SUDARSAN TRADING CO. versus GOVT. OF KERALA & ANR.

Citation: [1989] 1 S.C.R. 665 · Decided: 14-02-1989 · Supreme Court of India · Bench: SABYASACHI MUKHERJI · Disposal: Appeal(s) allowed

Cited by 4 judgment(s) · cites 2 · see the full citation network in Lexace

Judgment (excerpt)

' 
SUDARSAN TRADING CO. 
v. 
GOVT. OF KERALA & ANR. 
FEBRUARY 14, 1989 
[SABYASACHI MUKHARJI, ANDS. RANGANATIIAN, JJ.] 
Arbitration Act, 1940: s. 30---Non-speaking award-Validity of-
Not open to court to probe the mental process of the arbitrator-
Reasonableness of the reasons-Arbitrator the sole judge of quality and 
quantity of evidence-Interpretation of contract by arbitrator-Court 
cannot substitute its own decision-Setting aside of award-Grounds 
for. 
The appellant-contractor undertook construction of certain time-
bound projects. The work, however, could not be completed within the 
scheduled time due to various reasons. The contract was consequently 
cancelled at appellant's risk. The disputes arising therefrom between 
the parties were referred to the arbitrator named in the agreement. He 
made three awards allowing claim Nos. l(e), 2, 5, 7(a), 7(b), 7(c), 13, 
14, and 15 preferred by the appellant aggregating to Rs.31.15 lakhs 
under the several heads mentioned therein. 
A 
B 
c 
D 
Uyon these awards, an application was made 'before the court for 
E 
passmg decrees in terms thereof. Objections were also filed. 
The trial court took the view that it could not adjudicate upon the 
justification for the conclusions arrived at by the arbitrator unless 
such awards were the result of corruption, fraud or there were errors 
apparent on the face of the award, that it was not necessary for the 
arbitrator to give reasons for his award, that there was no jurisdiction 
to investigate Into the merits of the case and to examine t}te documen-, 
tary and oral evidence for the purpose of finding out whether or not the 
arbitrator had committed an error of law or fact, that the arbitrator 
had not incorporated in the award any materials for his conclusion nor 
did he incorporate the terms of the contract between the parties. Under 
such circumstances the award could not be set aside, especially when 
there was no error apparent on the face of it and there was nothing to 
show that the arbitrator had misconducted the proceedings or that the 
award had been improperly procured. 
F 
G 
In appeal before the High Court it was contended for the respon-
H 
665 
A 
B 
c 
666 
SUPREME COURT REPORTS 
[1989] 1 S.C.R. 
dents that there were errors apparent on the face of the award, that the 
arbitrator had misconducted himself and travelled beyond the terms of 
the contract, and that the claims allowed were beyond and contrary to 
the agreement between the parties, whereas for the appellants it was 
contended that the award was a non-speaking award and, therefore, it 
was not open to the court to go into the correctness or reasonableness of 
the award. 
The High Court set out the claims, noted the rival contentions and 
referred to the various clauses and the conditions of the contract, 
though the contract itself was made no part of the award, and con-
cluded that there were errors apparent on the face of the award that the 
arbitrator had misconducted himself and travelled beyond his power. 
In the appeals by special leave, it was contended that the High 
Court had exceeded its jurisdiction in acting in the manner it did on the 
aforesaid aspects. 
D 
Allowing the appeals by special leave, 
HELD: 1.1 The High Court fell into an error in deciding the 
question on interpretation of the contract. It had no jurisdiction to 
examine the different items awarded clause by clause by the arbitrator 
and to hold-that under the contract these were not substainable in the 
E 
facts found by the arbitrator. [688D, E] 
1.2 Once there is no dispute as to the contract, what is the 
interpretation of that contract, is a matter for the arbitrator and on 
which the court cannot substitute its own decision. So also, the court 
cannot substitute the decision of the arbitrator, as to what was meant by 
F 
the contract, once a dispute under the contract is conceded to the 
arbitrator. [687B, D] 
1.3 In the instant case the court had examined the different 
claims not to find out whether these claims were within the disputes 
referable to the arbitrator, but to lind out whether in arriving at the 
G decision, the arbitrator had acted correctly or incorrectly. This the 
court had no jurisdiction to do, namely, subs!ltution of its own evalua-
tion of the conclusion of law or fact to come to the conclusion that the 
arbitrator had acted contrary to the bargain between the parties. 
Whether a particular amount was liable to be paid or damages liable to 
be sus

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