Special Leave Petition Civil No 9524 of 1987
From the Judgment and order dated 2551987 of the Delhi High Court in FAO No 58 of 1987
RB Datar and Ranjit Kumar for the petitioner
The Judgment of the Court was delivered by SABYASACHI MUKHARJI J
The respondent No 1 herein was awarded the contract in question for the construction of staff quarters for the Municipal Corporation of Delhi the petitioner herein and the work had to be completed within the stipulated period mentioned in the contract
Since however the work was not being done in the manner as the Delhi Municipal Corporation thought it ought to have been done the petitioner wrote 29 letters during June 1978 to July 1980 regarding the timely completion of the work
It is alleged that the work was not completed by the 15th of January 1980 as per the schedule in the contract
Show cause notice was given to the respondent contractor
The contractor failed to give satisfactory reply and according to the petitioner the contract was rescind
Thereafter several other letters were written which are not material to refer
183 There was an arbitration clause in the agreement
On 2nd November 1982 an application was filed under section 20 of the hereinafter called the Act  in the Delhi High Court
A learned Single Judge of the said High Court directed reference of the dispute and directed the Commissioner of the Municipal Corporation or anyone nominated by him to enter into reference
The Commissioner on 17th of March 1983 appointed one Shri SM Hasnain Arbitrator and Superintending Engineer No II of the Municipal Corporation of Delhi as the arbitrator
He is respondent No 2 in this petition
The said arbitrator entered upon the reference and thereafter on 21st of August 1984 submitted his award allowing some claims of the contractor and some counter claims of the Municipal Corporation
The Municipal Corporation filed its objections to the said award
The learned Single Judge of the High Court by his judgment and order dated 22nd of October 1986 directed that the award be made a rule of the Court
A Letters Patent Appeal was filed thereafter but the same was summarily dismissed by a Division Bench of the Delhi High Court on 25th May 1987
The petitioner seeks leave in this petition under Article 136 of the Constitution to challenge the said order
As the learned Division Bench did not give reasons we must refer to the order of the learned Single Judge
The arbitrator gave reasons in support of the award
The question is whether reasonableness of the reasons in a speaking award is justiciable under Article 136 of the Constitution
We are of the opinion that such reasonableness of the reasons given by an arbitrator in making his award cannot be challenged in a proceeding like the present
It is desirable however that we state our reasons for so holding
In order to appreciate this the award of the arbitrator must be looked into
The arbitrator in his award has dealt with various claims one of the main claims was the claim of 23850 out of which 8300 was in the form of fixed deposit receipt carrying interest and the balance amount of 15520 was deducted as security of 10 from the bills of the claimant
According to the claimant this amount had wrongly been forfeited by the Corporation at the time of rescission of the contract and that the same should be refunded to him
It was held by the arbitrator that there was provision in the agreement for extension of time for completion of the contract as well as for levy of compensation for delay
Therefore it could not be taken that time was the essence of the contract
The arbitrator had opined that according to the respondents  own admission there was delay of nearly four 184 Months in the commencement of the work due to giving of the layout etc
There was also delay in the execution of sanitary work by another contractor previously employed by the petitioner and this work was still incomplete at the time of the making of the award and as such complete site had not been made available to the present contractor in time
Further there was provision in the agreement for extension of time or levy of compensation for delay and therefore according to the arbitrator time could not be considered in such a contract to be the essence of the contract
Furthermore subsequent to the expiry of the stipulated period of completion the Corporation did not make time the essence of the contract by directing the claimant to complete the work within a specified period but instead rescinded the contract
In those circumstances it was held by arbitrator that the decision of rescission of the contract has bad wrongful and hence the claim of Rs23820 was considered to be just
We do not find any lack of reason in the reasons given by the arbitrator
Whether in a particular contract time was the essence of the contract or not is a mixed question of law and fact
But the reasons given by the arbitrator appear to be reasonable and have rational nexus with the conclusion arrived at by him
It was stated that it was admitted on behalf of the Corporation that there was initial delay of four months
This was controverted by the Corporation
They say that there was no admission
This in our opinion was a significant factor that there was some delay and in spite of the delay the corporation gave letters to the contractor to complete the work and in the contract itself there was provision for extension of time
In our opinion where reasons germane and relevant for the arbitrator to hold in the manner he did have been indicated it cannot be said that it was unreasonable
Another factor the arbitrator had noted was that the site was not available due to the conduct of another contractor previously employed by the petitioner
This factor is also a relevant factor
The fourth item of the award was a claim for damages for Rs60000
This amount was not granted on the ground that the claimant was not able to prove this amount
The fifth item in the award was a claim for interest at 18  per annum on certain items from the date of rescission of the contract to the date of payment of decretal amount
The arbitrator allowed the interest as the amount had been withheld due to unjustified and wrongful rescission of the contract
Reasons given by the arbitrator appear per se not unreasonable
The arbitrator has not awarded any costs
There were also counter claims by the Corporation against the contractor
The first counter claim was forfeiture of Rs23820 on account on the rescission of the contract
Inasmuch as the rescission was held to be unjustified in the facts of this case the forfeiture was also held to be wrongful
There was a claim of 185 Rs32640 as payment of compensation at 10 of Rs328400 but as the time was not the essence of the contract and the rescission of the contract was unjustified this claim could not be sustained and it was so rejected by the arbitrator
The next claim was for Rs85620 for the execution of the remaining work at the risk and cost of the respondent
The arbitrator found that the contractor had as far as possible discharged his contractual obligation and the rescission of the contract was unjustified and wrongful
Therefore the Corporation s claim for getting the work executed at the risks and costs of the contractor was unjustified and the claim was so logically rejected and no amount was awarded on that score
The next claim was for Rs2739 on account of mild steel Lying with the contractor
On examination it was found that some quantities of steel had been consumed in the work and as such recovery could only be made for the balance quantity of 1172 kgs
at the recovery rate of Rs150 per kg
and the claim was therefore allowed in favour of the Corporation for Rs1758
The Corporation further claimed a sum of Rs608320 on account of non return of certain steel
After taking into account the steel consumed in the work and after allowing for permissible variation and wastage it was held that recovery claim for Rs3862 only was justified
The award was made accordingly
There was another claim of Rs6473 on account of penal rate recovery of mild steel
It was held for good reasons indicated in the award that the claim for Rs5620 was justified
The Corporation claimed Rs13578 for penal rate recovery of cement for the quantity in excess of the theoretical consumption
After going into the material the arbitrator found that the cement issued to the claimant was consumed in the work and the claim of the Corporation for the penal rate recovery was not justified
The next was the claim for Rs1400 by the Corporation on account of non return of 700 empty cement bags to the Municipal store
This was enquired into and found to be justified and a sum of Rs1400 was awarded in favour of the Corporation
There was a further claim of Rs65 for adjustment of cost of steel on account of three transfer entries
From the documents produced the claim was awarded in favour of the Corporation
The next claim was for interest at the rate of 12 per annum wef 1981 on the amount of alleged counter claim preferred against the claimant
As it was held that the rescission of the contract was unjustified and wrongful the Corporation was at liberty to recover its justified claims from the dues of the claimant at its disposal and pay the balance amount to the claimant within a reasonable time
There was a further claim for Rs10000 as arbitration costs and the claim was rejected
It appears to be very reasonable and fair award
186 In this case there was no violation of any principles of natural justice
It is not a case where the arbitrator has refused cogent and material factors to be taken into consideration
The award cannot be said to be vitiated by non reception of material or non consideration of the relevant aspects of the matter
Appraisement of evidence by the arbitrator is ordinarily never a matter which the Court questions and considers
The parties have selected their own forum and the deciding forum must be conceded the power of appraisement of the evidence
In the instant case there was no evidence of violation of any principle of natural justice
The Arbitrator in our opinion is the sole judge of the quality as well as quantity of evidence and it will not be for this Court to take upon itself the task of being a judge of the evidence before the arbitrator
It may be possible that on the same evidence the Court might have arrived at a different conclusion than the one arrived at by the arbitrator but that by it self is no ground in our view for setting aside the award of an arbitrator
It is familiar learning but requires emphasis that section 1 of the Evidence Act 1872 in its rigour is not intended to apply to proceedings before an arbitrator
PB Mukharji J as the learned Chief Justice then was expressed the above view in Haji Ebrahim Kassam Cochinwall vs Nothern Indian oil Industries Ltd AIR 1951 Calcutta 230 and we are of the opinion that this represents the correct statement of law on this aspect
Lord Goddard CJ in Mediterranean  Eastern Export Co Ltd vs Fortress Fabrics Ltd observed at pages 188189 of the report as follows A man in the trade who is selected for his experience would be likely to know and indeed to be expected to know the fluctuations of the market and would have plenty of means of informing himself or refreshing his memory on any point on which he might find it necessary so to do
In this case according to the affidavit of sellers they did take the point before the Arbitrator that the Southern African market has slumped
Whether the buyers contested that statement does not appear but an experienced Arbitrator would know or have the means of knowing whether that was so or not and to what extent and I see no reason why in principle he should be required to have evidence on this point any more than on any other question relating to a particular trade
It must be taken I think that in fixing the amount that he has he has acted on his own knowledge and experience
The day has long gone by when the Courts 187 looked with jealousy on the jurisdiction of the Arbitrators
The modern tendency is in my opinion more especially in commercial arbitrations to endeavour to uphold Awards of the skilled persons that the parties themselves have selected to decide the questions at issue between them
If an Arbitrator has acted within the terms of his submission and has not violated any rules of what is so often
called natural justice the Courts should be slow indeed to set aside his award
 This in our opinion is an appropriate attitude
In this case the reasons given by the arbitrator are cogent and based on materials on record
In Stroud s Judicial Dictionary Fourth Edition page 2258 states that it would be unreasonable to expect an exact definition of the word reasonable
Reason varies in its conclusions according to the idiosyncrasy of the individual and the times and circumstances in which he thinks
The reasoning which built up the old scholastic logic sounds now like the jingling of a child s toy
But mankind must be satisfied with the reasonableness within reach and in cases not covered by authority the verdict of a jury or the decision of a judge sitting as a jury usually determines what is reasonable in each particular case
The word reasonable has in law the prima facie meaning of reasonable in regard to those circumstances of which the actor called on to act reasonably knows or ought to know
See the observations in Re a Solicitor  1945 KB 
368 at 371 of the report 
After all an arbitrator as a Judge in the words of Benjamin N Cardozo has to exercise a discretion informed by tradition methodized by analogy disciplined by system and subordinated to the primordial necessity of order in the social life
F Indeed reading the award of the arbitrator one would say that he acted reasonably and rationally
In the premises the award of the arbitrator was assailed on trivial grounds and the challenge was rightly rejected by the High Court
The respondent is entitled to the costs of the challenge upto the High Court
So far as the costs of this petition to this Court is concerned parties are directed to bear their respective costs
The petition for leave to appeal is therefore dismissed and the leave refused
PSS Petition dismissed


Summary:
HELD 11 The reasonableness of the reasons given by an arbitrator in making his award cannot be challenged in proceedings under Article 136
183E 12 Appraisement of evidence by the arbitrator is ordinarily never a matter which the court questions and considers
Section 1 of the Evidence Act 1872 in its rigour is not intended to apply to proceedings before an arbitrator
In the instant case the parties have selected their own forum and the deciding forum must be conceded the power of appraisement of the evidence
The arbitrator is the sole judge of the quality as well as quantity of evidence and it will not be for the Supreme Court to take upon itself the task of being a judge of the evidence before the arbitrator
It may be possible that on the same evidence the Court might have arrived at a different conclusion than the one arrived at by the arbitrator but that by itself could be no ground for setting aside the award of an arbitrator
1186B D Haji Ebrahim Kassam Cochinwall vs Northern Indian oil Industries Ltd AIR 1951 Calcutta 230 referred to 2
There was no violation of any principles of natural justice in the instant case
It was not a case where the arbitrator had refused cogent and material factors to be taken into consideration
The award could not therefore be said to be vitiated by non reception of material or non consideration of the relevant aspects of the matter
186A B Mediterranean  Eastern Export Co Ltd vs Fortress Fabrics Ltd 11948 2 All
ER 186 referred to
Whether in a particular contract time was the essence of the contract or not is a mixed question of law and fact
In the instant case the reasons given by the arbitrator in holding that it could not be taken 182 that time was the essence of the contract were cogent and based on materials on record and have a rational nexus with the conclusion arrived at by him
184C186A 4
The word reasonable  have in law the prima facie meaning of reasonable in regard to those circumstances of which the actor called on to act reasonably knows or ought to know
An arbitrator acting as a Judge has to exercise a discretion informed by tradition methodized by analogy disciplined by system and subordinated to the primordial necessity of order in the social life
Therefore where reasons germane and relevant for the arbitrator to hold in the manner he did have been indicated it cannot be said that it was unreasonable
187E F 184E Re a Solicitor at 371 of the Report and Stroud s Judicial Dictionary Fourth Edition page 2258 referred to
In the instant case the arbitrator acted reasonably and rationally
The challenge to the award was therefore rightly rejected by the High Court
187G