LexSTATE OF RAJASTHAN versus M/S. NAV BHARAT CONSTRUCTION CO.
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A STATE OF RAJASTHAN V. MIS. NA V BHARAT CONSTRUCTION CO. OCTOBER 4, 2005 B [S.N. VARIAVA AND TARUN CHATTERJEE, JJ.] Arbitration: ·contract-Dispute-Reference of claims to arbitration-Reference of C 28 claims-Decision of 39 claims-Difference of opinion between two arbitrators-Dispute referred to Umpire arbitrator-Award by Umpire challenged on the grounds that the Umpire was biased; that decision of 39 claims were wrong as only 28 claims were referred; and that the umpire had misconducted himself by not giving reasoned award and by passing the award D contrary to the terms of the contract-Held: In the facts of the case bias not proved-Umpire should have confined its award only to the claims made in the applications-The Act does not require giving reasons unless the contract so requires-An arbitrator cannot go beyond the terms of the contract-The majority of the claims in the present case are against the terms of the contract- Award is not set aside on the ground of misconduct as it would cause hardship E to the party who had got contract-Hence award set aside and matter referred to independent Umpire appointed by this Court-Arbitration Act, 1940. A contract for construction was awarded by appellant to the respondent. Despite extension of time, respondent was not able to complete the work within stipulated time. The contract was terminated and the F balance work was completed by some other contractor. Various claims of respondents were rejected by appellants. The respondent moved application u/s.20 of Arbitration Act, 1940 for reference of 4 claims to the Arbitrator. District Judge referred only one claim and refused to refer other three claims as not referable. In appeal, High Court directed that G all the four claims be referred to arbitration. In the meantime, respondent had filed another application· u/s 20 of the Act seeking reference of 24 more claims and the same was allowed. Disputes were referred to two arbitrators. Due to difference of opinion between the two arbitrators, dispute was referred to an Umpire arbitrator. Appellant filed application seeking removal of the Umpire on the ground of bias and the same was fl 988 STATE OF RAJASTllAN "· NAV BHARAT CONSTRUCTION CO. 989 dismissed. Revision against the same was also dismissed. Umpire passed A the award. Appellants' objection was dismissed by trial court. The cross- appeals of the appellants and respondents were dismissed by High Court. Hence the present cross-appeals. It was contended that the Umpire was biased; that the Umpire had wrongly decided 39 claims as only 28 claims were referred; that as one of B the Arbitrators out of the two, had given reasoned and speaking order, the Umpire by not giving reasoned award had misconducted himself; that the Umpire had also misconducted himself inasmuch as he had awarded contrary to the terms of the contract. Disposing of the appeals, the Court c HELD: 1. It cannot be said that the Umpire was biased against the appella~ts inasmuch as he was the person, who regularly appeared for the respondent in arbitration matters and assisted the respondent in their arbitration cases. On this ground the Appellant had earlier filed an application for removal of the Umpire. That application came to be D rejected and an appeal against that order was also dismissed. Having failed in their attempt to remove the Umpire, this ground is no longer available to the appellants. Even otherwise except for making bare averments no proof has been produced to substantiate the averments. If, this Umpire was appearing for and/or regularly assisting the respondents there would E be documents showing his name/appearance. None have been produced. [994-F; 995-A-BJ Ran) it Thakur v. Union of India and Ors., [1987) 4 SCC 611 and Jiwan Kumar Lohia and Anr. v. Durga Dutt Lohia and Ors., [1992] 1 SCC 56, referred to. F 2. If any claim did not form part of the two applications the same cannot be arbitrated upon and the Umpire will confine the reference to the claims made in the two applications. It prima facie appears that the two applications were for referring, in all, 28 claims to arbitration. G (995-F-G; 995-C( Orissa Mining Corporation Ltd v. Prannath Vishvanath Rawlley, [1977) 3 SCC 535 and H.L. Batra and Co. v. State of Haryana and Anr .. (1999] 9 sec 188, relied on. H A B 990 SUPREME COURT REPORTS [2005] SUPP. 3 S.C.R. 3. Under the Arbitration Act 1940, unless the contrac
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