UNION OF INDIA versus BUNGO STEEL FURNITURE PVT. LTD.

Citation: [1967] 1 S.C.R. 324 · Decided: 14-09-1966 · Supreme Court of India · Bench: RAGHUBAR DAYAL · Disposal: Dismissed

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

Judgment (excerpt)

UNIO:'ll OF INDIA 
A 
v. 
BUNGO STEEL FURNITURE PVT. LTD. 
September 14, 1966 
(V. ilAMASWAMI, V. BllARGAVA AND RAGHUBAR DAYAL, JJ.) 
8 
ArbitraJion-Error of law apparent on the face of award, lVhat is-
lurisdicrion of court to exmnine evidence. 
Code of Civil Procedure (Act 5 of 
1908), s. 34--Applicability to 
arbitraJion proceedings-Jurirdiction of arbitrator to award future interest. 
The disputes between the appellant and respondent in regard lo certain 
contracts were referred to arbitration. The award was sought to be set 
aside on the grounds that the arbitrator committed an error : (i) with 
C 
respect to the deduction of an amount, and (ii) ·by granting future interest 
from the date of award till tlie date when the court passed a decree in 
terms ot the award. 
For the purpose of establishing the first error the 
appellant relied on affidavits filed and statements made by t!>e parties be-
fore the .arbicrator. 
HELD : (i) The award of an arbitrator can be set asidl.! on the ground 
of error of law on the face of the award, only when in the a\l+ard or in 
D 
a docwnent incorporated with it there is found some legal 
proposition 
which is the basis of the award and which is erroneous. The court bu 
no jurisdiction to investigate into the merits of the case and to examine 
the documentary and oral evidence on the record . for the purpose of 
finding our .. whether or not the arbitrator has committed an error of law. 
13~7 A-BJ 
Champsey Bhare & Co. v. Jivraj Ba!loo Spinning & Weaving Co. Ltd. 
F. 
50 I.A. 324, applied. 
(ii) The arbitrator had jurisdiction to grant interest on the amount of 
the award from the date of the award till the date of the decree as all 
questions including that of interest were referred to the arbitrator. 
It is 
an implied 
term 
of the reference 
that 
the 
arbitrator 
will 
decide 
the dispute according to existing law and g;,.., such relief wilh regard to 
interest as a coun could· give if it decided the dispute. Though, in terms, 
F 
<. 34 of the Civil Procedure Code does not apply to arbitralion proceed-
ings, the principle of that section may be npplied by the arhilrator for 
award:ng interest in cases where a court of la\v could grant a decree for 
interest under the section. [329 A-DJ 
Seth Thawardas Pheruma/ v. Unio11 
of India, I 1955J 2 S.C.R. 48, 
explained. 
Firm Madan/al Ros/Jania/ Jfaha;an 
v. 
The Hukumchand Mills Ud. 
G 
/11dore. [1967J I S.C.R. 105, followed. 
Ov1L ArPF.LLATE JURISDICTION : Civil Appeals Nos. 373 and 
543 of 1965. 
Appeals from the judgment and decree/order dalcd the August 
I, 1962 of the Calcutta High Court in Appeals Nos. 132 and 
32 
of 1961. 
H 
N. S. Bindra and R. N. Sachthey, for the appellant (in the both 
arpeals). 
UNION v. BUNGO FURNITURE co. (Ramaswami, !.) 
325 
A 
A. K. Sen, Uma Mehta, P. K. Chatterjee and P. K. Bose, for the 
B 
c 
D 
E 
F 
G 
H 
respondent (in both the appeals). 
The Judgment of the Court was delivered by 
Ramaswami, J. These appeals are brought by certificate 
from the judgment of the Calcutta High Court dated August I, 
1962 in Appeals Nos. 32 and 132 of 1961 by which the High Court 
allowed the appeals against the Union of India (hereinafter called 
the 'appellant') in part and modified the award of· the arbitrator 
and the judgment of Mallick, J. 
' 
The disputes relate to 3 contracts for the supply of bedsteads 
by the respondent-Bungo Steel Furniture Pvt. Ltd.-(herein-
after called the 'Company') to the appellant, namely, contract 
No. A.T. 3116 for the supply of 17202 bedsteads, contract No. 
A.T. 767 for the supply of 30,000 bedsteads and contract No. 
A. T. 816 for the supply of 7,000 bedsteads. Each of these con-
tracts contained the usual arbitration clause embodied in cl. 21 
of the general conditions of contract in form No. W.S.B. 133. 
The disputes arising between the. Company and the appellant 
out of the three contracts were referred to the arbitration of Sir 
Rupen Mitter. The award of the arbitrator is dated September 2, 
1959. The arbitrator found that the Company was entitled to 
be credited with the sum of Rs. 11,64,423/- on account of the price 
(inclusive of the price of steel) of the bedsteads supplied under the 
three contracts made up of (a) a sum of Rs. 4,12,848/- for the 
price ·of 17,202 bedsteads supplied under contract No. AT. 
3116 at Rs. 24/- per bedstead, (b) Rs. 7,05,000/- for the price of 
30,000 bedsteads supplied under contract No. A.T. 767 at Rs. 23/8/-
per bedstead and (c) Rs

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