IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA Arb. Case No. 24 of 2002 alongwith with Arb. Case No. 31 of 2002 . Reserved on: 14.3.2008 Date of decision: 07.04.2008. 1. Arb. Case No. 24 of 2002: Ajay Aggarwal … Objector/Claimant Versus H.P. Housing & Urban Development Authority & Anr. … Respondents 2. Arb. Case No. 31 of 2002: H.P. Housing & Urban Development Authority & Anr. … Objectors Versus Ajay Aggarwal …. Respondent/Claimant Coram : The Hon’ble Mr. Justice V.K. Ahuja, Judge. Whether approved for reporting?1 No. 1. Arb. Case No. 24 of 2002: For the claimant-objector: Mr. Suneet Goel, Advocate. For the respondents: Mr. C.N. Singh, Advocate. 2. Arb. Case No. 31 of 2002: For the claimants-objectors: Mr. C.N. Singh, Advocate. For the respondent: Mr. Suneet Goel, Advocate. V.K. Ahuja , J.: This judgment shall dispose of the objections filed under Section 34 of the Arbitration and Conciliation Act, 1996 filed by 1Whether reporters of Local Papers may be allowed to see the judgment? Yes. 2 claimant Ajay Kumar Aggarwal against the award dated 1.4.2002 made by the Arbitrator i.e. Superintending Engineer. Arbitration, H.P.P.W.D., Solan with a prayer to set aside the award. This award shall also dispose of the objections filed by the H.P. Housing Board as against the said award dated 1.4.2002 made by the same Arbitrator. In view of the fact that both the objections under Section 34 of the Arbitration Act have been filed by both the parties as against the award of the Arbitrator, both these objections petitions can be disposed of together and as such, are being disposed of together. Briefly stated the facts of the case as alleged by the parties are that a contract was entered into in between claimant Ajay Aggarwal and respondent/H.P. Housing Board for execution of the work of “Construction of Residential Complex near Village Singla in New Rampur Bushar, Phase-I, Distt. Shimla”. A formal agreement was entered into in between the parties as Agreement No.1/1997-98. It was also alleged that there was an arbitration agreement providing for arbitration in case of dispute between the parties which was to be referred to the sole arbitration of the Superintending Engineer, Arbitration, H.P.P.W.D., Solan. The said Arbitrator entered into reference on 23.9.1999 and after conducting the hearings, he made award on 1.4.2002. The claimant/objector has challenged the award of the Arbitrator on the ground that it was against public policy since the delay in question was caused due to non handing over the site and the liability for the same lies on the respondent/Housing Board but the compensation was awarded at the rate of 2.5% of the value of the unexecuted work as against the law laid down by the Supreme Court vide which the objector was entitled to 15% as the damages for loss of 3 profit. It was alleged that while arbitrarily reducing the percentage of anticipated profit the Arbitrator has not given any reasons as required by Section 31 of the Act. It was further alleged that while disallowing the claim of the claimant on account of direct loss sustained on account of non-execution of the work, the Arbitrator has failed to record any reasons for disallowing the claim. Thus, it was pleaded that the award made by the Arbitrator is against the public policy. The objections made by the H.P. Housing Board in the 2nd case were that the Arbitrator while giving award has not given the reasons as required by Section 31 of the Arbitration Act, and, therefore, the award was not in accordance with law and was against public policy. I have heard the learned counsel for the parties and have gone through the objections filed by both the objectors. On the pleadings of the parties, the following issues were framed by this Court on 2.12.2002 in Arb. Case No. 24 of 2002 and in Arb. Case No. 31 of 2002:- Arb. Case No. 24 of 2002: 1. Whether the impugned award is not supported by reasons and if so, to what effect? OPO 2. Whether the impugned award is against the public policy of India, as alleged? OPO 3. Relief. Arb. Case No. 31 of 2002: 1. Whether the impugned award is bad for want of reasons as alleged? If so, to what effect? OPO 2. Whether the arbitral award deals with a dispute not contemplated or falling under the terms of submissions to arbitration? OPO 2. Relief. 4 Both the parties sought time to file affidavits in support of their objection petitions, but subsequently no evidence was led in the form of affidavits and only oral submissions were made. My findings on both these issues in regard to both the cases are given as under: Issue No. 1 : Yes. (In both the cases) Issue No. 2 : Yes. (In Arb. Case No. 24 of 2002). No. (In Arb. Case No. 31 of 2002). Relief : Objections are allowed as per operative part of the judgment . (In both the cases). Both these issues can be disposed of together, hence both these issues are taken up together: Issues No. 1 & 2: Both the parties have substantiated their plea that the impugned award does not give any reasons as provided in Section 31 of the Act and as such, it is against public policy. A perusal of the impugned award shows that in giving its findings for loss of profit, the award only shows that the Arbitrator after referring to the judgment of the Supreme Court had found that 2.5% of the cost of abandoned work is found to be reasonable in his opinion, which is awarded in favour of the claimant but on what basis it was reduced from 15% to 2.5% has not been substantiated by him by giving any reasons. Both the parties have filed objections that the award made by the Arbitrator is not a reasoned award since it does not give any reasons in support of findings and, therefore, the award passed by the Arbitrator is liable to be set aside since it is against public policy. Issues No. 1 & 2 are decided in favour of the objector in Arb. Case No. 24 of 2002. Issue No. 1 is 5 decided in favour of objector in Arb. Case No. 31 of 2002. Issue No. 2 in Arb. No. 31 of 2002 is decided as against the objector since there is nothing on record to substantiate this issue. Relief: In view of my findings on Issues No. 1 & 2, the objection petitions are allowed and the case shall be remitted back to the Arbitrator for hearing the parties afresh only and to give the findings accordingly afresh on all the points. The objections are allowed accordingly. Parties are left to bear their own costs. Record be returned to the Arbitrator by designation alongwith a copy of the judgment. ( V.K. Ahuja ) April 07, 2008 Judge (BSS)