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TMI Blog2001 (7) TMI 1169X X X X Extracts X X X X X X X X Extracts X X X X ..... was to be rejected in toto. - CIVIL APPEAL NO. 12881 OF 1995 - - - Dated:- 11-7-2001 - A.P. MISRA AND D.P. MOHAPATRA, JJ. Sanjay Parikh, A.N. Singh and R.R. Chandrachud for the Appellant. Mukul Rohtagi and V.B. Saharya for the Respondent. JUDGMENT Mohapatra, J. Whether the appellant, on the evidence on record, is entitled to the price of hard coke supplied by it to the respondent at the enhanced rate, is the controversy raised in this case. The dispute was referred to an arbitrator pursuant to the arbitration clause in the agreement entered by the parties. The arbitrator held in favour of the appellant and accepted its claim of Rs. 2,34,097.41. A Single Judge of the Delhi High Court rejecting the objections raised by the respondent against the award, made it rule of the Court. On appeal, the Division Bench of the High Court reversed the order of the Single Judge and set aside the award passed by the arbitrator. As such, the claimant is in appeal before this Court challenging the judgment of the Division Bench of the High Court. 2. The factual matrix of the case leading to the present proceeding may be shortly stated thus : The Delhi Development Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rease/decrease after the date of the tender, i.e., 12-2-1981. The agreement incorporating the price escalation clause was signed between the parties on 14-5-1981. When the appellant submitted bills for the hard coke and pig iron supplied to the respondent at the escalated price with effect from 14-2-1981, the respondent denied its liability to pay the enhanced price for hard coke while admitting the liability of the escalated price in respect of pig iron. A dispute, therefore, arose between the parties. 4. The dispute was referred to the arbitrator, Shri Banarasi Das, Superintendent Engineer by the Engineer Member, DDA. The arbitrator, by a reasoned award passed on 16-5-1985, accepted the claim of the appellant in respect of the three items of claim including the claim in respect of hard coke (item No. 2). The respondent raised an objection to the award only in respect of item No. 2, i.e., hard coke. A Single Judge of the High Court by the order passed on 7-4-1989 remitted the matter to the arbitrator for fresh decision after taking into consideration the effect of the letter dated 9-6-1982. Pursuant to the said decision, the arbitrator passed the award dated 3-10-1989 afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an award shall not be set aside except on one or more of the grounds enumerated in the provision. The three grounds set out in the section are : ( a )that an arbitrator or umpire has misconducted himself in the proceedings ; ( b )that an award has been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid under section 35 ; ( c )that an award has been improperly procured or is otherwise invalid. 6.1 Interpreting the statutory provisions, the Courts have laid stress on the limitations on exercise of jurisdiction by the Court for setting aside or interfering with an award in umpteen cases. Some of the well recognised grounds on which interference is permissible are : ( 1 )violation of principle of natural justice in passing the award ; ( 2 )error apparent on the face of the award ; ( 3 )the arbitrator has ignored or deliberately violated a clause in the agreement prohibiting dispute of the nature entertained ; ( 4 )the award on the face of it is a based on a proposition of law which is erroneous, etc. 6.2 In U.P. Hotels v. U.P. State Electricity Board [1989] 1 SCC 359, this Court in par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not lightly to be exercised. If a specific question of law is submitted to the arbitrator for his decision and he decides it, the fact that the decision is errone- ous, does not make the award bad on its face so as to permit it being set aside; and where the question referred for arbitration is a question of construction, which is, generally speaking, a question of law, the arbitrator s decision cannot be set aside only because the court would itself have come to a different conclusion; but if it appears on the face of the award that the arbitrator has proceeded illegally, as, for instance, by deciding on evidence which was not admissible, or on principle of construction which the law does not countenance, there is error in law which may be ground for setting aside the award. 18. It was contended by Mr. F.S. Nariman, counsel for the appellant, that a specific question of law being a question of construction had been referred to the umpire and, hence, his decision, right or wrong, had to be accepted. In view of clause 18, it was submitted that in this case a specific reference had been made on the interpretation of the agreement between the parties, hence, the parties were bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the face of the award or wholly improbable or a perverse one. As such, it was not open to the Court to interfere with the award within the statutory limitations laid down in section 30. The Single Judge, therefore, rightly declined to interfere with the award passed by the arbitrator and made it rule of the Court. 8. As noted earlier, the Division Bench in appeal filed under section 39 of the Act, reversed the order passed by the Single Judge and set aside the award holding that there was no material before the arbitrator for accepting the claim of the appellant. The Division Bench exceeded the limits of its jurisdiction in entering into the facts of the case and in interpreting the agreement between the parties and correspondence which was a part of the said agreement. What was the price of the commodity to be paid by the respondent to the appellant was essentially a question of fact. Even assuming that the arbitrator had committed an error in coming to the conclusion that the appellant was entitled to the claim of the escalated price of the commodity (hard coke) under the terms of the agreement and the Division Bench felt that the conclusion should have been otherwise, it was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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