vil Appeal No 1945 and 1946 of 1989
From the Judgment and Order dated 11121984 of the Punjab and Haryana High Court in CR No 1794 and 1795 of 1985
Dr LM Singhvi and YP Rao for the Appellant
GL Sanghi JP Gupta and SK Agarwal for the Respondent
The Judgment of the Court was delivered by SABYASACHI MUKHARJI J
Special leave granted
882 This appeal arises from the decision of the High Court of Punjab  Haryana dated 11th December 1984 dismissing the Civil Revision filed by the appellant
It appears that there was a contract entered into by the parties on or about 15th May 1979 which provided that the appellant would give to the respondent paddy to convert these into rice after lifting paddy from the godown of the appellant
There was an agreement between  the parties for shelling of paddy into rice after lifting the paddy from the godown of the appel lant at the rate of 70 of the paddy
The shelling charge was Rs220 per quintal
The learned Subordinate Judge First Class directed on or about 17th March 1980 appoint ment of an arbitrator on an application by the respondent
On 22nd January 1982 the arbitrator gave his award
The arbitrator did not allow the claims of the appellant as claimed as per the terms of the agreement
The arbitrator allowed certain claims
It is necessary in view of the contentions that have been raised to refer to the award of the arbitrator
After setting out the history the arbitrator dealt with the various contentions
It is not necessary to refer to all the contentions and points urged before the arbitrator and upon which he has made his award
It is sufficient if the relevant portions are dealt with
The arbitrator inter alia dealt with a claim of Rs 5506029 which had claimed as penalty at Rs2 per qtl
for not lift ing the balance of the paddy weighing 2765 3093 mts
The arbitrator noted that he had held that there was justifica tion for the millers millers being respondent herein not to lift the paddy
Assuming however the arbitrator noted that if it was decided that the millers were at fault in not lifting this paddy the arbitrator expressed the opinion that the appellant could not recover the amount claimed by way of penalty
He expressed the view that in order to enable the appellant to claim the amount it had to be shown that the actual losses were suffered by the Corporation
Otherwise it could not be claimed as pre estimated damages
Otherwise it would only be penalty which could not be recovered
No evidence had been led for how many days the bags of the paddy remained in the godowns of the Corpora tion the arbitrator noted and what losses were incurred for getting it shelled from other quarters
The arbitrator referred to the affidavit of one Mr MS Rawat Asstt
Manager that the Corporation had to get the unlifted paddy shelled by transporting to other centre as well as getting the same shelled at heavy additional expenditure
The arbi trator noted that there was not an iota of evidence on that point
So no actual losses stated to have been suffered by the Corporation and no proof thereof was there
The arbitra tor further noted that an amount by way of penalty could be permitted if some losses were proved
He accordingly dismissed the claim of the appellant for Rs 5509019
883 The next claim dealt with by the arbitrator was the claim of Rs32385608 claimed by the Corporation as the cost of non delivery of 137 39549 tonnes of rice at the rate of Rs 165 per qtl
of paddy
The claim of the appellant was based on the basis that the appellant had converted the undelivered rice into paddy by multiplying it with 10070 and it came to 1238711 tonnes
The arbitrator dealt with this question as follows At the rate of Rs 165 per qtl
its price works at Rs32385608
According to provi sions of clause gi of the Contract in the event of failure to supply rice within pre scribed specification the millers are liable to pay to the Corporation for the quantities of rice short supplied at the penal rate of 112 times the economic cost of the concerned variety of the paddy equivalent to the short ages
In the contract no definition of Eco nomic Cost  is furnished nor is the expression any where defined in any law
However Shri Pritam Singh in the statement attached to the affidavit work it out at Rs 110 per qtl
The procurement price of paddy is Rs85 per qtl
as shown therein
He has added to it market fee and other charges including cost of gunny Rs2 and interest charges at Re 1
Under the above clause of the contract the Corporation has added 50 penalty and thus has claimed the price at Rs 165 per qtl
I do not think that the Corporation is enti tled to such a fantastic rate particularly when the expression economic rate  has not been defined
Even if the statement of Shri Pritam Singh is accepted the maximum price of the rice at that time should be Rs 100 per qtl
exclusive of gunny bag and interest charges to which in my opinion the Corporation is not entitled
The market rate did not exceed that amount at that time
So the calcu lated at this rate the price of the undeliv ered rice will come to Rs19627700
to which the Corporation is entitled
I may add here that the above amount has been allowed to the Corporation besides from the evidence on the record I believe that the rice was short delivered
When the paddy had been accepted by the millers unconditionally and without any reservation they were bound to give to the Corporation 70 of the yield
As they did not do it so they are liable to pay the price of the undelivered rice
884 I have already stated above that the rice after shelling to be  delivered to the Corpo ration under clause giof the contract had to conform to the specification laid down by the Punjab Government under the Punjab Rice Pro curement Price Control Order 1968 issued on the 22nd October 1968 as amended from time to time
The Corporation states that the rice accepted by them was done subject to the quality rice which was permissible under clause gii of the contract
This has been duly proved from the evidence placed on the record by the Corporation
Even Shri Anil Kumar a partner of the millers firm admitted that they received an analysis report in respect of the rice which was accepted by the Corporation to continue that the Corporation was mentioned and that they did not appeal against the cut though there was a provision in the said order to do so
It therefore means that the quality cut was admitted to have been correctly assessed under the said Punjab Rice Order and to that the millers submitted
This item is therefore allowed
 The respondent filed an application under section 14 of the Arbitration Act 1948 hereinafter referred to as the Act  for filing of the award and prayed for making the award the rule of the court
The appellant on 25th May 1982 filed objections under sections 30 and 33 of the Act
The learned Subordinate Judge First ClasS on 2nd December 1982 found that the award was liable to be set aside and modified the award and passed a decree in favour of the appellant for the amount
On 2nd March 1984 the Additional District Judge allowed the appeal by respondent and reversed the Subordinate Judge s order
Aggrieved thereby the appellant went in revision before the High Court
The High Court on 11th December 1984 dis missed the revision petition
Aggrieved thereby the appel lant has come up before this Court
It is therefore neces sary to decide whether the High Court was right
As mentioned hereinbefore the learned Subordinate Judge had modified the award and passed a decree in favour of the appellant for the amount
The learned Additional District Judge however allowed the appeal of the respondent and reversed the decision of the learned Subordinate Judge
The High Court did not interfere with that decision because the High Court did not find any ground to interfere
The 885 question therefore is whether the learned Additional Dis trict Judge in the first appeal was right in holding that the award was not liable to be corrected in the manner done by the learned Subordinate Judge
The jurisdiction to inter fere by the Court of law of an award made by the arbitrator chosen by the parties is circumscribed
In India there is a long history of arbitration
Arbitration is a mode of set tlement of disputes evolved by the society for adjudication and settlement of the disputes and the differences between the parties apart from the courts of law
Arbitration has a tradition it has a purpose
Arbitration that is a refer ence of any particular dispute by consent of the parties to one or more persons chosen by the parties with or without an umpire and an award enforceable by the sovereign power were generally unknown to ancient India
Hindus recognised deci sions of Panchayats or bodies consisting of wealthy influ ential and elderly men of the Community and entrusted them with the power of management of their religions and social functions
The sanction against disobedience to their deci sion was excommunication or ostracism and exclusion from all religions and social functions of the community
An agreement to abide by the decision of a Panchayat and its decision with regard to the line of boundary was held not to be conclusive since a reference to arbitration and award properly so called did not exist
See the observations in Mukkudduns of Kimkunwady vs Inamdar Brahmins of Soorpai See also Bachawat s Law of Arbitration at page 1
When power came to the East India Company they framed Regulations in exercise of the power vested in them by the British Government Some of these Regulations were touching arbitration
Bachawat gives description of the evolution of the 
Therefore arbitration as a mode for settlement of disputes between the parties has a tradi tion in India
It has a social purpose to fulfil today
It has great urgency today when there has been an explosion of litigations in the courts of law established by the sover eign power
New rights created or awareness of these rights the erosion of faith in the intrinsic sense of fairness of men intolerant and uncompromising attitudes are all the factors which block our courts
The courts are full of litigations which are pending for long time
Therefore it should be the endeavour of those who are interested in the administration of justice to help settlement by arbitra tion if possible
It has also a social efficacy being the decision by the consent of the parties
It has greater scope of acceptance today when there is a certain erosion of faith in view of the failure to appreciating the functions of the courts of law
It has also the advantage of not only quick ness of decision but of simplicity of procedure
But in proceedings of arbitra 886 lion there must be adherence to justice equity law and fair play in actions
However the proceedings of arbitra tion must adhere to the principles of natural justice and must be in consonance with such practice and procedure which will lead to a proper resolution of the dispute and create confidence of the people for whose benefit these processes are resorted to
It is therefore the function of courts of law to oversee that the arbitrators act within the norms of justice
Once they do so and the award is clear just and fair the courts should as far as possible give effect to the award of the parties and make the parties compel to adhere to and obey the decision of their chosen adjudicator
It is in this perspective that one should view the scope and limit of correction by the court of an award made by the arbitrator
We should make the law of arbitration simple less technical and more responsible to the actual realities of the situation but must be responsive to the cannons of justice and fair play and make the arbitrator adhere to such process and norms which will create confidence not only by doing justice between the parties but by creating a sense that justice appears to have been done
Sections 30 and 33 of the Act provide for the grounds on which an award of the arbitrator can be set aside
These were mainly until recent changes made by statutory laws in England in consonance with the English principles of Common Law as adopted in India
So far as the material of the present purpose is concerned an award of the arbitrator can only be interfered with or set aside or modified within the four corners of the procedure provided by the Act
It is necessary to find whether the arbitrator has misconducted himself or the proceedings legally in the sense whether the arbitrator has gone contrary to the terms of reference between the parties or whether the arbitrator has committed any error of law apparent on the face of the award
It is necessary to empha sise that these are grounds for setting aside the award but these are separate and distinct grounds
Halsbury s Laws of England Vol
2 4th Edn para 623 reiterates that an arbi trator s award may be set aside for error of law appearing on the face of it
Though this jurisdiction is not to be lightly exercised
The award can also be set aside if inter alia the arbitrator has misconducted himself or the pro ceedings
It is difficult to give an exhaustive definition what may amount to a misconduct on the part of the arbitra tor
This is discussed in Halsbury s Laws of England supra
It is not misconduct on the part of an arbitrator to come to an erroneous decision whether his error is one of fact or law and whether or not his findings of fact are supported by evidence
See the observations of Russell on Arbitration 20th Edn page 422
In the instant case the arbitrator has chosen to make a speaking 887 award that is to say he has given reasons for his conclu sion
Whether he is obliged to give such reasons or not is another matter but since the arbitrator has chosen to give the reasons unless it is demonstrated to this Court that such reasons are erroneous as such as propositions of law or a view which the arbitrator has taken is a view which it could not possibly be sustained on any view of the matter then the challenge to the award of the arbitrator cannot be sustained
As has been emphasised in Ms Sudarsan Trading Co vs The Government of Kerala  Anr 1989 1 Jt
Today SC 339 that an award could be set aside if the arbitrator has misconducted himself or the proceedings or has proceeded beyond jurisdiction
It could also be set aside where there are errors apparent on the face of the award
But these are separate and distinct grounds
In case of errors apparent on the face of the award it can only be set aside if in the award there is any proposition of law which is apparent on the face of the award namely in the award itself or any document incorporated in the award
See the observations of the Judicial Committee in Champsey Bhara  Co vs Jivraj Balloo Spinning  Weaving Co Ltd L 1922 IA 324
Dr LM Singhvi learned counsel for the appellant urged before us that the arbitrator was wrong in not award ing 50 of the added penalty as claimed by the appellant as mentioned hereinabove
The appellant had claimed the price of Rs 165 per qtl
The arbitrator was of the view that the expression Economic Rate  had not been defined
It is true that the expression Economic Rate  has not been used but the expression Economic Cost  has been used
The arbitrator has noted that the market rate did not exceed that amount at the time
The amount of Rs 100 per qtl
is mentioned of such a rate as the arbitrator had noted could only be pre estimated damages but this was not so according to the arbitrator
The arbitrator had construed the effect of clause gi of the contract as mentioned hereinbefore
It cannot be said that such a construction is a construction which is not conceivable or possible
If that is the position assuming even for the argument that there was some mistake in the construction such a mistake is not amenable to be connected in respect of the award by the court
This was a fair order after considering all the records
The conclusion arrived at by the arbitrator is a plausible conclusion
The court has in our opinion no jurisdiction to interfere or modify the award in the manner sought for by the appellant and in the manner done by the learned Subordinate Judge in the first instance in this case
In that view of the matter the learned Additional District Judge was justified in correcting the 888 order of the learned Subordinate Judge and the High Court was also justified in not interfering with the order of the Additional District Judge
The award on the aspects can vassed before us by Dr LM Singhvi is a plausible con struction of clause gi of the contract
It cannot in our opinion be interfered with either on the ground that there was error apparent on the face of the award or on the ground that the arbitrator has misconducted himself in not giving the effect to the penal rate as contemplated under clause gi of the contract referred to hereinbefore in the award
Dr Singhvi sought to urge that as per the terms of the contract the arbitrator was obliged to award penal rate in terms of clause gi of the contract
The arbitrator has apparently not done so
He has given reason why he has not done so
It was submitted that he was wrong in not doing so
We do not agree
The arbitrator has discussed the effect of clause gi
He has noted that unless there was evidence about which incidentally there was none this amount could not be treated as a pre estimate of damage
If that be so then it was penalty
It was not recoverable
Reasons may not be apparent latent was there
Dr Singhvi s objection therefore cannot be accepted
Dr Singhvi drew our attention to the observations of this Court in Ms Sudersan Trading Co supra at page 352 of the report where it was stated that if it was apparent from the award that a legal proposition which formed its basis was erroneous the award was liable to be set aside
Dr Singhvi sought to urge that when the arbitrator observed that Corporation is not entitled to recover such a claim particularly when the Economic Rate  has not been defined this according to the statement of Dr Singhvi the arbi trator was mistaking the law such a mistake of law is apparent on the face if it
It has to be borne in mind however that wrong statement or conclusion of law assuming even that it was a wrong statement of law was not wrong statement of the proposition of law which was the basis for decision in this award
Error of law as such is not to be presumed if there is legal proposition which is the basis of the award and which is erroneous as observed in Champsey Bhara  Co supra then only the award can be set aside
There was no proposition of law there was a legal deduction of law arrived at to say that the provisions of clause gi of the contract would be penal rate and such penal rate cannot be sustainable without evidence of the damages suf fered to that extent
We are of the opinion that the arbi trator had taken a view which is plausible view
Beyond this the court has nothing to examine
It is not necessary for a court to examine the merits of the award with refer ence to the materials produced before the arbitrator
The Court cannot sit in appeal over the 889 views of the arbitrator by re examining and re assessing the materials
See the observations of this Court in Puri Con struction Pvt Ltd vs Union of India In the aforesaid view of the matter it appears to us that the learned Additional District Judge was right in the view it took and the High Court therefore was justified in dismissing the revision
The appeal therefore fails and is accordingly dismissed
No order as to costs
Special leave granted
In view of the fact that the facts of this appeal are more or less identical to the Appeal arising out of SLP C No 3392 of 1985 this appeal is also dismissed
No order as to costs
YL Appeals dis missed


Summary:
In the Lok Sabha elections held in 1984 the appellant was declared elected from the Nizamabad Parliamentary Constitu ency
He secured 251172 votes while Respondent No 1 got 248725 votes
An election petition under Sections 80 and 81 of the Act was filed in the High Court by the First Respondent challenging the election of the appellant on grounds of illegalities and irregularities in the counting of votes impersonation of voters and corrupt practices
The High Court set aside the election only on one ground that is the Additional Returning Officers in respect of the Nizamabad Parliament Constituency were not appointed and authorised by the Election Commission to perform the duties and functions of Returning Officers and every action taken by such officers including the rejection of doubtful ballot papers is absolutely illegal void and forbidden by law
The High Court gave directions to the Election Commission for recounting
This appeal by special leave is against the High Court s order setting aside the election
On behalf of the appellant it was contended that the officers were duly appointed and authorised by the Election Commission
The First Respondent contended that the officers were not duly appointed by the Election Commission and that their purported exercise of power as Additional Assistant Returning Officers was without authority and in contraven tion of the relevant legal provisions
Allowing the appeal 841 HELD 11
Under Section 19A of the Act the Secretary to the Election Commission is empowered to perform the functions of the Election Commission under the Constitution relevant statutes and the rules
The Secretary is there fore competent to approve the revised list containing the names of officers proposed by the Chief Electoral Officer
845H 846A B 12
Under Secretaries are duly authorised to authenti cate all orders notifications and other instruments on behalf of the Election Commission as per the Gazette of India notification dated 541958
847C 21
In the instant case the officers concerned were duly appointed by the competent authority viz Secretary Election Commission and were authorised to perform the duties and functions of Assistant Returning Officers for the Nizamabad Parliamentary Constituency
The appointments were also duly notified to the Chief Electoral Officer by commu nicating the same by an officer who was competent to authen ticate such orders
847E 22 Publication of the notification by exhibition on the notice boards was sufficient notice to all persons con cerned
847F 3
The High Court was not justified in setting aside the proceeding of counting of votes and the resultant declara tion and in ordering a fresh counting of votes in respect of the election from the Parliamentary Constituency in ques tion
The order of the High Court in so far as it relates to the findings and directions in this regard is set aside
847G