Case: Firm Madanlal Roshanlal Mahajan Vs. Hukumchand Mills Ltd., Indore

a consideration of the contentions, and submissions of the parties, the arbitrator directed the appellant to pay Rs. 1,17,108-7-9 and to give up its claim to 461/2 bales. As the respondent was allowed to retain the bales, the arbitrator passed a lump sum award for Rs. 1,17,108-7-9 only in respect of both items of the respondents claim. The arbitrator could give a lump sum award. He was not bound to give a separate award for each claim. His award on both fact and law is final. There is no appeal from his verdict. The Court cannot review his award and correct any mistake in his adjudication, unless an objection to the legality of the award is apparent on that face of it. In Champsey Bhara and Co. v. Jivraj Balloo Spinning and Weaving Co. Ltd., 50 Ind App 324 : (AIR 1923 PC 66), the Privy Council stated :"An error in law on the face of the award means, in Their Lordships view, 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."In the present case, the arbitrator gave no reason for the award. We do not find in the award any legal proposition which is the basis of the award, far less a legal proposition which is erroneous. It is not possible to say from the award that the arbitrator was under a misconception of law. The contention that there are errors of law on the face of the award is rejected.3. Counsel then submitted that by amending an issue behind the back of the appellant, the arbitrator was guilty of misconduct. This contention has no force. The arbitrator had raised two issues. The second issue referred to the respondents claim in respect of 461/2 bales as a claim for loss in respect of the bales. At the time of the writing of the award, the arbitrator corrected this issue so as to show that the claim was for the price of the bales. By this Amendment, the appellant suffered no prejudice. The parties well knew that the respondent claimed the price of 461/2 bales and fought the case before the arbitrator on that footing.4. The last objection to the award is that the arbitrator had no power to award interest during the pendency of the suit. In support of this objection, counsel for the appellant relied upon the following observations of Bose, J., in Thawardas Pherumal v. Union of India, 1955-2 SCR 48 at p. 65: (AIR 1955 SC 468 at p. 478):"It was suggested that at least interest from the date of suit could be awarded on the analogy of S. 34 of the Civil Procedure Code, 1908. But S. 34 does not apply because an arbitrator is not a Court within the meaning of the Code nor does the Code apply to arbitrators, and, but for S. 34, even a Court would not have the power to give interest after the suit. This was, therefore, also rightly struck out from the award."These observations divorced from their context lend colour to the argument that the arbitrator has no power to award pendente life interest. But, in later cases, this Court has pointed out that the observations in Thawardass case, 1955-2 SCR 48 : (AIR 1955 SC 468 ), were not intended to lay down such a broad and unqualified proposition, see Nachiappa Chettiar v Subramaniam Chettiar, 1960-2 SCR 209 at p. 238 : (AIR 1960 SC 307 at p 320), Satinder Singh v. Umrao Singh, 1961-3 SCR 676 at p. 695 : (AIR 1961 SC 908 at p. 916). The relevant facts regarding the claim for interest in Thawardass case, 1955-2 SCR 48 : (AIR 1955 SC 468 ) will be found at pp. 64 to 66 of the Report (SCR) : (at pp. 477 to 478 of AIR) and in Paras. 2, 17 and 24 of the judgment of the Patna High Court reported in Union of India v. Premchand Satram Das, AIR 1951 Pat 201 at pp. 204-205. The arbitrator awarded interest on unliquidated damages for a period before the reference to arbitration and also for a period subsequent to the reference. The High Court set aside the award regarding interest on the ground that the claim for interest was not referred to arbitration and the arbitrator had no jurisdiction to entertain the claim. In this Court, counsel for the claimant contended that the arbitrator had statutory power under the Interest Act of 1839 to award the interest and, in any event, he had power to award interest during the pendency of the arbitration proceedings under S. 34 of the Code of Civil Procedure, 1908. Bose, J. rejected this contention. It will be noticed that the judgment of this Court in Thawardass case, 1955-2 SCR 48 : (AIR 1955 SC 468 ), is silent on the question whether the arbitrator can award interest during the pendency of arbitration proceedings if the claim regarding interest is referred to arbitration. In the present case, all the disputes in the suit were referred to the arbitrator for his decision. One of the disputes in the suit was whether the respondent was entitled to pendente life interest. The arbitrator could decide the dispute and he could award pendente lite interest just as a Court could do so under S. 34 of the Code of Civil Procedure. Though, in terms, S. 34 of the Code of Civil Procedure does not apply to arbitrations, it was an implied term of the reference in the suit that the arbitrator would decide the dispute according to law and would give such relief with regard to pendente life interest as the Court could give if it decided the dispute. This power of the arbitrator was not fettered either by the arbitration agreement or by the Arbitration Act, 1940.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]In the present case, the arbitrator gave no reason for the award. We do not find in the award any legal proposition which is the basis of the award, far less a legal proposition which is erroneous. It is not possible to say from the award that the arbitrator was under a misconception of law. The contention that there are errors of law on the face of the award isarbitrator awarded interest on unliquidated damages for a period before the reference to arbitration and also for a period subsequent to the reference. The High Court set aside the award regarding interest on the ground that the claim for interest was not referred to arbitration and the arbitrator had no jurisdiction to entertain the claim. In this Court, counsel for the claimant contended that the arbitrator had statutory power under the Interest Act of 1839 to award the interest and, in any event, he had power to award interest during the pendency of the arbitration proceedings under S. 34 of the Code of Civil Procedure, 1908. Bose, J. rejected this contention. It will be noticed that the judgment of this Court in Thawardass case, 1955-2 SCR 48  : (AIR 1955 SC 468  ), is silent on the question whether the arbitrator can award interest during the pendency of arbitration proceedings if the claim regarding interest is referred to arbitration. In the present case, all the disputes in the suit were referred to the arbitrator for his decision. One of the disputes in the suit was whether the respondent was entitled to pendente life interest. The arbitrator could decide the dispute and he could award pendente lite interest just as a Court could do so under S. 34 of the Code of Civil Procedure. Though, in terms, S. 34 of the Code of Civil Procedure does not apply to arbitrations, it was an implied term of the reference in the suit that the arbitrator would decide the dispute according to law and would give such relief with regard to pendente life interest as the Court could give if it decided the dispute. This power of the arbitrator was not fettered either by the arbitration agreement or by the Arbitration Act, 1940.