IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA Arbitration Cases No. 56 & 57 of 2004 Date of decision August 25th ,2009 __________________________________________________________ M/s Astra Construction Pvt. Ltd. ….Petitioner Versus Executive Engineer, National Highway ….Respondents _________________________________________________________ Coram The Hon’ble Mr. Justice Dev Darshan Sud, J. Whether approved for reporting?1 Arbitration Cases No. 56 and 57 of 2004 For the Petitioner : Shri Shrawan Dogra, Advocate. For Respondent No.1 : Ms. Ruma Kaushik, Addl. A.G. __________________________________________________________ Dev Darshan Sud, J. These two petitions are being disposed of by a common judgment as the same point of law is involved. In OMP(M) Nos. 22 and 23 of 2002, titled State of H.P. & another Vs. M/s Astra Construction Company and another. This Court held that: “By this common judgment and with the consent of learned counsel for the parties, both these appeals are being disposed of. Vide judgment dated 1st October, 2001 passed by learned Single Judge of this Court in OMPs (M) No. 5 and 7 of 1999, the arbitral awards passed by learned Arbitrator were set aside on the ground that reasons for making the awards were not stated in the arbitral awards. The arbitral awards being unreasoned and non-speaking and thus in violation of Section 31 (3) of the Arbitration and Conciliation Act, 1996, were accordingly set aside by learned Single Judge. It is against the aforesaid judgments in the aforesaid two applications that the present appeals under Section 37 (1) of the 1996 Act have been filed by the appellants. 1 Whether reports of Local Papers may be allowed to see the judgment? 2 Even in the Arbitration Agreement in existence between the parties (which is Clause-25 of the General Rules and Directions for the guidance of the contractors, forming a part of the Agreement between the parties), it has clearly been spelt that in all cases where the amount of the claim in dispute is Rs. 50,000/- or above, the arbitrator shall give reasons for making the award. Undoubtedly, a combined reading of Sub-section (3) of Section 31 (supra) and the Arbitration Agreement between the parties does clearly suggest that it was obligatory upon the arbitrator to have assigned reasons for making the award and, therefore, to have passed a speaking and reasoned award. He admittedly having not done so, learned Single Judge was justified in setting aside the awards.” This Court thereafter proceeded to direct the disposal of the case afresh by the sole arbitrator. Unfortunately, again the award made by the arbitrator has been challenged inter-alia on the ground that the award is a non- speaking award. Before I consider the matter any further, I must express my anguish in the manner in which the proceedings have been conducted despite the fact that by way of the judgment as noticed, this Court had issued clear directions to the arbitrator to act in accordance with law and to pass a reasoned award. In M/s Guru Nanak Foundation Vs. M/s Rattan Singh & Sons, AIR 1981 Supreme Court 2075 the Supreme Court held that: “Interminable, time consuming, complex and expensive court procedures impelled jurists to search for an alternative forum, less formal, more effective and speedy for resolution of disputes avoiding procedural claptrap and this led them to Arbitration Act, 1940 (‘Act’ for short). However, the way in which the proceedings under the Act are conducted and without an exception challenged in Courts, has made lawyers laugh and legal philosophers weep. Experience shows and law reports bear ample testimony that the proceedings under the Act have become highly technical accompanied by unending prolixity, at every stage providing a legal trap to the unwary. Informal forum chosen by the parties for expeditious disposal of their disputes has by the decisions of the Courts been clothed with ‘legalese’ of unforeseeable complexity. This case amply demonstrates the same.” These observations apply squarely to the facts of the present case. Looking to the award, which has been passed, the arbitrator has simply accepted or rejected the claim/counter claims without going into the respective contentions 3 as detailed by the petitioner herein or by the respondents in respect of their claims filed before the Arbitrator. This is not compliance with the provisions of Section 31 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “Act”). It has been retreiated time and again that it is not the quantum of reasons but quality that matters. In other words, the conclusion arrived at by the arbitrator is to be judged on the basis of quality of reasoning and not on the number of pages written in support of his judgment. Simply saying that a particular claim is allowed or disallowed, does not in any manner satisfy the mandatory requirement of Section 31 of the Act or the general principles of law that reasons are the foundations of any order. In Janki Ram Vs. State of H.P. & others 2008 Shim. L.C. 195 I had considered this aspect and held that merely writing arguments or submissions in the award does not render it a speaking award. The duty to record reasons is now a mandatory requirement and moreover, it also forms part of the agreement between the parties. Learned counsel representing the parties have made submissions supported by case law with respect to the merits of the respective claims. I need not go into the details as I find from the pleadings that the parties before the arbitrator had raised a number of grounds in support of their claim(s)/counter claim(s) and also led evidence in support of their contentions. I do not find from the impugned award(s) that any of these arguments/contentions have been considered. Learned counsel appearing for the petitioner contends that the delay in execution of the work was for the reason that the site etc. was not handed over to the petitioner within time and that in these circumstances, he was entitled to the counter claim(s) as pleaded. He has referred to the pleadings and evidence before the arbitrator. Without adjudicating the legality of the claims, all that need be said is that this is a matter to be determined by the arbitrator. I note with anguish that even in the second round of litigation, the award is to be set aside and matter 4 remanded afresh for arbitration. Shri J.S. Bhogal, Senior Advocate, High Court of Himachal Pradesh, Shimla is appointed as the sole Arbitrator who will enter into reference and will decide both the arbitration proceedings preferably within a period of three months from the date of first appearance of the parties before him. The material on record of each case shall constitute the pleadings and evidence before him. His remuneration is consolidated and fixed at Rs. 55,000/- which shall be borne equally by the parties. The parties shall appear before him on 18th September, 2009 at his Chamber at Daulat Ram Complex, Lakkar Bazar, Shimla at 5 PM. Thereafter, the parties shall be free to fix the venue of the proceedings as convenient to the Arbitrator as also both the parties. In addition to the fee fixed, the learned Arbitrator shall be entitled to the miscellaneous and transportation charges etc. which shall also be borne equally by both the parties. A direction is issued to the Registry to make the record of arbitration available to the Arbitrator will before that date. Let a certified copy of this order be sent to the learned Arbitrator forthwith. August 25, 2009 (Dev Darshan Sud), (ms) Judge