The Hon’ble Supreme Court has held that arbitrator’s adjudication is generally considered binding between the parties for he is a tribunal selected by the parties and the power of the court to set aside the award is restricted to cases set out in section 30 of the Arbitration Act.
Appellant being a government company had entered into a works contract with the Respondent-Company for some work within a specified period of time. A contract was signed between the parties wherein there was a provision for arbitration in case of dispute that may arise between the parties. In the contract there was a clause to the effect that any increase in statutory levies such as taxes and duties and statutory increase in prices would be paid by the appellant. Before the work was completed, dispute arose between the parties which were referred to the Arbitration.
Arbitrator passed an Award with pendente lite interest against the Appellant, which was challenged before the Civil Court by filing an application under Section 30 of the Arbitration Act, 1940 (Act) for setting aside Award. High Court also affirmed the award. Award was challenged on various grounds including the ground of jurisdiction of the Arbitrator in passing a non-speaking Award when arbitrability of the disputes was questioned. It was contended that in absence of any specific provision, the claim against the escalation of prices ought not to have been awarded.
The question thus that arose for consideration was as to whether the non-speaking Award given by the Arbitrator can be set aside on the grounds asserted by the Appellant.
It was observed arbitrator’s adjudication is generally considered binding between the parties for he is a tribunal selected by the parties and the power of the court to set aside the award is restricted to cases set out in section 30 of the Act.
In the instant case the Award passed was a non-speaking one. Hence, it was not permissible for the court to probe into the mental process of the learned Arbitrator especially when the Arbitrator rejected major portion of the claim made by the Respondent. In the above background the Court decided against interfering with either the Award passed by the Arbitrator or the impugned order passed by the High Court. The appeal was accordingly dismissed.
[Indian Rare Earths Ltd. vs. Unique Builders Ltd.]
Civil Appeal No.3209 of 2007