Case: Kanpur Nagar Mahapalika Vs. M/S Narain Das Haribansh

The appellant was formerly known as Municipal Board, Kanpur and thereafter as Kanpur Nagar Mahapalika. The appellant in the former name of Municipal Board, Kanpur and the respondent entered into, a contract in writing for construction of zone pumping stations and reservoirs at Kanpur. One of the clauses in the said agreement in writing contained an arbitration agreement between therespondent filed original suit No. 45 of 1946 in the Court of Civil and Sessions Judge, Kanpur, against the Municipal Board, Kanpur and claimed a sum of Rs. 60, 802-4-9 representing the claims on account of balance sum due according to the final bills, interest on the amount due, refund of security deposit and interest thereon. The suit was instituted in the year 1946. The Municipal Board, Kanpur thereafter made an application under section 34 ofthe Arbitration Act, 1940 for stay of the suit contending that the suit related to a matter agreed to be referred to arbitration. On 9th August, 1952, the Court ordered stay of the proceedings. The plaintiff preferred an appeal against the order. By an order dated 4th November, 1957 the High Court at Allahabad directed that since the appeal was not pressed by the plaintiff the Court should proceed with the matter of reference. Thereafter on 17th May, 1958 the Court of Additional Civil Judge, Kanpur sent the matter to Shri A.K. Roy, Superintending Engineer, who was appointed an arbitrator on thearbitrator on 8th March, 1960 made an award in favour of the plaintiff respondent for the sum of Rs. 42, 772-2-9 on account of final bill, a sum of Rs. 9, 705/- on account of refund of security deposit and interest on the security deposit.The appellant thereafter made an application for setting aside the award on the ground that the arbitrator misconducted himself in the proceedings by not properly considering and deciding that the claim of the plaintiff was barred by section 326 of the U.P. Act 2 of 1916. The Additional Civil Judge, Kanpur by judgment dated 31st May, 1960 set aside the award by holding that the arbitrator wrongly decided the point of limitation and thereby misconducted himself. The High Court referred to two lines of decisions of the Allahabad High Court on the question as to whether the claim by the contractor for money due on account of the work done by him for the Municipal Board was governed by section 326 of the U.P. Act prescribing six months as the period of limitation or by the period of limitation for three years under the Limitation Act. The High Court came to the conclusion that if the arbitrator had decided it in favour of the plaintiff and did not accept the prescribed period of limitation under section 326 of the Municipalities. Act, it would not be an error of law apparent on the face of the Award

Court's reasoning:
In the present case, the award does not lay down any proposition of law on the question of limitation. The award does not put any construction on section 326 of the Municipalitiesaward in the present case cannot be impeached either for stating the reasons for the judgment or for stating any legal proposition which is the basis of thethe present case, it cannot be predicated of the award that there is any proposition of law forming the basis of the award, and, therefore, it cannot be said that there is any error apparent on the face of the award. The arbitrator is under the agreement in the present case to decide the questions which were within the province of the arbitrators jurisdiction. It cannot be said on the face of the award that the arbitrator has decided on any principle of construction which the law does notmust not in the present case be understood to express any opinion that there was however anyan error of law appears on the face of the award it is a ground for remitting it or setting it aside. An exception arises where the parties choose specifically to refer a question of law to arbitration. This Court in the case of Messrs. Alopi Parshad and Sons Ltd. v. Union of India([1962] S.C.R. 793.) pointed out the distinction between a general reference on the one hand and the specific reference on the other on any question ofis sufficient if the arbitrator gives an award on the whole case and he need not deal with each issue separately. It was open to the arbitrator to decide on the rival contentions of the partieslimitation. In doing so, if an arbitrator makes a mistake either in law or on fact and if such mistake does not appear on the face of the award, the award will not be bad notwithstanding any mistake. Wemust not in the present case be understood to express any opinion that there was however any