UNION OF INDIA versus M/S G.S. ATWAL, AND CO. (ASANSOLE)

Citation: [1996] 2 S.C.R. 940 · Decided: 22-02-1996 · Supreme Court of India · Bench: K. RAMASWAMY · Disposal: Appeal(s) allowed
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Judgment (excerpt)

A 
B 
UNION OF INDIA 
v.· 
MIS G.S. ATW~AND CO. (ASANSOLE) 
FEBRUARY 22, 1996 
[K. RAMASWAMY AND G.B. PATTANAIK; JJ.] 
Arbitration Act, 1940-Sec 30(c)-Enlargement of-Scope of reference 
by Arbitrator-Held, a legal misconduct-Award vitiated. 
C 
The Respondent had entered into an agreement with the Petitioner 
in 1968-69 for excavation of a Feeder Canal. During the course of execution 
of the work certain disputes had arisen and they were referred to Ar-
bitrators in instalments. In the fifth of such· Arbitrations, the dispute was 
as regards hire charges of equipment loan by Farakka Barage and the 
Respondent claimed for Reference of Arbitration and an Arbitrator was 
D appointed to settle the disputes, After entering into the reference, the 
Respondents, laid claim for various expenses in addition to the earlier 
claim for refund of hire charges which was disputed by counter-statement 
of the Appella~t. The Appellant in its statement had objected to the 
unilateral enlargement of the Reference. By a non-speaking Award the 
E 
Arbitrator awarded a sum of Rs. 35,72,550 with interest at 15% p.a. from 
1.7.76 of the date of payment whichever was earlier. 
The Appellant filed a petition under section 30(c) of the Arbitation 
Act 1940, questioning the Award on the grounds that the claim was barred 
by Limitation, that the Arbitrator had no power to enlarge the scope of the 
F 
Arbitration and that he had no power to award interest at higher rate 
without any claim before it. The Assistant District Judge, set aside the 
Award upholding the contentions of the Appellant. On appeal, the High 
Court set aside the order of the District Court holding that there was no 
error apparent on the face of the Award and directed the Civil Court to 
G take steps for passing a decree in terms of the Award as expeditiously as 
possible, not later than four months. 
On Appeal, it was contended before this Court by the Appellant that 
the Arbitrator has no power to unilaterally enlarge the scope of the · 
Reference and that he has no power to award interest in a non-speaking 
H Award. The Respondents contended that the Appellant having participated 
940 
•, 
U.0.1. v. G.S. ATWALAND CO. 
941 
before the Arbitrator with full knowledge and had an Award unfavourable A 
to them, could not question the validity thereafter; that the conduct on the 
part of the Appellant amounts to acquiescence to the power and jurisdic-
tion of the arbitrator to make the Award and that thereby the plea of lack 
of jurisdiction cannot be permitted to be raised by the unsuccessful party 
to the Arbitration. 
B 
Allowing the Appeal, this Court 
HELD : The jurisdiction of an Arbitrator is founded upon the 
agreement between the parties. To the extent of the agreement, the parties 
are bo~nd by the decision of the Arbitrator. But the Arbitrator cannot C 
enlarge the scope of his Arbitration and make non-speaking Award, allow-
ing a lump sum amount of all claims, after enlarging his jurisdiction on 
non-accepted or objected claims. [947-C-D] 
U.P. Rajkiya Ninnan Nigam Ltd. v. Indure Pvt. Ltd. & Ors., [1996) 2 
SCR, relied on. 
D 
N. Chillappam v. Secreta1y, Kerala State Electricity Board and Anr., 
[1975] 1 SCC 289; Mis. Nee/kanthan Constrnction Superintending Engineer, 
National Highways, Salem and Ors., [1988) 4 SCC 462; Chowdluy Murtaza 
Hussain v. Mussumat Bibi Bechunnisa, L.R. (IA) Vol. III 209; Champsey 
Bhara & Co. v. Jivraj Ba/loo Spinning & Weaving Co. Ltd., 'L.R. (IA) Vol,. E 
1324; Champsey Bhara Company v. The Jivraj Ba/loo Spinning and Weaving 
Company Ltd., AIR (1923) P.C. 66 and Finn Madan/al Roshanal Mahajan 
v. Hulatmchand Mills Ltd., Indore, [1967) 1 SCR 105, referred to. 
Law of Arbitration by Justice Bachawat, 2nd (1987) Edn. P. 90, 
referred to. 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3679 of 
1996. 
F 
From the Judgment and Order dated 12.2.92 of the Calcutta High G 
Court in Appeal from Original order Tender no. 20390 of 1991. 
N.N. Goswamy A.K. Srivastava for Mrs. Anil Katiyat for the Appel-
lant. 
Soli J. Sorabjee, R.S. Sodhi, for the Respondent. 
H 
A 
B 
c 
D 
942 
SUPREME COURT REPORTS 
[1996] 2 S.c.R: 
The Judgment of the Court was delivered by 
K. RAMASWAMY, J. This appeal by special leave arises from the 
judgmen~ and order dated February 12, 1992. of the Division Bench of the 
Calcutta High Court in F.M.A.T. No. 1390 of 1991. The respondent had 
entered into an agreement in 1968-69 for excavation of Feeder canal from 
RD. 68.00 to
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