PREMIER FABRICATORS, ALLAHABAD versus HEAVY ENGINEERING CORPN. LTD., RANCHI

Citation: [1997] 3 S.C.R. 161 · Decided: 21-03-1997 · Supreme Court of India · Bench: A.M. AHMADI · Disposal: Appeal(s) allowed

Judgment (excerpt)

PREMIER FABRICATORS, ALLAHABAD 
v. 
HEAVY ENGINEERING CORPN. LTD., RANCHI 
MARCH 21, 1997 
(A.M. AHMADI CJI., M.M. PUNCH! AND 
K. RAMASWAMY, JJ.) 
Arbitration Act, 194(}-S.3(}-Non-speaking award of the Umpire passed 
A 
B 
on nwits without deciding the preliminary question of arbitrability of the 
claims-Held: Per majority,---lllegal---Umpire committed jurisdictional C 
erro1~Without a separate order or statement on the preliminary issue of ar-
bitrability of the claims, it could not be discemed that umpire had decided 
the preliminary issue-Remanded the award to the umpire to decide denovo 
the arbitrability of the claims-Held, Per minority.~Award valid and 
legal-From the facts and circumstances it must be presumed that umpire had D 
considered and decided preliminary question of arbitrability of the 
claims-Hence no error apparent on the face of the record. 
The appellant entered into a contract with the respondents for 
execntion of certain works. Dispute arose between them during the coutse 
of execution. Pursuant to clause 78 of the contract, disputes were referred E 
to two arbitrators. One of the disputes was whether claims referred to at 
items 2-5 were referable to arbitrations iu terms of the contract. Both the 
arbitrators held that the claims were referable to arbitration but they 
could not come to an agreement on the merits of the claim. Therefore, they 
appointed an umpire. The umpire made a non-speaking award directing 
the respondent to pay a lumpsum amount of Rs. 80,000 besides interest. F 
On application made by the applicant the Civil Court made the award rule 
of the Court. 
The respondent preferred an appeal in the High Court challenging 
the award to be illegal interalia on the ground that the same was passed G 
by the Umpire on merits without deciding the preliminary question of 
referabllity of the claims under items 2 to S. Both the judges of the Division 
Bench concurrently agreed that the umpire must decide the preliminary 
question of arbitrability before deciding the claims on merits. 
But difference of opinion arose as to whether the umpire bad decided H 
161 
162 
SUPREME COURT REPORTS 
[1997] 3 S.C.R. 
A the preliminary question of arbitrability of the claims before deciding them 
on merits. One of the judges held that umpire must be deemed to have 
decided the preliminary 11uestion in the affirmative and the award there-
fore must be accepted as valid. The other judge differed starting that in 
the facts and circumstances of the case it was not possible to inferentially 
B 
hold that the umpire must have decided the question of referability while 
making the award. The matter was referred to a third judge, who con-
curred with the latter view. As per the majority view, it was held that the 
umpire did not decide the preliminary issue of referability of items 2-5 
before deciding the claims un merits. Therefore, the award was set aside. 
C 
The appellant filed the present appeal against the judgment of the 
High Court. 
Allowing the appeal, this Court 
HELD : (Per K. Ramaswamy, J. for himself and Ahmadi, CJI.): 
b 
1. The awarq is illegal as it was passed by the umpire on merits 
without deciding the preliminary question of arbitrability of the claims. 
The entire dispute including the arbitrability of the claims in items 2 to 5 
had been referred to the umpire. Before proceeding to adjudicate the 
claims on merits, the umpire was required to give his finding on the 
E 
preliminary issue of arbitrability of the claims and reasons in support 
thereof. The umpire did not write a separate order nor indicated in the 
award .that he had applied his mind to the aspect that the claims were 
arbitrable. The award should have contained a statement that the claims 
were arbitrable and that he had given a consolidated award. In view of the 
F 
admitted position that there was no statement or separate order in the 
non-speaking award regarding the arbitrability of the claims, it can not be 
construed by implication that the umpire had considered the same. The 
umpire is enjoined to consider a preliminary question of his jurisdiction 
as to arbitrability of claims in items 2 to 5. It being a jurisdictional issue, 
G though the umpire can not conclusively clothe himself with his conclusion 
of arbitrability of the claims which is to be decided ultimately by the Civil 
Court as a condition to exercise his power to decide the claims on merits, 
the umpire is required to decide arbitrability of the c

Excerpt shown. Read the full judgment & AI analysis in Lexace.