2016 (3) TMI 1453 - HC - Indian Laws

Liability to pay a sum of Rs. 8,40,568/- in 40 equal installments payable within 7th of each month, starting from August, 2000 - petitioner assails the award passed by the Arbitrator under Section 7B of the Indian Telegraph Act, 1885, on the ground that the Arbitrator has passed an unreasoned award, more so, the award so passed is without jurisdiction - HELD THAT - Appointment of the Arbitrator having not been done in consonance with the provisions contained under Section 7B of the Act, meaning thereby, it is the Central Government alone can appoint Arbitrator, the same having not been done in consonance with the said provisions the award so passed in Annexure-5 is without jurisdiction and therefore, cannot sustain in the eye of law. Similar question came up for consideration in M/s. Fly Wings Travels (P.) Ltd. 1994 (4) TMI 406 - DELHI HIGH COURT wherein, the Delhi High Court having come to the conclusion that the Arbitrator having not been appointed in consonance with the provisions contained under Section 7B of the Act, set aside the award passed by the said incompetent Arbitrator. In the present case the Arbitrator has not been appointed by the Central Government as required under Section 7B of the Act. On perusal of the award indicates that no reason has been assigned, rather, the Arbitrator who is obliged under law to pass a reasoned award has resolved the dispute without assigning any reason. It is well settled law that in public law remedy when the order visits with civil consequences, natural justice required recording the reasons as they are bridge between the order and its maker to indicate how his mind was applied to the facts presented and the decision reached. It is seen that under Section 7B, the award is conclusive but when the citizen complains that he was not correctly put to bill for the calls he had made and disputed the demand for payment, the statutory remedy opened to him is one provided under Section 7B of the Act. By necessary implication, when the arbitrator decides the dispute under Section 7B, he is enjoined to give reasons in support of his decision since it is final and cannot be questioned in a court of law. However, the only remedy available to the aggrieved person against the award is judicial review under Article 226 of the Constitution. The appointment of Arbitrator, having been made, in derogation of the provisions contained under Section 7B of the Act and such Arbitrator having passed the award in Annexure-5 without assigning any reasons, the same cannot sustain - the impugned award passed by the Arbitrator in Annexure-5 is set aside and the matter is remitted back to the Central Government to adjudicate the dispute in consonance with Section 7B of the Act - Application allowed.

Summary

Issues Involved:
1. Whether the award passed is in violation of Section 7B of the Indian Telegraph Act, 1885, as the Arbitrator was not appointed by the Central Government.
2. Whether an unreasoned award passed by the Arbitrator can sustain in the eye of law.
3. To what relief is the petitioner entitled?

Issue-wise Detailed Analysis:

Issue 1: Violation of Section 7B of the Indian Telegraph Act, 1885

The petitioner contended that the Arbitrator was not appointed by the Central Government as required under Section 7B of the Indian Telegraph Act, 1885. Section 7B stipulates that any dispute concerning any telegraph line, appliance, or apparatus between the telegraph authority and the person for whose benefit the line, appliance, or apparatus is provided shall be determined by arbitration and referred to an arbitrator appointed by the Central Government. The Assistant Director General (TR) appointed Mr. B. Mallik as the Arbitrator, which was argued to be not in consonance with Section 7B. The court noted that the statutory provision requires the Central Government alone to appoint the Arbitrator. The delegation of this power to the Assistant Director General (TR) was not in line with the law. The court referenced several cases, including M/s. Fly Wings Travels (P.) Ltd. v. Mahanagar Telephone Nigam Ltd. and M.L. Jaggi v. Mahanagar Telephones Nigam Ltd., to support the conclusion that the appointment was invalid. Consequently, the award passed by the Arbitrator was deemed without jurisdiction and unsustainable in law.

Issue 2: Unreasoned Award

The petitioner argued that the award was unreasoned, which is impermissible in law. The court emphasized that in public law remedies, especially when orders have civil consequences, natural justice requires recording reasons. This principle ensures transparency and allows the affected party to understand how the decision was reached. The court cited the Supreme Court's decision in M.L. Jaggi, which highlighted the necessity of reasoned awards in disputes involving public interest and government entities. The absence of reasons in the Arbitrator’s award made it difficult for the court to review the decision's correctness and legality. Thus, the unreasoned award could not sustain in the eye of law.

Issue 3: Relief

Given the findings on the first two issues, the court set aside the impugned award. The matter was remitted back to the Central Government to adjudicate the dispute in accordance with Section 7B of the Indian Telegraph Act, 1885. The writ application was allowed, but no order as to costs was made.

Conclusion:

The court concluded that the appointment of the Arbitrator was not in compliance with Section 7B of the Indian Telegraph Act, 1885, and the award passed was unreasoned. Consequently, the award was set aside, and the matter was remitted back to the Central Government for proper adjudication. The writ application was allowed without any order as to costs.