAH, J.I 163
·-.(
\ 4.45. There are, it seems to us, several consideration that
A
are relevant in determining the question whether an
arbitrator should be required by Jaw to give reasons for the
award.

The scheme of the Arbitration Act is to provide a
domestic forum, for speedy and substantial justice, B
untrammelled by legal technicalities, by getting the dispute
resolved by a person in whom the parties have full faith and
confidence. The award given by such a person under the
scheme of the Act can be assailed only on very limited
ground like those mentioned in section 30 of the Act. The
result is that most of the awards at present are made rules c .
of the court despite objections to their validity by the party
against whom those awards operate. To have a provision
making it obligatory for the arbitrator to give reasons for
the award would be asking for the introduction of an in-
firmity in the award which in most cases is likely to prove
fatal. Many honest awards would thus be set aside. D

Once the arbitrators are compelled to give reasons in
support of the award, the inevitable effect of that would be
that the validity of most of the awards would be challenged
on the ground that the reasons, or at least some of them,

-
are bad and not germane to the controversy. Sometimes, if E
four reasons are given in support of the award and one of
the reasons is shown to be not correct or not germane, the
award would be challenged on the ground that it is difficult
to predicate as to how far the bad reason which is not
) germane has influenced the decision of the arbitrator.
Many awards would not survive court scrutiny in such F
circumstances.

4.46. It is also noteworthy that in a large number of cases
the arbitrators would be laymen. Although their final
award may be an honest and conscientious adjudication of
the controversy and dispute, they may not be able to insert G
reasons in the award as may satisfy the legal requirements
and the scrutiny of the court. The arbitrators having been
chosen by the parties, it would, in our opinion, be not
correct to put extra burden on them of also giving reasons
which are strictly rational and germane in the eye of law in
support of their award. Once the parties have voluntarily H
164 SUPREME COURT REPORTS [1989] 3 S.C.R.

chosen the arbitrators, presumably because they have faith
A
in their impartiafity, the law should not insist upon the
recording of reasons by them in their award.

4.47. The previous experience, in fact, points out that it is
awards incorporating reasons which have generally been
B quashed in court. The awards not giving reasons have y
survived the attack on their validity, unless the arbitrator is
otherwise shown to have misconducted himself or his
award suffers from some other technical defect. >

Once we have the compulsion for the incorporation
. c of reasons in the award given by the arbitrators, validity of
most of the awards, in our opinion, would not be able to
survive in court. As such, the object of the Arbitrations
Act would be substantially defeated.

4.48. Once Parliament provides that reasons shall be
D given, that must clearly be read as meaning that proper,
adequate, reasons must be given; the reasons tt.at are set
out, whether they are right or wrong, must be reasons
which not only will be intelligible, but also can reasonably
be said to deal with the substantial points that have been
raised. If the award in any way fails to comply with the
E statutory provisions, then it would be a ground for saying
that the award was bad on the face of it, as Parliament has •,
required that reasons shall be incorporated (Of. Re Poyser
& Mills Arbitration, (1964) 2 Q.B. 467; (1963) 1 All E.R.
612, 616 (Megaw J.).

F It is well established that where the arbitrator gives
reasons for a conclusion of law, courts can go into those
reasons. (Champsey Bhara & Co. v. J.B. Spinning & Weav-
ing Co. Ltd., A.LR. 1923 P.C. 66; S. Dutt v. University of
Delhi, A.LR. 1958 S.C. 1050.

G 4.49. It is sometimes stated that since an arbitrator is
bound to apply the law, there should be some means of y
ensuring that he applied the law correctly. However, it is
also to be remembered that parties resort to an arbitration
voluntarily and select or agree to a particular arbitrator,
because, inter alia,
H
R.D.A. v. CHOKHAMAL CONTRACTORS [VENKATARAMIAH, J.] 165

(i) they have faith in him, and
A
(ii) the proceedings will be more speedy and free
from technicalities than in the courts.

The object of achieving speed and informality is
likely to be largely frustrated if a statutory provision makes B
it compulsory to give reasons for the award. The general
rule is that the parties cannot object to the decision given
by their own judge, except in case of misconduct and the
like. (Government of Kelantan v. DuffDeve/opment Co.
Ltd., [1923) A.C. 395; Russell (1970), pages 359, 360). This
general principle should not be departed from unless
weighty reasons exist for such departure.
c

No doubt, it is desirable that the award should be
correct in law. But the fundamental question is, how far
should the finality of the award yield to the desirability of
legal correctness, and what procedural requirements D
should be insisted upon to ensure that the award is sound in
law? In this connection, reference may be made to the
observations of Barwick C.J. (of the High Court of
Australia). Tata Products Pvt. Ltd. v. Hutcheson Bros.
Pvt. Ltd., [1972) 127 C.L.R. 253, 258; (1972) Australia
Law Journal Reports 119 (Australia). He observed that E
'finality in arbitration in the award of the lay arbitrator is
more significant than legal propriety in all his processes in
reaching that award.'

J The importance which the law attaches to the finality
of arbitration goes against the suggestion now put forth for F
giving reasons for an award. A requirement that the
reasons for an award should be given would open too wide
a door for challenging the award, even if the grounds for ·
setting aside are, by statute, restricted in other respects.

4.50. For these reasons, we are not inclined to recommend G
a provision requiring the arbitrator to give reasons for the
award."

Thus it is seen that the Law Commission did not recommend the
inclusion of a provision in the Act requiring the arbitrator or umpire to
give reasons for the award. H
166 SUPREME COURT REPORTS [19891 3 S.C.R.

A It is not disputed that in India it had been firmly established till
the year 1976 that it was not obligatory on the part of the arbitrator or
the umpire to give reasons in support of the award when neither in the
arbitration agreement nor in the deed of submission it was required
that reasons had to be given for the award (vide Firm Madan/al
Roshanlal Mahajan v. Hukumchand Mills Ltd., Indore, (1967] 1
B S.C.R. 105; Bungo Steel Furniture Pvt. Ltd. v. Union of India, (supra)
y
and N. Chellappan v. Secretary, Kera/a State Electricity Board &
Another, (1975] 2 S.C.R. 811. It is, however, urged by Shri Fali S.
N ariman, who argued in support of the contention that in the absence
of the reasons for the award, the award is either liable to be remitted
or set aside, that subsequent to 1976 there has been a qualitative
change in the law of arbitrati<:>n and that it has now become necessary
c to insist upon the arbitrator or the umpire to give reasons in support of
the award passed by them unless the parties to the dispute have agreed
that no reasons need be given by the arbitrator or the umpire for his
decision. Two main submissions are made in support of the above
contention. The first submission is that an arbitrator or an umpire
o discharges a judicial function while functioning as an arbitrator or an
umpire under the Act, and, therefore, is under an obligation to
observe rules of natural justice while discharging his duties, as
observed by this Court in Payyavula Vengamma v. Payyavula Kesanna
and others, (1953] S.C.R. 119. This Court relied in that decision upon ,
the observations made by Lord Langdale M.R. in Harvey v. Shelton,
E [ 1844] 7 Beav. 455 at p. 462 which read thus:

"It is so ordinary a principle in the administration of
justice, that no party to a cause can be allowed to use any
means whatsoever to influence the mind of the Judge,
which means are not known to and capable of being met
F and resisted by the other party, that it is impossible, for a
moment, not to see, that this was an extremely indiscreet
mode of proceeding, to say the very least of it. It is contrary
to every principle to allow of such a thing, and I wholly
deny the difference which is alleged to exist between
mercantile arbitrations and legal arbitrations. The first
G principle of justice must be equally applied in every case.
Except in the few cases where exceptions are unavoidable,
both sides must be heard, and each in the presence of the
other. In every case in which matters are litigated, you
must attend to the representations made on both sides, and
you must not, in the administration of justice, in whatever
H form, whether in the regularly constituted Courts or in ar-
R.D.A. v. CHOKHAMAL CONTRACTORS [VENKATARAMIAH, J.] 167

bitrations, whether before lawyers or merchants, permit
A
one side to use means of influencing the conduct and the
decisions of the Judge, which means are not known to the
other side."

This Court also relied on the decision in Haigh v. Haigh, [1861]
y 31 L.J. Ch. 420 which required an arbitrator to act fairly in the course B
of its duties. The two well recognised principles of natural justice are
(i) that a Judge or an arbitrator who is entrusted with the duty to
decide a dispute should be disinterested and unbiased (nemo judex in
,., cause sua); and (ii) that the parties to dispute should be given adequate
. 'notice and opportunity to be heard by the authority (audi alteram
partem) (See Administrative Law by H.W.R. Wade, Part V and Judi-
).- cial Review of Administrative Action by S.A. de Smith, Third Edition, c
Chapter 4). Giving reasons in support ofa decision was not considered
to be a rule of natural justice either under the law of arbitration or
under administrative law.

In Som Datt Datta v. Union of India and Ors., [1989] 2 S.C.R. D
177 a Constitution Bench of this Court held that there was no obliga-
tion on the part of an administrative or statutory tribunal to give
reasons for the order passed by it. The releva,nt part of the said deci-
_,..A- sion in which this Court considered the prevailing legal decision in
England at the time reads thus:
E
"In the present case it is manifest that there is no
express obligation imposed by s. 164 or by s. 165 of the
Army Act on the confirming authority or upon the Central
' Government to give reasons in support of its decision to
J confirm the proceedings of the Court Martial. Mr. Dutta
has been unable to point out any other section of the Act or F
any of the rule made therein from which necessary implica-
tion can be drawn that such a duty is cast upon the Central
Government or upon the confirming authority. Apart from
any requirement imposed by the statute or statutory rule
either expressly or by necessary implication, we are unable
to accept the contention of Mr. Dutta that there is any G
general principle or any rule of natural justice that a statu-
tory tribunal should always and in every case give reasons
in support of its decision.

In English law there is no general rule apart from the
statutory requirement that the statutory tribunal should H
168 SUPREME COURT REPORTS [1989] 3 S.C.R.

give reasons for its decision in"every case. In Rex."'· Nor-
r--
A
thumberland Compensation Appeal Tribunal, [1952] 1 K.B.
338, it was decided for the first time by the Court of Appeal
that if there was a 'speaking order' a writ of certiorari could
be granted to quash the decision of an inferior court or a
statutory tribunal on the ground· of error on the face of
B record. In that case, Denning, L.J. pointed out that the )'
record must at least contain the document which initiates
the proceedings; the pleadings, if any, and the adjudica-
tion, but not the evidence, nor the reasons, unless the '-
tribunal chooses to incorporate them in its decision. It was
""
observed that if the tribunal did state its reasons and those
reasons were wrong in law, a writ of certiorari might be
c granted by the ljigh Court for quashing the decision: In ~
that case the statutory tribunal under the National Health
Service Act, 1946 had fortunately given a reasoned deci-
sion; in other words, made a 'speaking order' and the High
Court could hold that there was an error of law on the face
D of the record and a writ of certiorari may be granted for
quashing it. But the decision in this case led to an anoma-
lous result, for it meant that the opportunity for certiorari
depended on whether or not the statutory tribunal chose to
give reasons for its decision, in other words, to make a ~-
'speaking order'. Not all tribunals, by any means, were
E prepared to do so and a superior court had no power to
compel them to give reasons except when the statute
required it. This incongruity was remedied by the Tribunals
and Inquiries Act, 1958 (s. 12), (6 & 7 Elizabeth 2 c. 66),
which provides that on request a subordinate authority
must supply to a party genuinely interested the reasons for
F its decision. Section 12 of the Act states that when a
tribunal mentioned in the First Schedule of the Act gives a
'
decision it must give a written or oral statement of the
reasons for the decision, if requested to do so on or before
the giving or notification of the decision. The statement
may be refused or the specification of reasons restricted on
G grounds of national security, and the tribunal may refuse to
give the statement to a person not principally concerned y
with the decision if it thinks that to give it would be against
the interest of any person primarily concerned. Tribunals
may also be exempted by the Lord Chancellor from the
duty to give reasons but the Council on Tribunals must be
H consulted on any proposal to do so. As already stated,
R.D.A. v. CHOKHAMAL CONTRACTORS [VENKATARAMIAH, J.) 169

there is no express obligation imposed in the present case A
either bys. 164 or bys. 165 of the Indian Army Act on the
confirming authority or on the Central Government to give
reasons for its decision. We have also not been shown any
other section of the Army Act or any other statutory rule
from which the necessary implication can be drawn that
such a duty is cast upon the Central Government or upon B
the confirming authority. We, therefore, reject the argu-
ment of the petitioner that the order of the Chief of the
Army Staff, dated May 26, 1967 confirming the finding of
the Court Martial under s. 164 of the Army Act or the
order of the Central Government dismissing the appeal
under s. 165 of the Army Act are in any way defective in
law." c
It is, however, urged that this Court omitted to notice an earlier
decision of a Constitution Bench of this Court in Bhagat Raja v. The
Union of India & Ors., (1967] 3 S.C.R. 302 and therefore, the decision
in Som Datt Datta, (supra) should be considered as a decision per in D
curiam. The point involved in Bhagat Raja' case (supra) was whether
in dismissing a revision petition filed under the Mines & Minerals
(Regulation and Development) Act, 1957 and the rules made thereun-
der, the Union of India was bound to make a speaking order. Tb.is
Court held that under the Mines & Minerals (Regulation and Develop·
ment) Act, 1957 the Central Government while deciding a revision E
petition was required to act judicially as a tribunal and an appeal could
be filed against the said decision before this Court under Article 136 of
the Constitution of India. ln order to make the right of appeal effec-
tive it was necessary that the Central Government should pass a
reasoned order so that this Court might decide whether the case had
been properly decided by the Central Government or not and in the F
absence of the reasons the order of the Central Government was liable
to be reversed. The relevant part of the judgment of this Court in
Bhagat Raja's, case (supra) reads thus:

"Let us now examine the question as to whether it was
incumbent on the Central Government to give any reasons G
'y for its decision in review. It was argued that the very exer-
cise of judicial or quasi judicial powers in the case of a
tribunal entailed upon it an obligation to give reasons for
arriving at a decision for or against a party. The decisions
of tribunals in India are subject to the supervisory powers
of the High Courts under Art. 227 of the Constitution and H
170 SUPREME COURT REPORTS [1989] 3 S.C.R.

of appellate powers of this Court under Art. 136. It goes
A
without saying that both the High Court and this Court are
placed under a great disadvantage if no reasons are given
and the revision is dismissed curtly by the use of the single
word 'rejected', or, 'dismissed'. In such case, this Court
can probably only exercise its appellate jurisdiction satis-
B factorily by examining the entire records of the case and
after giving a hearing come to its conclusion on the merits
of the appeal. This will certainly be a very unsatisfactory
method of dealing with the appeal. Ordinarily, in a case
like this, if the State Government gives sufficient reasons
for accepting the application of one party and rejecting that
of the others, as it must, and the Central Government
c adopts the reasoning of the State Government, this Court
may proceed to examine whether the reasons given are
sufficient for the purpose of upholding the decision. But,
when the reasons given in the order of the State Govern-
ment are scrappy or nebulous and the Central Government
D makes no attempt to clarify the same, this Court, in appeal
may have to examine the case de novo without anybody
being the wiser for the review by the Central Government.
If the State Government gives a number of reasons some of
which are good and some are not, and the Central Govern-
ment merely endorses the order of the State Government
E without specifying those reasons which according to it are
sufficient to uphold the order of the State Government,
this Court, in appeal, may find it difficult to ascertain which
are the grounds which weighed with the Central Govern-
ment in upholding the order of the State Government. In
such circumstances, what is known as a 'speaking order' is _\
F called for."

A careful reading of this decision shows that it is not based on the
ground that the order of the Central Government was not in
conformity with the principles of natural justice but on the ground that
the order of the Central Government was subject to the supervisory
G powers of the High Courts under Article 227 of the Constitution of
India and the appellate powers of this Court under Article 136 of the
Constitution of India. It is no doubt true that in Siemens Engineering
& Manufacturing Co. of India Limited v. Union of India & Anr.,
I 1976] Supp. SCR 489 a Bench of three Judges of this Court held that
every quasi judicial order of a tribunal must be supported by reasons
H and the rule requiring the reasons to be given in support of the order
R.D.A. v. CHOKHAMAL CONTRACTORS lVENKATARAMIAH, J.] 171
-(
was like the principles of audi alteram partem, a basic principle of A
natural justice whi~h must involve every quasi judicial process and that
the said rule should be observed in this proper spirit. In that case again
the order whose validity had· been questioned in this Court in an ap-
peal filed \lnder Article 136 of the Constitution of India was an order
passed by the Central Government under the Customs Act. A reading
"Y of the decision in this case shows that this Court felt that the rule B
requiring reasons in support of an order was a rule not covered by the
principle audi alteram partem but an independent principle of natural

• justice. We have already observed that the two recognised principles
of natural justice were (i) that a Judge or an umpire who is entrusted
with the duty to decide a dispute should be disinterested and unbiased
(nemo judex in causa sua); and (ii) that the parties to dispute should be c
~ given adequate notice and opportunity by the authority (audi alteram
pllrtem). For the first time this Court laid down that the rule requiring
reasons in support of an order is a third principle of natural justice. It
may be as observed in Bhagat Raja's case (supra) that the Court may
require a tribunal to give reasons in support of its order in order to
make the exercise of power of the High Courts under Articles 226 and D
227 of the Constitution of India and the powers of this Court under
Article 136 of the Constitution of India effective. It is further urged

l relying upon the decisions of this Court in Associated Cement Com-
panies Ltd. v. P.N. Sharma and Another, [1965] 2 S.C.R. 366 and
A.K. Kraipak & Ors. etc. v ... Union of India & Ors., [1970] 1 S.C.R.
457 that the concept of natural justice had undergone a great deal of E
~hange in recent years. It is argued that while originally there were two
rules of natural justice in course of time many more subsidiary rules
had come to be added to the rules or natural justice and, therefore, in
the same way the requirement of giving reasons for a decision should
_) be treated as a new rule of natural justice.
F
The second main submission made in support' of the necessity of
giving reasons for the award is that since the arbitrator or umpire is
required to make an award in accordance with law as held by this
Court in Seth Thawardas Pherumal's case (supra) and several other
cases decided by this Court and since under section 16(1)(c) of the Act
the legality of an award can.be questioned in Court on the basis of an G
' 'f error apparent on the face of an award the only way of ensuring that an
award is in accordance with law is by insisting upon the arbitrator or
umpire to give reasons for the award. It is urged that if no reasons are
disclosed it would not be possible for the Court to find out whether an
award has been passed in accordance with Jaw or not.
H
172 SUPREME COURT REPORTS [1989] 3 S.C.R.

A Our attention is drawn to the existence of the safeguard in the
English Law of Arbitration (before the English Arbitration Act, 1979)
for ensuring that an arbitrator deciding a dispute judicially and in
accordance with the requirement of the parties to the agreement that
the dispute be decided according to law in the form of the power of the
Court to compel the arbitrator to state his award in the form of a
B special case under section 21 of the Arbitration Act, 1950. It is submit-
ted that the provision with regard to the statement of the case by an
arbitrator to the Court contained in clause (b) of section 13 of the Act,
i.e., the Indian Arbitration Act, 1950, being one which could be exer-
cised at the option of the arbitrator and there being no power for the
Court to compel the arbitrator to state. a case for its decision, the only
way of ensuring that the arbitrator kept within the bounds of law is to
c compel him to give reasons for his award. Our attention is also drawn
to the Report on Arbitration made by the Commercial Court Commit-
tee presided over by Justice Donaldson (now Master of Rolls) in which
certain recommendations were made in order to improve the proce-
dure which was prevailing in England with regard to the power of
D judicial review of the decisions of the arbitrators. In the course of the
said report, the Commercial Court Committee has observed thus:

"Supervisory powers

3. All systems of law provide for some degree of
judicial supervision of arbitral proceedings and awards.
These powers enable the Courts to intervene in cases of
fraud or bias by the arbitrators, contravention of the rules
of natural justice or action in excess of jurisdiction. In the
case of the English Courts these powers are conferred by
sections 22, 23 and 24 of the Arbitration Act, 1950. -\__
F
Powers of review

4. Most systems of law adopt the philosophy that the
parties, having chosen their own tribunal, must accept its
decisions ""with all faults'". Accordingly, they make no, or
G very little, provision for a review by the Courts of arbitral
decisions which may be based upon erroneous conclusions 'y
of fact or law. Until recently the law of Scotland was based
upon this philosophy. However, this has never been the
approach of the law of England or of some systems derived
from the law. English law provides for two different forms
H of review, namely by motion to set aside the award for
R.D.A. v. CHOKHAMAL CONTRACTORS IVENKATARAMIAH, J.] 173
·~
error on its face and by a reference to the High Court of an
A
award in the form of a special case.

(a) Setting aside an award for error on its face

5. Under English law the Courts have jurisdiction to
.. "!'.
set aside any arbitral award if it appears from the award B
itself or from documents incorporated in the award that the
arbitrator has reached some errnneous conclusion of fact or
law. The Court cannot correct the error. It can only quash
the award leaving the parties free to begin the arbitration
again.

6. As a result of the existence of this power, English
c
arbitrators customarily avoid giving any reasons for their
awards, confining themselves that A should pay B a
specified sum. Where the parties wish to know the reasons
for the award or the arbitrator wishes to give them, this is
achieved by giving the reasons in a separate document D
which expressly states that it is not part of the award and by
obtaining an undertaking from the parties that they will not
seek to refer to or use the reasons for the purposes of any
legal proceedings. The general pattern is, however, that
English awards are given without reasons.
E
7. In this important respect English arbitral awards
differ from those of most other countries. In the case of
arbitrations held under the laws of Belgium, the Federal
Republic of Germany, France, Italy and the Netherlands,
the giving of reasons is normally obligatory. When it comes
to enforcing an English arbitral award in a foreign country, F
there is always some doubt whether objection may not be
taken to it on the ground that it is "unmotivated", to use
the continental term, although the Committee knows of no
case in which this objection has yet been upheld.

G
y The alternative of judicial review based on reasoned
awards

25. The existing obstacle to a judicial review based
upon reasoned awards is the power and the duty of the
Court to set aside awards for error on their face. This H
174 SUPREME COURT REPORTS [1989] 3 S.C.R.

obstacle could easily be removed and this system would
A
then have consideFable attractions.

26. In every case an arbitrator would be free to give
reasons for his award. This would in itself be an improve-
ment, if arbitrators took advantage of the facility. The
B making of an award is, or should be, a rational process.
Formulating and recording the reasons tends to accentuate
its rationality. Furthermore, unsuccessful parties will
often, and not unreasonably, wish to know why they have
been unsuccessful. This change in the law would make this
possible.
c 27. tiiven a reasoned award, an unsuccessful party
could know whether he had a just cause for complaint.
Where no reasons were given initially and he thought that
an error had been made, he could ask for reasons to be
supplied. If the arbitrator refused to supply them, the
D Court could, in appropriate cases, order him to do so. This
would be no great burden on the arbitrator provided that
the application ~as made promptly. He would have had
some reasons for making the award and all that he would
need to do would be to summarize them in ordinary
language. Nothing formal would be required.
E
28. Armed with the reasons for an award, the un-
successful party could apply to the Court for leave to
appeal. The right of appeal could be restricted to questions
of law arising out of the decision, leaving all questions of
fact to be decided finally by the arbitrator. Furthermore, -\__
F unlike the position when the Court is being asked to order
an arbitrator to state an award in the form of a special case,
the Court would know whether any particular question of ,
law really arose for decision since both it and the parties
would have access t~ the facts as found by the arbitrator.
Additional restrictions could be imposed on the circums-
G tances in which leave to appeal would be given and in which
a further appeal to the Court of Appeal would be per- y
milted.

29. An additional advantage of a change to reasoned
awards lies in the fact that this would tend to assimilate
H English awards to those made in other countries, thus mak-
R.D.A. v. CHOKHAMAL CONTRACTORS (VENKATARAMIAH, J.] 175

ing English awards more acceptable and readily enforce-
A
able abroad.

30. Finally, there would be the great advantage that
every award would be a final award and immediately
enforceable as such, subject only to the right of the Court in
appropriate cases to impose a stay of execution pending an B
appeal. Such a stay could, of course, be granted subject to
conditions, such as that the amount awarded be brought
into Court.
.~
31. In a word, a system of judicial review based upon
reasoned awards would place very grave obstacles in the
way of those seeking unmeritoriously to avoid meeting
c
their just obligations, would improve the standard of
awards and would render them more easily and speedily
enforceable. The same system is used for the review of
decisions of the industrial tribunals and of the restrictive
Practices Court and has worked well .• D

Recommendations on judicial review

l 32. In the light of these considerations the Commit-
tee makes the recommendations set out below.
E
33. The system of judicial review based upon the
special case procedure should be replaced by one based
upon reasoned awards. This would involve comparatively
minor amendments to the 1950 Act. Section 21 would be
) repealed and the Court would be deprived of the power
and duty to set an award aside because of errors of fact or F
law on the face of the award. Arbitrators would be
encouraged to give reasons for their awards, but would
only be obliged to do so if it was necessary for the purposes
of the new review procedure. A new section 21 would
define the right of appeal to the High Court.
G
34. The new right of appeal would be confined to ·
questions of law, all decisions on questions of fact being for
the arbitrator alone."

After the submission of the report the British Parliament enacted
the Arbitration Act, 1979. Sub-sections (1), (2), (5) and (6) of section H
176 SUPREME COURT REPORTS [1989] 3 S.C.R.

A 1 of the English Arbitration Act, 1979 which are material in this case
read thus:

"1. Judicial review of arbitration awards-(1) In the arbit-
ration Act 1950 (in this Act referred to as 'the principal
Act') section 21 (statement of case for a decision of the
B High Court) shall cease to have effect and, without pre-
judice to the right of appeal conferred by sub-section (2)
below, the High Court shall not have jurisdiction to set
aside or remit an award on an arbitration agreement on the
ground of errors of fact or law on the face of the award.

(2) Subject to sub-section (3) below, an appeal shall
c lie to the High Court on any question of law arising out of
an award made on an arbitration agreement; and on the
determination of such an appeal the High Court may by
order-

D (a) confirm, vary or set aside the award; or

(b) remit the award to the reconsideration of the
arbitrator or umpire together with the court's
opinion on the question of law which was the j
subject of the appeal;
E
and where the award is remitted under paragraph (b) above
the arbitrator or umpire shall, unless the order otherwise
directs, make his award within three months after the date
of the order.

F
(5) Subject to sub-section (6) below, if an award is
made and, on an application made by any of the parties to
the reference-

(a) with the consent of all the other parties to the
G reference, or

(b) subject to section 3 below, with the leave of the
court,

it appears to the High Court that the award does not or
H does not sufficiently set out the reasons for the award, the

•
R.D.A. v. CHOKHAMAL CONTRACTORS [VENKATARAMIAH: J.I 177
-·(
court may order the arbitrator or umpire concerned to state
A
the reasons for his award in sufficient details to enable the
court, should an appeal be brought under this section, to
consider any question of law arising out of the award.

(6) In any case where an award is made without any
reason being given, the High Court shall not make an order B
under sul;>-section (5) above unless it is satisfied-

(a) that before the award was made one of the parties
to the reference gave notice to the arbitrator or
umpire concerned that a reasoned award would
be required; or
c
(b) that there is some special reason why such a
notice was not given."

Section 2 of the said Act of 1979 empowered the High Court to
determine any preliminary point of law arising in the course of an O
arbitration reference under certain circumstances. It is urged that in
view of the fact that similar safeguards which are available in· the
English Law do not exist in the Indian Law, it is necessary that this
Court should hold that there is an implied obligation on the part of the
arbitrator or umpire to give reasons for the award unless the parties to

-
the dispute agree that no such reasons need be given. E

A reference was made in the course of the arguments to the
decision of this Court in Rohtas Industries Ltd. & Anr. v. Rohtas
Industries Staff Union and Ors., [1976) 3 S.C.R. 12 in which an award
passed by the arbitrators under section 10-A of the Industrial Disputes
Act, 1947 had been struck down by the High Court in part and appeals F
filed against the decision of the High Court were under consideration
by this Court. In that case the appellants contended that an award
under section 10-A of the Industrial Disputes Act, 1947 was equivalent
to an award made in a private arbitration and was not amenable to
correction under Article 226 of the Constitution of India. But this
Court rejected this said contention by observing at page 26 thus: G

" .... Suffice it to say that a reference to arbitration under
s. JOA is restricted to existing or apprehende<) industrial
disputes. Be it noted that we are not concerned with a
private arbitration, but a statutory one governed by the
Industrial Disputes Act, deriving its validity, enforceability H
178 SUPREME COURT REPORTS [1989] 3 S.C.R.

and protective m~ntle during the pendency of the proceed-
A ings, from s. JOA.

A distinction was thus made between statutory arbitrations
. under section 10-A of the Industrial Disputes Act and private arbitra-
tions. It is not necessary to refer to the other cases cited before us
B which have a bearing on section 10-A of the Industrial disputes Act,
y
1947.

The question which arises for consideration in these cases is
whether it is appropriate for this Court to take the view that any award
passed under the Act, that is, the Indian Arbitration Act, 1940 is liable
to be remitted or set aside solely on the gro\!nd that the arbitrator has
c not given reasons thus virtually introducing by a judicial verdict an
amendment to the Act when it has not been the law for nearly 7/8
decades. The people in India as in other parts of the world such as
England, U.S.A. and Australia have become accustomed to the system
of settlement of disputes by private arbitration and have accepted
D awards made against them as binding even though no reasons have
I-
been given in support of the awards for a long time. They have
attached more importance to the element of finality of the awards than
their legality. Of course when reasons are given in support of the
A __ ....
awards and those reasons disclose any error apparent on the face of the
record people have not refrained from questioning such awards before
E the courts. It is not as if that people are without any remedy at all in
cases where they find that it is in their interest to require the arbitrator
to give reasons for the award. In cases where reasons are required, it is
open to the parties to the dispute to introduce a term either in the
arbitration agreement or in the deed of submission requiring the
arbitrators to give reasons in support of the awards. When the parties
F to the dispute insist upon reasons being given, the arbitrator is, as
already observed earlier, under an obligation to give reasons. But
there may be many arbitrations in which parties to the dispute may not
relish the disclosure of the reasons for the awards. In the circums-
tances and particularly having regard to the various reasons given by
the Indian Law Commission for not recommending to the Government
G to introduce an amendment in the Act requiring the arbitrators to give
reasons for their awards we feel that 1t may not be appropriate to take y
the view that all awards which do not contain reasons should either be
remitted or set aside. A decision on the question argued before us
involves a question· of legislative policy which should be left to the
decision of Parliament. It is a well-known rule of construction that if a
H certain interpretation has been uniformly put upon the meaning of a
R.D.A. v. CHOKHAMAL CONTRACTORS [VENKATARAMIAH, 1J 179
--{
statute and transactions such as dealings in property and making of
A
contracts have taken place on the basis of that interpretation, the
Court will not put a different interpretation upon it which will mate-
rially affect those transactions. We may refer here to the decision of
the Court of Appeal rendered by Lord Evershed M.R. in Brownsea
Havel Properties v. Poole Corpn., [1958] Ch. 574 (C.A.) in which it is
observed thus: 8
' "There is well-established authority for the view that a
decision of long standing, on the basis of which many
_,,.... persons will in the course of time have arranged their
affairs, should not lightly be disturbed by a superior court
not strictly bound itself by the decision."
c
Courts should be slow in taking decision which will have the
effect of shaking rights and titles which have been founded through a
long time upon the conviction that a particular interpretation of law is
the legal and proper one and is one which will not be departed from.
D
It is no doubt true that in the decisions pertaining to Administra-
tive Law, this Court in some cases has observed that the giving of
reasons in an administrative decision is a rule of natural justice by an
extension of the prevailing rule. It would be in the interest of the world
of commerce that the said rule is confined to the area of Administra-

-
tive Law. We do appreciate the contention, urged on behalf of the E
parties who contend that it should be made obligatory on the part of
the arbitrator to give reasons for the award, that there is no justifica-
tion to leave the small area covered by the law of arbitration out of the
general rule that the decision of every judicial and quasi-judicial body
should be supported by reasons. But at the same time it has to be
borne in mind that what applies generally to settlement of disputes by F
authorities governed by public law need not be extended to all cases
arising under private law such as those arising under the law of arbitra-
tion which is intended for settlement of private disputes. As stated
elsewhere in the course of this judgment if the parties to the dispute
feel that reasons should be given by the arbitrators for the awards it is
within their power to insist upon such reasons being given at the time G
when they enter into arbitration agreement or sign the deed of submis-
sion. It is significant that although nearly a decade ago the Indian Law
Commission submitted its report on the law of arbitration specifically
mentioning therein that there was no necessity to amend the law of
arbitration requiring the arbitrators to give reasons, Parliament ·has
not chosen to take any step in the direction of the amendment of the H
180 SUPREME COURT REPORTS [1989] 3 S.C.R.

A law of arbitration. Even after the passing of the English Arbitration
Act, 1979 unless a court requires the arbitrators to give reasons for the
award (vide sub-sections (5) and (6) of section 1 of the English Arbit-
ration Act, 1979, an award is not liable to be set aside merely on the
ground that no reasons have been given in support of it.

B It is true that in two cases on~ decided by the High Court of
Delhi and another decided by the High Court of Orissa there are some
observations to the effect that it would be in the interests of justice if
the arbitrators are required to give reasons for their awards because in
recent years the moral standards of arbitrators are going down. But
generally this Court and all the High Courts have taken the view that
c merely because the reasons are not given an award is not liable to be
remitted or set aside except where the arbitration agreement or the
deed of submission, or an order made by the court such as the one
under section 20 or section 21 or section 34 of the Act or the statute
governing the arbitration requires that the arbitrator or umpire should
give reasons for the award. The arbitrators or umpire have passed the
D awards which are involved in the cases before us relying on the law
declared by this Court that the awards could not be questioned merely
on the ground that they hav,e not given reasons. Al the same time it
cannot also be said that all the awards are contrary to law and justice.
In this situation it would be wholly unjust to pass an order either
remitting or setting aside the awards, merely on the ground that no
E reasons are given in them, except where the arbitration agreement or
the deed of submission or an order made by the court such as the one
under section 20 or section 21 or section 34 of the Act or the statute
governing the arbitration required that the arbitrator or the umpire
should give reasons for the award.

F There is, however, one aspect of non-speaking awards in non-
statutory arbitrations to which Government and Governmental
authorities are parties that compel attention. The trappings of a body
which discharges judicial functions and required to act in accordance
with law with their concomitant obligations for reasoned decisions, are
not attracted to a private adjudication of the nature of arbitration as the
G latter, as we have noticed earlier, is not supposed to exert the State's
sovereign judicial power. But arbitral awards in disputes to which the
State and its instrumentalities are parties affect public interest and the
matter of the manner in which Government and its instrumentalities
allow their interest to be affected by such arbitral adjudications
involve larger questions of policy and public interest. Government and
H its instrumentalities cannot simply allow large financial interests of the

'
R.D.A. v. CHOKHAMAL CONTRACTORS (VENKATARAMIAH, J.l 181

State to be prejudicially affected by non-reviewable-except in the A
limited way allowed by the Statute-non-speaking arbitral awards.
Indeed, this branch of the system of dispute-resolution has, of late,
acquired a certain degree of notoriety by the manner in which in many
cases the financial interests of Government have come to suffer by
awards which have raised eye-brows by doubts as to their rectitude and
B
propriety. It will not be justifiable for Governments or their instru-
mentalities to enter into Arbitration agreements which do not ex-
pressly stipulate the rendering of reasoned and speaking awards.
Governments and their instrumentalities should, as a matter of policy
and public interest-if not as a compulsion of law-ensure that wher-
ever they enter into agreements for resolution of disputes by resort to
private arbitrations, the requirement of speaking awan.js is expressly c
stipulated and ensured. Jt is for Governments and their instrumen-
talities to ensure in future this requirem_ent as a matter of policy in the
larger public interest. Any lapse in that behalf might lend itself to and
perhaps justify, the legitimate criticism that Government failed to pro-
vide against possible prejudice to public-interest.
D
Having given our careful and anxious consideration to the con-
tentions urged by the parties we feel that law should be allowed to
remain as it is until the competent legislature amends tne law. In the
result we hold that an award passed under the Arbitration Act is not
liable to be remitted or set aside merely on the ground that no reasons
have been given in its support except where the arbitration agreement E
or the deed of submission or an order made by the Court such as the
one under section 20 or section 21 or section 34 of the Act or the
statute governing the arbitration requires that the arbitration or the
umpire should give reasons for the award. These cases will now go
back to the Division Bench for disposal in accordance with law and the
view expressed by us in this decision. F

R.S.S.

,.