FOOD CORPORATION OF INDIA & ANR. versus GREAT EASTERN SHIPPING CO. LTD.

Citation: [1988] 3 S.C.R. 366 · Decided: 28-03-1988 · Supreme Court of India · Bench: SABYASACHI MUKHERJI · Disposal: Dismissed

Judgment (excerpt)

"f 
A 
FOOD CORPORATION OF INDIA & ANR. 
v. 
GREAT EASTERN SHIPPING CO. LTD. 
MARCH 28, 1988 
B 
[SABYASACHI MUKHARJI ANDS. RANGANATHAN, JJ.] 
)( 
Arbitration Act, 1940: Sections 2, 14, 30 and 33-Charter Party 
agreement-Arbitrators--Men of commerce-Letter written by one 
party to its Arbitrator to record reasons for award-Copy to arbitrator 
appointed by other party-Whether amounts to mandate from both 
)!.--' 
c parties to both arbitrators--Arbitrators award lump sum amount-
~ 
Whether legal misconduct. 
' 
A Charter Party agreement was entered into betwe.en the appel-
lant-Food Corporation of India, and the respondent-Shipping Com-
D pany for transportation of bulk cargo from Australia to India. After the 
cargo was delivered, the respondent Company raised disputes regard· 
ing certain items and claimed demurrage and overtime charges. As per 
the agreement, .the disputes were referred to joint arbitration by two 
Arbitrators, one each appointed by each of the parties. The appellant 
appointed its Arbitrator with a specific condition that he should give 
)..-
E 
reasons for his award, and sent a copy of this letter to the arbitrator 
appointed by the respondent. The award was made and duly signed by 
the two Arbitrators at Calcutta and Bombay respectively. The award, 
which was a non-speaking one rood did not contain reasons for the 
award but directed the appellant Corporation to pay a lump sum 
amount to the respondent Company, was filed in the High Court of * 
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Bombay. 
The High Court rejected the objection petition filed by the appel· 
lants for setting aside the award. 
In the appeals, by special leave, it was contended that the High 
G Court of Bombay had no jurisdiction to entertain the filing of the award 
since no cause of action arose in Bombay and that the Arb.itrators had 
)-.._ 
not complied with the mandate given to them to state the reasons and, 
therefore, th~ award was liablr to he set aside for reasons of miscon-
duct, irregularity and lack of competence. 
H 
Dismissing the appeals, by special leave, 
l
366 
F.C.I. v. GREAT EASTERN SHIPPING [MUKHARJI, J.[ 
367 
HELD: There was no mandate given by both the parties to the 
arbitration agreement to both the arbitrators to state reasons, The 
arbitrators could not act on the mandate of one of the parties, [368G I 
Unreasoned award is bad, Though the recent trend is that there 
should be a reasoned award, and that would be in consonance with the 
principles of natural justice, in a case where two men of commerce 
entered into arbitration in respect of money claim under the Charter 
Party Agreement and the award has awarded a lump sum amount, the 
reasons are not far too seek, It is really an accounting of the rivai claims 
of the parties, [368H, 369A-BI 
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B 
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Therefore, on the facts of the case, there is no legal misconduct as 
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'ii 
such in not giving reasons, [369B-CI 
r 
There is a specific finding by the Single Judge of the High Court 
that the agreement was signed at Bombay which was affirmed by the 
Division Bench. Hence the High Court bad the jurisdiction to entertain 
the filing of the award. [368E-FJ 
D 
CIVIL APPELLATE JURISDK'TION: Civil Appeal Nos. 150(). 
Olof1988. 
From the Judgment and Order dated 26.10.1987 of the Bombay 
High Court in Appeal No. 1207and 1206 of 1987. 
E 
Y.P. Rao for the Appellants. 
H.N. Salve, Hardeep Singh and Raian Karanjawala for the 
Respondent. 
The Judgement of the Court was delivered by 
SABYASACHI MUKHARJI, J. Special leave granted and the 
appeals are disposed of by the judgment herein. 
These two appeals are directed against the judgment and order G 
of the Division Bench of the High Court of Bombay confirming the 
decision of the learned single Judge dismissing the application for 
setting aside the award. It appears that there was a Charter Party 
Agreement entered into between the parties in .December, 1981 signed 
by the representative of the President of India . and the respondent 
Shipping Company for transportation of bulk cargo from Australia to H 
368 
SUPREME COURT REPORTS 
[19881 3 S.C.R. 
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India. Thereafter in February, 1982 the agreement was sent to the 
President's representative at New Delhi for signing the same. The said 
cargo was delivered at the port of Tuticorin and not at Calcutta. The 
respondent company raised disputes regarding several items and 
claimed an amount of Rs.9,06,854.86 as demurrage and Rs.7881.43 
against over time charges. As per the said agreement, the 

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