LexM/S SUBHASH AGGRAWAL AGENCIES versus M/S BHILWARA SYNTHETICS LTD. AND ORS.
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MIS SUBHASH AGGRA WAL AGENCIES
v.
MIS BHIL WARA SYNTHETICS LTD. AND ORS.
DECEMBER 13, 1994
[A.M. AHMADI, CJ, S. MOHAN AND
MRS. SUJATA V. MANOHAR, JJ.]
Arbitration Act, 1940: Arbitrator-Award-Duty to give reasons-
Reasons given by Arbitrator-Award affirmed by Appellate Tribunal-
lnsistence upon appellate Tribunal to furnish reasons for confirmation held
not warranted
Delhi Hindustani Mercantile Association Rules and Regulations:-
Rule 37-Regulations 7 and JO-Arbitrator-Award-Appeal against
Provisions for.
The appellant claimed a sum of Rs. 4,51,246.50 from the first
respondent. In turn tbe first respondent also made a counter claim
against the appellant. Both being members of the Delhi Hindustani
Mercantile Association, their dispute was referred to an Arbitrator
under the Rules of the Association. By its order dated 20.11.1981 the
High Court directed that in terms of the concession made on behalf of
the Mercantile Assocfation and the sole Arbitrator, a reasoned award
shall be passed by the Arbitrator. Consequent to the said direction, the
sole Arbitrator entered upon the reference and by his reasoned award
dat~d 19.7.1983 awarded a sum of Rs. 1,97,891.8.l in favour of the
appellant with 18% interest till the date of payment. The first
respondent preferred an appeal before the Tribunal which confirmed
the Arbitrator's award without assigning any reasons. Thereafter, the
appellant filed a suit for making the award a rule of the Court but a
single Judge of the High Court set aside the Award on the ground that
it was be'reft of reasons and thus runs counter to the High Court's
order dated 20.11.1981. Consequently the award was remitted to the
tribun~I for reconsideration and for giving reasons. The appellant
preferred appeal before the High Court which was dismissed in limine.
In appeal to this Court it was contended on behalf of the appellant
that since the Arbitrator gave a reasoned award it was not necessary
for the Tribunal to give reasons as it merely affirmed the Tribunal's
award.
530
S. AGGRA WAL AGENCIES v. BHILW ARA SYNTHETICS LTD.
531
On behalf of the respondents it was contended that when the A
appellate Tribunal confirms or reverses the original award, its award
not only completely replaces the original award but also defines the
rights of the parties and therefore, such an award must contain its
reasons to enable the parties to know as to why the appellate Tribunal
has come to such a conclusion.
B
Allowing the appeal and setting aside the impugned judgment ~f
the High Court, this Court
HELD: 1. The award of the sole Arbitrator contained reasons as to
why it was made in favour of the appellant. Therefore, that is fully in
conformity with the direction given by the High Court on 20.11.1981.
C
[536 BJ
2. When the tribunal upheld the award of the sole Arb~trator, it
stands to reason that it has come to be confirmed for the same reasons
as prevailed with the sole Arbitrator. To insist upon such reasons to be
repeated by the appellate authority will only be superfluous. An
arbitration procedure should be quick. Such proceeding cannot be D
equated to Court proceedings nor do they partake of the character of
trial. To insist upon the appellate Tribunal to furnish reasons for its
confirmatory order is not warranted. The direction dated 20.11.1981
does not cover the appellate authority. (545 H, 546 A)
3. The essence of arbitration is to avoid cumbersomeness of the E
Court procedure and to have a fair settlement. It is true that the award
of the appellate Tribunal is the final award and it is that which is to be
made the rule of the Court. The Court, by looking at the original award
as confirmed by the order of the appellate Tribunal, can always discern
the reasons which in this case are fully contained in the award dated
19.7.1983 of the Sole Arbitrator. (546 E)
F
4. Of course, if the appellate Tribunal reverses the arbitrator's
award, it may be required to give reasons but that is not the position
here. (546 F)
Indian Oil Corporation v. Indian Carbons Ltd, [1983) 3 SCR 426; G
Bermer Handelegesellschaft mbH v. Westzucker GmbH, (No. 2) (1981) 2
Lloyd's rep.130; Bungo Steel Furniture v. Union of India, AIR (1967) SC
376; Firm Madan/al Roshanlal v. Hukumchand Mills, AIR (1967) SC
1030; Raipur Development Authority v. Mis Chokhamal Contractors, AIR
{1990) SC 1426; University of New South Wales v. Max Cooper and Sons
Pvt. LtExcerpt shown. Read the full judgment & AI analysis in Lexace.