Case: V.G. George Vs. Indian Rare Earths Ltd.

This appeal is directed against the common judgment and order dated 25.5.1987 passed in M.F.A. No. 161 of 1986 and 781 of 1986 by the High Court of Kerala.2. For the purpose of appreciating the points urged in this appeal we may briefly state the facts.3. The appellant herein, who is a mining contractor entered into an agreement with respondent No. 1 namely Indian Rate Earths Ltd. for mining, collection and supply of raw-sand during the period from 1.6.1979 to 31.5.1980. It was agreed between the parties that appellant would supply 2,02,000 tonnes of raw-sand at the average rate of 920 tonnes per day. The appellant failed to supply entire quantity and supplied only 1,72,489.24 tonnes. The disputes between the parties were referred to the arbitrator, who has been made a party in the present appeal namely respondent No. 2.4. Before the arbitrator the appellant claimed Rs. 24,02,272/- under 10 heads along with interest. A counter claim was also filed by respondent No. 1 for Rs. 3,29,648.99 paise alongwith interest. The arbitrator framed as many as 51 issues and after recording his findings a sum of Rs. 5,40,191.10 paise with interest @ 15% per annum from 11.11.82 upto the date of decree was awarded in favour of the appellant. The award was made a rule of the Court on a petition filed by the appellant under Section 17 ofthe Arbitration Act, 1940 (for short the Act). The respondent No. 1 also filed a petition under Section 30 of the Act which was dismissed.5. Two appeals were filed before the High Court and the High Court by the common impugned judgment and order held that there was legal misconduct on the part of the arbitrator and accordingly set aside the award except the finding that the present appellant was entitled to refund of the earnest money deposited. Hence the present appeal.

Court's reasoning:
16. It has been urged on behalf of the appellant that as the award is non-speaking one the High Court erred in law in going into the facts of the case. On the other hand it has been urged on behalf of the respondents that the present award cannot be said to be a non-speaking one as the findings of the arbitrator on each issue form part of the award. Ã¯7Â?3 s stated above the award contains not only the sum awarded but also the case of the parties, issues framed, findings on each issue, therefore, we hold that the findings of the arbitrator on the issues are the part of the award and the court can look into the findings.The petitioner has come to the findings that the entire mining area covered with tender was made available to the appellant but according to the arbitrator mining was not possible in some days in the month of April, 1980 and whole month of May, 1980 on account of obstructions by kudikidappukars and local public. The above finding of the arbitrator is in respect of the issue No. 15 which forms part of the award. While awarding the amount the arbitrator did not take note of the above Clause (c) of the tender notice which is a part of the agreement and under which the respondent would not be liable for such obstruction. Therefore, we hold that the amount awarded under Claim No. 3 is beyond the scope of the agreement entered into between the parties and, therefore, the awarded amount in respect of Claim No. 3 cannot be sustained.19. Claim No. 9 is in respect of escalation. It is not disputed at bar that in the agreement entered into between the parties there was no escalation clause. The arbitrator has come to the clear finding that the present appellant was not pressurised by respondent No. 1 to agree 10% hike in the wages of the mining workers as recorded in the findings in respect of issue No. 34. In issue No. 35 the arbitrator has recorded that the present appellant acceded to for raise in the wages of mining workers.20. The amount awarded under Claim No. 9 is not only beyond the scope of the agreement but also contract to the findings recorded by the arbitrator.21. Therefore, we hold that the arbitrator has misconducted himself in the proceedings and, therefore, the award is liable to be set aside on the ground of legal misconduct on the part of the arbitrator under Section 30 of the Act.