M/S HARISH CHANDRA & COMPANY versus STATE OF U.P. THR. SUPERINTENDING ENGINEER

Citation: [2016] 8 S.C.R. 773 · Decided: 08-09-2016 · Supreme Court of India · Bench: JASTI CHELAMESWAR · Disposal: Disposed off

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Judgment (excerpt)

[2016] 8 S.C.R. 773 
M/S HARISH CHANDRA & COMPANY 
v. 
STATE OF U.P. THR. SUPERINTENDING ENGINEER 
(Civil Appeal No. 8829of2016) 
SEPTEMBER 08, 2016 
[J, CHELAMESWAR AND ABHAY MANOHAR SAPRE, JJ,] 
Arbitration Act, 1940 - s.30- Grounds for setting aside award 
- Jurisdiction of Court - High Court set aside the award u/s.30 on 
ground of legal misconduct by arbitrator in passing the award, 
holding that he travelled beyond the terms of the agreement - Held: 
A 
B 
c 
An award can be set aside only on the grounds specified in sub-
clause (a), (b) and (c) of s.30 and on no other ground - High Courts 
finding that since the arbitrator passed an award contrary to clause -
26 of the agreement and hence travelled beyond the terms of 
agreement, untenable in law - This factual objection was raised · D 
for the first time in appeal in the High Court and hence could not 
have been gone into by High Court - Award being a reasoned one 
;ms neither perverse nor any finding of the arbitrator was against 
· any provision of law or in contravention of any clause of the 
agreement so as to constitute a case of legal misconduct on part of E 
arbitrator within meaning of s.30. 
Allowing the appeal, the Court 
HELD: 1. An award can be set aside only on the grounds 
specified in sub-clause (a), (b) and (c) of Section 30 of the 
Arbitration Act, 1940 and on no other ground. Indeed this is clear F 
from the opening words of Section 30 itself which starts with the 
words "An award shall not be set aside except on one or more of 
the following grounds." Afortiori, a reasoned award cannot be set 
aside unless it falls in any of the three sub-clauses (a), (b) and (c) 
of Section 30 of the Act 1940. [Para 31)(783-G-H] 
2. The High Court while setting aside the award virtually 
sat as an appellate Court as if it was hearing the appeal arising 
out of the award. It went into the factual question by referring to 
clause 26 of the agreement for holding that the arbitrator passed 
an award contrary to clause 26 and thereby travelled beyond the 
773 
G 
H 
774 
A 
B 
c 
D 
E 
F 
G 
H 
SUPREME COURT REPORTS 
[2016) 8 S.C.R. 
terms of agreement which constituted a legal misconduct on his 
part. This finding on the face of it was untenable in law for the 
reason, inter alia, that this objection was neither raised before 
the arbitrator nor before the Trial Court but was raised for the 
first time in the High Court. In absence of any finding recorded 
by the arbitrator and the Trial Court, such issue could not have 
been gone into for the first time in appeal by the High Court. The 
High Court failed to sec that clause 26 only prohibited the 
appellant from assigning the agreement to any third person. 
Clause 26, therefore, had nothing to do with the claims filed by 
the appellants. It was an admitted fact that the appellant did not 
assign the agreement to any third person. If some work was got 
done by the appellant by employing some small contractor then 
it did not constitute a case of assignment of a whole agreement in 
favour of small contractors within the meaning of clause 26 so as 
to empower the State to cancel the agreement on such ground. 
The High Court further failed to see that there was no error 
apparent on the face of the record in the findings recorded by the 
arbitrator. Award being a reasoned one, the reasoning of the 
arbitrator was neither perverse nor any finding of the arbitrator 
was against any provision of law or in contravention of any of the 
clauses of the agreement so as to constitute a case of legal 
misconduct on the part of the arbitrator within the meaning of 
Section 30 of the Act for setting aside an award. [Paras 34, 37] [784-
D; 787-C-H; 788-A-B] 
3.1 The main claim of the appellant-claimant against the 
State was in relation to work done by the appellant of breaking of 
large pieces of hard rock from 9.00 Km to 9.80 Km distance. 
Since the respondent-State disputed the appellant's claim on 
various factnal grounds hence the issue centered around to the 
•i '-'"it ions as to whether the appellant did the work. The arbitrator 
in the ;,ward examined this issue on tl!e basis of evidence adduced 
by parties and held that the appellant did the work in question 
and therefore was entitled to claim its price for the work done. 
[Paras 38, 39)[788-B-D] 
3.2 The claims made by the appellant were essentially base(! 
on facts and were accordingly probed on oral and documentary 
evidence adduced by the parties, which resulted 

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