Madhya Pradesh High Court
Agrawal Krishi Sewa Kendra vs Hindustan Fertilizer Corporation Ltd. on 27 March, 2000
Equivalent citations: 2001(5)MPHT192
Author: Arun Mishra
Bench: Arun Mishra
ORDER Arun Mishra, J.
1. M/s Agrawal Krishi Sewa Kendra has filed the present appeal against the Judgment dt. 8-1-1990 passed by the IIIrd Additional Judge to the Court of District Judge, Raipur, in Civil Suit No. 18-B/1985, whereby the Court has made an award, passed by the arbitrator, rule of the Court and the objections filed by the appellant under Sections 30 and 33 of the Arbitration Act, were set aside. It was ordered that Hindustan Fertilizer Corporation Ltd. was entitled for payment of Rs. 12,231/- paise 25 as per the award.
2. Facts stated in brief are that Hindustan Fertilizer Corporation Ltd. (hereinafter referred to as 'Corporation') is engaged in the manufacture, sale and supply of fertilizers. Vide agreement dt. 1-4-80, M/s Agrawal Krishi Sewa Kendra (hereinafter referred to as 'dealer'), was appointed as dealer by the Corporation. The dealer on 6-6-80 and 7-6-80 deposited certain amount for the purchase of fertilizers and the orders were issued by the sale depost bearing No. 7057, 7069 and 7070, respectively Ex. P-2, P-3 and P-4. Ex. P-2 is the delivery order cum challan cum invoice, which was issued against the amount paid of Rs. 53,351/- on 7-6-80. The rate at which Amonium Sulphate was sold was mentioned as Rs. 1220/- per metric ton. 400 bags were sold. Each bag was of 50 kilo grams weight Total weight was 20 metric tons. The total sale was for Rs. 24,400/-, sales tax of Rs. 732/- was added. The sale was against the advance payment of Rs. 25,132/-. The material was issued on 12-6-80. The sale contract of Ex. P/2 was as per the terms and conditions printed over leaf. The term and condition No. 3 of sale provides that physical delivery of the materials should be taken preferably on the date of the issue of Delivery order cum Challan cum Invoice. If the material is taken delivery after 7 days from the date of issue of the Delivery order cum Challan cum Invoice the Warehouse Superintendent will recover the rental @ Rs. 3/- per metric ton per month or part thereof.
3. Ex. P-3 is another delivery order cum challan cum invoice dt. 7-6-80 for Urea 400 bags. Total 50 bags were sold under it. Total weight in metric ton was 20 at the rate of Rs. 1370/- per metric ton, for a total amount of Rs. 27,400/-. M.P. sales tax added was Rs. 822/-. Gross amount was Rs. 28,222/-.
4. Ex. P-4 is another delivery order cum challan cum invoice dt. 6-6-80 with respect to Suphala fertilizer of 100 bags of 50 kg. each. Total weight was 5 metric tons. Rate per metric ton was Rs. 1420/-. Total amount was Rs. 7,100/-. Sales tax of Rs. 213/- was added. Gross amount was Rs. 7313/-. Delivery material was issued for P-3 and P-4 on 10th June, 1980. Same conditions are printed over leaf as mentioned above.
5. Before the material could be issued under the delivery orders P-2, P-3 and P-4, price of the fertilizers was increased on 8-6-80 by the Government. Hence, the Corporation wrote a letter to the dealer on 1-11-80 and demanded a sum of Rs. 24,462/- paise 50, as the management of the Corporation had taken a decision to make such a demand, as the material was issued subsequently, pursuant to the delivery orders dt. 6-6-80 and 7-6-80 as contained in P-2 to P-4 as the effective date of increase of the price was 8-6-80. An arbitrator was appointed invoking Clause 14 of the agreement Ex. P-1. This agreement Ex. P-1 was entered into between the Corporation and the dealer on 1st April, 80. Shri S.K. Biswas was appointed as an arbitrator between the parties who passed an award on 2-12-85 of Rs. 12,231/- paise 25 payable by the dealer to the Corporation in full satisfaction of the claim made by the Corporation with respect to the delivery orders dt. 6-6-80 and 7-6-80. The parties were directed to bear their own costs. This award was challenged by filing an application under Section 30 read with Section 33 of the Arbitraion Act, 1940 by the dealer before the IIIrd Additional Judge to the Court of District Judge, Raipur. The award was objected on the various grounds; (i) the sale had completed once a delivery order cum challan cum invoice was issued. The payment was already made on 6-6-80 and 7-6-80. Thus, merely the material was issued subsequent to increase of price on 8-6-80 the increase price could not be foisted on the dealer, (ii) increase of the price was prospective, (iii) no reference was called for to the arbitrator in view of the terms and conditions of the sale and the agreement, (iv) dispute between the parties was not arbitrable and an arbitrator had no right to pass the award in view of the terms and conditions entered into by the parties, (v) appointment of the arbitrator was not valid. In the absence of the officers specified in the agreement, third person could be appointed. Hence, Mr. Biswas was not an officer specified in the agreement and he could not be appointed as an arbitrator by the Corporation, (vi) the arbitrator did not pass the award within four months and the arbitrator had proceeded as ex parte and has passed the award without mentioning the reasons.
6. Reply was filed by the Corporation to the objections. It was contended that there was dispute between the parties as to the payment under Clause 24 of the agreement. Hence, the dispute was rightly referred to the sole arbitrator by the Corporation. Shri S.K. Biswas, Finance Manager of the Corporation (Marketing Division) was appointed as arbitrator. On arbitration, the arbitrator entered on a reference on 29-5-82. Time was extended by the Court on 5-11-85 and the award was passed on 2-12-85. Principle of natural justice was followed by the arbitrator. No misconduct could be attributed to the arbitrator and the award cannot be set aside on the ground that the arbitrator had committed mistake in law and fact. There was no error in law apparent on the face of the award. It was not necessary to mention the reason in the award for in passing it. The award was validly passed and was according to law. The objections be dismissed and Judgment be pronounced under Section 17 of the Arbitration Act.
7. In the appeal, learned counsel appearing for the appellant Shri Neera Vegad has submitted that the award passed was beyond the jurisdiction and the dispute was not arbitrable and the award is in contravention of the express terms and conditions of the sale and the agreement. The award is a non-speaking award. No reasons have been mentioned. Principles of natural justice have been violated while passing the award. Hence, the award ought to have been set aside by the Court below and not made a rule of the Court.
8. Learned counsel Shri Abhijit Bhoumik, appearing for the respondent Corporation has submitted that the award has been validly passed by the arbitrator and it is not the requirement of the Court of law to mention the reason of the award. There was dispute as to the rate between the parties which was clearly covered within the agreement. The dispute was arbitrable. No violation of any terms and conditions of the contract has been committed. Learned counsel has placed reliance on condition No. 7 of the agreement and it is his further submission that the scope of interference in the award is very limited by a Court of law.
9. The facts which are not in dispute between the parties indicates that the delivery order cum challan cum invoice was issued by the Corporation to the dealer on 6-6-80 and 7-6-80. The payment was already made to the Corporation by the dealer by D.O./pay order mentioned in the delivery order. The delivery order was subject to the main conditions No. 3, 5 and 6 which read as under:
"3. Physical delivery of the material should be taken preferably on the date of the issue of Delivery Order cum Challan cum Invoice. If the material is taken delivery after 7 days from the date of issue of the Delivery Order cum Challan cum Invoice, the Warehouse Superintendent will recover the rental @ Rs. 3/- per M.T per month or part thereof.
5. All deliveries are also subject to general terms and conditions in vogue under agreement between Hindustan Fertilizer Corporation Ltd. and the buyer.
6. The date of D.O. cum Challan cum Invoice will be taken as the date of sale and the price application that date will be the price of product. However, any difference in price due to lack of communication has to be accepted by the consignee dealer."
10. Learned counsel for the Corporation has relied upon condition No. 7 of the agreement Ex. P-1 dt. 1-4-80 between the Corporation and the dealer. Condition No. 7 (a) provides that the Dealer shall pay for the fertilizers at the price which will be unilaterally fixed by the Corporation from time to time. An advance deposit of Rs. 500/- will be required if the goods are despatched by rail. The final payment will be effected at the time of delivery of the R.R. duly endorsed in favour of dealer. The price charged to the dealers with regard to the rail delivery will be prices ruling on the date to despatch of materials, and not those ruling on the date of booking of the order. In case delivery of any fertilizers is required from the godown of the Corporation the dealer shall pay the full payment of the price at the time of the issue of Delivery order. The price, at any time, will be fixed by the Corporation in there absolute discretion and will not be subject matter of any dispute whatsoever. The Condition No. 7 (a)(b)(c) and (d) are reproduced herein under :
"7. (a) The Dealer shall pay for the fertilizers at the price which will be unilaterally fixed by the Corporation from time to time. The dealer will deposit an advance of Rs. 500/- for each wagonload where goods are indented to be despatched by rail. The final payment will be effected at the time of delivery of the R.R. duly endorsed in favour of dealer. The price charged to the dealers with regard to the rail delivery will be prices ruling on the date of despatch of materials, and not those ruling on the date of booking of the order. If the delivery of any fertilizers is required from the godown of the Corporation the dealer shall pay the full payment of the price at the time of the issue of the D.O. All these payments will be made by crossed Bank Draft. The price, at any time, will be fixed by the Corporation in these absolute discretion and will not be subject matter of any dispute whatsoever.
(b) The Corporation will be at liberty from time to time to issue circulars fixing the price of the Fertilizers to be paid by the dealer as well as the price at which the Dealer will sell the fertilizers and the terms and condition of sale and mode of delivery and other matters and may modify or cancel the same. The dealer shall duly comply with the circulars issued from time to time which shall be binding on them if they are part of the contract.
(c) The Corporation will have the right to increase the issue price of fertilizer on account of any duty or levy imposed by any governmental authority. The advance deposit to be made by the dealer against indent/indents may however vary in the facts and circumstances of each particular case as would be shown by a separate memo to the contract/agreement. (Please strike the para, not applicable).
(d) In case the Dealer has any arrangement with the Corporation for supplies against secured Credit (Letter of Credit/Bank Guarantee) for a period as may be specified by the Corporation from time to time (The period of Credit to be reckoned with from the date of despatch i.e. the date of Railway Receipt in case of rail - delivery and from the date of D.O. in case of godown, road delivery) the payment will be effected according to the terms and conditions of the Credit Agreement. In case of payment is not effected on or before the expiry of credit period, the dealer agrees to pay the principal and interest thereof @ 12% per annum on the bill value of the goods supplied from the date of expiry of the Credit period within a Maximum period of 30 days from the date of expiry of the Credit period. Thereafter the rate of interest charged will be a penal one at the discretion of the Corporation."
11. A reading of Clause 7 of the agreement indicates that the price on the date of despatch of material is relevant in case the delivery is made by R.R. (railway receipt), not with respect to delivery obtained from the godown. As per the Condition No. 7 (a) the price has to be paid at the time of issue of delivery order and full payment has to be made of the price when the delivery orders were issued, thereafter as per the Condition No. 3 of the delivery order the material has to be taken within 7 days from the date of issue of the delivery order cum challan cum invoice, otherwise Warehouse Superintendent will recover the rental @ Rs. 3/- per metric ton per month or part thereof. Condition No. 6 of the delivery orders Ex. P-2 to P-4 makes it further clear that the date of the delivery order cum challan cum invoice will be taken as the date of sale and the price application (applicable) that date will be the price of product. However, any difference in price due to lack of communication has to be accepted by the consignee dealer.
12. In the present case the price was not varied prior to issue of delivery orders cum challan cum invoice. Thus a price applicable in the present case on the date of delivery order was not varied, it was varied on 8-6-80, just after one to two days of the issue of Ex. P-2 to P-4. Thus, difference of price could be effected with respect to the delivery orders issued on or after 8-6-80, not before it as per the Condition No. 6 of sale and Condition No. 7 (a) of the agreement also makes it amply clear that the price with respect to issue of material was relevant only when advance payment was not made and goods were despatched by R.R. In that event the price on the date of delivery by railway will be the price ruling on the date of despatch of material, and not those ruling on the date of booking of the order. In the present case the delivery was taken from the godown against the advance payment made.
13. The arbitrator had passed an award on 2-12-85. The award is running in six paragraph. It is reproduced below :
"WHEREAS the parties hereto had agreed that the dispute between them arising out of the agreement shall be referred to the sole arbitration of the General Manager of Hindustan Fertilizer Corporation Ltd. or in case the General Manager is unable or unwilling to act as arbitrator then to the sole arbitration of an officer of Hindustan Fertilizer Corporation Ltd. not below the rank of Finance Manager to be appointed by the General Manager.
AND WHEREAS dispute having arisen between the parties in connection with the claim made by Hindustan Fertilizer Corporation Ltd. on the respondent, the General Manager of the Marketing Division of Hindustan Fertilizer Corporation Ltd. by an order dated 23rd/30th October, 1981 appointed me Shri S.K. Biswas, the Finance Manager of the Marketing Division to be the arbitrator.
AND WHEREAS the statement of claims has been filed by the claimant and the reply thereto was also filed by the respondent. I entered on the reference on or about 25-6-1982.
AND WHEREAS by an order of the III Additional Judge, to the Court of District Judge, Raipur the time for me to make the award was extended till 4-12-1985.
AND WHEREAS notices were served to the parties the representative of the claimant as well as representative of the respondent were present on 1st and 2nd hearing on 25-6-1982 and 16-8-1982 respectively. The date of final hearing was fixed on 28-11-85, however, the respondent prayed for a fresh date. Accordingly, the fresh date of final hearing was fixed again on 2-12-85, where the respondent failed to appear. The representative of the claimant was present on the date of final hearing.
Now, I the said S.K. Biswas having duly considered the matter referred to me do hereby make my award as follows :
(i) That M/s. Agrawal Krishi Sewa Kendra, 113, Subhas Mar. (Shahar Saray), Ratlam (MP) should pay the claimant a sum of Rs. 12,231=25 in full satisfaction of the claim made by the claimant in this case in respect of delivery order bearing No. 7057 dated 6-6-80, 7069 and 7060 dated 7-6-80.
(ii) Each party should bear and pay their own costs."
14. A bare reading of the award indicates that the arbitrator has not mentioned what was agreement between the parties, what were the terms and conditions of the sale. It is a non-speaking award. In 5th paragraph the arbitrator has given details of the proceedings, how he came to be appointed, as to the extension of time by the Court for passing of the award, the date which fixed for arbitration and thereafter without even mentioning what was the amount claimed by the Corporation, has outrightly passed an award for a sum of Rs. 12,231=25 in full satisfaction of the claim of the Corporation against the delivery orders Ex. P-2 to P-4. The parties were directed to bear their own costs.
15. Though, it is apparent that the arbitrator has not mentioned the reason, but, it is settled law that there is no requirement of law for an arbitrator to give the reason in support of the award passed by him. Thus, I find no force in the submission raised by learned counsel for the appellant. The scope of interference with respect to an award passed by an arbitrator is very limited, even if there are certain clauses which are considered by the arbitrator, even if the clauses are such, two views are possible as to their interpretation; if the arbitrator had acted upon a particular interpretation, it is not permissible to a Court to interfere with the award. It is laid down in case of Hind Builders v. Union of India (AIR 1990 SC 1340) by the Supreme Court. In case of U.P. Hotels and Ors. v. U.P State Electricity Board, (1989) 1 SCC 359 Hon'ble the Supreme Court has laid down that only in case of error apparent on the face of the award, the Court can interfere. In the said case interpretation was made by the Umpire of the provision of law and a conclusion was reached. In the premises, a question of law arose certainly during the course of the proceedings. Such a question has been decided by the Umpire on a view which is a possible one to take. Even if there was no specific reference of a question of law referred to the Umpire, there was a question of law involved. Even assuming that there was an error of construction of the agreement or even that there was an error of law arriving at a conclusion, such an error is not an error which is amenable to correction even in a reasoned award under the law. It was further observed by the Supreme Court that an arbitrator's award may be set aside for error of law appearing on the face of it, though that jurisdiction is not lightly to be exercised.
16. Question is whether the Court can appreciate the evidence and the material on record which was before the arbitrator? The question came to be considered by their Lordships of the Supreme Court in case of Hindustan Construction Co. Ltd. v. Governor of Orissa and Ors., (1995) 3 SCC 8 wherein it was laid down that it is not open for a Court to re-appreciate the evidence and an award can be set aside only on the grounds specified in Section 30, not otherwise.
17. It is also true that the Court cannot sit in appeal on the award and examine the validity of the award like the Court of appeal. Nor can examine the correctness on merits. Reference may be had to aforesaid preposition in case of Pun Construction Pvt. Ltd. v. Union of India (AIR 1989 SC 777).
18. Question for consideration is what is a scope of interference in the matter of arbitration award? Questions to be considered whether the arbitrator can go beyond the terms of the agreement and pass an award? Whether the arbitrator must mention that he had considered all the documents? and whether in the facts and circumstances of the present case it can be said that legal misconduct was committed by the arbitrator and even if patent error has been committed by an arbitrator, whether that can be interfered with by the Court?
19. In the present case, the arbitrator had ignored the agreement as well as the terms and conditions printed over leaf the delivery order. Whether in such circumstances, interference is permissible and whether it can be said that the arbitrator has mis-conducted the proceedings by ignoring important material on record which was necessary to be considered to decide the dispute between the Corporation and the dealer? Their Lordships of the Supreme Court in case of K.P Poulose v. State of Kerala and Anr., (AIR 1975 SC 1259) considered the said question and laid down that misconduct under Section 30(a) has not a connotation of moral lapse. It comprise legal misconduct which is complete if the Arbitrator on the face of the award arrives at an inconsistent conclusion even on his own finding or arrives at a decision by ignoring very material documents which throw abundant light on the controversy to help a just and fair decision.
20. In the present case the agreement as well as receipts were on record, but, Condition No. 6 and condition No. 7 (a) of the agreement were totally ignored, which were relevant to be considered by the arbitrator for reaching a just and fair decision in the matter. Thus, the arbitrator has misconducted the proceedings by ignoring the two material documents while arriving at a decision between the parties.
21. Similar question was again considered by the Supreme Court in case of Dandasi Sahu v. State of Orissa (AIR 1990 SC 1128) wherein it was observed in Para 3 that "Though the arbitrator is not bound to disclose as to what interpretation he has made and what inference he has derived from the documentary evidence, he is bound to refer in the award that he had considered all the documents placed before him no matter whether he relies on them or discards them from consideration. The arbitrator in his award ex facie does not mention that he had referred to or considered the documents placed before him in respect of the original claim."
22. Thus, the arbitrator was not bound to mention what interpretation he has made and what inference he has arrived. He is bound to refer in the award that he had considered all the documents placed before him. In the present case the arbitrator had not mentioned in the award that he had considered "all the documents placed before him." It was a different thing whether he discards them after consideration. Their Lordships in case of Dandasi Sahu (supra) have further laid down that the award could be interfered with only in limited circumstances as provided under Sections 16 and 30 of the Arbitration Act. The award has to be tested with circumstances and with all the limitations on the powers of Court and the arbitrator's non-application of mind in the particular peculiar facts of the case was held to be amounting to legal misconduct. In the present case the arbitrator has not mentioned what was the dispute between the parties and on what account it arose and what was the amount claimed by the Corporation. Thus, it is a case where not only the documents placed were not considered as it is not mentioned in the award that the documents were considered. It is a case where mind was not applied by the arbitrator at all. Thus, he has committed legal misconduct. If he has discarded the documents by simply mentioning that he had considered them, effect of such omission would have been otherwise.
23. It may be seen that it has to be considered whether in view of the Condition No. 6 of the delivery order cum challan cum invoice Ex. P-2 to P-4 and Condition No. 7 (a) of the agreement Ex. P-1 the arbitrator could go beyond the terms of the agreement as the Condition No. 6 of the delivery order fixes a price on the date of issuance of delivery order only variable in the event that the price was mentioned in the delivery order due to non-communication of the price. The date of sale as per the Condition No. 6 was payable on date of delivery order cum challan cum invoice and the date of completion of the sale as per the Condition No. 6 is the date of delivery order cum challan cum invoice and the price applicable that date will be the price of product. Whether in view of this condition of delivery order and admitted position that the price was revised subsequently on 8-6-80 and also the term in Clause 7 (a) of the agreement that the date of despatch/issue of the material was relevant only in case of delivery effected by R.R., not against delivery obtained directly from the godown against the advance payment. Question is whether it was open for the arbitrator in view of such an agreement to have transgressed the limit of the terms and conditions settled between the parties and travel beyond them or the arbitrator could have decided the dispute if any, conclusively, within the terms of the agreement. If the arbitrator commits a mistake and proceeds beyond the terms of the agreement and makes applicable the price which was revised subsequently to a date of delivery order and after the sale was completed, it would constitute jurisdictional error on the part of the arbitrator. Law in this regard has been settled by various decisions of the Supreme Court. In case of New India Civil Erectors (P) Ltd. v. Oil and Natural Gas Corporation (AIR 1997 SC 890) the Apex Court had laid down where there is express stipulation between parties as to price being firm and not subject to any escalation till completion of work, contractor was not entitled for escalation for work completed after expiry of period of contract. Award granting such amount is beyond authority of arbitrator. Arbitrator derives authority from the agreement of the parties and dispute must be within the purview of the agreement in order to authorize an arbitrator to pass an award. Agreement appears to be matter of essence between the parties. That is why the arbitrator is required to confine himself within the four corners of the agreement and cannot go beyond it and cannot violate the express terms.
24. In case of V.G. George v. Indian Rare Earths Ltd. (AIR 1999 SC 1409) the arbitrator did not take note of Clause (c) of the tender notice while deciding Issue No. 15 which was a part of the agreement and under which the respondent would not be liable for such obstruction. It was held that such a claim contrary to express condition was beyond the scope of the agreement entered into between the parties and, therefore, the awarded amount was held to be not sustainable and the arbitrator was held to have misconducted himself and the award was set aside on the ground of legal misconduct on the part of the arbitrator under Section 30 of the Act.
25. Yet in another case of Steel Authority of India Ltd. v. J.C. Budharaja, Government and Mining Contractor reported in (1999) 8 SCC 122 the Supreme Court has considered the matter of validity of an award wherein damages for the alleged delay in handing over work sites was ex facie against the terms of the contract. The award was set aside while laying down that the arbitrator derives the authority from the contract and if he acts in manifest disregard of the contract, the award given by him would be an arbitrary one. The Arbitration Act does not give any power to the arbitrator to act arbitrarily or capriciously. His existence depends upon the agreement and his function is to act within the limits of the said agreement. To find out whether the arbitrator has traveled beyond his jurisdiction and acted beyond the terms of the agreement between the parties, the agreement is required to be looked into. It is true that interpretation of a particular condition in the agreement would be within the jurisdiction of the arbitrator. However, in cases where there is no question of interpretation of any term of the contract, but of solely reading the same as it is and still the arbitrator ignores it and awards the amount despite the prohibition in the agreement, the award would be arbitrary, capricious and without jurisdiction.
26. In the present case the arbitrator had passed an award contrary to the express terms of the agreement which were not capable of two interpretation. Thus, there was no jurisdiction for the arbitrator as the dispute was beyond the express terms of the agreement and the conditions of the delivery order cum challan cum invoice to pass such an award.
27. What amounts to be a legal misconduct of an arbitrator, may be such an error, which on the face of it demonstrates itself amount to be a legal misconduct. Award cannot be set aside on the ground of non mentioning the reason merely on the ground of misreading, misconstruction or misappreciation of material on record, it can be justified or supported by such material. Nor it can be set aside merely on the possibility of an alternative view. Even an award of lumpsum amount, as has been done in the instant case, without mentioning the reason, may not be an illegality, but, illegalities galore have been found in the instant case. Court has disfavoured interference with arbitration award, but, lumpsum award does not get undesirable immunity. The Supreme Court in case of State of Rajasthan v. Puri Construction Co. Ltd. and Anr., reported in (1994) 6 SCC 485 has laid down as under :
"In recent times, error in law and fact in basing an award has not been given the wide immunity as enjoyed earlier, by expanding the import and implication of "legal misconduct" of an arbitrator so that award by the arbitrator does not perpetrate gross miscarriage of justice and the same is not reduced to mockery of a fair decision of the lis between the parties to arbitration. However, in the anxiety to render justice to the party to arbitration, the Court should not reappraise the evidence intrinsically with a close scrutiny for finding out that the conclusion drawn from some facts, by the arbitrator is, according to the understanding of the Court, erroneous. Such exercise of power which can be exercised by an Appellate Court with power to reverse the finding of fact, is alien to the scope and ambit of challenge of an award under the Arbitration Act. If a question of law is referred to arbitrator and the arbitrator comes to a conclusion, it is not open to challenge the award on the ground that an alternative view of law is possible. Even if it is assumed that on the materials on record, a different view could have been taken and the arbitrators have failed to consider the documents and material on record in their proper perspective, the award is not liable to be struck down in view of judicial decisions referred to hereinbefore. Error apparent on the face of the record does not mean that on closer scrutiny of the import of documents and materials on record, the finding made by the arbitrator may be held to be erroneous. An error of law or fact committed by an arbitrator by itself does not constitute misconduct warranting interference with the award."
28. As there was a patent error in the instant case committed by the arbitrator the objections filed by the dealer were substantial in nature. Sale was completed in the instant case. The price was not variable nor had varied in view of the express stipulation. There is patent error apparent on the face of the award as such it is liable to be set aside. Where error is such award is liable to be interfered with by the Court, was held by the Privy Council in case of Nana Kwaku Amoah and am v. Nana Sir Ofori Atta (AIR 1933 PC 46). It was laid down that in order to impinge the validity of the award patent error should be pointed out and further that there was no evidence at all on which arbitrator could have come to his conclusion.
29. Similar view was taken by Hon'ble the Supreme Court in case of Chahal Engineering and Construction Co. v. Irrigation Department, Punjab, Sirsa (AIR 1993 SC 2541) wherein it was laid down that the misconduct of the arbitrator referred to in Section 30(a) and the expression "is otherwise invalid" in Section 30(c) would include an error apparent on the face of the record. Where the award suffers from several patent errors, a party could raise objections for getting it set aside under Section 30.
30. What is an error apparent on the face of the record was considered by the Supreme Court in case of Associated Engineering Co. v. Government of Andhra Pradesh and am (AIR 1992 SC 232). In Para 23 the Supreme Court has laid down that "Where it is apparent not by construction of the contract but by merely looking at the contract that the umpire travelled totally outside the permissible territory and thus exceeded his jurisdiction in making the award, it is an error going to the root of his jurisdiction." It was further laid down by the Supreme Court that "a dispute as to the jurisdiction of the arbitrator is not a dispute within the award, but one which has to be decided outside the award. An umpire or arbitrator cannot widen his jurisdiction by deciding a question not referred to him by the parties or by deciding a question otherwise than in accordance with the contract. He cannot say that he does not care what the contract says. He is bound by it. It must bear his decision. He cannot travel outside its bounds. If he exceeded his jurisdiction by so doing, his award would be liable to be set aside. Such error going to his jurisdiction can be established by looking into material outside the award. Extrinsic evidence is admissible in such cases because the dispute is not something which arises under or in relation to the contract or dependent on the construction of the contract or to be determined within the award.
31. The other submission raised by learned counsel for the appellant that the award was passed in violation of principles of natural justice and they were not given adequate opportunity to reach at Calcutta. Representative of the dealer had gone to attend the date fixed before the arbitrator, but, the train reached late. The arbitrator did not hear him and by that time the representative reached, the proceedings were closed and thereafter arbitrator passed the award. It appears that on previous date the case was adjourned at the request of the dealer, by the arbitrator. Because the time was going to expire within another 3 days, the arbitrator had passed the award on 2-12-85. Thus, the question of violation of principle of natural justice does not arise in the present case. The appellant/dealer was given the notice of both the dates and their representative could not reach to attend the date in time for which they have to fault themselves.
32. Thus, for the aforesaid foregoing reasons, it is held that the arbitrator has mis-conducted himself within the purview of Section 30 and has committed legal misconduct by not mentioning that he has considered the material documents and has passed the award violating the express terms of the award travelling beyond it. The error is apparent on the face of the record, the terms of the agreement are not capable of two interpretations, the award is not sustainable being arbitrary. In view of the aforesaid findings recorded on the issues. The objections filed under Section 30 are allowed. The award passed is set aside and it is held that the sale between the parties was complete on 6th and 7th of June 80 and the price increased on 8-6-80. would not apply to the transaction which was already completed as per the express terms and Condition No. 6 of delivery cum challan cum invoice and Condition No. 7 of the agreement Ex. P-1.
33. The appeal is accordingly allowed. Objections filed under Section 30 are allowed. Award is set aside. Parties are directed to bear their own costs as incurred in the present appeal.