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Judgment
R.N. Misra, J.—Defendants have carried this appeal u/s 39(vi) of the Arbitration Act of 1940 (hereinafter referred to as the Act) against the decision of the learned Subordinate Judge, Cuttack, making an award rule of the Court u/s 17 of the Act after rejecting the objection.
The contractors (Respondents herein) undertook the construction of the second runway at Charbatia in October, 1942 and when disputes arose relating to the execution of the contract and the same were not referred to arbitration, an application was made by the contractors before the Court u/s 20 of the Act. The said application was allowed in appeal by this Court in Miscellaneous Appeal No. 107 of 1963 and pursuant to it arbitration was undertaken. The arbitrator awarded compensation of Rs. 39.870/- with interest thereon at six per cent amounting to Rs. 70.331/-. The total award thus worked out at Rs. 1,10,201/-.
Objection on two grounds was raised before the trial Court when the contractors applied for making the award a rule of the Court: (i) the claim was barred by limitation; and (ii) the award of interest was not in accordance with law. Both the objections were overruled and while making the award a rule of the Court the learned Subordinate Judge directed that interest shall run on the principal amount from 15-2-1956 until payment at the rate of six percent.
In appeal before this Court, two contentions are raised by learned Standing Counsel for the Central Government:
(i) In view of the provisions of Section 29 of the Act, it was not open to the Court to award interest for any period to the decree. Thus from the date of the award from which interest had been allowed upto the date of the decree, no interest was payable.
(ii) The question of limitation which had been raised from the very commencement of the dispute should have been examined by the learned Subordinate Judge.
Section 29 of the Act provides:
Where and in so far as an award is for the payment of money the Court may in the decree order interest, from the date of the decree at such rate as the Court deems reasonable to be paid on the principal sum as adjudged by the a ward and confirmed by the decree.
In view of the clear provision in the section, it is conceded by counsel for the contractors-Respondents that the learned Subordinate, Judge could not have decreed interest for any period prior to the decree granted by him. Thus, the direction that on the principal amount the claimants shall be entitled to interest for the entire period has to be modified. It is conceded that interest has been decreed upto the date of the award. That shall stand. Interest shall also run at the rate of six per cent per annum from the date of the decree. The claimants shall not be entitled to interest from the date of the award till the date of the decree.
The other question for consideration is relating to limitation. The ratio in the case of N. Chellappan Vs. Secretary, Kerala State Electricity Board and Another, , is directly against the contention of learned Standing Counsel. Mathew, J, spoke for the Court thus:
... No mistake of law appears on the face of the award. The umpire as sale arbitrator was not bound to give a reasoned award and if in passing the award he makes a mistake of law or of fact, that is no ground for challenging the validity of the award. It is only when a proposition of law is stated in the award and which is the basis of the award, and that is erroneous, can the award be set aside or remitted on the ground of error of law apparent on the face of the record.
A passage from ''Russell on Arbitration running to the following effect was quoted with approval:
Where an arbitrator makes a mistake either in fact in determining the matters referred, but such mistake does not appear on the face of the award the award is good notwithstanding the mistake, and will not be remitted or set aside.
The general rule is that, as the parties choose their own arbitrator to be the judge in the disputes between them, they cannot, when the award is good on its face, object to his decision, either upon the law or the facts.
The learned Judge further stated:
An error of law on the face of the award means that you can fined in the award or a document actually incorporated thereto, as, for instance, a note appended any the arbitrator stating the reasons for his judgment, some legal proposition which is the basis of the award and which you can then say is erroneous-see Lord Dunedin in Champsey Bhara and Co. v. Jivraj Balloo Co. AIR 1923 P.C. 66. In Union of India (UOI) Vs. Bungo Steel Furniture Pvt. Ltd., , this Court adopted the proposition laid down by the Privy Council and applied it. The Court has 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 out, whether or not the arbitrator has committed an error of law.
The state of the law being as indicated above, I do not find any merit in the objection raised by learned Standing Counsel in regard to the question of limitation.
The appeal is partly allowed. The direction for payment of interest stand modified to the extent indicated. Parties are directed to bear their own costs here.
Appeal partly allowed.