V.G.GEORGE versus INDIAN RARE EARTHS LTD. AND ANR.

Citation: [1999] 2 S.C.R. 531 · Decided: 08-04-1999 · Supreme Court of India · Bench: S. RAJENDRA BABU · Disposal: Dismissed

Judgment (excerpt)

V.G.GEORGE 
A 
v. 
INDIAN RARE EARTHS LTD. AND ANR. 
APRIL 8, 1999 
[S. RAJENDRA BABU AND S.N. PHUKAN, JJ.] 
B 
Arbitration Act, 1940 : 
Section 30(a)-Misconduct by arbitrator-Award beyond the scope of 
the agreement-Agreement provided that contractor would be responsible C 
for negotiations with the land owner and local public whose land needed 
to be used for mining-Arbitrator awarding a sum on account of claim of the 
contractor for obstruction by the land owners and local public-Held, the 
award clearly beyond the scope of the agreement-Arbitrator misconducted 
with the proceedings and the High Court rightly set aside the award. 
Section 30(a)-Escalation-There was no escalation clause in th.~~ 
agreement-Finding of the arbitrator that contractor was not pressurised to 
agree to a 10% hike in the wages of the mining worker and on the other 
hand he observed that the contractor acceded to a raise in the wages-Held, 
D 
the arbitrator exceeded the jurisdiction-Case of misconduct existed when E 
the award is contrary to the findings of the arbitrator. 
Award-Findings when part of the award-Where the award contains 
not only the sum awarded but also the case of the parties, the issues framed 
and findings on each issue-Held, the findings on the issue are part of award 
and the court can look into the findin$s. 
p 
Award-When can be set aside-The arbitrator derives its jurisdiclton 
from the contract and if he exceeds his jurisdiction the award can be set 
aside-In case of misconduct on the face of award, court can interfere-If the 
arbitrator has given reason disclosing an error apparent on the face of it, 
the award can be interfered 
G 
The appellant-contractor entered into an agreement with Respondent 
No. 1 for mining, collection and supply of raw sand at the average rate of 
920 tonnes per day. Out of an agreed supply of 2,02,000 tonnes of raw-sand, 
appellant supplied only 1,72,489.24 tonnes. The disputes between the parties 
were referred to the arbitration of Respondent No. 2. 
531 
H 
532 
SUPREME COURT REPORTS 
[1999] 2 S.C.R. 
A 
Before the arbitrator the appellant made claims under 10 heads. One 
. of the grievances of the appellant was that he suffered due to obstruction by 
Kudikidappukars and the general public. However, Clause (c) of the tender 
notice stipulated that the appellant would be responsib.Je for obtaining consent 
of the landowners concerned and entering an agreement with them and that 
B Respondent No. 1 would not be liable to compensate against any claim by the 
landowners. The arbitrator gave a clear finding that the appellant was not 
responsible for settling problems created by strangers like kudikidappukars 
and the local public. However, a sum on this account was awarded by the 
arbitrator~ 
c 
D 
The claim of escalation was also awarded by the arbitrator although 
there was no escalation clause in the agreement On the other hand, arbitrator 
recorded a finding that the contractor was not pressurised by Respondent 
No. 1 to agree to a 10% hike in the wages of the mining worker and on the 
other hand he observed that the contractor had acceded to a raise in the 
wages. 
The objections filed by Respondent No. 1 was dismissed and the award 
was made rule of the court. On appeal, the High Court set aside the award 
except for the finding that the appellant was entitled to refund of the earnest 
money deposited by him. Hence this appeal by the contractor. 
E 
It was contended by the appellant that the award was a non speaking 
F 
award and the High Court erred in law in going into the facts of the case. 
Dismissing the appeal, this Court 
HELD : 1.1. Law is well settled that if the award is non-speaking, court 
can look into the question as to whether arbitrator has travelled beyond the 
scope of the contract as he derives his jurisdiction from the contract and if 
the arbitrator exceeds his jurisdiction the award can be set aside . An award 
can also be set aside in case of misconduct apparent on the face of the award. 
It can also be interfered with if the arbitrator has given reasons for the 
G award disclosing an error apparent on the face of it. [535-E-Ff 
State of Orissa v. Mis. Lall Brothers, [1988) 4 SCC 15; State of Andhra 
Pradesh & Ors. v. R. V. Rayanim & Ors., (1990) 1 SCC 433 and Associated 
Engineering Co. v. Government of Andhra Pradesh & Ors., relied on. 
H 
t.2. An award contains not only the sum awarded but also the case of 
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r 
V.G. GEURGE v. INDIAN RARE EARTHS L

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