STATE OF ORISSA & ORS.versusLALL BROTHERS

                     STATE OF ORISSA & ORS.
                                                                             A
                               v.
                         LALL BROTHERS

                           AUGUST 25, 1988

   [SABYASACHI MUKHARJI AN,D S. RANGANATHAN JJ.]                             B

        Arbitration Act 1940: Sections 14, 17, 30 and 33-Unreasoned
 award-No ground to set aside award-Lump sum award-Not bad
 per ~e.

       The respondent-firm was entrusted with the construction work of
 a 'Minor Irrigation Project' by the State of Orissa-Petitioner. The         c
 work was due to be completed on 3rd August, 1977 but it was actually
 completed on 31st March, 1978. Disputes arose in regard to the pay-
 ment for the work. The respondent-contractor raised certain claims
 and gave notice for th~ appointment of an arbitrator according to the
 contract. On 22nd April, 1980, the Chief Engineer appointed an              D
 arbitrator but, on an application by the respondent, the Sub-Judge
 removed him and appointed another arbitrator.

       Before the arbitrator, the respondent filed its claim along with
  some documents and the petitioner filed its counter statement. No
· further evidence was adduced and on 23rd June, 1982, the arbitrator        E
  gave a lump sum award for Rs. 14.67 lakhs with interest at 9% from
  30th April, 1978.

       On llth July, 1983, the Sub-Judge made the award rule of the
 Court with the modification that the interest was directed to run from
 23rd June, 1982, instead of 30the April, 1978.                              F

      . The High Court allowed the appeal in part and deleted the direc-
 tion regarding future interest awarded by the arbitrator and modified
 by the Subordinate Judge.

       1n the appeal by special leave to this Co'!rt, it was contended on    G
 behalf of the State-petitioner that the award in the instant case was· an
 unreasoned award and a lump such amount was awarded without
 specifying the amount awarded on particular grounds:

       Dismissing.the special leave petition,
                                                                             H
                                     579
    580         SUPREME COURT REPORTS                [1988) Supp. 2 S.C.R.

          HELD: I. The fact that there is an unreasoned award, is no
A
    ground to set aside an award.. L,ump sum award is not bad per se, as
    such. [583A]

          In the instant case, the award contained the recitals to the effect
    that the arbitrator had gone through the claim statement, counter'
B   statement and documents produced before him and heard the represen-
    tations made by the parties. There is no error of law apparent on tbe
    face of the award. There was no misconduct on the part of the
    arbitrator or in the conduct of the proceedings. [582G]

          Firm Madan/a/ Roshanlal Mahajan v. Hukumchand Mills ltd.,
C Indore, [1967] 1 SCR 105; Union of India v. Bungo Steel Furniture Pvt.
    ltd., [1967] 1 SCR 324 and Allen Berry & Co (P) ltd. v. Union of
    India, New Delhi, [1971) 3 SCR 282, referred to.

        2. An award is conclusive as a judgment between the parties aitd
  the court is entitled to set aside an award only if the arbitrator has
D misconducted himself, or where an award has been inproperly pro-
  cured, or is otherwise invalid under Sections 30 and 35 of the Arbitra-
  tion Act 1940. [583B]

          3. 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
IE because by a process of inference and argument it may be demons-
   trated that the arbitrator has committed some mistake in arriving
   at his conclusion. [583C]

         4. It is not open to the Court to speculate, where no reasons are
    given by the arbitrator, as to what impelled him to arrive at his
F   conclusions. [583D)

          Champ5ey Bhara & Co. v. Jivraj Ba/loo Spinning & Weaving Co.
    Ltd .• L.R. 50 I.A. 324; Jivarajbhai Ujamshi Sheth & Ors. v.
    Chintamanrao Ba/aji & Ors., [1964] 5 SCR 480 referred to.

G         5. If a question of law was not specifically referred to the
    arbitrator his decision is not final. [583F]

           Continental Construction Co. ltd. v. State of Madhya Pradesh,
    [ 1988] 3 sec 82 distinguished.

H         CIVIL APPELLATE JURISDICTION: Special Leave Petition
    (Civil) No. 7396 of 1987.


                                              •
           STATE OF ORISSA v. LALL BROS. [MUKHARJI, J.]               581
                            ·;             I                     -       -
     From the Judgment and Order dated 8.4.1987 of the Orissa High           A
Court in M.A. No. 378 of ·i983.

    M.K. Banerjee, Solicitor General, R.K. Mehta and Miss Mona
Mehta for the Petitioners.

     . G.L. Sanghi, A.P. Jena and Vinoo Bhagat for the Respondent.           B

      The.Judgment ofihe Court was delivered by

      SABYASACHI MUKHARJI, J. This is an application for leave
to appeal under Article 136 of the Constitution from the decision. and
judgment of the High.Court of Orissa, dated 8th April, 1987. By the· C
said judgment the High Court had allowed the appeal _in part and
modified the award so far as it related to the payment of interest on the
awarded amount. Another appeal challenging the validity of the award
was, howeve;r, dismisse;d.

       In or about 1975-76 the respondent was entrusted with the work        D
of "Constrnction of balance work of earth dam of Koska Minor Irriga-
tion Project" vide an agreement No. 207 F-2. The said work was due to
be completed on 3rd August, 1977 but it was actually completed on
31st March, 1978. The estimated value of the work was Rs.25,06,299.
It is stated that the contractor, respondent herein, had executed only
18 out of 22 items of w.ork beside. one extra item and he was paid a sum     E
of. Rs.23,63,122 for the work done. According to the petitioner, no
further amount was due to the contractor, the respondent.

      Final bill was prepared on 12th February, 1980 and it was uncon-
ditionally accepted by the respondent-contractor. This contention,
however; was sought. to be disputed before us by the respondent-             F
contractor by producing certain bill stated to be the final bill which was
"accepted under protest". It is, however, not necessary for us to go
into this question at this stage.

      On or about 16th April, 1980, the respondent-contractor raised
certain claims and gave notice for appointment of an arbitrator accord-      G
ing to the contract. On 22nd April, 1980, the Chief Engineer
appointed Shri N.K. Mishra as arbitrator. However, on· the applica,
tion of the respondent the Subordinate Judge removed Shri N .K.
Mishra and instead appointed Shri P .C. De as the arbitrator. Before
the arbitrator the respondent filed its claim along with. some docu-
ments and the petitioner filed his counter statement. It is stated on        H
    582        SUPREME COURT REPORTS                 [1988] Supp. 2 S.C.R.
                                 \
    behalf of the State that no further evidence was adduced by the
A
    respondent but the petitioner produced the measurement books. The
    petitioner contended that no amount was due. The respondent dis-
    puted that.

          The arbitrator on behalf of the claim statement and some docu-
B   ment filed by the respondent-contractor, gave a lump sum award for
    Rs.14,67,000 plus interest at 9% from 30.4.1978. The award was given
    on 23rd June, 1982. On 11th July, 1983, the learned Subordinate Judge.
    made the award rule of the Court with the modification that the
    interest was directed to run from 23.6.1982 insiead of 30.4.1978. The
    High Court allowed the appeal in part and deleted the direction
    regarding future interest awarded by the arbitrator and modified by
c   the learned.Subordinate Judge. In appeal it was contended before the
    High Court for the said judgment by the Subordinate Judge that the
    following objections were taken against the award, namely:

               "(i) that there _is an error of law apparent on the face of the
D              award;

               (ii) that the arbitrator has misconducted himself by giving
               a lump sum award without examining each item of the
               claims;

B              (iii) that the claimant having accepted the final bill uncon-
               ditionally deposit, the contract between the parties stood
               closed and, therefore, the arbitration clause was not opera-
               tive and the arbitrator appointed had no jurisdiction to
               adjudicated upon the disputes;

F              (iv) that the award of interest is without jurisdiction".

          Except the documents on record, neither of the parties adduced
    any evidence. It was urged before us that the High Court did not
    accept challenge to the award but modified the order of interest as
    indicated before. The award in question contained the recitals to the
G   effect that the arbitrator had gone through the claim statement,
    counter statement and documents produced before him and heard the
    representations made by the parties. There is no error of law apparent
    on the face of the award. There was no misconduct on the part of the
    arbitrator or in the conduct of the proceedings. It was contended
    before us that this is an award which was an unreasoned and a lump
H   sum amount was awarded without specifying the amount awarded on
    particular grounds.
           STAIB OF OR!SSA v. LALL BROS. [MUKHARJI, J.]                583

      In our opinion, the High Court was right in refusing to accept the A
challenge to the award. The fact that there is an unreasoned award, is
no ground to set aside an award. Lump sum award is not bad per se. as
such. An award is conclusive as a judgment between the parties and
the court is entitled to set aside an award only if the arbitrat.or has
misconducted himself in the proceedings or when the award h>is b~en
made after the issue of an order by the Court superseding the arbitra- B
tion or after arbitration proceedings have become invalid under sec-
tion 35 of the Arbitration Act or where an award has been improperly 1
procured or is otherwise invalid under section 30 of the 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 agrument it may be demonstrated that the arbitrator has         c
committed some mistake in arriving at his conclusion.

      It is not open to the Court to speculate, where no reasons are
given by the arbitrator, as to what impellied him to arrive at his conclu-
sions. See in this connection the observations of the Judicial Commit-
tee in Champsey Bhara & Co. v. Jivraj Ba/loo Spinning & Weaving Co.           D
Ltd., L.R. 50 I.A. 324 and of tbis Court in Jivarajbhai Ujamshi Sheth
& Ors. v. Chintamanrao Balaji & Ors., [1964] 5 SCR 480.

      The fact that a Jump sum award has been given, is no ground to
declare the award bad: See further Firm Madan/al Ros~anlal Mahajan
v. Hukumchand Mills Ltd:·; Indore, [1967] 1 SCR 105 and Union of              E
fndia v. Bungo Steel Furniture Pvt. Ltd., [1967] 1 SCR 324 as well as
the ·decision of this Court in Allen Berry & Co. (P) Ltd, v. Union of
India, New Delhi, [1971] 3 SCR 282.                          ··
                             '"
      Learned Solicitor General for the petitioner relied on Continental
Construction Co. Ltd. v.. State of Madhya Pradesh, [1988] 3 SCC 82.           F
Reliance was misplaced. If a question of law was not specifically refer-
red to the arbitrator his decision is not final. It was reiterated that the
arbitrator is bound by law, and if an error of law in the award is on the
face of it, it is amenable to"be corrected.                       ' ' ·

      In that view of the matter the points sought to be urged in this        G
application for leave, are not entertainable. The application fails and
is accordingly dismissed.

N.V.K.                                                 Petition dismissed.