RAIPUR DEVELOPMENT AUTHORITY ETC. ETC. versus CHOKHAMAL CONTRACTORS ETC. ETC.

Citation: [1989] 3 S.C.R. 144 · Decided: 04-05-1989 · Supreme Court of India · Bench: R.S. PATHAK · Disposal: Remitted to Lower Court

Cited by 4 judgment(s) · cites 7 · see the full citation network in Lexace

Judgment (excerpt)

A 
RAIPUR DEVELOPMENT AUTIIORITY ETC. ETC. 
v. 
CHOKHAMAL CONTRACTORS ETC. ETC. 
MAY 4, 1989 
B 
[R.S. PATHAK CJ., E.S. VENKATARAMIAH, RANGANATH 
'r 
, 
MISRA, M.N. VENKATACHALIAH AND N.D. OJHA, JJ.] 
Arbitration Act, 1940: Sections 16(J)(c), 20, 21 and JO(c), 32-
A ward-Whether liable to be set aside on ground that no reasons have 
• 
been given-Necessity to give reasons where statute or Court orders. 
,.: 
c 
Government Contracts: Government and their instrumentalities-
Should as matter of policy and public interest-Ensure that arbitration 
clause provides for speaking awards by arbitrators. 
Administrative Law: Natural Justice-Principles of-Furnishing 
reasons in support of decision-Not applicable to cases arising under 
D 
the law of arbitration which is intended for settlement of private disputes. 
Practice And Procedure: Courts should be slow in taking deci-
sions which will have effect of shaking rights/titles which have been 
founded on particular interpretation of law. 
The common question arising in the instant cases which was refer-
...l. .. 
E 
red to this larger Bench is whether an award passed under the provisions 
of the Arbitration Act, 1940 is liable either to be remitted under section 
16(1)(c) of the Act or liable to be set aside under section 30(c) thereof 
merely on the ground that no reasons have been given by the arbitrator 
or umpire, as the case may be, in support of the award. 
It was urged that (i) subsequent to 1976 there has been a qualitative 
J--.. 
F 
change in the law of arbitration and that it has become necessary to insist 
upon the arbitrator or the umpire to give reasons in support of the award 
passed by him unless the parties to the dispute have agreed that no 
reasons need be given by the arbitrator or umpire for his decision; (ii) 
since under section 16(l)(c) of the Act the legality of an award can be 
questioned in Court on the basis of an error apparent on the face of an 
G 
award, the only way of ensuring that an award is in accordance with law 
is by insisting upon the arbitrator or umpire to give reasons for the award 
r 
and (iii) an arbitrator or an umpire discharges a judicial function while 
functioning as an arbitrator or an umpire under the Act, and, therefore, 
is under an obligation to observe rules of natural justice while discharg-
ing his duties, (iv) that the concept of natural justice had undergone a 
H 
great deal of change in recent years, and the requirement of giving 
144 
. R.D.A. v. CHOKHAMAL CONTRACTORS 
145 
reasons for a decision should be treated as a new rule of natural justice. 
While answering the question in the negative and remitting the 
cases to the Division Bench for disposal in accordance with law, this Court, 
HELD: (I) The arbitrator or umpire is under no obligation 
to give reasons in support of the decision reached by him unless 
under the . arbitration agreement or in the deed of submission he is 
required to give such reasons, and if the arbitrator or umpire chooses 
to give reasons in support of his decision it is open to the Court 
to set aside the award if it finds that an error of law has been 
committed by the arbitrator or umpire on the .face of the record on 
going through such reasons. [161C-D] 
(2) The arbitrator or umpire shall have to give reasons also 
where the court has directed in any order such as the one made 
under section 20 or section 21 or section 34 of the Act that reasons 
should be given or where the statute which governs an arbitration 
requires him to do so. [161D-E] 
(I) University of New South Wales v. Max Cooper & Sons Pty. 
Ltd. 35 Australian Law Reports p. · 219; (2) Hodgkinson v. Fernie 
& Anr., [1857] 3 C.B. (N.S.) 189=140 English Reports p. 712; (3) 
Champsey Bhara & Company v. Jivraj Ba/loo Spinning and Weaving 
Company Ltd., A.LR. 1923 Privy Council 66, (4); Seth Thawardas 
Pherumal v. The Union of India, [1955] 2 S.C.R. 48 (5) Jivarajbhai 
Ujamshi Sheth & Ors. v. Chintamanrao Balaji & Ors., [1964] 5 
SCR 480 (6) Bungo Steel Furniture Pvt. Ltd. v. Union of India, 
[1967] I SCR 633, (7) State of Rajasthan v. Mis. R.S. Sharma & Co .• 
[1988] 4 sec 353, referred to. 
(3) The people in India as in other parts of the world such as 
England, U.S.A. and Australia have become accustomed to the system 
of settlement of disputes by private arbitration and have accepted 
awards made against them as binding even though no reasons have 
been given in support of the awards for a long time. ·They have attached 
m

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