Case: Rajendra Construction Company Vs. Maharashtra Housing&amp; Area Dev.Auth

had expressed the legislative judgment that the award must state reasons upon which it is passed unless the parties have agreed otherwise or the award is on agreed terms.24. The present awards are not under the new Act but under the old Act. It is, therefore, obvious that they could not have been set aside by the High Court on the ground that they were not supported by reasons and were not speaking awards. 25. The learned counsel for the respondent invited our attention to a decision of this Court in State of Punjab vs. Bhag Singh, (2004) 1 SCC 547 and contended that this Court has held that reasons must be recorded in support of the order. That was a case wherein the High Court dismissed an appeal against an order of acquittal without recording reasons. The State approached this Court. Reversing the order passed by the High Court, this Court held that in an appeal against acquittal recorded by the Sessions Court, the High Court must record reasons as the High Court was obliged to undertake the exercise by application of mind and coming to the conclusion that an order of acquittal recorded by the trial court was or was not in accordance with law. The ratio laid down in Bhag Singh, in our opinion, does not apply to the facts of the present case. 26. The counsel relied upon the observations of Lord Denning, M.R. in Breen v. Amalagamated Engineering Union, (1971) 1 All ER 1148. There His Lordship observed; "The giving of reasons is one of the fundamentals of good administration". Reference was also made to Alexander Machinery (Dedley) Ltd. v. Crabtree, 1974 ICR 120, wherein it was indicated that failure to give reasons amounts to denial of justice. Reasons are live links between the mind of the decision maker to the controversy in question and the decision or conclusion arrived at by him. Reasons substitute subjectivity by objectivity. The emphasis on recording reasons is that if the decision reveals the inscrutable face of the sphinx, it can by its silence render it virtually impossible for the courts to perform their appellate function or exercise the power of judicial review in adjudging the validity of the decision. 27. As already observed by us, all these principles apply to Administrative Law and in the public law field. They would not get attracted in the field of private law. The court, in such matters, does not exercise appellate jurisdiction and cannot substitute its decision for the decision of the Arbitrator. Those principles, therefore, have no place when one is considering the legality of an award made by an Arbitrator with the consent of parties, which is otherwise legal and valid. 28. The learned counsel also placed reliance on a decision of this Court in Gora Lal v. Union of India, (2003) 12 SCC 459. The Court in that case held that when the Arbitrator was to give his findings, it was obligatory on him to record reasons. In Gora Mal, the relevant clause of arbitration was as under; "The arbitrator shall be deemed to have entered on the reference on the date he issues notice to both the parties, asking them to submit to him their statement of case and pleadings in defence.29. The arbitrator may, from time to time, with the consent of the parties, enlarge the time up to but not exceeding one year from the date of his entering on the reference, for making and publishing the award. 30. The arbitrator shall give his award within a period of six months from the date of his entering on the reference or within the extended time as the case may be on all matters referred to him and shall indicate his findings, along with the sums awarded, separately on each individual item of the dispute." 31. Observing that the word findings denotes reasons in support of the conclusion on each item of dispute, the Court held that the Arbitrator was required to record reasons in support of his findings. The Court, however, added; "We make it clear that this order is confined to the facts of this case and our interpretation is confined to clause 70 of the arbitration agreement in this case". Gora Lal thus was decided in the fact-situation before the Court and the relevant clause in the agreement and the ratio of that case cannot make the awards in the present case illegal or unlawful in absence of a similar clause. 32. For the foregoing reasons, the awards passed by the sole Arbitrator cannot be held illegal or unlawful. In making such awards the rule of the court, the Court of Civil Judge, (Senior Division), Aurangabad had not committed any illegality which vitiated the awards and the High Court could not have set aside them.33. The question then remains as to interest. The appellant had claimed interest in the suits. The Arbitrator awarded interest at the rate of 18 per cent per annum on the principal amount from the date of the suits to the date of awards and also from the date of the awards to the date of payment or up to the date of decrees, whichever is earlier. This Court has dealt with the power of Arbitrator to award interest for (i) pre-reference period [Executive Engineer, Dhenkanal Minor Irrigation Division & Others v. N.C. Budhraj (Deceased) by LRs & Others (2001) 2 SCC 721 ]; (ii) pendente lite [Secretary, Irrigation Department, Government of Orissa & Others v. G.C. Roy (1992) 1 SCC 508 ]; and (iii) post-award period [Hindustan Construction Co. Ltd. v. State of Jammu & Kashmir, (1992) 4 SCC 217 ]. In Bhagwati Oxygen Ltd. v. Hindustan Copper Ltd., AIR 2005 SC 2071 : JT (2005) 4 SC 73 , one of us (C.K. Thakker, J.) had an occasion to consider the relevant decisions on the power of Arbitrator to award interest at all the three stages. It was held that the arbitrator had power to award interest.

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

Explanation:
1[ds]21. This Court noted that a consistent view has been taken by all courts that an award was not liable to be set aside merely because reasons were not given except where the arbitration agreement or the deed of submission or an order made by the court under Sections 20, 21 or 34 of the Act or the statute governing the arbitration required the Arbitrator or Umpire to give reasons for the award.22. In our opinion, the ratio in Chokhamal applies to the case on hand. The law laid down in that case has been reiterated by this Court in many cases.24. The present awards are not under the new Act but under the old Act. It is, therefore, obvious that they could not have been set aside by the High Court on the ground that they were not supported by reasons and were not speaking awards.As already observed by us, all these principles apply to Administrative Law and in the public law field. They would not get attracted in the field of private law. The court, in such matters, does not exercise appellate jurisdiction and cannot substitute its decision for the decision of the Arbitrator. Those principles, therefore, have no place when one is considering the legality of an award made by an Arbitrator with the consent of parties, which is otherwise legal and valid.For the foregoing reasons, the awards passed by the sole Arbitrator cannot be held illegal or unlawful. In making such awards the rule of the court, the Court of Civil Judge, (Senior Division), Aurangabad had not committed any illegality which vitiated the awards and the High Court could not have set aside them.33. The question then remains as to interest. The appellant had claimed interest in the suits. The Arbitrator awarded interest at the rate of 18 per cent per annum on the principal amount from the date of the suits to the date of awards and also from the date of the awards to the date of payment or up to the date of decrees, whichever is earlier. This Court has dealt with the power of Arbitrator to award interest for (i) pre-reference period [Executive Engineer, Dhenkanal Minor Irrigation Division & Others v. N.C. Budhraj (Deceased) by LRs & Others (2001) 2 SCC 721 ]; (ii) pendente lite [Secretary, Irrigation Department, Government of Orissa & Others v. G.C. Roy (1992) 1 SCC 508 ]; and (iii) post-award period [Hindustan Construction Co. Ltd. v. State of Jammu & Kashmir, (1992) 4 SCC 217 ]. In Bhagwati Oxygen Ltd. v. Hindustan Copper Ltd., AIR 2005 SC 2071 : JT (2005) 4 SC 73 , one of us (C.K. Thakker, J.) had an occasion to consider the relevant decisions on the power of Arbitrator to award interest at all the three stages. It was held that the arbitrator had power to award interest.