ivil Appeal No 756 of 1988
From the Judgment and Order dated 2171987 of the High Court of Allahabad in FAFO No 106 of 1984
FS Nariman ML Verma Jeet Mahajan and Ranjit Kumar for the Appellats
B Sen Gopal Subramanium and Mrs Shobha Dikshit for the Respondent
The Judgment of the Court was delivered by SABYASACHI MUKHARJI J
This appeal by special leave is from the judgment and order of he High Court of Allahabad dated 21st July 1987
The High Court has set aside the award of the Umpire
To appreciate the decision and the contentions urged a few facts are necessary
On or about 20th October 1962 there was a Bulk Supply Agreement entered into between Agra Electric Supply Co Ltd and the appellant herein for supply of electrical energy to the latter s hotel inter alia containing terms of rates discounts minimum sum payable and increase in the rates and sums payable once a year on account of increase in cost of production and distribution of electrical energy
Clause 9 of the said agreement contained terms of the rate of supply and the contingencies in which such rates could be increased
The said Clause provided as follows PG NO 674 The consumer shall subject to the provisions hereinafter contained pay to the Company for all electrical energy supplied and registered or estimated as herein provided at the rate of Rs020 Rupees zero decimal two zero per unit per month for all energy so supplied and registered andor estimated in the case of a defective meter installation in accordance with the proviso to clause 6 thereof
The charge for all energy shall be subject to the scale of special discounts in accordance with the schedule annexed thereto
Provided that without regard to the quantity of units supplied if the payment made or to be made for any one English Calendar year ending 31st March in respect of the electricity consumed shall fall short of a minimum sum of Rs 38640 Rs Thirty eight thousand six hundred and forty the consumer shall nevertheless pay to the Company such amount in addition to the payments already made in respect of the electricity consumed for such Calendar year as will being the total payment made in this respect to the said minimum of Rs38640 Rs Thirty eight thousand six hundred and forty
Provided Further that in the event of the first and last years of this Agreement not being complete calendar year as aforesaid the Company shall make a proportionate reduction on the aforesaid annual Maximum Demand and Minimum charges in respect of the period for which the said first and last year as the case may be shall be less than a complete calendar year
Provided also that
if and whenever during the subsistence of this Agreement the Company is satisfied that there has been an increase in the cost of production and distribution of electrical energy it shall be at liberty but not more than once in any year of accounts to increase the rates and sums payable by the Consumer under the foregoing provision of this present clause 9 by such amount as it shall in its sole and absolute discretion decide
 There was a clause providing for arbitration ie clause 18 which read as follows If any question or difference whatsoever shall arise between the parties to these presents as to the PG NO 675 interpretation or effect of any provision or clause herein contained or the construction thereof or as to any other matter in anyway connected with or arising out of these presents or the operation thereof or the rights duties or liabilities of either party in connection therewith when unless the means for deciding any such question or difference is provided for by the or the as the case may be or by the rules made respectively under the said Acts or by a specific provision of this Agreement in every such case the matter in difference shall be referred to the Arbitration of two Arbitrators one to be appointed by each party hereto and an Umpire to be appointed by the Arbitrators before entering upon the reference and the decision or award of the said Arbitrators or Umpire shall be final and binding on the parties hereto and any reference made under this clause shall be deemed to be a submission to arbitration under the Indian Act X of 1940 or any statutory modification or re enactment thereof for the time being in force
The Arbitrators or the Umpire giving their or his decisions shall also decide by which party the cost of the Arbitration and award shall be paid and if by both parties in what proportion
 On or from 26th September 1973 the Agra Electric Supply Co Ltd increased per unit rate of electricity from 020 P to 215 P in terms of clause 9 of the said agreement
Thereafter the bills were sent  215 P per unit after giving discounts and rebates as per the agreement
On or about 1718th December 1973 the respondent herein took over the undertaking of the Agra Electric Supply Co Ltd On or about 16th January 1974 the respondent informed the appellant by a written communication that consequent upon the expiry of licence granted to Agra Electric Supply Co Ltd to generate and supply electricity the respondent had taken it over and would supply electric energy to the hotel and that the Bulk Supply Agreement with Agra Electric Supply Co Ltd will continue to be in force with the respondent until such time the agreement is determined in accordance with its relevant provisions
All bills received subsequent to the take over were billed at the agreed rate allowing discounts and rebates
On or about 23rd November 1974 the appellant received a communication from the respondent informing that uniform PG NO 676 tariff rates issued under section 49 of the Electricity Supply Act 1949 will be applicable to the electrical energy supplied to the hotel wef
12101974
Section 49 of the hereinafter called the Act  is to the following effect 49
Provision for the sale of electricity by the Board to persons other than licensees
1 Subject to the provisions of this Act and of regulations if any made in this behalf the Board may supply electricity to any person not being a licensee upon such terms and conditions as the Board thinks fit and may for the purposes of such supply frame uniform tariff
2 In fixing the uniform tariffs the Board shall have regard to all or any of the following factors namely a the nature of supply and the purposes for which it is required b the co ordinated development of the supply and distribution of electricity within the State in the most efficient and economical manner with particular reference to such development in areas not for the time being served or adequately served by the licensee c the simplification and standardisation of methods and rates of charge for such supplies d the extension and cheapening of supplies of electricity to sparsely developed areas
3 Nothing in the foregoing provisions of this section shall derogate from the power of the Board if it considers it necessary or expedient to fix different tariffs for the supply of electricity to any person not being a licensee having regard to the geographical position or any area the nature of the supply and purpose for which supply is required and any other relevant factors
4 In fixing the tariff and terms and conditions for the supply of electricity the Board shall not show undue preference to any person
 PG NO
677 After the said date the bills were sent at the enhanced rate of 030 P per unit adding fuel cost variation charges and without allowing any discount or rebate
On or about 28th November 1974 the appellant however protested against the unilateral withdrawal of contractual discount and rebates and enhancement in the rates and drew the attention of the respondent to the existing and subsisting bulk supply agreement but the respondent took no action
On or about 31st August 1976 a Circular was issued by the Chief Engineer of the respondent advising all Engineers in charge of the undertakings to bill the consumers having special agreements with the ex licensees as per those agreements and steps be taken to terminate the old agreements with new agreements providing for application of tariff
On 7th October 1977 vide written communication the appellant informed the respondent that upon latter s failure to resolve the disputes and differences arising between them consequent to the illegal increase in the rates and discontinuation of discounts and rebates wef
12101974 the appellant was referring the disputes for decision by the arbitrator and appointed Justice Manchanda a retired Judge of the Allahabad High Court as the arbitrator and the respondent appointed Justice Nigam another retired Judge of the same High Court as its arbitrator
On or about 8th April 1977 the joint arbitrators appointed Justice V Bhargava a retired Judge of this Court as an Umpire
Between 3rd November 1979 and 4th March 1980 several sittings were held before the arbitrators but the parties were unable to agree and upon their disagreement the disputes were referred to the learned Umpire for decision
From 4th March 1980 onwards proceedings started before the Umpire and there was a plea for de novo hearing of the proceedings before the Umpire by the respondent
The learned Umpire started de novo proceedings taking evidence of the parties
On 21st March 1980 the respondent filed an application being Case No 59 of 1980 under section 33 of the before the District Judge Lucknow denying the existence of the agreement dated 20th October 1962
The respondent also denied the acceptance and adoption of the agreement consequent upon the take over and sought a declaration from the Court that the arbitration agreement did not exist
The Vth Addl
District Judge by his order dated 2751983 held that the agreement was duly executed accepted and adopted by the respondent and was binding on it and that the arbitration proceedings were pursuant to the arbitration clause and as such the application under section 33 of the  was rejected
PG NO
678 On 1st June 1983 the award was made by the learned Umpire holding that in terms of clause 9 the increase in the unit rate was permissible and the fuel cost variation charges which were variable every month was contrary to clause 9 as increase was permitted only once in a year of accounts and further held that the appellant was entitled to discount of 50 on the charges for electricity and was also entitled to 003 paise per rupee for prompt payment of bills
The learned Umpire in his award set out the facts and therein recited these as follows The main terms of the agreement were that in respect of the bulk electric supply to the petitioner the Hotel was to be charged at the rate of twenty paise per unit per month
There was also a clause for granting a special discount to the petitioner to the extent of 50 and in addition a cash discount of three paise per whole rupee was to be allowed to the petitioner in case the petitioner paid the bills of the Company within the stipulated period
The bills for the electric energy supplied by the Supply Company continued on these contractual rates till October 1974 even after the Supply Company was acquired by the opposite party in December 1973 and the bills were accordingly paid
However in October 1974 the opposite party under section 49 of the hereinafter referred to as the Act unilaterally and according to the petitioner illegally and arbitrarily purported to replace the original terms in the agreement and revised the charges with effect from 12th October 1974
The Board under this notification increased the rate of electricity supplied to 30 paise per unit and further refused to grant the discount to which the petitioner was entitled under the agreement as well as the cash discount of three paise per rupee
The opposite party further levied a fuel cost adjustment charges and subsequently the rate was raised to 31 paise per unit with effect from June 1976
 Thereafter the learned Umpire set out the history of the negotiations between the parties resulting in the agreement dated 20101962
After referring to the bulk supply agreement the learned arbitrator set out the terms upon which supply was made to the appellant
The appellant was to make an initial payment of Rs35326 towards service connection for the purpose of supply though irrespective of PG NO 679 the payment the service connection was to continue to be the property of the Supply Company
The Supply Company was to make provision in the appellant s monthly bill granting a rebate of Rs 14720 for each month that the agreement remained inforce upto a maximum of 20 years
Under para 9 of the agreement the appellant was to pay the Company for all electric energy supplied registered and estimated at the rate of 20 paise pm
The charges for energy consumed were subject to special discount according to the scale in the schedule which permitted a maximum discount of 50 in case a minimum of 41000 units were consumed in each month
The consumption as shown by the record was never less than 41000 units pm
In addition there was a provision under clause ii of the agreement for cash discount of 3 paise per whole rupee in case payment was made within the stipulated period
Under the first proviso to para 9 the appellant had to pay a minimum sum of Rs38640 for electricity consumed in any English calendar year
The provision made was that in addition to the amount paid in accordance with the bills the appellant was to make payment in such cases so as to make up the said minimum of Rs38640
The second proviso laid down that if and whenever during the subsistence of the agreement the Supply Company was satisfied that there was an increase in the cost of production and distribution of electric energy it shall be at liberty but not more than once a year to increase the rates and sums payable by the consumer under the provisions of clause 9 by such amount as the Company shall in its sole and absolute discretion decide
Hence it was held by the Umpire on the oral and documentary evidence that the payment was made at the enhanced rate under protest
Challenging the Award several contentions were raised namely i that there was no agreement in existence and that neither the Umpire nor the arbitrator had any jurisdiction to make the award
This contention was rejected and no argument was advanced before us challenging this finding of the Umpire ii that the appellant should prove the terms and conditions upon which the Supply Company was supplying the electricity to the appellant
This the Umpire held had been duty proved and there was no challenge to either of the findings of the Umpire
iii it was thirdly contended that the agreement even if in existence was not binding upon the respondent
and that while admitting that the respondent under section 49 of the Act issued Notification under which the tariff was revised wef
12101974 it was claimed that the opposite party had not in any way failed to fulfil its obligations on the alleged agreement and that the opposite party was fully competent under law to fix a uniform tariff and also to levy fuel PG NO 680 adjustment charges
This is the main and substantial question involved in this matter
It was then contended that the respondent was entitled even under the agreement and under its second proviso to clause 9 to revise the tariff and the appellant was not entitled to any relief
It was further urged that the payments were made after coming into operation of the  under protest
In respect of these contentions the learned Umpire held that the plea was that even if the agreement was in existence it was not binding on the opposite party and that the opposite party was competent under section 49 of the Electricity Supply Act to fix revised charges wef
12101974 and had not violated any terms of the agreement
The appellant had also relied on the alternative provisions of section 493 of the Act set out hereinbefore
The said sub section 3 provides that nothing contained in sub sections 1  2 of section 49 shall derogate from the power of the Board if it happens to enter into an agreement at different rates of tariff with any person other than a licensee
It appears that when the Supply Company was taken over on l718121973 the resident Engineer wrote a letter on 1611974 in which he informed the appellant that the licence of Ms Agra Electric Supply Co Ltd having expired and the UP State Electricity Board having taken over the supply it was to supply energy to the appellant at the aforesaid date
Their further contention was that the bulk supply agreement which the appellant had with Ms Agra Electric Supply Co Ltd would continue to be in force with the State Electricity Board until such time as the agreement was determined in accordance with the relevant provisions thereof
The learned Umpire held that the letter clearly laid down that the UP Electricity Board had accepted the agreement which was in existence between the Supply Company and the appellant and the Umpire proceeded on that basis
The learned Umpire further stated as follows The Board thus having accepted the agreement with the claimant it became binding on the Board and under sub section 3 of section 49 of the Electric Supply Act nothing contained in sub sections 1  2 of section 49 of the Act could have any bearing on the terms of the agreement
The result was that the uniform tariff fixed by the Board with effect from 12th October 1974 did not apply to the claimant and the claimant had to be granted the various rebates laid down in the agreement
The decision of the Supreme Court in Indian Aluminium Co Ltd vs Kerala Electricity Board PG NO 681 1976 1 SCR pa
70 fully covers the case and supports the claim of the claimant
In the case before the Supreme Court an agreement had been entered into by the State Government and it was held that under section 60 of the Electricity Supply Act 1940 it became binding on the Kerala State Electricity Board and further that that agreement was enforceable under sub section 3 of s 49 irrespective of the fixation of uniform tariff under sub sections I and 2 of section 49
In the present case the only difference is that instead of the agreement being first binding between the consumer and the State Government the agreement became binding on the Electricity Board because it accepted the agreement and became a party to it by letter dated 16th January 1974 exhibit R
 The aforesaid basis of the decision it was contended was the error of law which vitiated the award
This question will require further consideration later
It was held that the decision in Indian Aluminium Co supra fully covered the dispute on this aspect in the instant case
The learned Umpire further held as follows Once the agreement was binding on the Board its terms under sub section 3 of section 49 could not be varied by fixation of uniform tariff under sub sections 1 and 2 of section 49
The opposite party in these circumstances must be held to have failed to fulfil its obligations under the agreement
On 1st July 1983
an application was made under section 12 2 of the before the learned District Judge Lucknow for filing of the award and making the same Rule of the Court
Objections were filed by the respondent against the said award
The learned kind Addl
Distt
Judge Lucknow held that the award was legal valid and binding on the parties and the alleged grounds of misconduct were not maintainable
The award was
however set aside on the ground that the reference made to arbitration was unilateral
The appellant filed an appeal
The Lucknow Bench of the Allahahad High Court held against the finding of the Ilnd Additional Distt
Judge Lucknow that the reference was unilateral
but set aside the award on the ground that there was an error of law apparent on the face of it in view of the agreement dated 2010 1962 and the ratio of the decision of this Court in Indian Aluminium Co supra
The revision filed by the respondent against the judgment of the Vth Addl
Distt Judge Lucknow was also rejected
This appeal is from the aforesaid decision of the High Court by special leave
PG NO 682 The two learned Judges of the High Court gave separate judgments
The High Court was of the view that the instant case was distinct from the facts in the case of Indian Aluminium Co supra
There it was held that where a stipulation in a contract is entered into by a public authority in exercise of a statutory power then even though such stipulation fetters subsequent exercise of the same statutory power it would be valid and the exercise of such statutory power would pro tanto stand restricted
Mr Justice Loomba was of the view that in the instant case even if the stipulation as to the tariff structure in the agreement by taken to have been continued to be in existence in view of sub section 3 of section 49 of the Act the same was not unrestricted
The stipulation was expressly made subject to certain reservations as would be clear from the opening sentence of clause 9 of the agreement the main clause was subject to the provisions hereinafter contained
Mr Justice Loomba was of the view that the decision of the Indian Aluminium Co supra case was inapplicable to the present case
According to the learned Judge the mistake committed by the Umpire was a manifest error
It was further stated that it is well settled proposition of law that if the reasons are stated on the basis of which the award was made and such reasons are found to be erroneous the errors become apparent on the face of the award and constitute legal misconduct on the part of the Umpire vitiating the award
The other learned Judge Mr Justice Mathur also held that there was error of law apparent on the face of the award of the Umpire
He was of the opinion that the expression sum payable by the consumer under the foregoing provision of this present clause 9 was subject to the discounts mentioned in the subsequent clauses of the agreement
In view of the discounts the sum payable under clause 9 was altered and the altered amount becomes the sum payable under clause 9
According to the learned Judge since the amount determined after allowing discounts is also sum payable under clause 9 it followed that in exercise of the power conferred under the third proviso the discount could only be tampered with in the same way the unit charge could be tampered with
Beyond this it was not permissible
In permitting this the Umpire committed an error in drawing distinction between rates  and discount  and upholding the right of the Board to tamper with the former and negating similar right in respect of the latter
According to the learned Judge this was a wrong understanding of the decision of the Indian Aluminium s case supra
In the aforesaid view of the matter the learned Judge agreed with the other learned Judge and held that the award was vitiated
PG NO 683 It appears that the main question that arises is whether the decision of this Court in Indian Aluminium s case supra was properly understood and appreciated by the learned Umpire and whether he properly applied the agreement between the parties in the light of the aforesaid decision
It was contended that the question was whether the sums payable under clause 9 included discounts
On the aforesaid basis it was contended that there was an error of law and such error was manifest on the face of the award
Even assuming however that there was an error of construction of the agreement or even that there was an error of law in arriving at a conclusion such an error is not an error which is amenable to correction even in a reasoned award under the law
Reference may be made to the observations of this Court in Coimbatore Distt
PT Sangam vs Bala Subramania Foundry AlR  where it was reiterated that an award can only be set aside if there is an error on its face
Further it is an error of law and not mistake of fact committed by the arbitrator which is justiciable in the application before the Court
Where the alleged mistakes or errors if any of which grievances were made were mistakes of facts if at all and did not amount to error of law apparent on the face of the record the objections were not sustainable and the award could not be set aside
See also the observations of this Court in Delhi Municipal Corpn
vs MS Jagan Nath Ashok Kumar   where this Court reiterated that reasonableness of the reasons given by an arbitrator in making his award cannot be challenged
In that case before this Court there was no evidence of violation of any principle of natural justice and in this case also there is no violation of the principles of natural justice
It may be possible that on the same evidence some court might have arrived at some different conclusion than the one arrived at by the arbitrator but that by itself is no ground for setting aside the award of an arbitrator
Also see the observations of Halsbury s Laws of England 4th Edn Vol 2 at pages 334  335 para 624 where it was reiterated that an arbitrator s award may be set aside for error of law appearing on the face of it though that jurisdiction 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 erroneous 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 principles of construction which the law does not PG NO 684 countenance there is error in law which may be ground for setting aside the award
It was contended by Mr FS 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 in the interpretation of the agreement between the parties hence the parties were bound by the decision of the Umpire
Our attention was drawn to the observations of this Court in Ms Hindustan Tea Co vs Ms K Sashikant  Co AIR 1987 SC 81 where this Court held that under the law the arbitrator is made the final arbiter of the dispute between the parties referred to him
The award is not open to challenge on the ground that the arbitrator has reached a wrong conclusion or has failed to appreciate facts
Where the award which was a reasoned one was challenged on the ground that the arbitrator had acted contrary to the provisions of section 70 of the Contract Act it was held that the same could not be set aside
In order to set aside an award there must be a wrong proposition of law laid down in the award as the basis of the award
For this see the observations of this Court in Kanpur Nagar Mahapalika vs Ms
Narain Das Haribansh In that case the appellant had entered into a contract with the respondent for certain construction work
The contract contained an arbitration agreement between the parties
The respondent filed a suit in 1946 claiming certain moneys due against its final bills but at the instance of the appellant the suit was stayed and the matter referred to arbitration
The arbitrator made an award in March 1960 in favour of the plaintiffs determining the amount payable by the appellant
Thereafter the appellant made an application for setting aside the award on the ground that the arbitrator had misconducted himself in not properly considering that the claim of the respondent was barred by limitation under section 326 of the UP Act 2 of 1916
Although the trial court set aside the award the High Court in appeal reversed this decision
In appeal to this Court it was contended for the appellant that the award was bad by reason of an error apparent on its face
Dismissing the appeal it was held that there could not be predicated of the award that there was any proposition of law forming the basis of the award and therefore it could not be said that there was any error apparent on the face of the award
PG NO 685 The Judicial Committee in the famous decision of Champsey Bhara  Co vs Jivraj Balloo Spinning  Weaving Co Ltd  held that the error of law on the face of the award means that one can find in the award or in document 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 is erroneous
The same view was reiterated by this Court in Dr SB Dutt vs University of Delhi  In this case
Mr Nariman appearing for the appellant contended that there was no proposition of law as such stated by the Umpire which could be said to be the basis of his decision
Hence the award was not amenable to corrections on the ground that there was an error of law apparent on its face
Mr Nariman further submitted that the Umpire had decided the specific question of law and such a decision right or wrong is binding on the parties
In aid of his submission Mr Nariman referred to the decision of this Court in Ms Kapoor Nilokheri Co op
Dairy Farm Society Ltd vs Union of India  Ors   where it was held that in a case of arbitration where the appellants had sepcifically stated that their claims were based on the agreement and on nothing else and all that the arbitrator had to decide was as to the effect of an agreement between the appellant and the respondent the arbitrator had really to decide a question of law ie of interpreting the document the agreement
Such a decision his is not open to challenge
Our attention was drawn to the observations of this Court in Tarapore  Co vs Cochin Shipyard Lld
Cochin  Anr l984 3 SCR 118 where Desai J spoke for the Court and Justice Chinnappa Reddy agreed with him
It was stated that a question of law might figure before an arbitrator in two ways
It may arise as an incidental point while deciding the main dispute referred to the arbitrator or in a given case parties may refer a specific question of law to the arbitrator for his decision
This Court reiterated that the arbitration has been considered a civilised way of resolving disputes avoiding court proceedings
There was no reason why the parties should be precluded from referring a specific question of law to an arbitrator for his decision and agree to be bound by the same
This approach manifests faith of parties in the capacity of the tribunal of their choice to decide even a pure question of law
If they do so with eyes wide open there is nothing to preclude the parties from doing so
If a question of law is specifically referred and it becomes evident that the parties desired to have a decision on the specific question from the arbitrator rather than one from the Court then the court will not interfere PG NO 686 with the award of the arbitrator on the ground that there was an error or law apparent on the face of the award even if the view of law taken by the arbitrator did not accord with the view of the court
A long line of decisions was relied upon by this Court for that proposition
Mr B Sen learned counsel for the respondent however contended that in the present case there was no specific question of law referred to the Umpire
He submitted that it was a general reference in which a question of law arose
It was any question in the proceedings and the question of law as such did not arise
According to Mr Sen the mistake that the Umpire has committed is clear from his following statement The Board thus having accepted the agreement with the claimant it became binding on the Board and under sub section 3 of section 49 of the Electricity Supply Act nothing contained in sub section  1  2 of section 49 of the Act could have any bearing on the terms of the agreement
The result was that the uniform tariff fixed by the Board with effect from 12th October 1974 did not apply
It was stated that no specific question having been referred to this mistake was fatal
We are unable to accept this submission
Our attention was drawn by Mr Nariman to the observations of Justice Macnaghten in Hitchins  Anr
vs British Coal Refining Processes Ltd 1936 2 AER Reprint 191
Ihere by an agreement the applicants were to act as consulting Engineers in connection with a certain coal refining process owned by the respondents
While the plant for the working of the process was being erected a dispute arose
the respondents wanting the applicants to attend every day at the site of the plant and the applicants considering this to be no part of their duty
The respondents thereupon terminated the agreement and the matter was referred to arbitration
The applicants pleaded that the termination of the agreement was unjustified the respondents pleaded that the applicants should have attended every day and that they had been quilty of negligence in respect of certain matters set out in the counterclaim
The arbitrator found the termination of the agreement to be unjustified and also negligence on the part of the appellants in respect of the matters set out in the counterclaim and he awarded the appellants damages after setting off an unspecified amount for damages for negligence
The respondents moved to set aside the award on PG NO 687 the ground of error of law apparent on the face of it
At the hearing the respondents contended that the whole of the pleadings in the arbitration were admissible
The respondents contended that for the purpose of deciding whether there was an error of law apparent on the face of the award the court could not look at any document except the award itself
The respondents further contended that the arbitrator had committed an error of law in deciding that the negligence found did not afford sufficient ground for the termination of the agreement and further that on the true consideration of the agreement the refusal to attend daily was as a matter of law a sufficient ground for the termination of the agreement
It was held that inasmuch as the arbitrator in his award referred to certain paragraphs in the counterclaim such paras ought in considering whether there was an error on the face of the award to be regarded as forming part of the award
Whether misconduct justifies dismissal is a question of fact and the arbitrator s decision was final
It was further held that the light to terminate the agreement because the applicants refused to attend daily was a question specifically submitted to the arbitrator and the court could not interfere with his decision even if the question was a question of law
Mr Justice Macnaghten at page 195 of the report observed that it was permissible to look at the whole of the pleadings delivered in the arbitration and it appears therein that the respondents affirmed and the applicants denied that the respondents were entitled to terminate the agreement as the applicants refused to attend daily at the site and that this was a specific question submitted to the decision of the arbitrator
Our attention was also drawn to the observations of House of Lords in Pioneer Shipping Ltd and Ors
vs ETP Tioxide Ltd In that case by a charterparty dated 2nd November 197 the owners of a vessel chartered her to the charterers
It was held by the House of Lords that having regard to the purpose the Arbitration Act 1970 of England which was to promote greater finality in arbitration awards then had been the case under the special case procedure judicial interference with the arbitrator s award was only justified if it was shown that the arbitrator had misdirected himself in law or had reached a decision which no reasonable arbitrator could have
In the instant case the view taken by the Umpire on the interpretation of the agreement between the parties in the light of the observations of this Court in Indian Aluminium Co s case supra was at best a possible view to take if not the correct view
If that was the position then such a view even if wrong cannot be corrected by this Court on the basis6is of long line of decisions of this Court
In the PG NO 688 aforesaid view of the matter it is necessary to examine the aforesaid decision in the Indian Aluminium Co s case supra
There under section 491  2 of the Electricity Supply Act 1948 the Legislature had empowered the State Electricity Board to frame uniform tariffs and had also indicated the factors to be taken into account in fixing uniform tariffs
Under sub section 3 the Board was empowered in the special circumstances mentioned therein to fix different tariffs for the supply of electricity but in doing so sub section 4 directed that the Board was not to show undue preference to any person
Under section 59 it was stipulated that the Board shall not as far as practicable carry on its operations at a loss and shall adjust its charges accordingly from time to time
Certain consumers of electricity had entered into agreements for the supply of electricity for their manufacturing purposes at specified rates for specified period
Some of the agreements were entered into with the State Governments and the others with the State Electricity Boards
In one of the agreements there was an arbitration clause
On account of the increase in the operation and maintenance cost due to various causes which caused loss to the State Electricity Boards the Boards wanted to increase the charges in all the cases
The consumers challenged the competency of the Boards to do so by petitions in the respective High Courts
The High Court sustained the Board s claim in some cases under sections 49  59 and in others held that the Board was incompetent to do so
In the case of the consumer where there was the arbitration clause
the High Court refused to entertain the petition on account of the clause
This Court held that fixation of special tariffs under section 49 3 can be a unilateral Act on the part of the Board but more often it is the result of negotiations between the Board and the consumer and hence a matter of agreement between them
Therefore the Board can in exercise of the power conferred under the sub section enter into an agreement with a consumer stipulating for special tariff for supply of electricity for a specific period of time
The agreements for supply of electricity to the consumers must therefore he regarded as having been entered into by the Boards in exercise of the statutory power conferred under section 493
The Umpire in his award stated that the decision of this Court covered and supported the claim of the claimant
In the present case the only difference is that there was only an agreement by which the Electricity Board accepted the agreement which was held by the Umpire to have become operative
Once that agreement was binding on the Board its terms could not be varied from the uniform rate under sub sections 1 and 2 of section 49
The Umpire was right
In our opinion the Umpire committed no error in arriving at such conclusion
Furthermore such a conclusion is certainly a possible view of the interpretation of the decision of this PG NO 689 Court in Indian Aluminium Co s case if not the only view
We need go no further than that
We are therefore of the opinion that the view taken by the Umpire on section 49 was a possible view in the light of the decision of this Court in Indian Aluminium s case
In the premises a question of law arose certainly during the course of the proceedings
Such a question has been decided by the Umpire on a view which is a possible one to take
Even if there was no specific reference of a question of law referred to the Umpire there was a question of law involved
Even on the assumption that such a view is not right the award is not amenable to interference or correction by the courts of law as there is no proposition of law which could be said to be the basis of the award of the Umpire and which is erroneous
In the premises we are of the opinion that the High Court and the learned IInd Additional District Judge were in error in the view they took of the award of the Umpire
The appeal must therefore be allowed and the decision of the High Court dated 21st July 1987 as well as the order of the IInd Additional Judge Lucknow dated 30th May 1984 are set aside
No other point was urged challenging the award of the Umpire
The award of the Umpire is confirmed and let the award be made Rule of the Court under section 142 of the Act
The appeal is allowed with costs
RSS Appeal allowed


Summary:
An order was passed by the District Magistrate Nellore directing the detention of the respondent under the Prevention of Black Marketing and Maintenance of supplies of Essential Commodities Act 1980
The State Government approved the detention and referred the matter to the Advisory Board under section 10 of the Act
The detenus
representation was also forwarded by the Government to the Advisory Board
The Advisory Board heard the detenu and the top ranking police officers who represented the State and expressed the opinion that there was sufficient cause for the detention of the respondent
The Government agreed with the opinion and confirmed the respondent s detention for a period of six months
The detenu challenged the validity of the order of detention
The High Court allowed the writ petition
The High Court found that there was unequal treatment by the Advisory Board in considering the representation of the detenu
Dismissing the appeal it was HELD 1 The Act by section 114 expressly denies representation through a legal practitioner
The Board may hear any person it necessary
If the detenu desires to be PG NO 620 PG NO 621 heard the Board may hear him also
But no person has a right to be represented by a lawyer much less the detenu
This provision is in conformity with article 223b of the Constitution
626B C 2 The power to detain a person without trial is a serious In road into the liberty of individuals
It is a drastic power capable of being misused or arbitrarily exercised
The framers of our Constitution were not unaware of it
They had therefore specially incorporated in the Constitution enough safeguards against the abuse of such power
630G H 3 The Advisory Board is a constitutional imperative
It has an important function to perform
There is no particular procedure prescribed for the Advisory Board since there is no lis to be adjudicated
Section 11 of the Act provides only the broad guidelines for observance
The Advisory Board however may adopt any procedure depending upon varying circumstances
But any procedure that it adopts must satisfy the procedural fairness
631F G 4 It is important for laws and authorities not only to be just but also appear to be just
Therefore the action that gives the appearance of unequal treatment or unreasonableness whether or not any substance in it should be avoided by the Advisory Board
It is the duty of the Advisory Board to see that the case of detenu is not adversely affected by the procedure it adopts
It must be ensured that the detenu is not handicapped by the unequal representation or refusal of access to a friend to represent his case 632B C 5 In the instant case since the Advisory Board has heard the high ranking officers of the Police Department and others on behalf of the Government and detaining authority it ought to have permitted the detenu to have the assistance of a friend who could have made an equally effective representation on his behalf
Since that has been denied to the detenu the High Court was justified in quashing the detention order
1632D E AK Roy vs Union of India   Kavita wo Sunder Shankardas Devidasani etc
vs State of Maharashtra   Nand Lal vs State of Punjab 1982 I SCR 718 Johney DaCouto vs State of Tamil Nadu  referred to