JAJODIA (OVERSEAS) PVT. LTD. versus THE INDUSTRIAL DEVELOPMENT CORPORATION OF ORISSA LTD.

Citation: [1993] 1 S.C.R. 229 · Decided: 15-01-1993 · Supreme Court of India · Bench: K. JAYACHANDRA REDDY · Disposal: Case Partly allowed
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Judgment (excerpt)

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JAJODIA (OVERSEAS) PVT. LTD. 
A 
v. 
THE INDUSTRIAL DEVELOPMENT CORPORATION OF 
, 
ORISSA LTD. 
AND 
VICE VERSA 
B 
JANUARY 15, 1993 
[K. JAYACHANDRA REDDY AND S.P. BHARUCHA, JJ.] 
Aribitration Ac~ 1940-S.21>-AriJitration award-Held, on facts of the C 
case that award not a speaking or reasoned award, agreement not incorporated 
by reference in the award and no inconsistency on the face of the award. 
IDCO and JOPL entered into an agreement wbereunder IDCO 
agreed to supply to JOPL 5000 tens of MS rounds for export on terms and 
conditions mentioned therein. The goods were not supplied. By a letter D 
dated September 12, 1969, IDCO cancelled the agreement and intimated 
to JOPL that Its offer which had culminated in the agreement, shonld be 
treated as withdrawn. Some correspondence followed. Thereafter JOPL's 
claim for damages against IDCO for breach of contract was referred to 
the Chief Secretary, who was named in the agreement, for arbitration. He E 
declined to act as arbitrator. An arbitrator was thereafter appointed lJy 
the Subordinate Judge, Bhubaneswar under S.20 or the Arbitration Act, 
1940. He gave his award on September 24, 1985. 
In the award the arbitrator briefty stated the facts, the issues settled 
for adJudlcation and that the parties had produced a large number or 
F 
documents, examined witnesses and advanced elaborate arguments. 
Having carefully considered them, he set out the conclusions and awarded 
JOPL Rs. 11,00,344 with pendente lite interest @ 6%. 
IDCO challenged the award before the Subordinate Judge, 
Bhubaneswar who dismissed the petition and made the award a rule or the G 
Court. In appeal before the Orissa High Conrt, the learned Judge rejected 
all contentions of IDCO except one namely that in answering three issues 
the arbitrator bad arrived at inconsistent conclusions apparent on the 
face of the award, which bad a bearing on the question or awarding or 
damages. He therefore directed that the records be sent back to the H 
229 
230 
SUPREME COURT REPORTS 
(1993] 1 S.C.R. 
A 
arbitrator for making a fresh award. 
Cross appeals were filed in the Supreme Court. JOPL contended 
that there was no inconsistency on. the face · of the award which vitiated IL 
·For IDCO, it was contended that the award was bad in law, and in any 
event the High Court was in error in sending the matter back to the 
B arbitrator for making a fresh award. 
Dismissing the appeal of IODC, Ibis Court, 
HELD: 1. A speaking or reasoned award is one which discusses or 
sets out the reasons which led the arbitrator to make the award. Setting 
C out the conclusions upon the questions or issues that arise in arbitration 
proceedings without discussing the reasons for coming to these con· 
clusions does not make an award a reasoned or speaking award. The 
arbitrator has in the award only answered the issues that were framed. He 
had not discussed or set out the reasons for the answers. The award is, 
D therefore, not a speaking or reasoned award. [234E·F] 
2. That the arbitrator merely referred to the pleadings does not 
mean that the pleadings are Incorporated in the award. [234F] 
Allen Berry and Co. v. Union of India, AIR 1971 SC 696 and Ciacomo 
E Costa Fu Andrea v. British Italian Trading Co. Ltd., (1962) 2 Ali E.R. 53, 
followed. 
3. In answering issue no.2, the arbitrator construed only such clause 
of the agreement as was relevant to decide the issue. Such clause alone 
would be incorporated in the award and could be looked al by the court 
F to determine if the arbitrator had misconstrued it. (pp.9-10) [2368] 
4. Even assuming the incorporation of the agreement, an error 
apparent on the face of the award bad to be shown. (p.10) [236D] 
Bungo Steel Furniture Pvt. Ltd. v. Union of India, [1967] 1 SCR 633, 
G relied on. 
H 
5. In the circumstances of the case, merely because the arbitrator 
bad not mentioned the pleadings and order of reference does not mean 
that the issues framed did not reflect the referred disputes. (pp.11 and 12) 
[2378] 
JAJODIA LID. v. IND. DEVELOPMENT CORPN. [BHARUCHA, J.] 231 
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) 
6. That the original foreign sale contracts bad not been sent to A 
iDCO does not ipso facto lead to the conclusion that the arbitrator bad uo 
material before him upon which be could find in monetary terms the 
damages suffered by JOPL. [237EJ 
7. In the facts of the case, there are no inconsistencies upon the face of B 
the award as can be characterised as errors that vitiate the
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