COIMBATORE DISTRICT PODU THOZILLAR SAMGAM REPRESENTED BY ITS SECRETARYversusBALA SUBRAMANIA FOUNDARY AND ORS.

A      COIMBATORE DISTRICT PODU THOZILLAR SAMGAM
              REPRESENTED BY ITS SECRETARY
                                          v.
              BAL.A SUBRAMANIA FOUNDRY AND ORS.

B                               AUGUST 11, 1987

            [SABYASACHI MUKHARJI AND G.L. OZA, JJ.]

          Arbitration Act, 1940: Section 14(1)-Award of arbitrator-
    lnterference-When arises.

c          There were disputes between the partners of the respondent firm
    and several legal .proceedings were taken in the courts below, which
    ultimately came to this Court. This Court by an order dated 2nd of
    November, 1982 referred the disputes to an Arbitrator. An application
    for appointment of Receiver was also directed to be disposed of by the
D   trial court.

          The Arbitrator duly filed the award dated 3rd of April, 1985 in
    this Court under Section 14(1) of the Arbitration Act.

          The petitioner in the special leave petitions filed an affidavit alleg-
E   ing that the Arbitrator was guilty of legal misconduct, and that there
    were errors which were amenable to correction by this Court, that the
    award was inconsistent and, therefore, the award should be set aside so
    far as it was against the applicant.
                                                                                    y
          Ou behalf of the Respondent-Workers an application was filed
F   and it was contended that their claims have not been fully protected,
    and that the workers' claim on account of gratuity would come to about
    Rs. 7 Iakhs while the Arbitrator had estimated it erroneously at Rs.4
    lakhs, and had also made no sufficient provision in respect thereof.

          Disposing of the Civil Miscellaneous Petitions, the Court,
G
          HELD: There is no legal proposition either in the award or in any
    document annexed therewith which was erroneous. The alleged mistake
    or alleged errors, if there be any, of which grievances are made, are
    mistakes of fact, if at all. The grievances, even if true, do not amount to
H   an error apparent on the face of the record. [857 A, B, D]


                                       852
  COIMBATORE DT. P.T. SAMGAM v. B.S. FOUNDRY [MUKHARJJ, J.I         853

       Sufficient provisions have been made in the award for the existing A
liabilities of the workers and for any further contingencies is respect of
their claims. The right of gratuity has been recognised. It cannot, there·
fore, be said that the award of the arbitrator is left incomplete and this
dispute left undetermined. [855C-D]

      The objection to the award cannot be sustained. There will, there•   B
fore, be judgment in terms of the award. There will be no interim
interest. There will, however, be interest on judgment at 9%. [857E]

     Union of India v. A.L. Rallia Ram, [1964] 3 S.C.R. 164;
Champsey Bhara and Company v. Jivraj Balloo Spinning and Weaving
Company Ltd., [1932] L.R. 50 I.A. 324; Kanpur Nagar Mahapalika v.          C
Mis Narain Das Haribansh, [1970] 2 S.C.R. 28; Allen Berry and Co.
(P) Ltd. v. Union of India, New Delhi, [1971] 3 S.C.R. 282 and
Hindustan Tea Co. v. K. Sashikant Co. and another, [1986] Suppl.
S.C.C. 506, referred to.

        CIVIL APPELLATE JURISDICTION: C.M.P. No. 46931 of                  D
1985.

                                     IN

        W.P. Nos. 11361·62 of 1983 etc.
                                                                           E
        (Under Article 32 of the Constitution of India).

        A.K. Ganguli and K. Swami for the Petitioners.

     Shankar Ghosh, S. Padmanabhan, K.K. Venugopal, C.S.
Vaidyanathan, A.T.M. Sampath, P. Choudhary, S.R. Setia and S.R.            F
Bhatt for the Respondents.

        The Judgment of the Court was delivered by

      SABYASACHI MUKHARJI, J. There were disputes between
the partners of the firm Balasubramania Foundry (hereinafter called G
'the firm') and several legal proceedings were taken in the courts of
Coimbatore, these ultimately came to this Court. This Court by an
order dated 2nd of November, 1982 referred the disputes to the
Arbitrator. The order stated that the disputes were referred to the sole
Arbitrator, Justice K.S. Palaniaswamy failing him Justice C.J.R. Paul
and the respective parties including the firm were directed to file their H
    854                   SUPREME COURT REPORTS             [1987) 3 S.C.R.

A joint memos in all the courts where the suits/proceedings were pending
  before the Arbitrator. The Arbitrator was directed to proceed in
  acoordance with the Arbitration Act. In order to complete the narra-
  tion, there was an application for appointment of Receiver which was
  directed to be proceeded with in the trial court. This Court, however,
  by the said order directetl the trial court to dispose of that application.
B
        By the said order as mentioned hereinbefore in the absence of
  Justice K.S. Palaniaswamy, Justice C.J.R. Paul duly heard and con-
  sidered the matter and published the award on 3rd April, 1985.

         It is claimed by Mr. Ghosh, appearing on behalf of respondent
C no. I as well as Mr. Venugopal, appearing on behalf of other respon-               -
  dents supporting that the said award be made a rule of the court and
  the judgment in terms of the said award be passed. It may be
  mentioned that the Coimbatore District Podu Thozillar Munnetra
  Samgam represented by its Secretary being a union of the workers
  filed writ petitions in this Court being writ petitions Nos. 11361-62 of
D 1983. Later on another special leave petition being special leave peti-
  tion No. 2271 of 1983 was filed by the firm against the order of the
  High Court confirming the order of appointment of Receiver·of the
  firm. In those proceedings the Court was pleased to pass an order on
   17th of February, 1984 that all the claims of the workers for their past
  dues would be referred for arbitration to the Arbitrator and consi-
E dered by him. On 27th of July, 1984 this Court was pleased to refer the
  money claims of one Velmurugan Factory and the money claims of the
  workers who were members of the Coimbatore District Engineering and
  General Workers Union to the Arbitrator for adjudicating by arbi-
  tration.

F         The Arbitrator has duly filed the award dated 3rd April, 1985 in
    this Court under section 14( 1) of the Arbitration Act.

        A. Rangaswamy, the petitioner herein for whom Mr. Ganguly is
  appearing has filed an affidavit alleging that the arbitrator was guilty
  of legal misconduct and there were errors which were amenable to
G corrections by this Court. It was contended on behalf of the workers          y'
  also that their claims had not been fully protected. Mr. Sampath, ap-
  pearing on their behalf has contended that the claims of the workers
  would amount to about rupees seven lakhs while provision had been
  made only for rupees three lakhs and even then there was not suffi-
  cient provision. The workers, gratuity, it was contended would come to
H about rupees seven lakhs while the Arbitrator had really estimated
         COIMBATORE DT. P.T. SAMGAM v. B.S. FOUNDRY [MUKHARJI, J.J              855


      erroneously rupees four lakhs and provisions had been made only for               A
      Rs.3, 10,000 which according to Mr. Sampath have been further
      diminished by payments made by the Receiver in the meantime. There
      is also an application on behalf of the workers' union on these
      grounds.

                It appears, however, that this objection on behalf of the workers       B
         on ground of imperfect protection of workers was under a misconcep-
     / tion on behalf of the respondents. It was stated and brought before us
         that in the last two years there had been sufficient profit to cover the
         claims of the workers. Indeed it appears that of the 27 workers whose
         claims had to be settled on account of gratuity, 14 had received the
         same and a document indicating the payments to them was sought to              c
         be filed before us. We are satisfied that sufficient provisions have been
""(      made for the existing liabilities of the workers and for any further
         contingencies in respect of the workers' claims. It cannot be said,
         therefore, that the award of the Arbitrator is incomplete and left
         undetermined this dispute. The right to gratuity has been recognised
         and provision for the same has been made. The respondents Nos. 2, 3,           D
 -i and 5 pleaded before us through counsel that they had no objection to
         the award being made the rule of the court. The respondent no. I as
         mentioned hereinbefore is arguing that the award be made the rule of
         the court. Respondent no. 4 is also supporting that claim. It is only the
         petitioner A. Rangaswamy who is the only party opposing the award.
         It was submitted by Mr. Ganguly in support of his objection that the           E
          Arbitrator while holding that the lease in favour of the firm was bad
f< had awarded substantial sum on the basis of the lease. It was further
         submitted that the Arbit;ator while noting the reasons and recording
         the formal award had applied a reasoning altogether unconnected with
         the merits of the controversy which amounted to legal misconduct. It
         was further alleged that the award was inconsistent. In those circum-          F
         stances, it was submitted that the award so far as it was against the appli-
         cant. A. Rangaswami should be set aside. It was submitted that in spite of
         the alleged lapses in the illegal leases it was Palaniappan who was con-
          tinuing to manage the business, sometimes as the Managing Partner of
          the firm and at other times as the proprietor or partner of the lessee
    ',.- company and recognition and rewarding him on that basis was                    G
          perverse. It was further submitted that reliance placed on Exhibit A-46
          for the purpose of allotting the articles was perverse and a grave error
          apparent on the face of the record. It was submitted that the Arbi-
          trator committed a grave error in rejecting the claim of the applicant
          for a sum of Rs.39,27,940.11 which was due from Palaniappan and
          Doraiswamy as suppressed profits. It was submitted by Mr. Ganguly             H
    856                   SUPREME COURT REPORTS            [1987] 3 S.C.R.

A that at least rupees nine lakhs should have been left out in item No. 9.
  This was not duly noted. On the other hand, it was urged that the
  alleged errors were not amenable to be corrected in this application by
  this Court. Mr. Ganguly submitted that on the whole the award was
                                                                             ·-
  wholly inequitable.

B        The law on this aspect is, however, settled. In Union of India v.
   A.L. Rallia Ram, [1964] 3 S.C.R. 164, this Court reiterated that in
   order to make arbitration effective and the awards enforceable,
   machinery was devised by the Arbitration Act for lending the assis-
   tance of the ordinary courts. The Court was also entrusted with the
   power to modify or correct the award on the ground of imperfect form
C or clerical errors, or decision on questions not referred, which were
   severable from those referred. The Court had also power to remit the y
   award when it had left some matters referred undetermined, or when
   the award was indefinite, where the objection to the legality of the
   award was apparent on the face of the award. The Court might also set
   aside an award on the ground of corruption or misconduct of the
D arbitrator, or that a party had been guilty of fraudulent concealment
  or wilful deception. But the Court could riot interfere with the award if ,._
  otherwise proper on the ground that the decision appeared to it to be
  erroneous. The award of the arbitrator was ordinarily final and conclu-
  sive, unless a contrary intention was disclosed by the agreement. The
  award was the decision of a domestic tribunal chosen by the parties,
E and the civil courts which were entrusted with the power to facilitate
  arbitration and to effectuate the awards, could not exercise appellate ;:,.;
  powers over the decision. Wrong or right the decision was binding, if it
  be reached fairly after giving adequate opportunity to the parties to
  place their grievances in the manner provided by the arbitration agree- )I
  ment. This Court reiterated in the said decision that it was now firmly    4111
F established that an award was bad on the ground of error of law on the
  face of it, when in the award itself or in a document actually in-
  corporated in it, there was found some legal proposition which was the
  basis of the award and which was erroneous. This view had been
  enunciated by the Judicial Committee in Champsey Bhara and
  Company v. Jivraj Ba/loo Spinning and Weaving Company Ltd.,
G [ 1932] L.R. 50 I.A. 324. This view was again reiterated and 'f"
  emphasised by this Court in Kanpur Nagar Mahapalika v. Mis. Narain
  Das Haribansh, [1970] 2 S.C.R. 28, where Ray, J. as the learned Chief
  Justice then was observed at page 30 of the report relying on Champ-
  sey Bhara's case (supra) "an error of law on the face of the award
  meant that one could find in the award, or in a document actually
H incorporated thereto, as, for instance a note appended by the arbi-
           COIMBATORE DT. P.T. SAMGAM v. B.S. FOUNDRY [MUKHARJI, J.)          857
~·)-
         tracor stating the reasons for his judgment; some legal proposition A
         which was the basis of the award and which one can say is erroneous."
         In the instant case there is no legal proposition either in the award or
t        in any document annexed with the award which was erroneous. In
         Allen Berry and Co. (P) Ltd. v. Union of India, New Delhi, (1971] 3
         S.C.R. 282, this Court reiterated that the principle was that an award
                                                                                     B
     ~   could only be set aside where there is an error on its face. Jn the instant
         case, the alleged mistakes or alleged errors, if there be any of which
         Mr. Ganguly made grievances are mistakes of fact if at all. Mr. Gangu-
"t       ly's grievances have a ring of similarity with the grievances which were
         agitated before this Court in Hindustan Tea Co. v. K. Sashikant Co.
         and another, [ 1986] Suppl. S.C.C. 506, and this Court reiterated that it



•
         was an error of law and not mistake of fact committed by the arbitrator c
         which was justiciable in the application before the court. It was an
         error of law and not mistake of fact committed by the arbitrator which
         was amenable to corrections by this Court. The grievances of Mr.
         Ganguly's client even if true, which as at present advised we are not
         inclined to accept; do not amount to error apparent on the face of the
                                                                                     D
         record.
---.j
               In the aforesaid view of the matter we are unable to sustain the
         objections to the award. There will, therefore, be judgment in terms of
         the award, there will no interim interest. There will, however, be
         interest on judgment at 9%. The objections are dismissed and the
         workers' objections are disposed of by stating that there are sufficient   E
         provisions in the award to meet the claim of the gratuity of the workers
~-       and they should have the right to be met out of the award. In that
         view of the matter the award is made the rule of the Court and the
         judgment be in terms of the award. No order as to costs.

         N.P.V.                                                                     F
                                                           Petitions disposed of.




,