Case: Maharashtra State Electricity Board Vs. Sterilite Industries (India)

overruled the objections holding that the award is unassailable in proceedings under Section 30 of the Arbitration Act. 7. Appeals were filed against this order of the learned Single Judge on the Letters Patent side and a Division Bench of the High Court reiterated the view taken by the learned Single Judge after reappraisal of the facts, the award made by the arbitrators and the contentions raised in the appeals. It is against this order of the Division Bench, these special leave petitions are filed. 8. Shri T.R. Andhyarujina, learned senior Advocate appearing for the petitioners, contended that the view taken by the arbitrators and the High Court on the construction of clause 14(ii) is plainly wrong; that under clause 14(ii) of the contract a right was reserved in favour of the petitioners to purchase upon such terms and in such manner as the petitioners deemed appropriate, equipments similar to that contracted and the respondents are liable to the petitioners for any additional costs for such similar equipments and/or for liquidated damages for delay as defined in Article 22 of the General Conditions until such reasonable time as may be required for final supply of the equipments; that this reservation in favour of the petitioners is an additional right to claim damages for the respondents for an additional costs that might be incurred for such purchases and has not been taken away from the petitioners their general right to claim damages under Section 73 of the Indian Contract Act; that for invoking the provisions of Section 73 of the Indian Contract Act it was not necessary for the petitioners to have purchased the equipments and materials not supplied by the respondents from the open market; that even in such an event, the petitioners are entitled to claim damages from the respondents on the basis of the difference between the contract price and the market price of the materials on the date of the breach of the agreement by the respondents. 9. The position in law has been noticed by this Court in Union of India v. A.L. Rallia Ram, AIR 1963 SC 1685 , and Firm Madanlal Roshanlal Mahajan v. Hukumchand Mills Ltd., Indore, 1967(1) SCR 105, to the effect that the arbitrators award both on facts and law is final; that there is no appeal from his verdict; that the Court cannot review his award and correct any mistake in his adjudication, unless the objection to the legality of the award is apparent on the face of it. In understanding what would be an error of law on the face of the award, the following observations in Champsey Bhara & Company v. Jivraj Balloo Spinning and Weaving Company Ltd., L.R. 50 I.A. 324, a decision of the Privy Council, are relevant : "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." 10. In Arosan Enterprises Ltd. v. Union of India & Anr., 1999(9) SCC 449, this Court again examined this matter and stated that where the error of finding of fact having a bearing on the award is patent and is easily demonstrable without the necessity of carefully weighing the various possible viewpoints, the interference in the award based on erroneous finding of fact is permissible and similarly, if an award is based by applying a principle of law which is patently erroneous, and but for such erroneous application of legal principle, the award could not have been made, such award is liable to be set aside by holding that there has been a legal misconduct on the part of the arbitrator. 11. In the Russell on Arbitration (17th Edition), the position in law is thus stated : "Where an arbitrator makes a mistake either in law or in fact in determining the matters referred, but such mistake does not appear on the face of the award, the award is good notwithstanding the mistake, and will not be remitted or set aside. The general rule is that, as the parties choose their own arbitrator to be the Judge in the disputes between them, they cannot, when the award is good on its face, object to his decision, either upon the law or the facts." 12. In the light of this enunciation of law, we are of the view that unless the error of law sought to be pointed out by the learned counsel for the petitioners in the instant case is patent on the face of the award neither the High Court nor this Court can interfere with the award. The exercise to be done by examining clause 14(ii) of the contract entered into between the parties, construing the same properly and thereafter applying the law to it to come to a conclusion one way or the other, is too involved a process and it cannot be stated that such an error is apparent or patent on the face of the award. Whether under the context of the terms and conditions of a contract, a stipulation in the form and nature of clause 14(ii) operates as a special provision to the exclusion of Section 73 of the Indian Contract Act is a matter of appreciation of facts in a case, and when the decision thereon is not patently absurd or wholly unreasonable, there is no scope for interference by courts dealing with a challenge to the award. Therefore, we think, the view taken by the High Court in this matter is correct and calls for no interference. 13. If as construed by the arbitrators that clause 14(ii) excludes applicability of Section 73 of the Indian Contract Act and the proposition of law stated by the arbitrators is correct, then Section 73 is not attracted to the case.

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

Explanation:
0[ds]12. In the light of this enunciation of law, we are of the view that unless the error of law sought to be pointed out by the learned counsel for the petitioners in the instant case is patent on the face of the award neither the High Court nor this Court can interfere with the award. The exercise to be done by examining clause 14(ii) of the contract entered into between the parties, construing the same properly and thereafter applying the law to it to come to a conclusion one way or the other, is too involved a process and it cannot be stated that such an error is apparent or patent on the face of the award. Whether under the context of the terms and conditions of a contract, a stipulation in the form and nature of clause 14(ii) operates as a special provision to the exclusion of Section 73 of the Indian Contract Act is a matter of appreciation of facts in a case, and when the decision thereon is not patently absurd or wholly unreasonable, there is no scope for interference by courts dealing with a challenge to the award. Therefore, we think, the view taken by the High Court in this matter is correct and calls for no interference. 13. If as construed by the arbitrators that clause 14(ii) excludes applicability of Section 73 of the Indian Contract Act and the proposition of law stated by the arbitrators is correct, then Section 73 is not attracted to the case.