JUDGMENT [ENTITY], J.
1. The [ENTITY] (hereinafter referred to as "the Food Corporation of India") is the appellant in [CASE NUMBER] and petitioner in [CASE NUMBER]. These cases arise out of the same facts, so they can be disposed of together.
2. The Food Corporation of India challenges the order of the learned II Additional Judge, City Civil Court, Hyderabad, dated 29-8-1980 in [CASE NUMBER] dismissing the O.P. filed by the Food Corporation of India and allowing the suit [CASE NUMBER] filed by the arbitrator, to make the award rule of the Court.
3. Sri [ENTITY], the learned counsel for the Food Corporation of India, contends that the trial court erred in decreeing the suit and dismissing the O.P. as the arbitrator has misconducted himself in law and the award suffers from error of law apparent on the face of the record.
4. The learned counsel for the respondent contractor, on the other hand contends that the award of the arbitrator can be challenged only on the grounds specified in [SECTION] of the [ACT], but mistake of facts or even of law cannot be a ground to challenge the award passed by the arbitrator, in a civil court, therefore the trial court has rightly made the award rule of Court.
5. To appreciate the contentions urged by the learned counsel it would be necessary to refer to the facts giving rise to these cases. The respondent-contractor (hereinafter referred to as "the contractor") was given handling contract by the Food Corporation of India on 20-9-1972 for a period of five years. Within a week thereafter the contractor wrote to the Food Corporation of India that he would not be able to undertake the work entrusted to him. He also did not furnish the security deposit according to the terms of the contract. The said letter of the contractor, marked as Ex.C-5 reached the Food Corporation of India on3-10-1972. The Food Corporation of India did not accept the unilateral breach of contract by the contractor, but however handed over the work to some other contractor and ultimately terminated the contract on 6-12-1972. The Food Corporation of India claimed a sum of Rs. 43,542-63 being the loss suffered due to the breach of contract by the contractor. The Food Corporation of India then laid the suit for recovery of the said amount, [CASE NUMBER] in the Court of the III Additional Judge, City Civil Court, Hyderabad, on 18-10-1975. On 27-3-1976 the contractor filed [CASE NUMBER] under [SECTION] of the [ACT] for stay of the suit contending that in view of the arbitration agreement the suit cannot be proceeded with. However the said LA. was dismissed on 1-7-1976. Aggrieved by the said order passed by the trial court the contractor filed [CASE NUMBER] in the High Court. This Court allowed the C.M.A and consequently dismissed the said suit of the Food Corporation of India on 23-11-1977. Then the Food Corporation of India appointed the 2nd respondent, a retired District Judge, as arbitrator on 1-5-1978. Before the arbitrator the Food Corporation of India claimed a sum of Rs. 61,476-53 on 21-6-1978 and filed additional claim of Rs. 1504/- on 26-8-1978. The contractor disputed the liability, inter alia, on the ground that the claim was barred by limitation. In support of its contention the Food Corporation of India led both oral and documentary evidence. It examined one witness and marked Exs.C-1 to C-23. No oral and/or documentary evidence appears to have been filed by the contractor.
6. On consideration of the eivdence on record, the arbitrator dismissed the claim of the Food Corporation of India holding that the suit filed by the arbitrator (Sic. Corporation) on 18-10-1975, was barred by limitation, consequently the claim of the Food Corporation of India was also barred by limitation. The award was passed on 4-12-1978. Claiming that the award be made rule of Court, the arbitrator filed [CASE NUMBER], while the Corporation filed [CASE NUMBER] under [SECTION] of the [ACT] to set aside the award. By separate orders to which a reference has already been made above, the learned Additional Judge, decreed the suit making the award rule of the Court and dismissed the O.P. filed by the Food Corporation of India.
7. It may be pointed out that the general rule is that the parties to arbitration proceedings cannot object to the award passed by an arbitrator as he is the person chosen by the parties and as such a man of their choice. But this is subject to the exception when the award suffers from an error apparent on the face of the record either upon the law or the facts. However, [SECTION] of the [ACT] enumerates three grounds for challenging the award. It would be useful to setout the said section here.
"30. Grounds for setting aside award.
An award shall not be set aside except on one or more of the following grounds, namely:-
(a) that an arbitrator or umpire has misconducted himself or the proceedings;
(b) that an award has been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid under [SECTION]; and
(c) that an award has been improperly procured or is otherwise invalid.
8. We are here concerned with Clause (a). The question before the trial court was whether the arbitrator has misconducted himself.
9. In [PRECEDENT], it has been observed by the Supreme Court that misconduct under [SECTION] has not a connotation of moral lapse; it comprises legal misconduct which is complete if the Arbitrator on the face of the award arrives at an inconsistent conclusion even on his own finding or arrives at a decision by ignoring very material documents which throw abundant light on the controversy to help a just and fair decision. In the same category falls error of law apparent on the face of record.
10. In [PRECEDENT], , the Supreme Court adopted the observation of Lord [ENTITY] that an error of 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 and held that the Court had no jurisdiction to investigate into the merits of the case and to examine the documentary and oral evidence on the record for the purpose of finding out, whether or not the arbitrator has committed an error of law.
11. In this case the claim filed by the Food Corporation of India relates to compensation. For purposes of limitation it is covered by [SECTION] of the [ACT], which reads as follows:
For compensation for the Three years. When the contract is broken or breach of any contract, (where there are successive express or implied not breaches) when the breach in herein specially provided respect of which the suit is for. instituted occurs or (where the breach is continuing ) when it ceases.
12. A perusal of the above article shows that for claiming compensation for breach of any contract express or implied, not specifically provided for in the [ACT], the claim must be preferred within a period of three years from the date when the contract was broken or where there are successive breaches when the breach in respect of which a suit is instituted occurs or where the beach is continuing when it ceases.
13. A great deal of argument was advanced by Sri [ENTITY], the learned counsel for the Food Corporation of India, urging that the contract was not broken when the letter of the contractor dated 28-9-1972, reached the Food Corporation of India on3-10-1972 as the Food Corporation of India did not accept the breach. But it was broken when the Food Corporation of India by letter dated 6-12-1972, put an end to the contract.
14. It may be pointed out here that there is difference between breach of a contract and termination of a contract; every breach of a contract by one party to it does not result in termination of the contract thought it may furnish ground to the other party to terminate the contract and every termination of a contract does not necessarily result in breach of the contract. The question here is not as to when the contract as such was terminated or came to an end; the short question which is to be considered for purposes of application of [SECTION] is when did the breach of the contract, in respect of which compensation is claimed, occur? On 28-9-1972 the contractor has expressed his inability to execute the work. That letter reached the Food Corporation of India on 3-10-1972. Therefore on that date the contract was broken, whether or not the Food Corporation of India has accepted the breach. Subsequent termination of contract by the Food Corporation of India on 8-12-1972, is immaterial for the purposes of [SECTION]. The suit was filed by the Food Corporation of India on 18-10-1975 which was beyond three years from the date of breach of the contract on 28-9-1972 when the contractor declined to take up the work by Ex.C-5 which was received by the Food Corporation of India on 3-10-1972. It follows that the arbitrator was right incoming to the conclusion that the suit itself was barred by limitation and consequently the claim put forth in [CASE NUMBER] which was filed on 27-3-1976 was barred within the meaning of [SECTION] of the [ACT].
15. It will be useful to bear in mind the observation of the Supreme Court in [PRECEDENT], to the effect that 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 whether the proceedings are illegal 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. Their Lordships further held that it was 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 and that 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; error of law as such was not to be presumed and if there was legal propostition which was the basis of the award and which was erroneous then only the award could be set aside, and that if the award was a speaking award then unless it was demonstrated to the Court that such reasons were erroneous as positions of law or that the arbitrator had taken a view which it could not possibly be sustained on any view of the matter, the challenge to the award of the arbitrator could not be sustained.
16. Keeping the above observations in mind, if the award in question is perused, no propostition of law on which the decision is based, is erroneously stated. Therefore the award is not liable to be interfered with under [SECTION] of the [ACT].
17. In this view of the matter, I do not find any illegality in the impugned judgments of the learned II Additional Judge, City Civil Court.
18. The C.M.A. and C.R.P. therefore fail and they are accordingly dismissed. but in the circumstances of the case without costs.