INDIAN OIL CORPORATION versus INDIAN CARBON LTD.

Citation: [1988] 3 S.C.R. 426 · Decided: 06-04-1988 · Supreme Court of India · Bench: SABYASACHI MUKHERJI

Cited by 1 judgment(s) · cites 2 · see the full citation network in Lexace

Judgment (excerpt)

A 
INDIAN OIL CORPORATION 
v. 
INDIAN CARBON LTD. 
APRIL 6, 1988 
\ 
j 
B 
[SABYASACHI MUKHARJI AND S. RANGANATHAN, JJ.] I I ,. _ 
c 
Arbitration Act, 1940: Sections 30 and 33-Award of Arbi-' 
trator-Reasoned Award-What is-Arbitration clause requiring \ 
arbitrator to give reasoned award-Whether arbitrator required to give 1-
detailed reasons-Sufficiency of reasons depends on facts of the case-
Court not to sit in appeal over award and review reasons. 
/ 
. 
'"· 
In respect of sale of raw petroleum coke by Petitioner to Respon-
dent there were three agreements, providing for sale, petitioner's right 
to shift raw petroleum coke at the risk and expense of the respondent in 
case of failure of Respondent to shift the same as agreed, and the 
D Respondent's liability to pay interest on the value of stock not uplifted. 
There was default in payment and petitioner stopped supplies to 
respondent, filed a suit and obtained an order of attachment of stocks of 
raw petroleum coke, to the extent of Rs.6 crores, of the Respondent. 
The respondent filed an appeal as also an application for stay of the suit 
').. 
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under Section 34 of the Arbitration Act. Meanwhile the petitioner 
terminated the agreement. Thereafter the respondent filed a suit and 
the Court passed an order for restoration of supplies. 
On an appeal by the petitioner, this Court stayed the order of 
restoration of supplies, and recorded the compromise terms, pursuant );· 
F 
to which all proceedings were withdrawn by the parties. The petition-
er's claim were referred to an Arbitrator, who passed an interim 
award, according to which the petitioner was not entitled to any interest 
nor any shifting charges. The petitioner challenged the said award, 
when it was filed in High Court. The High Court dismissed the petition 
and this special leave petition is against the High Court's order. 
G 
It was contended before this Court that the Arbitrator has failed 
to give a reasoned award and so it is bad in law. 
Dismissing the special leave petition, this Court, 
H 
HELD: 1. It is obligatory in England now after the Arbitration 
426 
INDIAN OIL CORPN. v. INDIAN CARBON 
427 
Act, 1979, that the award should give reasons. The purpose of Section 
12 of the Act requiring the tribunal to furnish a statement of reasons if 
requested to do so before it gave its decision is to enable the person 
whose property or whose interests were affected, to know, if the deci-
,sion was against him, what the reasons were. [435B-C] 
'Law of Arbitration' by Justice R.S. Bachawat. First Edition 1983 
pp. 320 and32 J, referred to. 
2.1 In India, there has been a trend that reasons should be stated 
in the award. The reasons that are set out must be reasons which will 
not only be intelligible but also deal with the substantial points that have 
been raised. When the arbitration clause required the arbitrator ·to 
give a reasoned award, the sufficiency of tile reasons depend upon 
the facts of the particular case. He is not bound to give detailed 
reasons. [43SC-D) 
2.2 The Court does not sit in appeal over the award and review 
A 
B 
c 
the reasons. The Court can set aside the award only if it is ap-
D 
parent from the award that there is no evidence to support the con-
clusions or if the award is based upon any legal proposition which is 
erroneous. [4350-E] 
2.3 The award in question is unassailable. According to the 
Arbitrator, because of the letter dated 18th October, 1982 of the 
E 
petitioner addressed to the Respondent stating that if the outstandings 
and interest are not paid, further supplies would not be made, has been 
acted upon by the petitioner, which had not delivered any coke to the 
respondent, or made any offer to do so, the petitioner was not entitled 
to the interest in respect of the period from 18th October, 1982 
onwards, nor to shifting charges in respect of any shifting on or after 
F 
18th October, 1982. On this reasoning, he had given the award. How 
the Arbitrator has drawn inference is apparent from the reasons. No 
proposition was stated in the aforesaid reasons, which could be objected 
to as an error of law. Tbe reasons given by the Arbitrator meet the 
requirements of a reasoned award. It is apparent that the arbitrator has 
not acted irrelevantly and unreasonably. [432E-G; 434G-H] 
G 
2.4 Arbitration procedure should be quick and that quickness of 
the decision cau always be ensured by insisting that short intelligible 
indications of the grounds should 

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