M/S GORA LALversusUNION OF INDIA

                           MIS. GORA LAL                                 A
                                   v.
                          UNION OF INDIA

                        DECEMBER 18, 2003

             (V.N. KHARE, CJ. AND S.H. KAPADIA, J.]                      B

     Arbitration Act, 1940-Work Contract-Arbitration clause-Refer-
ence ofdispute to arbitrator-Arbitrator to give finding in his award along
with sum awarded on each item of dispute-Arbitrator awarding sum on
each item-Award made rule of court by Single Judge of High Court- C
However, set aside by Division Bench-Aggrieved party pleading that
arbitrator has given findings in his award-On appeal, held: In terms of
the arbitration clause words 'findings' with 'on each item of dispute'
denotes 'reasons', in support of the conclusion on each item of dispute,
therefore, arbitrator required to give 'reasons' in support of his finding D
along with the sum awarded-As no findings recorded on each item, High
Court justified in setting aside the award.

      Appellant and the respondent entered into a work contract and
in terms of the contract dispute arising out of the contract was to be
referred to an arbitrator. Arbitrator passing an award was to indicate E
his findings along with the sum awarded separately on each individual
item of the dispute. Dispute arose between the parties regarding final
 payment for the work undertaken by the appellant. Appellant filed an
application seeking reference of the dispute to an arbitrator. Arbitra-
tor was appointed who entered upon reference. Thereafter, he passed F
an award, awarding a sum on each item which was later made rule
of the Court. Aggrieved respondent filed letters patent appeal. Division
Bench of High Court allowed the same. It set aside the award and
directed the respondent to appoint new arbitrator to enter upon
reference and pass a speaking award. Hence the present appeals.
                                                                         G
      Appellant contended that the expression 'reason's is not akin to
the expression 'finding'; that the expression 'finding' denotes 'conclu-
sion' and not 'reason'; and that since the Arbitrator bas already given
'findings' in his award, the judgment under challenge suffers from
                    \ '
legal infirmity and is liable to be set aside.                           H
                                  1129
    1130               SUPREME COURT REPORTS [2003] SUPP. 6 S.C.R.
A          Dismissing the appeals, the Court

         HELD : In the instant case, the Arbitrator on each item has
    awarded a sum which is not a finding but merely a conclusion. Under
    the arbitration clause, the arbitrator was required to identify each
B   individual item of dispute and give his findings thereon along with the
    sum awarded. In this context, the word 'findings' is to be read with
    the expression "on each item of dispute" and if so read it is clear that
    the word "finding" denotes "reasons" in support of the said conclusion
    on each item of dispute. Therefore, applying the above test to the
    arbitration clause, the Arbitrator was required to give reasons in
C   support of his findings on the items of dispute along with the sums
    awarded. As no finding has been recorded on each item as required
    by the arbitration clause, the High Court was justified in setting aside
    the award. [1132-F-H; 1133-A-B]

D        Words and Phrases, Permanent Edition 17, West Publishing Co.,
    referred to.

         CIVIL APPELLATE JURISDICTION                 Civil Appeal Nos. 4350-
    4351 of 2002.

E       From the Judgment and Order dated 8.12.99 of the Jammu and
    Kashmir High Court in LP.A. (C) No. 7 of 1998 and CIMA. No. 8of1998.

           P.P. Rao and Ashok Mathur for the Appellant.

F        N.N. Goswami, Ms. Rekha Pandey, Ajay Sharma, Ms. Sushma Suri
    (NP) and B.V.Balram Das (NP) for the Respondent.

           The .Judgment of the Court was delivered by

           V.N. KHARE, CJ. : The appellant and the respondent herein entered
G into a written contract on 4.1.1982 whereby and whereunder certain work
    contract was awar<led to the appellant herein. The said contract stipulated
    that in the case of any dispute arising out of the contract, the dispute would
    be referred to an arbitrator. It is alleged that during the period of contract,
    the respondent took additional work from the appellant. It is not disputed
H   that the appellant completed the a!Iotted work. However, certain disputes


                                                                                      I
                  GORA LAL v. U.O.I. [KHARE, CJ.]                   ' 1131
arose as regards the final payment for the work undertaken by the appellant. A
It is alleged that the appellant accepted the final bill under protest. ,

      Subsequently, the appellant moved an application before the High
Court under Section 20 of the Arbitration Act, 1940 (hereinafter referred
to as "the Act") seeking reference of dispute to an arbitrator. The B
respondent contested this application. However, a learned single Judge of
the High Court referred the matter to the arbitrator and on 5.2.1990, one
Col. M.P. Sikka was appointed as sole Arbitrator who entered upon
reference and invited claims and counter-claims of the parties by issuing
notices to them. The parties put up their claims before the Arbitrator and
subsequently the Arbitrator gave his award on 3.11.1990. Thereafter, the C
award was filed in the Court for being made rule of the Court. The
respondent filed an objection petition under Sections 30 and 33 of the Act.
However, the learned single judge of the High Court by an order dated
12.2.1998, with ce1tain modification, directed that the award be made rule
of the Court.                                                               D

      Aggrieved, the respondent filed a letters patent appeal before a
Division Bench of the High Court. The appellant also filed a counter cross-
objection in the said appeal. The Division Bench of the High Court allowed
the letters patent appeal preferred by the respondent. The Division Bench E
set aside the award and directed the respondent to appoint a new Arbitrator
to enter upon the reference and made a speaking award. It is against the
said judgment of the High Court, the appellant is in appeal before us by
way of special leave.

      Shri P.P. Rao, learn~<l senior counsel appearing for the appellant F
 urged that there is a distinction between the expressions 'finding' and.
 'reason'; the expression 'reason' is not akin to the expression 'finding';
the expression 'finding' denotes 'conclusion' and not 'reason'; and since
the Arbitrator has already given 'findings' in his award, the order and
judgment under challenge suffers from legal infirmity and is liable to be G
set aside. We do not find any substance in the argument. The borderline
 between the expressions 'finding' and 'reason' is very thin.

     The arbitration clause 70 of IAFW 2249, inter alia, provided as
under:
                                                                             H



                                                                                 1
                                                                                    -{


    1132                SUPREME COURT REPORTS (2003] SUPP. 6 S.C.R.

A             "The Arbitrator shall be deemed to have entered on the reference
              on the date he issues notice to both the parties, asking them to
              submit to him their statement of case and pleadings in defence.

              The Arbitrator may, from time to time, with the consent of the
              parties, enlarge the time upto but not exceeding one year from one
B
              year the date of his entering on the reference, for making and
              publishing the award.

              The Arbitrator shall give his award within a period of six months
              from the date of his entering on the reference or within the
c             extended time as the case may be on all matters referred to -him
              and shall indicate his findings, alongwith the sum awarded,
              separately on each individual item of the dispute."

           A perusal of the aforesaid clause would show that the Arbitrator is
D required to indicate a finding along with the sum awarded separately on
    each individual item of the dispute. While giving a finding, the Arbitrator
    necessarily has to take into consideration the disputes, claims and counter-
    claims of the parties and after considering the evidence on such claims and
    the legal position, has to record his finding on each disputed item. In ~he
E   present case what we find is that the Arbitrator on each item has awarded
    a sum which according to us is not a finding but it is merely a conclusion.

          The point for d~termination in this case is : Whether the Arbitrator
    ought to have given reasons in support of his findings, along with the sum
    awarded, on each item of dispute. To decide this point, we have to go by
F   the text and the context of Clause 70 of the arbitration agreement quoted
    above. Under the said Clause, the Arbitrator was required to identify each
    individual item of dispute and give his findings thereon along with the sum
    awarded. In this context, one has to read the word "findings" with the
    expression "on each item of dispute" and if so read it is clear that the word
G   "finding" denotes "reasons" in support of the said conclusion on each item
    of dispute. The word "finding" has been defined in 'Words and Phrases'.
    Permanent Edition 17, West Publishing Co.' to mean "an ascertainment of
    facts and the result of investigations". Applying the above test to Clause
    70, we are of the view that the Arbitrator was required to give reasons in
H   support of his findings on the items of dispute along with the sums
                   GORA LAL v. U.0.1. [KHARE, CJ.]                      1133

awarded. We make it clear that this order is confined to the facts of this A
case and our interpretation is confined to Clause 70 of the arbitration
agreement in his case.

     In such a situation as in the present case, there having been no finding
recorded on each item as requi~ed by the arbitration clause, the High Court B
was justified in setting aside the award. We, therefore, do not find any merit
in these appeals. They are, accordingly, dismissed.

      Before we part with the case, we would like to clarify that we are not
expressing any opinion on any other matter and all contentions available
to the parties may be raised before the Arbitrator. The Arbitrator shall give   C
his award within a perfod of four months from the date of receipt of this
Order.

N.J.                                                    Appeals dismissed.