1966 (9) TMI 133 - SC - Companies Law

Whether the arbitrator committed an error of law in holding that the appellant had deducted ₹ 3,57,500/- from the bills of the Company with regard to contracts other than the three contracts of bedsteads which are the subject matter of the present case? Whether the arbitrator could subtract the aforesaid amount of ₹ 3,57,500/from the price of steel credited to the appellant? Held that - There is no error of law on the face of the award and the argument of the appellant on this aspect of the case must fail. In the present case, all the disputes in the suit, including the question of interest, were referred to the arbitrator for his decision. In our opinion, the arbitrator had jurisdiction, in the present case, to grant interest on the amount of the award from the date of the award till the date of the decree granted. Though, in terms, s. 34 of the Code of Civil Procedure does not apply to arbitration proceedings, the principle of that section will be applied by the. arbitrator for awarding interest in cases where a court of law in, a suit having jurisdiction of the subject-matter covered by s. 34 could grant a decree for interest. Appeal dismissed.

Issues Involved:
1. Error of law by the arbitrator regarding the deduction of Rs. 3,57,500/-.
2. Authority of the arbitrator to award interest from the date of the award to the date of the decree.

Issue-wise Detailed Analysis:

1. Error of Law by the Arbitrator Regarding the Deduction of Rs. 3,57,500/-:

The primary contention was whether the arbitrator committed an error of law by holding that the appellant had deducted Rs. 3,57,500/- from the bills of the Company concerning contracts other than the three contracts of bedsteads in question. The appellant argued that this deduction was made from the bills submitted by the Company for the price of bedsteads supplied under the three contracts (Nos. A.T. 3116, A.T. 767, and A.T. 816). The Supreme Court found that the award of the arbitrator did not show on its face that the amount was deducted from the bills for the bedsteads under the three contracts. The relevant portion of the award indicated that the steel supplied by the Government was used in making the bedsteads under the three contracts, and the Company paid for the steel as per the M.R.Os. The arbitrator's findings were based on conflicting statements in affidavits filed before Mallick, J. The Court reiterated that it had no jurisdiction to investigate the merits of the case or examine evidence to determine if the arbitrator committed an error of law. The Court cited Hodgkinson v. Fernie and Champsey Bhara and Company v. Jivraj Balloo Spinning and Weaving Company, Ltd., to affirm that an arbitrator is the sole and final judge of all questions of law and fact unless there is an error of law on the face of the award. The Court concluded that there was no error of law on the face of the award, and thus, the argument of the appellant on this aspect failed.

2. Authority of the Arbitrator to Award Interest from the Date of the Award to the Date of the Decree:

The appellant contended that the arbitrator had no authority to award interest from the date of the award (September 2, 1959) to the date of the decree by Mallick, J. (August 2, 1960). The appellant relied on the observations of Bose, J. in Seth Thawardas Pherumal v. The Union of India, which suggested that an arbitrator could not award interest post-award as they are not a court within the meaning of the Civil Procedure Code. However, the Court noted that subsequent cases clarified that the observations in Seth Thawardas were not intended to establish a broad and unqualified proposition. The Court highlighted that in the present case, all disputes, including interest, were referred to arbitration. It was an implied term of the reference that the arbitrator would decide the dispute according to existing law and grant relief, including interest, as a court would. The Court referred to Edwards v. Great Western Ry. and Chandris v. Isbrandtsen-Moller Co. Inc., which established that an arbitrator could award interest if the matter was within their submission. The Court also cited Bhwanidas Ram-Gobind v. Harasukhdas Balkishandas and a recent judgment in Firm Madanlal Roshanal Mahajan v. The Hukamchand Mills Ltd., Indore, affirming that arbitrators in India have the authority to award interest post-award. Consequently, the Court held that the arbitrator had the jurisdiction to grant interest from the date of the award to the date of the decree, and the appellant's argument on this issue was unsuccessful.

Conclusion:

The Supreme Court affirmed the decree of the Calcutta High Court dated August 1, 1962, and dismissed the appeals with costs. The arbitrator's award was upheld, including the deduction of Rs. 3,57,500/- and the authority to award interest from the date of the award to the date of the decree.

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