1958 (9) TMI 77 - SC - Companies Law

Whether the High Court was wrong in its view that the award disclosed an error on the face of it Whether the portion of the award which held that his dismissal had no effect on his status and that he continued to be a professor was merely consequential and hence a surplusage and therefore an error disclosed in it would not vitiate the award? Whether the appointment of Professor Saha as the sole Arbitrator was illegal? Held that - We are in entire agreement with the view expressed by the High Court. There is no doubt that a contract of personal service cannot be specifically enforced. Section 21 Cl. (b) of the Specific Relief Act 1877 and the second illustration under this clause given in the section make it so clear that further elaboration of the point is not required. It seems to us that the present award does purport to enforce a contract of personal service when it states that the dismissal of the appellant has no effect on his status and He still continues to be a Professor of the University . When a decree is passed according to the award which if the award is unexceptionable has to be done under s. 17 of the Arbitration Act after it has been filed in Court that decree will direct that the award be carried out and hence direct that the appellant be treated as still in the service of the respondent. It would then enforce a contract of personal service for the appellant claimed to be a professor under a contract of personal service and so offend s. 21 (b). We are also clear in our mind that the contention about the offending portion of the award being a mere surplusage affords no assistance to the appellant for it was not said on his behalf that the offending portion was severable from the rest of the award and should be struck out as a mere surplusage. It therefore has to remain as a part of the award and so long as it does so it would disclose an error on the face of the award and make it liable to be set aside as a whole. All considerations that apply to an award under the Industrial Disputes Act cannot be said to apply to an award made under the Arbitration Act. Furthermore under s. 45 of the University Act the arbitration held under it is to be governed by the provisions of the Arbitration Act 1940 and the validity of an award made under such an arbitration has therefore to be decided by reference to the rules applying to that Act one of such rules being that the award should not disclose an error on its face. For these reasons in our view this argument is unfounded. It was said that the respondent claimed to appoint Professor Saha the sole arbitrator under s. 9 of the Arbitration Act but that section could only apply where the reference was to two arbitrators one to be appointed by each party while the proper interpretation of s. 45 of the University Act was that the arbitration was to three Arbitrators one nominated by each of the parties and the third by the Chanceller of the University. This point was decided against the respondent by the High Court. As however the appeal must be dismissed for the reason that the award contains an error on the face of it as we have earlier found it becomes unnecessary to decide the point raised by the resp.ndent.Appeal dismissed.

Issues Involved:
1. Entitlement to Selection Grade
2. Wrongful Supersession by Appointment of Dr. Seshadri
3. Wrongful Dismissal
4. Validity of Arbitration Award
5. Specific Enforcement of Personal Service Contract
6. Error on the Face of the Award
7. Legality of Sole Arbitrator Appointment

Detailed Analysis:

1. Entitlement to Selection Grade
The appellant claimed entitlement to the Selection Grade sanctioned by the Government of India in 1948 but was denied by the respondent. The arbitrator found that the appellant was wrongfully deprived of this grade, which the court later reviewed.

2. Wrongful Supersession by Appointment of Dr. Seshadri
The appellant contended that he was wrongfully superseded by the appointment of Dr. Seshadri as the Head of the Department of Chemistry. The arbitrator held that the appellant's removal from the headship was wrongful.

3. Wrongful Dismissal
The appellant argued that his dismissal by the Executive Council on April 26, 1951, was wrongful and mala fide. The arbitrator concluded that the dismissal was ultra vires, mala fide, and had no effect on the appellant's status. The High Court found that such declarations amounted to the specific enforcement of a personal service contract, which is prohibited by Section 21 of the Specific Relief Act.

4. Validity of Arbitration Award
The award made by Professor Saha, acting as the sole arbitrator, was challenged by the respondent on various grounds. The Sub-Judge, Delhi, initially upheld the award, but the High Court set it aside, citing an error on the face of the award.

5. Specific Enforcement of Personal Service Contract
The High Court held that the arbitrator's declaration that the appellant continued to be a professor was equivalent to the specific enforcement of a personal service contract, which is forbidden by Section 21 of the Specific Relief Act. The Supreme Court agreed with this view, stating that a contract of personal service cannot be specifically enforced.

6. Error on the Face of the Award
The Supreme Court examined whether the award disclosed an error on its face. The court held that an error appears on the face of the award if it contains a legal proposition that is clearly erroneous. The award's declaration that the appellant's dismissal had no effect on his status was found to be such an error, as it purported to enforce a contract of personal service.

7. Legality of Sole Arbitrator Appointment
The respondent contended that the appointment of Professor Saha as the sole arbitrator was illegal under Section 9 of the Arbitration Act, which applies to references to two arbitrators. However, the High Court had decided this point against the respondent. The Supreme Court did not express an opinion on this issue as the appeal was dismissed on other grounds.

Conclusion:
The Supreme Court dismissed the appeal, agreeing with the High Court that the award disclosed an error on its face by purporting to enforce a contract of personal service. The court also found that the declaration of the appellant continuing as a professor was not merely consequential but a substantive error. The legality of the sole arbitrator's appointment was not addressed, as it was unnecessary for the final decision. The appeal was dismissed with costs throughout.

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