1999 (4) TMI 648 - SC - Indian Laws

Summary

Issues:
1. Appeal against the judgment and order passed by the High Court of Kerala
2. Dispute between a mining contractor and Indian Rare Earths Ltd.
3. Arbitration award challenged on grounds of legal misconduct by the arbitrator
4. Interpretation of the Arbitration Act and relevant case laws
5. Examination of the arbitrator's findings on various issues raised in the case

Analysis:
1. The appeal was filed against the High Court's judgment regarding a dispute between a mining contractor and Indian Rare Earths Ltd. The contractor failed to supply the agreed quantity of raw sand, leading to arbitration. The arbitrator awarded a sum in favor of the contractor, which was challenged in the High Court.

2. The High Court set aside the award, citing legal misconduct by the arbitrator. The contractor claimed under various heads, while the respondent filed a counterclaim. The arbitrator framed 51 issues and awarded a specific amount. The High Court upheld only the refund of earnest money, leading to the current appeal.

3. The Supreme Court referred to relevant case laws to analyze legal misconduct by the arbitrator. It was established that the arbitrator's jurisdiction is derived from the contract, and the award can be set aside if the arbitrator exceeds this jurisdiction or if there is misconduct apparent on the face of the award.

4. The arbitrator's findings on issues related to mining area availability, loss suffered, and escalation were examined. The Court noted that the arbitrator's award exceeded the scope of the agreement between the parties, especially in relation to Clause (c) of the tender notice. The award under Claim No. 3 was deemed beyond the agreement's scope and unsustainable.

5. Additionally, the award under Claim No. 9, regarding escalation, was found to be beyond the agreement's scope and contrary to the arbitrator's own findings. Consequently, the Court held that the arbitrator had misconducted himself in the proceedings, leading to the award's setting aside under Section 30 of the Arbitration Act. The appeal was dismissed, with each party bearing their own costs.