Case: Sutna Stone &amp; Lime Co.Ltd., M.P.  Vs. U.O.I.

2. Brief facts relevant to dispose of these appeals are asappellant Satna Stone & Lime Company Ltd., Satna entered into an agreement with the General Manager, G.I.P. Railway, Government of India, on 23.3.1897, whereby a siding was provided to the company for clearance of its goods. The agreement was revised from time to time and the last such agreement was executed on 1.10.1942 (hereinafter called "the agreement").3. The Railway administration on 24.8.1968 informed the appellants that the maintenance charges would be levied at the rate of 4=% per annum instead of 2=%. The respondent Railway administration raised the bills for the period 1.11.1963 to 31.3.1975. The appellants paid the bill under protest on 22.6.1976. The appellants filed an application under section 20 of the Arbitration Act, 1940. On the request of the appellants, the matter was referred to the Arbitration. The Arbitrator decided the claim in favour of the appellants. The objections raised by the Railways under section 30 of the Arbitration Act, 1940 were rejected by the learned District Judge and the award was made the rule of the court.4. The miscellaneous application was preferred by the Railways before the Division Bench of the Madhya Pradesh High Court against the said order of the District Judge. The respondent Railways submitted that the claim of the appellants was clearly barred by limitation because the demand crystallized on 1.5.1975 and the claim was made on 8.8.1978.5. This Court in Union of India v. L.K. Ahuja & Co. (1988) 3 SCC 76  that the arbitrator would decide unless, however, if on admitted facts a claim is found at the time of making an Order under Section 20 of the Arbitration Act, to be barred by limitation.6. In Union of India v. Indian Sugar Mills Association, Calcutta & Another AIR 1968 SC 22 , the court dealt with this aspect and came to the conclusion that Railway administration was competent to increase the rate chargeable for the services rendered.7. This aspect of the matter was also ignored by the arbitrator and the High Court rightly concluded that the award is based on wrong principles of law. If the decision of the arbitrator is contrary to law laid down by this Court then it would be justified in interfering with the award.

Court's reasoning:
12. In the instant case, where there is an error apparent on the face of record or where the arbitrator has not followed the statutory legal position, the court would be justified in interfering with the award of the arbitrator.From the discussion of the aforementioned cases, it is clear that the error apparent on the face of the award contemplated by Section 16(1)(c) as well as Section 30(c) of the Arbitration Act is an error of law apparent on the face of the award and not an error of fact. Same principle has been reiterated in Thawardas Pherumal v. Union of India (1955) 2 SCR 48. The court reiterated the legal position that an arbitrator cannot ignore the law or misapply it in order to do what he thinks is just and reasonable. The legal position has been crystallized in a series of judgments of this Court that the arbitrator has got ample power in giving an award. The arbitrator is the sole judge of the quality as well as the quantity of evidence and it will not be for the court to take upon itself a task of being a judge of the evidence before the arbitrator. The court should approve the award with the desire to support it, if that is reasonably possible rather than to destroy it, by calling it illegal. This court has very limited jurisdiction to interfere with the reasoned award. Only when the award is based upon a proposition of law which is unjustified in law, the error of law must appear from the award itself or from any document or note incorporated in it or appended to it. It is not permissible to travel beyond and consider material not incorporated in or appended to the award.19. In view of the clear legal position which has been correctly appreciated by the High Court in the impugned judgment, in our considered view, no interference is called for.