DANDASI SAHU versus STATE OF ORISSA

Citation: [1989] SUPP. 2 S.C.R. 348 · Decided: 30-11-1989 · Supreme Court of India · Bench: SABYASACHI MUKHERJI · Disposal: Dismissed
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Judgment (excerpt)

A 
DANDASI SAHU 
v. 
STATE OF ORISSA 
NOVEMBER 30, 1989 
B 
[SABYASACHI MUKHARJJ AND V. RAMASWAMI, JJ.] 
c 
Arbitration Act, 1940: Sections 30 and 16-Award not disclosing 
the documentary evidence considered-Original and supplemental 
claims not making total claim-Inclusion of interest amount-Award 
amount disproportionately excessive-Validity of-Whether amounts to 
legal m1Sconduct-Non-application of mind. 
The appellant-contractor claimed a sum ofRs.3,87,796 before the 
sole arbitrator on April 5, 1977 for the value of 15 items of works not 
paid. To this he added interest to the tune of Rs.2, 95, 894 at 18 per cent 
from the date which according to him each of the claims should have 
D been settled, making a total of Rs.6,83,690. He also prayed for further 
interest~! 18 per cent from April 6, 1977 till date of award and there-
after until payment. The respondent State filed its written statement 
and the. arbitration proceedings continued for some time. But before the 
arbitrator could make an award, an application under ss. 8(2) and 12 of 
the Arbitration Act was filed bel'ore Subordinate Judge who by his 
E order removed the arbitrator and appointed another person as the sole 
arbitrator. The new arbitrator entered on the reference, got all the 
records from the previous arbitrator and continued the hearing. The 
appellant made a supplemental claim for a sum of Rs.8,27 ,857 and also 
prayed for interest on that amount at 18 per cent from October 14, 1973 
till date of payment. The respondent State objected to the entertain-
F ment of additional claim. The arbitrator, howeveruiroceeded with the 
hearing~ On November 8, 1981, the day the hearing was closed, the 
appellant-contractor filed one consolidated 'abstract' of his two claim 
statements showing a total claim of Rs.31.44.437 and also prayed for 
interest at 18 per cent per annum from November 9, 1981 till the date of 
payment. 
G 
The arbitrator made an award on December 7, 1981 allowing a 
lump-sum of Rs;25,00,156 together with interest at 9 per cent after the 
expiry of 30 days from the date of making the award, till the date of 
payment or decree whichever was earlier. The award was made a 
decree of the court. The court, however, disallowed interest from the 
H date of decree till realisation. 
348 
D. SAHU v. STATE OF ORISSA 
349 
On appeal by the respondent-State the High Court came to the 
conclusion that the award was vitiated by non-application of mind 
amounting to legal misconduct. In that view, it set aside the award and 
remitted the matter back to the Arbitration Tribunal constituted under 
s. 41A of the Arbitration Act, as amended by Orissa Act 3of1983. 
Dismissing the appeal, the Court, 
rtJ<;LJJ: 1.1 Though the. arbitrator is not bound to disclose as to 
what interpretation he has made and what inference he has derived 
from the documentary evidence, he is bound to refer in the award that 
he had considered all the documents placed before him, no matter 
whether he relies on them or discards thell) from consideratiun.T353A] 
1.2 In the instant case, the arbitrator in his award ex-facie did 
not mention that he had referred to or considered the documents placed 
before him in respect of the original claim. The order-sheet mentions 
about the nearing on different dates relating to the supplemental claim 
statement which was filed before him. It was this argument in respect of 
the supplemental claim that.has been mentioned in the award. [353BJ 
2.1 The arbitrator in case of a reference to him in pursuance of 
an arbitration agreement between the parties, being a person chosen by 
parties is· constituted as the sole and final judge of all the questions and 
the parties bind themselves as a rule to accept the award as final and 
conclusive. Even in a case where the arbitrator does not give any reason 
or he commits a mistake either in law or in fact in determining t.he 
matter referred to him and such a mistake does not appear on the face ,of 
the award, the same cannot be assailed. It could be interfered with only 
in limited circumstances as provided under ss. 16 and 30 of the Act. The 
court bas, therefore, to test the award with circumspection. [354F, E, G] 
2.2 All the same, if the amount awarded is disproportionately 
high having regard to the original . claim made and the totality of 
the circumstances, it would certainly be a case where the arbitrator 
could be said to have not applied his mind amounting to legal mis-
conduct. [354G-H]
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