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TMI Blog1971 (1) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... s of sale were subject to the General Conditions of Contract (Form Con. 117). Cl. 13 of these General Conditions provided that "In the event of any question or dispute arising under these conditions or any special conditions of contract or in connection with this contract-the same shall be referred to the award of an arbitrator to be nominated by the Director General and an arbitrator to be nominated by the contractor, or in the case of the said arbitrators not agreeing then to the award of an Umpire to be appointed by the arbitrators in writing before proceeding on the reference Upon every and any such reference, the assessment of the costs incidental to the reference and award respectively shall be in the discretion of the arbitrators, or in the event of their not agreeing, of the Umpire appointed by them." Disputes having arisen between the parties both as regards the contents and the quantity of the vehicles delivered under the contracts, they were referred, in the first instance, to two arbitrators nominated by the parties, and ultimately to an umpire. The disputes were crystallized into nine claims by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ire acted beyond his jurisdiction as those question; did not fall within the scope of the reference; 4. that the umpire did not act according to law but acted as a conciliator and based his award on mere conjectures and surmises; 5. that his conclusion on ground rent awarded to the Government was based on no evidence; and 6. that the costs awarded to the Government were altogether disproportionate. Before we proceed to consider these propositions, it is necessary to ascertain the scope of, S. 30 of the Arbitration Act 1940 and the principles underlying that section. The general rule in matters of arbitration awards is that where parties have agreed upon an arbitrator, thereby displacing a court of law for a domestic forum, they must accept the award as final for good or ill. In such cases the discretion of the court either for remission or for setting aside the award will not be readily exercised and will be strictly confined to the specific grounds set out in ss. 16 and 30 of the Act. In Hodgkinson vs. Fernie,( (1857)(3)C.B.(N.S.)189, 202) Williams, J. stated the principle as follows :"where a cause or matters in difference are referred to an arbitrator, whether a lawyer or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereby incorporating it into the award, and then stated the construction which the arbitrator placed upon that clause, the Court was entitled to look at that clause to ascertain if the construction placed by the arbitrator was erroneous. The correctness of the decision in Landauer v. Asser(1) was challenged before the Privy Council in Chempsey Bhara & Co. v. Jivraj Balloo Spinning and Weaving Co. Ltd.(2) Lord Dunedin,, however, did not expressly overrule it but rested content by observing that that decision was not binding on the Board. But he formulated the principle thus : " An error in law on the face of the award means, that you can find in the award or a document actually incorporated thereto, as for instance, a note appended by the arbitrator stating the reasons for his judgment, some legal proposition which is the basis of the award and which you can then say is erroneous. It does not mean that if in a narrative a reference is made to a contention of one party that opens the door to seeing first what that contention is, and then going to the contract on which the parties' rights depend to see if that conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n fact in determining the matters referred to him, but such mistake does not appear on the face of the award or in a document appended to or incorporated in it so as to form part of it, the award will neither be remitted nor set aside notwithstanding the mistake. In the light of the principle above stated, the first question calling for determination is, is there an error apparent on the award, in the sense that the umpire misconstrued the contracts of sale inasmuch as though those contracts were contained 'in sale-notes as well as in several letters, he considered the sale-notes only as containing the contracts of sale disregarding the correspondence which had taken place between the company and the Director-General, Disposals and his officers ? Such a question would undoubtedly be one of law. But the disputes referred to the umpire contained disputes both of fact and law. Ordinarily the decision of the umpire, even though it be on a question of law, would be binding on the parties. The court would only interfere if the case falls within the exceptions mentioned by Williams, J. in Hodgkinson v. Fernie([1857] 3 C.B. (N.S. 189,202. 57) and reaffirmed by Diplock L. J., in Giacomo Cos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es originally allotted to U.S.A.S.S. Units-for operational purposes and now no longer required by them." On September 17, 1946, a secraphone message was sent from New Delhi to Calcutta which stated "We have sold U.S. Army surplus vehicles presumed to be borne on Moran list, that is those actually in Moran Vehicle Depot or those that were intended to be moved to that depot, which was meant to be parking depot for surplus U.S. vehicles in Assam area." On September 26 1946, the Director-General,'Disposals, wrote to the company that "The vehicles sold to you in Assam are those U.S. Army surplus. vehicles actually in Moran Vehicle Depot or those that were intended to be moved to Moran Vehicle Depot. Any mobile engineering equipment, such as mobile cranes, tracked tractors are, excluded from the sale to you." On December 10, 1946, the Controller issued a release order in respect of 1. All vehicles and trailers lying in Moran Depot on 10th July 1946 including all United States Army Surplus Stores, excluding land and buildings lying within Moran Depot and transferred to the Government of India from the Government of the United States. 2. Vehicles in operational use in Calcutta and Assa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of evidence both oral and documentary has been produced in support of or against such contention. The point has also been argued at great length by learned counsel for the parties. I have given the whole matter my most serious and earnest consideration and my view is that apart from the language of the two saledeeds' being against such a contention, the evidence too considered as a whole does not support it. Accordingly, I hold that the stores sold to the claimants in the case of Assam were those actually located in Moran Depot on July 10,1946 and in the case of Bengal those actually located in Jodhpur and other depots specified in the sale letter on July 31, 1946." He next held : "The alleged clarifications or representations made or explantions or assurances given by any officer or officers of the Disposals Department either verbally or in writing have been very carefully examined by me and I am of opinion that neither are they, considered as whole, capable of the interpretation sought to be put upon them by the claimants nor are the respondents bound by them. They are not in accordance with law and do not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various documents placed in evidence before the umpire but not incorporated in the award so as to form part of it and then to make a search if they have been misconstrued by him. This, in our understanding, is the correct principle emerging from the decisions which counsel placed before us. In any event, this is not a case where the umpire, in the words of Lord Dunedin, "tied himself down to a legal proposition" which on the face of the award was unsound. The award ,makes it clear in so many words that he took into. account the entire evidence, including the documents relied on by counsel and then only came to the conclusion that it did not assist the company in its contention as to the scope of the sales. Contentions 1 and 2 raised by Mr. Agarwal, therefore, cannot be upheld. Contention No. 3 relates to 547 vehicles said' to have been sold to the company under sale:-note 197, dated August 2,/6, 1946. There is no dispute that out of these vehicles the company removed 291 vehicles alleging that the delivery of the balance of 256 vehicles was withheld. The company made a claim being claim No. VI for the price of these 256 undelivered vehicles. The respondents contention was that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment between the two Governments and the inventories produced before the umpire from which he could hold that they belonged to the Government of India from the date when the installations in which they were incorporated were relinquished by the U.S. forces, and that therefore, they could not form the subject-matter of sale-note 197 which related only to the U.S. Surplus St-ores. The second part of the argument, however, requires consideration. The question is whether the arbitration clause included. a dispute relating to compensation in respect of the said 291 vehicles unauthorisedly removed by the company. Cl. 13 of the General Conditions of Contract, quoted earlier, provides for reference to arbitration of all questions or disputes "arising under these conditions" or "in connection with this, contract". Dr. Singhvi referred us to cl. 10 of these Conditions also but it is clear that it can in no sense apply to the dispute relating to, compensation. But the words "arising under these conditions"' and "in connection. with this contract" are undoubtedly wide and comprehensive. it is, nonetheless, a question whether the dispute as to compensation on the ground of unauthorised appropr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bvious course. The dispute raised by the respondents that 291 vehicles were not included in the sale was: co-extensive with and connected with the dispute that the company was bound to return them if it was found that they were not covered by the sale. On this reasoning it is not possible to say that the umpire went beyond his jurisdiction either in rejecting the company's claim No. VI or in accepting the corresponding counter-claim No. VI of the respondents. Contention 4 relates to 600 vehicles which had been taken out of Moran Depot for operational purposes, but which the company claimed were part of the sale under sale-note 160. The umpire held (I that those vehicles having been taken out of the Depot for operational purposes did not fall within the sale, and (2) in the alternative, that the evidence disclosed that a substantial number of vehicles in operational use were delivered to the company even though strictly speaking it was not entitled to them as they were not lying in the, Depot on. July 10, 1946. The umpire further held that if some of them per chance were not handed over, the respondents had sufficiently compensated the company by handing over several non-operationa ..... 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