Gulmarg Hotel Ltd. vs Oriental Insurance Co.Ltd.and another

Bhawani Singh, Chief Justice

This Letters patent Appeal arises out of the Judgment dated 891994 passed by learned Single Judge in Arbitration petition No 280/199 .

Before adverting to the submissions advanced before us by the learned counsel for respective sides, it would be desirable to narrate the material

facts of the case.

M/S Gulmarg Hotel Ltd. Thereafter Appellant is a companies Act, 1956 and Shri Ghulam Mohammad it its Managing Director. Appellant

started Hotel business at Boulevard (Srinagar) after investing huge funds gathered from different sources. The Appellant was earning profits right

from the beginning.

Appellant was insured with the respondents under policy No. 23423/10/90/ 01790 dated 23 101986 for amount of Rs. 77.00 lac against

premium of Rs. 23,870,00. The policy was renewed for period from 23101986 to 22101997 for the same amount. Unfortunately , in the

devastating fire that took place on 3091987, the whole Hotel Complex was reduced to ashes.

When the Hotel was gutted in fire, Insurance Policy was in force. While paying the renewal premium of Rs. 23,870.00 through cheque, a

covering letter was also sent asking the respondents to cover/provide for reinstatement and debris clause also, the cheque was encashed by the

respondents and no objection was ever raised about the premium amount being less and for that reason the Renewal policy could not cover

reinstatement and debris clause. Consequently, Appellant was entitled to presume legitimately that respondents has accepted the demand of

appellant providing for reinstatement and debris clause in the policy.

Immediately after the fire incident. Appellant informed the respondents about the incident. First Information Report was also lodged, appellant

requested the respondents for release of insurance amount of Rs. 77,00 lac immediately to enable it to restart the construction work of the Hotel.

Respondents immediately asked surveyor Shri Omkar Pajnoo to report about the loss. Accordingly, spot inspection was carried out by Shri

Omkar Pajnoo and report of total loss was submitted to the respondents. However, the respondents did not release the payment and the matter

was delayed on one pretext or the other. After some time, another surveyor Shri Gupta was deputed, who submitted provisional Survey Report on

16111987 recommending interim payment of Rs. 50.00 lac to the Appellant. In this Report it was pointed out that total loss could not be less than

Rs. 70.00 lac, but out of the said amount, only Rs.40.00 lac were paid to the Appellant in January 1988 and remaining Rs. 37,00 lac were

withheld till the final report was submitted the final Report on depreciated value/adjustment basis for amount of Rs.73,50,557,00, While giving due

credit to salvage scrab/saved items for the remaining amount of about Rs. 3,50 lac. With the sole idea getting the amount immediately and avoiding

further delay in the matter, appellant agreed to accept the said amount by less Rs. 3,50 lac. but with the categorical assertion that the same was

accepted subject to escalation/debris clause which the appellant was entitled to over and above the assessed amount of Rs. 73,50,567,00 .

The respondents instead of paying the remaining amount of Rs.33,50,567,00 as per the Report of surveyor Shri Gupta postponed the matter

and appointed another Surveyor Shri N.P.Bakashi on their own behind the back of the Appellant who assessed the loss at Rs.61,45,652,00 and

the respondents relying on this Report, reduced the amount assessed in October 1988 and paid the remaining amount of Rs. 21,45,652,00 to the

Appellant in June 1991 at Chandigarh. While paying this amount through three different bank drafts two amounting to Rs 9,00 lac each and third

for Rs.3,45,652,00 Appellant did so. other sides the said payment could not have been released. In the original discharge voucher, Appellant had

indicated that the amount was being received under protest. A detailed legal notice was served upon the respondents mentioning the claim in

unambiguous terms. It was replied by the respondents mentioning interalia that Appellant had signed discharge voucher by way of settlement of his

claim and had no further right to agitate any grievance. As a matter of fact, while receiving the payment, the Appellant was asked to sign one

duplicate official voucher for purpose of Division places and was different from the one in which it had mentioned that the amount was received

under protest.

Appellant preferred Arbitration Petition No. 280/1991.By order of 2041992, this court appointed Additional District Judge, Srinagar as

Arbitrator directing the parties to appear before him and produce all relevant documents. The Arbitrator directing the respondents to produce all

the relevant record. But they failed to comply with the direction in Better and spirit and deliberately withheld the record, which would have

exposed their malacios designs, Before the Arbitrator, Appellant submitted statement of claim and the respondents merely stated that Arbitration

Petition was not maintainable and even if it be taken that it is maintable, then the. Appellant had no claim in view of the discharge voucher signed by

it. The Appellant claimed interest at the rate of 18% till the amount was realised from the respondents. Arbitration proceedings took place in Delhi

as ""well and ultimately"", the Award was passed in March 1993. This Award was challenged through objections dated 3091993 and the

respondents also filed objections on 1741994. Grievance of the Appellant is that single judge committed serious errors while deciding the

numerous questions involved in this case. Elaborating the contention, it was pointed out that provisions of section 16 of Arbitration ACT

2002(hereafter Arbitration Act) were not correctly appreciated and application of Apex court decision in Air 1963 supreme court!677, (Smt.santa

silla Devi and Another Versus Dhirendra Nath Sen and others) was applied out of context without understanding the true import and spirit behind

the decision. Finding on the Appellants' plea that Renewal policy contained reinstatement and debris clause is palpably erroneous, since the

Appellant had asked the respondents to issue policy of this kind and respondents had not at any stage expire4used inability to do so: The grievance

that respondents could not have sought further reports from Surveyors after the first Surveyor had reported total loss, more so without informing

the Appellant and recording justification for the same, has not been adjudicated properly. Grave misconduct has been committed by the Arbitrator

and the single on this question, although it was forcefully contented that after having received the first Report from the Surveyor, no other Reports

could be called and more so without hearing the Appellant on the question as such these two Reports could be rejected outright. The Award of

interest at the rate of 6% on Rs. 21,45,652,00 against claim of. 18% on the total amount has also been assailed. This apart, the assessment and

appreciation of evidence oral and documentary has been completely erroneous, with the result that conclusions are conflicting, inapt and vague.

The misconduct committed by the Arbitrator in various forms Chough pointed out has not been examined in terms of judicial pronouncements.

Therefore, interference by this court is called for.

Respondents' case has been that after execution of discharge voucher thereby finally settling all the claims, resort to arbitration proceedings c u

not be there and in the alternative, award of interest on Rs .21,45,652,00 is not maintainable under the Insurance policy and the Arbitration

Clause. Single Judge has come to conclusion that petitioner may have requested the respondents for issuance of policy on reinstatement basis

including debris clause, but this offer has not been accepted, since acceptance was not conveyed. According to the learned single Judge, Insurance

policy is a contract between the parties and the terms and conditions can be spelt out from it. This policy does not include reinstatement and debris

clause. In case the petitioner was interested for such inclusion, he should have insisted upon the respondents to include this clause and tendered the

requisite premium for the additional clause. Contract, according to the learned single Judge, has to he specific and unambiguous. It cannot be

based on conjectures and surmises. Offer and acceptance are sine qua non of a contract. Since the additional Clauses were not specifically

included in the policy contract, no presumption for their inclusion can be drawn. Consequently, loss was to be assessed on depreciated value basis

and not on reinstatement value basis and debris clause. Dealing with the assessment of loss by ""Surveyors, it is found that these Reports are based

on reinstatement and depreciation basis. In the former case, the figure would be higher as compared to the latter. Report of M/S padamsi and

company is based or. reinstatement debris clause and that of M/S P N. Bakshi on reinstatement / depreciation as said by the Appellant himself.

The policy is based on depreciation clause instead of reinstatement /debris clause. Assessment arrived at by the Arbitrator in this background did

not amount to misconduct and in case the Appellant was aggrieved of appointment of surveyors one after the other, it could also ask for the

appointment of some other surveyor to give assessment of loss by it assessable in terms of the policy. As to findings qua the discharge voucher,

Single Judge has concluded that there is no misconduct on the part of Arbitrator and the finding based on the Report M/S P.N. Bakshi by the

Arbitrator did not amount to misconduct being based on depreciation value of which Rs.41,00 lac had already been paid on 1961991 and Rs,

21,45,652,00 had to been paid by the respondents in time. On this amount, interest has been paid for the period the amount was delayed. But on

the question of rate of interest, the Arbitrator has been asked to reconsider it.

Before referring to and dealing with the precise contentions of learned counsel for the parties, Rs.16,30 and 39 of Arbitration Act may be.

quoted here.

Power to remit award (l)The Court may from time to time remit the award or any matter referred to arbitration to the arbitrators or umpire for

reconsideration upon such terms as it thinks fit (a) Where the award has left undetermined any of the matters referred to arbitration, or where it

determines any matter not referred to arbitration and such matter cannot be separated without affecting the determination of the matters referred;

or (b) Where the award is so indefinite as to be incapable of execution; or (c) Where an objection to the legality of the award is apparent upon the

face of it. (2) Where an award is remitted under subsection (1) the court shall fix the time within which the arbitrator or umpire shall submit his

decision to the court: Provided that any time so fixed may be extended by subsequent order of the Court.

Grounds for setting aside award. An award shall not be set aside except on one or more of the following grounds, namely :

(a) that the arbitrator or umpire has misconducted himself or the proceedings;

(b) that an award has been made after the issue of an order by the court superseding the arbitration or after arbitration proceedings ha""? become

invalid under section 35;

(c) that the award has been improperly procured or"" is otherwise invalid."" ""39. Appealable orders : (1) An appeal shall lie from the following

orders passed under this Act (and from no others) to the Court authorised by law to hear appeals from original decrees of the court passing the

order :

An order

(1) Superseding an arbitration

(ii) On an award stated in the form of a special case;

(iii) Modifying or correcting an award; (iv) Filling or refusing to file an arbitration agreement;

(v) Staying or refusing to stay legal proceedings when there is an arbitration agreement;

(vi) Setting aside or refusing to set aside an award;

Provided that the provisions of this section shall not apply to any order passed by a small cause court.

(2) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to

appeal to the supreme court.

First of all, we proceed to examine the contention about the maintainability of this Appeal. It was contended by learned counsel for

respondents that Appeal is maintainable under Section 39 of Arbitration Act but not under the Letters Patent. Reference was made to The Union

of India V. The Mohindra Supply Co. (1971 JKLR 630) was also made. Since it has been filed under a wrong provision of law, it is no Appeal,

hence deserves to be dismissed. In the alternative, contention was that in case the Appeal is held to be maintainable, no case for interference within

the meaning of Section 30 of Arbitration Act is made out, since no misconduct of any kind is committed by the Arbitrator. '

Appellant contended that Appeal is maintainable under clause 12 of Letters patent as well as section 39 of Arbitration Act. In any case, it is

hyper technical objection, which deserves no consideration, since Appeal is maintainable under either of the provisions clause 12 of the Letters

patent provides that;

And we do further ordain that an appeal shall lie to the said High Court of Judicature from the judgment (not being a judgment passed in the

exercise of appellate jurisdiction in respect of a decree or order made in the exercise of appellate jurisdiction by a court subject to the

superintendence of the said High Court, and not being an order made in the exercise of revisional jurisdiction, and not being a sentence or order

passed or made in the exercise of power of superintendence of one Judge of the said High Court or one Judge of any Division Court and that

notwithstanding any thing here in before provided an appeal shall lie to the said High Court from a judgment of one Judge of the said High Court or

one Judge of any Division Court, consistently with the provisions of the civil procedure code, made in the exercise of appellate jurisdiction in

respect of a decree or order made in the exercise of appellate jurisdiction by a court subject to the superintendence of the said High Court where

the Judge who passed the judgment declares that the case is a fit one for appeal, but of the Judges of the said High Court or of such Division Court

shall be to us. Our Heirs or successors and be heard by our Board of Judicial Advisors for report to us.

Perusal of these three decisions demonstrates that they do not strike against the maintainability of this Appeal. Although the context in which

these decisions were rendered was different than the facts of this case. However, principle of Law settled in these decisions does not militate the

maintainability of this Appeal taking that Arbitration Act is exhaustive with respective matters covered by it and Letters patent does not provide for

Appeal over and above the grounds under Section 39, we find that Appeal before us is out of decision of single Judge rendered in exercise of

original civil Jurisdiction. This is, therefore, first Appeal from the Judgment of the Single Judge, maintainable under section 39 of Arbitration Act.

similar is the scope of this kind of Appeal ""under clause 12 of Letters patent referred to above. With this background, we do not see much

sustenance in the objection since we find that Appeal is maintainable under both the provisions. Even if it is filed under clause 12 of Letters patent,

it can be taken to have been filed under section 39 of Arbitration Act and examined accordingly.

After having decided the question of maintainability of this Appeal, we examine the next contention .It was contended by learned counsel for

Appellant that his client received payment 'under protest' and the discharge voucher mentioning it was submitted to the respondents which they

have not produced before the Arbitrator intentionally despite court direction for production of all records before the Arbitrator. Instead, another

discharge voucher inappropriately filled at Srinagar and transmitted to chandigarh for payment has been produced before the Arbitrator to defeat

the claim signifying full and final settlement of Appellant's claim. Respondents oppose these contentions and claim that no other discharge voucher

was executed by the Appellant as alleged. The discharge voucher was signed by the Appellant voluntarily, out of free will and no pressure of any

kind was exercised on him. Since full and final payment has been made to the Appellant with respect to the insurance of his property, no further

claim can be made and arbitration proceedings are not maintainable. It may be that respondents have not produced whole record before the

Arbitrator as contended by Shri Bashir, but it is difficult to say that respondents have withheld the discharge voucher on which the Appellant had

recorded 'under protest' while receiving the payment. The application moved for the production of record is woefully vague and fantastically

general in nature. It does not make mention of the documents particularly the discharge voucher with ' under protest ' written by the Appellant.

Obviously, it is material record which was to be produced before the Arbitrator for determination of the dispute and not every kind of paper. The

Appellant ought to have specifically mentioned about this discharge voucher, since the whole emphasis of his claim terminates on this document

Therefore, it can be said that no such document was executed and signed by the Appellant. In addition to this, to buttress this conclusion, it is

difficult to assume that the Appellant would sign the second document without writing •' under protest "" particularly when he had handed over a

discharge voucher to the respondents at an earlier occasion receiving the payment 'under protest'. In the past, his case was not this. This grievance

has come into existence during later stage of the dispute. Consequently, this plea cannot be accepted. However, the question is whether the

Appellant can maintain claim for amount more than covered by the discharge voucher. We answer this question in the affirmative in view of the

decisions like; Union of India V.D. Bose and others (AIR 1981 Calcutta 95 ). Jiwani Engineering works (P.) Ltd. V. Union of India (AIR 1981

Calcutta 101) and Damodar Valley Corporation V. K.K.Kar (AIR 1974 Supreme Court 158).We may relevantly refer to all these decisions.

In a para 7(2) of AIR 1981 Calcutta 95 (Union of India vs. D.Bose and others),it is recorded that: on running account and before the last sum

was received by the respondent, the respondent filed a No Claim certificate whereby the respondent admitted and acknowledged that there was

no further claim of the respondent against the appellant and all the outstanding claims of the parties were and all the outstanding claims of the

parties were settled. Thus by reason of submission of the said ""No Claim Certificate ""the respondent was debarred from making any further claim

either before the appellant or before the arbitrator.

The proposition has been answered by the court in para 14 as under;

In our opinion, the submission of no claim certificate by the respondent to the appellant on the condition mentioned hereinabove or in any

event was a dispute within the ambit of the arbitration clause contained in the said contract and was a subjectmatter for adjudication by the

Arbitrator. The Arbitrator having decided against the appellant on the said issue by making the said award in favour of the respondent, the

contentions of Mr. Sen on this point cannot prevail. The next submission of Mr. Sen that the entire claim of the respondent stood satisfied by

accord and satisfaction in view of submission of the said no claim certificate ',in our opinion, has no merit. First, whether the claim of the

respondent stood discharged by accord and satisfaction was a question of fact for the Arbitrator to decide. The Arbitrator has decided the said

question of fact against the appellant. Mr. Sen drew our attention to the case of Kapurchand Godha v. Himayat AH Khan Azamjab, reported in

AIR 1963 SC250 wherein it was held in approving of illustration 'C' to Section 63 of the India Contract Act that if A owed a large sum of money

to B and B accepted a lesser sum (sic) recover balance from A after receiving the payment in full satisfaction. The said case merely laid down the

principle of accord and satisfaction as enunciated in the Indian contract Act and does not in any way affect any question involved in the instant

appeal. The proposition mooted by Mr. Sen was noted by the Supreme court in the case of Damodar valley corporation v. K.K.Kar, reported in

AIR 1974 SC 158. The supreme court was pleased to observe that the question whether there had been a full and final settlement of a claim under

the contract was itself a dispute arising upon or in relation to or in connection with the contract. Mr. Bhabhra also drew our attention to the case of

D. and C.Builders Limited v. Rees reported in (1966) 2 QB 617 wherein it was held that payment by a debtor whether in cash or by cheque of a

lesser sum than the amount of the debt was not a settlement of the debt which was binding at law upon the creditor. It is clear , therefore, that the

question as to whether the claim of the respondent stood discharged by accord and satisfaction was a question of fact and a dispute well within the

ambit of the arbitration clause and the Arbitrator decided the said question against the appellant.

(17). This Division Bench decision has been followed by sing le Bench of the Court in AIR 1981 Calcutta l01,(Jiwani Engineering works (p) Ltd,

v. Union of India)In para 4, it has been held that;

Mr. D. K. Sen with Mr. P. K. Sen appeared for the petitioner and challenged the award mainly on two grounds: firstly, that the respondent the

award holder ,has executed a no claim certificate which is annexure 'A' to the petition and, therefore ,he is not entitled to any claim in the reference

and he has mentioned specifically in no unequivocal terms that there was no dispute or difference in relation to the agreement contained in the

arbitration clause in the arbitration agreement. He submitted that on the basis of the said no claim certificate the order of reference and the award

become a nullity as the arbitrator has no jurisdiction to enter into the reference and as there was no difference or dispute between the parties arising

out of the said contract. But I am afraid the same cannot be accepted as to whether there was no claim certificate or not that itself is a dispute

which was referred to arbitration and covered under the arbitrators to decided such question. The said point was taken by the Union of India in so

many arbitrations which were couched in the same language and it is so well known and a notorious fact that unless a no claim certificate is issued

by the contractor payment of the final bill will not be made. But that does not prevent the contractor in terms of the arbitration clause for the value

of his work or other claims within the scope of the agreement between the parties. The said question came up before this court from time to time

and in one of the unreported decisions of the appeal Court in Award Case No. 124 of 1978 (Union of India v. D. Bose) of C.J.and S.C.chose,J,

dated 15th Feb., 1980 (since reported in AIR 1981Cal 95), the same contention of Mr. P.k.Sen, who is appearing before me, as to the no claim

certificate, has been rejected and, therefore, in my view there is no substance in the said contention. Mr.Sen thereafter referred to Cl. 16(2) of the

contract which disentitled the respondent award holder from any interest. But, in my view, that clause does not prevent the arbitrator from granting

pendente lite interest on the claim adjudicated by the arbitrators in the reference before them. In this case the arbitrator has awarded interest from

the date of entering upon the reference being 18th Nov., 1976, till the date of the publication of the award which, it is now well settled, that the

arbitrator has power to grant pendant lite interest by a series of supreme court decisions starting from Tharvard as pherumal v. Union of India

reported in AIR 1955 SC 468, Union of India v. Bungo steel Furniture, reported in AIR 1967 SC 1032 and state if Nadhya pradesh. v. Smith

and Skelton, reported in(1972) 1 SCC 702 : (AIR 1972 SC1507). Mr. Sen referred to a decision of Sir Ashutosh Mukherjee in (1920) 32 Cal

no 239: (air 1920 Cal 737) in J.W. Crewdson v. Gansehdas Hari Bux, wherein it was held that court has no jurisdiction to grant pendant lite

interest on damages i.e., on unascertained sum or unliquidated damages but it was held in that decision that court has power to grant pendant lite

interest on ascertained sum and, therefore, the said decision is not really helping Mr.Sen. in any way whatsoever. This is a claim of contractor for

the value, of the work done under contract and the award has ascertained the amount and granted interest pendant lite i.e. ,from the date of

entering upon the reference till the award, which jurisdiction the arbitrator has and the said principle is now well settled by the series of supreme

court decisions and various decisions of this court. Those being the two grounds of attack on the award Mr. Sen on behalf of the petitioner Union

of India submitted that the awardshould be set aside."" Apex Court said in para 6 of AIR 1974 SC 150: (Damodar Valley corporation v.

K.K.Kar) that;

It appears to us that the question whether there has been a full and final settlement of a claim under the contract is itself dispute arising upon or

'in relation to or 'in connection with the contract. These words are wide enough to cover the dispute sought to be referred. The respondent's

contention is that the contract has been repudiated by the appellant unilaterally as a result of which he had no option but to accept that repudiation

because if the appellant was not ready to receive the goods he could not supply them to him or force him to receive them. In the circumstances,

while accepting the repudiation, without conceding that the appellant had a right to repudiate the contract, he could claim damages for breach of

contract. Such a claim for damages is a dispute or difference which arises between himself and the appellant and is 'upon' or 'in relation to' or 'in

connection with the contract.

No contrary decision was brought to our notice. Therefore, assuming that the petitioner had executed discharge voucher in favour of the

respondents, that could, not prevent him from claiming more by raising dispute and seeking arbitration. Legal position, in terms of the three

decisions referred to hereinabove clearly supports this proposition beyond any shadow of doubt. The claim of petitioner for arbitration seeking

more Award than overed by the discharge voucher is justified.

Next it was contended that through communication of October 22, 1996, Policy with reinstatement and debris clause was sought. Amount was

transmitted through cheque, which was uncashed. No objections was communicated. In this background, it can be legitimately concluded that

respondents accepted his claim for policy with reinstatement and debris clause. Consequently, the appellant is entitled to enforce policy with

reinstatement and debris clause.

Shri Khuroo opposed this contention vehemently and submitted that prayer of Appellant for Policy with reinstatement and ddbris clause was

never accepted therefore, no Policy with reinstatement and debris clause came into existence between the parties, After examining the

communication dated October 22, 1996, Insurance Policy and other material on this question, we are of the considered opinion that there is no

force in this contention of Appellant. Of course, the Appellant sought Policy with reinstatement and debris clause, but he amount transmitted to the

respondents was for the same kind of Policy which was in existence during the previous period. In case the Appellant was genuinely interested in

Policy with rein

statement and debris clause, appropriate amount ought to have been sent and insisted thereafter for the Policy desired by him. The communication

therefore, was only an offer without completion of essentials, namely the payment of requisite amount. This offer was never accepted. Unless the

offer was accepted, no contract came into being between the parties. Contention that since no objection was raised by the respondents nor any

rejection conveyed, Policy with reinstatement and debris clause came into existence cannot be accepted. There is no presumption in such like

matters. The offer for Policy with reinstatement and debris clause should have been accepted but the respondents and form part of the Insurance

Policy. Therefore, we hold that it was a fire policy without reinstatement and debris clause.

Now we turn to deal with the question of misconduct of Arbitrator within the meaning of Section 30 aforesaid. Learned counsel for parties

made extensive submissions for and against the Award, Appellant contending that Arbitrator has really misconducted himself and the proceedings

and the Award is otherwise invalid, and the other side supporting the Award submitting interalia that this Court cannot appreciate the evidence and

come to a conclusion different from the one taken by the Arbitrator and the Single Judge; and some of the decisions on which reliance was placed

are; Jevarajbhai Ujamshi Shoth and other Vs. Chintamanroo Balalji and others (AIR 1965 Supreme Court 214), Smt. Santa Sila Devi and another

Vs. Dhirendra Nath Sen and others (AIR 1963 Supreme Court 1677), Mt. Ishwar Dei Versus Chhedu (AIR 1952 Allahabad 802) and M/s

Sudarshan Trading Co. Vs. Government of Kerala and Another (1989) 2 Supreme Court 38).

Explaining the submissions on this question, it was contended by Shri B.A. Bashir that property was insured for Rs. 77.00 laC. The Appellant

was entitled to immediate payment of this amount. In any case, it was finalised by negotiation reflected in letter of Sptember 8, 1998. Maintaining

the claim for Rs. 77.00 lac, learned counsel submitted that Appellant was paid Rs. 40.00 lac in June 1988 leaving balance of Rs. 37.00 lac on

which escalation at the rate of 35% till 1961991 was payable till this date when Rs. 21.00 lac were paid. Thereafter Rs. 16.00 lac were to be paid

with 35% escalation cost till payment. Learned counsel contended that when the first Surveyor reported total loss, there was no justification for

appointment of the second and the third Surveyors behind the back and without hearing the Appellant. This was done mischievously since the

respondents wanted to have Report of amount less than the insured amount and went on appointing the Surveyors till Report satisfying them was

got. More over, amounts have been paid without escalation at the rate of 35% and interest. With respectto claim for interest, Appellant's counsel

referred to Firm Madanlal Roshanlal Mahajan Vs. Hukumchand Mills Ltd., Indore (AIR 1967 Supreme Court 1030; (1967) 1 SCR 105),

Secretary, Irrigation Department, Government of Orissa and others Vs. G.C.Roy (AIR 1992 Supreme Court 732), Sankari Prasad Kundu Vs.

Union of India and others (AIR 1987 Calcutta 53), ,Lala Gobind Ram Kapoor and others etc. Vs. Prem Prakash Kapoor and others (AIR 1979

Punjab and Haryana 179) and State of Madhya pradesh Vs. M/S Saith and Skelton (P) Ltd. (1972 Supreme court Report 233).

Grievance of the Appellant is also that Arbitrator misconducted himself by charging fee on higher side as held by High Court of Delhi in Jeevan

Industries (P) Ltd. Vs. Haji Bashiruddin Madhusudan Dayal, Merchants and Commission agents (AIR 1975 Delhi 215).

Respondents opposed these submissions. They submitted that these contentions of Appellant are based, on evidence which cannot be

appreciated by this court at this stage. More over, the Appellant did not object to the appointment Surveyors appointed from time to time,

therefore, he cannot be heard on this question. The Arbitrator did not realise fee from the parties. Application was made to this Court, therefore,

no misconduct of any kind has been committed.

Having given our anxious consideration to the rival submissions of the learned counsel for the parties and perusing the relevant decisions

brought to our notice, we are of the opinion that the first part of the objection by appellant has no force. It is a speaking Award, therefore, it is

permissible to this Court to examine the legality and reasonableness of opinion given by the Arbitrator. With this background, it is noticeable that

property in dispute was insured for Rs. 77.00 lac. First Surveyor reported total loss meaning thereby the Appellant suffered loss of Rs. 77,00 lac.

What prompted the respondents to appoint the second and the third Surveyor has not been examined. Doubt about the bonafides of respondents

arises on account of varying reports scaling down the claim amount. Arbitrator has not examined this question appropriately with attention it

deserved, Finding that Appellant did not object to these Reports at any time is not correct. Right from the beginning, the Appellant is protesting

and insisting for the payment of amount for which the property was insured and wanted to settle it for some less amount and claimed escalation

cost, interest, etc. What is all this? Obviously, he did not agree to the Reports by Surveyors not allowing his claim. In any case Arbitrator ought to

have taken into consideration other evidence in addition to these Reports and settled the claim appropriately. Consequently, it can be legitimately

said that there is clear error on the face of the Award and the same is liable to be set aside under Section 30 of Arbitration Act, Plea that

Arbitrator realised fee from the parties is rejected.

No other point was urged. Consequently, this Appeal is allowed. Judgment of Single Judge as well as Award are set aside. Arbitrator will deal

with the matter afresh and give his award within four months from today after hearing both sides.