M/S. SOM DATT BUILDERS LTD. versus STATE OF KERALA

Citation: [2009] 14 S.C.R. 611 · Decided: 17-09-2009 · Supreme Court of India · Bench: TARUN CHATTERJEE · Disposal: Disposed off

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

Judgment (excerpt)

[2009] 14 (ADDL.) S.C.R. 611 
MIS. SOM DATT BUILDERS LTD. 
A 
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v. 
-~ 
STATE OF KERALA 
; 
(Civil Appeal No. 3089 of 2006) 
SEPTEMBER 17, 2009 
8 
[TARUN CHATTERJEE AND R.M. LODHA, JJ.] 
Arbitration and Conciliation Act, 1996: 
.,, 
s. 31 (3) - Arbitral award - Arbitral tribunal required to give c 
reasons in support of the award - On facts, no reason indicated 
in the award to reflect thought process leading to conclusion 
- Matter remitted to ADJ who would first remit award to Arbitral 
tribunal for stating reasons in support of the decision -
Thereafter ADJ to proceed with the hearing and objections. 
D 
_. 
The parties entered into works contract. Under the 
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contract, the co'1_tractor was to complete the work within 
forty-two months. The work could not be completed 
within the agreed period. The time for completion of work 
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was extended on two occasions; in all by 25 months. The 
case of the contractor was that the extension of time was 
not for any fault of theirs and as a matter of fact they had 
.. 
to continue the site office in Cochin; that they also 
J. 
incurred additional expenditure in relation to their work 
at Cochin and that further expenditure towards F 
equipment ownership charges in respect of the 
machinery worth crores of rupees continued to be 
l 
employed for the work. The contractor, therefore, raised 
.. 
claims under diverse heads before the Engineer . 
According to the contractor, the Engineer took decision G 
j 
concerning claim no. 1 but the said decision was not 
implemented and regarding other claims, no decision 
was taken. Matter was referred for arbitration. The arbitral 
tribunal passed its award. State filed petition under 
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611 
H 
612 
SUPREME COURT REPORTS (2009] 14 (ADDL.) S.C.R. 
A 
Section 34 of the Arbitration and Conciliation Act, 1996 
before the District judge which was dismissed on the 
""{. 
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ground that there were sufficient reasons recorded by the 
.arbitral tribunal for allowing claims under different heads. 
High Court allowed the appeal in part and set aside the 
B . award relating to claim nos. 1 a~d 4B on the ground that 
the findings thereon did not have supporting reasons 
being violative of See.tions 28(3) and 31 (3) of the 
Arbitration and Conciliation Act, 1996. ·Both ·the .parties 
filed appeals. 
~ 
c 
· Disposing of the appeals and remitting the matter to 
Additional Sessions Judge, the Court 
HELD: 1.1. The perusal of award showed that there 
were no reasons in support of claim no. 1 and 4B. Section 
D 31(3) of Arbitration and Conciliation Act, 1996 mandates 
that the arbitrai award shall state the reasons upon which 
,,.... 
it is based, unless -
(~) the parties have agreed that no 
reasons ar~ to be given or (b) the· award is an arbitral 
award under Section 30. It is not in dispute that the 
E 
present case i1 not covered by. clauses (a) and (b). In the 
circumstances, it was obligatory for the arbitral tribunal 
to state reasons in support of its award in respect of claim 
. 
. 
nos. 1 and 4B, By legislative mandate, it is now essential 
.. 
for the arbitral tr~bunal to give· reasons· in support of the 
,.I.. 
F 
award. The 1996 Act is based on UNCITRAL Model Law 
which has a provision of stating the reasons upon which 
the award is based. [Para 20 and 21] [622-G-H; 623~A-C] 
Union .of India v. Mohan Lal Capoor (1973) 2 SCC 836; 
Woo/combers of India Ud . . v. ··Woo/combers Workers Union 
G and another AIR 1973 SC 2758; S.N. Mukherjee v. Un;on of 
India (1990) 4 SCC 594; Delhi Electric Supply Undertaking 
I 
v. Victor Cable Industries Limited & Anr. 2006 (1) Arb. LR· 
-l. 
297-{Delhi); .Mis. Kµmar Construction Comptmy v. Delhi 
Development Authority & Anr; 64 (1966) DLT 553, referred 
H 
SOM DATT BUILDERS LTD. v. STATE OF KERALA 613 
to. 
A 
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1.2. The requirement of reasons in support of the 
award under Section 31(3) is not an empty formality. It 
guarantees fair and legitimate consideration of the 
,. 
controversy by the arbitral tribunal. It is true that arbitral B 
tribunal is not expected to write judgment like a court nor 
it is expected to give elaborate and detailed reasons in 
support of its finding/s but mere noticing the submissions 
of the parties or referehce to documents is no substitute 
p 
for reasons which the arbitral tribunal is obliged to give. 
Howsoever brief these may be, reasons must be c 
indicated in the. award as that would reflect thought 
process leading to a particular conclusion. To satisfy the 
requirem

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