1989 (2) TMI 401 - SC - Indian Laws

How should the court examine an award to find out whether it was a speaking award or not? Held that - In the instant case the High Court seems to have fallen into an error of deciding the question on interpretation of the contract. In the aforesaid view of the matter we are of the opinion that the High Court was in error. It may be stated that if on a view taken of a contract the decision of the arbitrator on certain amounts awarded is a possible view though perhaps not the only correct view the award cannot be examined by the court in the manner done by the High Court in the instant case. Appeal allowed. The High Court in our opinion had no jurisdiction to examine the different items awarded clause by clause by the arbitrator and to hold that under the contract these were not sustainable in the facts found by the arbitrator.

Issues Involved:
1. Examination of whether the award was a speaking award or not.
2. Determination of the extent to which the court could find errors apparent on the face of the award.
3. Examination of the contract in question not incorporated or referred to in the award.
4. Jurisdiction of the arbitrator and whether he exceeded it.
5. Misconduct by the arbitrator.
6. Validity of the termination of the contract.
7. Specific claims and counterclaims awarded by the arbitrator.

Detailed Analysis:

1. Examination of whether the award was a speaking award or not:
The Supreme Court held that the award was not a speaking award. The arbitrator merely set out the claims and gave the history of the claims without providing reasons for his conclusions. The Court stated, "In absence of any reasons for making the award, it is not open to the court to interfere with the award."

2. Determination of the extent to which the court could find errors apparent on the face of the award:
The Court reiterated that an award can only be set aside if there is an error of law apparent on the face of the award, or if the arbitrator had misconducted himself or exceeded his jurisdiction. The Court emphasized, "Where there are errors apparent on the face of the award it can only be set aside if in the award there is any proposition of law which is apparent on the face of the award."

3. Examination of the contract in question not incorporated or referred to in the award:
The Supreme Court noted that the High Court had erred by examining the contract terms which were not incorporated in the award. The Court stated, "It is not open to the court to probe the mental process of the arbitrator and speculate, where no reasons are given by the arbitrator, as to what impelled the arbitrator to arrive at his conclusion."

4. Jurisdiction of the arbitrator and whether he exceeded it:
The Court held that the arbitrator did not exceed his jurisdiction. It clarified, "There are two different and distinct grounds involved in many of the cases. One is the error apparent on the face of the award, and the other is that the arbitrator exceeded his jurisdiction." The Court found that the arbitrator acted within his jurisdiction.

5. Misconduct by the arbitrator:
The Supreme Court rejected the High Court's finding of misconduct by the arbitrator. It stated, "The arbitrator is the sole judge of the quality as well as the quantity of evidence and it will not be for the court to take upon itself the task of being a judge on the evidence before the arbitrator."

6. Validity of the termination of the contract:
The High Court had held that the termination of the contract was valid but erred in exonerating the contractor from risk and losses. The Supreme Court found that the High Court had no jurisdiction to substitute its interpretation of the contract terms over that of the arbitrator.

7. Specific claims and counterclaims awarded by the arbitrator:
The Supreme Court reviewed the specific claims and counterclaims and found that the High Court had overstepped its jurisdiction by setting aside the awards. The Court stated, "The High Court in the judgment under appeal referred to the decision of the Division Bench of the Kerala High Court in State of Kerala v. Poulose, (supra). Our attention was also drawn to the said decision by the counsel for the respondents that if an arbitrator or the umpire travels beyond his jurisdiction and arrogates jurisdiction that does not vest in him, that would be a ground to impeach the award."

Conclusion:
The Supreme Court allowed the appeals, set aside the judgment and order of the High Court, and restored the orders of the learned Sub-Judge. The Court emphasized that the High Court had no jurisdiction to examine the different items awarded clause by clause by the arbitrator and to hold that under the contract these were not sustainable in the facts found by the arbitrator.

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