M/S. SATHYANARAYAN BROTHERS (P) LTD.versusTAMIL NADU WATER SUPPLY & DRAINAGE BOARD

            MIS. SA THYANARA YAN BROTHERS (P) LTD.                            A
                              v.
         TAMIL NADU WATER SUPPLY & DRAINAGE BOARD

                           NOVEMBER 18, 2003

               [BRIJESH KUMAR AND ARUN KUMAR, JJ.]                            B


     Arbitration Act, 1940:

      Work contract for Water Supply Project subject to clearance offoreign
collaboration arrangement/release offoreign exchange-Delay in import of C
equipments-Non-compliance of the terms of the contract by the Board-
Stoppage of work by Contractor-Raising of claims against Board-
Arbitration clause-Invoking of-Arbitrator appointed by Contractor
awarded the claim partly in· his favour-Arbitrator appointed by the Board
did not agree-Appointment of Umpire-Award-Challenge to on ground of D
denial of perusal of relevant documents-Single Judge held that non-
production of relevant documents by the Board vitiating the award-Reversed
by Division Bench of the High Court-On appeal, Held: Perusal of the
contents of the relevant documents could not be denied even on ground of
confidentiality-Single Judge rightly held that such infirmity vitiated the
award-Hence matter remitted to the Division Bench of the High Court for E
reconsideration/re-adjudication.

      Appellant-Contractor and Respondent-Board entered into a contract for
manufacture, supply and delivery of pipes and fittings in connection with a
Water Supply Project of the Board. The contract was subject to clearance of   F
the foreign collaboration arrangement and release of necessary foreign
exchange by the Board.

      The Contractor, before accepting the contract, requested the concerned
a·uthority for providing necessary assistance in procurement of foreign
exchange to import equipments and getting Central Government clearance. G
The contract contained an arbitration clause. Due to delay in procurement of
imported equipment on account of necessary formalities, completion of the
work was delayed. Contractor had requested for extension of time but the
Authority did not accede to his request; however, it extended the time later. In
the meanwhile, the Contractor raised certain conditions but the same was
                                    733                                       1-1
    734                    SUPREME COURT REPORTS (2003] SUPP. 5 S.C.R.

A   not agreed to by the Board. The contractor stopped the work and invoked
    arbitration clause of the contract and appointed an arbitrator who awarded
    the claim partly in his favour. As per arbitration clause, the Board also
    appointed another arbitrator, who did not agree with the award of first
    arbitrator. Hence, an Umpire was appointed who gave an award. Contractor
B   raised objections against the award before the High Court. Single Judge of
    the High Court found that due to delay in extension of time, the Contractor
    stopped the work and that by doing so, the Contractor did not commit any
    breach of the contract; that non-production of relevant documents by the Board
    for perusal of the Contractor had vitiated the award given by the Umpire. The
    order was reversed by the Division Bench of the High Court. Hence the
C   present appeal.

          It was contended for the appellant-Contractor that as per clause 70 of
    the agreement, there should have been three arbitrators instead of two and
    an Umpire; that the authority did not render proper assistance in getting
    foreign exchange clearance which caused delay in procurement of the
D   imported equipments; that interrupted electric supply and low voltage affected
    the progress of the work adversely; that the authority had extended time
    belatedly in an unreasonable manner; and that non-production of relevant
    documents by the Board for his perusal vitiated the award.

         On behalf of the respondent-Board, it was submitted that the Board had
E   extended all possible assistance to the Contractor; and that the Board was
    not under any liability to arrange electricity for the contract.

          Allowing the appeals, the Court

           HELD: 1.1. Two arbitrators were appointed in accordance with the
F   provisions of arbitration clause as well as the third arbitrator called Umpire.
    The mode of hearing was adopted in the manner that the dispute was heard by
    two arbitrators appointed by the respective parties. The matter was referred
    to Umpire since there was no agreement between the two arbitrators. There
    is no justification to raise such an objection that board of three arbitrators
G   should have decided the matter. Such a plea contradicts appellant's own action,
    and it seems to be taken now to wriggle out of the award ultimately given by
    the Umpire, but it would not be permissible at this stage. (740-E-F-Gl

          Arbitration by Russel, referred to.

H         1.2. There is no question of secrecy or confidentiality so far the
  SATIIYANARAYANBROS. (P) LlD. •.TAMIL NADUWATERSUPP. & DRAINAGE BOARD [BRUESHKUMAR. l.]   735

"handing over note" of the Chief Engineer is concerned. It is a note prepared A
by the Chief Engineer of the project in official discharge of his duties. It
contains relevant facts and information regarding questions involved in the
case. The appreciation of the contents of the 'note' and its effect would of
course be a matter to be decided by the appropriate authority/arbitrator/umpire
but its perusal or consideration could not be shut out on the meek ground B
that the department was not bound by it or on the ground of confidentiality in
times when more stress is rather on transparency. Single Judge of the High
Court was right in inferring that such an infirmity would vitiate the award.
Hence the order of the Division' Bench, reversing the decision of the Single
Judge is not sustainable and the matter is remitted to the Division Bench of
the High Court for reconsideration in the light of the "handing over note" of C
the Chief Engineer and other relevant documents. (745-B-C-D-EI

     K.P. Poulose v. State of Kera/a and Anr., (19751 2 SCC 236; Sikkim
Subba Associates v. State of Sikkim, (20011SSCC629 and Bharat Cocking
Coal Ltd v. Mis. Annapurna Construction, (2003) 7 Scale Page 20, referred
~                                                                         D
        CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 9136-9137 of
2003.

     From the Judgment and Order dated 18.10.200 I of the Madras High
Court in O.S.A. No. 248/89 and 59 of 1993.                                                       E
        Sri Dipanker P. Gupta and T.G. Narayana Nair for the Appellant.

     L. Nageswara Rao, Jayanth Muthuraj and Rakesh K. Sharma for the
Respondent.
                                                                                                 F
        The Judgment of the Court was delivered by

        BRIJESH KUMAR, J. Leave granted.

       These appeals are the outcome of an arbitration proceedings initiated
at the instance of the appellant M/s. Sathyanarayana Brothers (P) Ltd. raising G
certain claims against the respondent Tamil Nadu Water Supply & Drainage
Board (for short 'the Board'). The claim was ultimately partly allowed by the
Umpire. The objections against the Award preferred by the appellant were
allowed by the learned single Judge but the Division Bench set aside the
order of the learned single Judge. Hence, this appeal by Mis. Sathyanarayana
                                                                                                 H
    736                    SUPREME COURT REPORTS [2003) SUPP. 5 S.C.R.

A Brothers (P) Ltd.
           In view of the acute scarcity of water in the State of Tamil Nadu a
    project known as Veeranam project was undertaken by the State Government
    after its clearance by the Planning Commission for bringing the water from the
    left bank of the Coleroon at Lower Anicut to the city of Madras covering a
B   distance of 155 miles through the pipelines to be laid for the purpose. The
    work required to be done was for manufacturing, supplying, delivering 1676
    mm. (66") Diameter Prestressed Concrete Pipes and fittings including
    transporting to site, laying, jointing and testing for raw water and clear water
    conveying mains from Veeranam Tank to Madras city.
c        The tenders submitted by the appellant Mis. Sathyanarayana Brothers
  (P) Ltd. for carrying on the job detailed above was accepted for a lump sum
  amount of Rs.16,55,87,300 subject to clearance of the foreign collaboration
  arrangement and release of necessary foreign exchange and also subject to
  other conditions and issued G.O. Ms. No.1607 Public (TWAD) Department
D dated 13.7.1970. While submitting the tender the petitioner had also written
  a letter dated 22.1.1970 to the Chief Engineer (Buildings) and City Water
  Supply, Veeranam Project, Public Works Department, Chepauk, Madras with
  a request for foreign exchange requirement for import of equipments from
  foreign manufacturers. The contractor had requested the government to give
  all assistance in procurement of foreign exchange and otl\er necessary central
E government clearances. Articles of agreement was executed between the State
  of Tamil Nadu and Mis. Sathyanaraya Brothers specifying the terms and
  conditions of the contract. The work was required to be completed within 36
  months from the date of the entrustment of the site which was to be done
  within 30 days after the date of acceptance of the tender. It also provided that
p if there was any delay in handing over the site there should be extension of
  time for completion of the contract. The time for completion was liable to be
  extended on the request of the contractor for justifiable reasons.

        The contractor required Rs.1.2 crores of foreign exchange for importing
  necessary equipments for manufacture of Prestressed Concrete Pipes from
G Switzerland since the exporters insisted on payment in Doutecha Marks. The
  contractor was advised to approach the Integral Credit and Investment
  Corporation of India (ICICI) who insisted that the contractor should be in the
  form of an incorporated company so as to be able to avail facilities of foreign
  exchange instead of a partnership firm.)

H
      SATIIYANARAYANBROS. (P)LID. •.TAMIL NADUWATER SUPP. & DRAINAGE BOARD [BRIJESHKUMAR. l]   73 7

     The contractor, therefore, converted into a private limited company as per the A
     advise on 24.2.1971. The imported equipment landed in Madras in February
     1972 whereafter a factory at Thirukalikundram and another factory at Panruti
     were commissioned by June 1972 and January 1973 respectively. There was
     thus already a delay of one year four months in commencing production of
     prestressed concrete pipes. The contractor therefore, requested for extension B
     of time up to 31.12.1975. It was, however, extended up to 30.06.1975 by the
     Chief Engineer. The contractor wrote a letter dated 11.11.1974 refusing to
     accept the offer and further indicated that he would be prepared to work on
    the condition that contractor would be paid at the rate to be worked out
    taking into account the increase in the cost and which may further increase
    during the course of the work. It was also indicated that necessary time may C
    be given for completion of the work keeping in mind the capacity of equipment
    and the rate of production. He also wanted to be compensated for the losses
    resulting from the delay and default on the part of the government. The
    contractor stopped the work with effect from June 30, 1975. The ChiefEngineer
    extended time for completion of the work by 31.12.1975 and again upto
    31.3.1976 but did not agree to the other conditions as indicated in the letter D
    of the contractor dated 11.11.1974. The dispute thus arose and the work stood
    stopped with effect from 30.06.1975. The contractor invoked the arbitration
    clause and appointed one Mr. P.S. Subramaniam, a Chartered Engineer as its
    Arbitrator. After some litigation at the instance of the Board it also nominated
    its arbitrator. The arbitrators entered upon the reference on 18.3.1978. The E
    arbitrators disagreed. Mr. P.S. Subramaniam, the arbitrator appointed by the
    appellant partially awarded the claim to the extent of about Rs. 7.00 crores
    whereas the arbitrator appointed by the Board only said that he did not agree
    with the award. Since there was no agreement between the two arbitrators
    hence the matter was referred to the Umpire - Justice Palaniswamy, a retired
    Judge of the High Court who started the proceedings on 2.4.979. The Umpire F
    gave its award on 10.9.1979 and filed it in the court on 26.11.1979. The
    appellant contractor filed objections for setting aside of the Award given by
    the Umpire and challenged the conclusions and findings arrived at by him to
    the effect that it was not obligatory upon the State Government to get foreign
    exchange cleared from Government of India for the contractor and that the G
    contractor had abandoned the work on June 30, 1975 despite the extension
    of time up to March, 1976 as well as the finding th&t non-production of inter-
    departmental correspondence and documents as requested by the contractor
    would not vitiate the award. The Board, on the other hand supported the
    findings of the Umpire and prayed for making the award a rule of the court.
                                                                                                      H


J
    738                    SUPREME COURT REPORTS [2003] SUPP. 5 S.C.R.
A         The matter was considered by the learned single Judge of the High
    Court. According to the decision of the learned single Judge the State
    Government was obliged to get foreign exchange clearance for the contractor
    for import of equipment from Switzerland for the purposes of manufacturing
    prestressed concrete pipes. Due to delay in clearance for foreign exchange the
B   time should have been extended by the Board as requested by the contractor.
    The learned single Judge also found that extension of time after stoppage of
    the work was -0f no avail, thus there was no breach on the part of the
    contractor. Non-production of the documents by the Board as requested by
    the appellant had the effect of vitiating the award given by the Umpire. The
    award was thus set aside by the learned single Judge.
c         In the appeal preferred by the Board, the Division Bench, found that the
    following points fell for its consideration:

             "(I) Whether there is any obligation on the part of the Government
            of Tamilnadu to get foreign exchange clearance from Government of
D           India as per the terms of contract entered into between the Contractor
            and the State Government?
            (2) Whether the contractor has not committed breach of contract by
            abandoning the work with effect from 30.06.1975?

            (3) Whether the non-production of inter departmental correspondence
E           of confidential nature as required by the contractor will vitiate the
            Award passed by the Umpire?

            (4) To what relief?"

         The Division Bench held that no such clause in the agreement has been
F disclosed to indicate that it was the obligation on the part of the State
  Government to get clearance of Government of India for foreign exchange for
  the purpose of import of equipment by the contractor from Switzerland. The
  acceptance of the tender was subject to Government of India clearance of
  foreign collaboration arrangement and release of necessary foreign exchange.
G While arriving at this finding the Division Bench quoted an extract from one
  of the letter of the contractor dated 22.1.1970 Exh.D-557 to the following
  effect:

            "We understand that the Government should give us all assistance in
            the procurement of foreign exchange and necessary Central
H           Government clearance".
  SATHYANARAYANBROS. (P) LTD. •.TAMIL NADU WATER SUPP. & DRAINAGE BOARD [BRIJESHKUMAR.l]   739

 The Division Bench further observed that the Umpire was right in coming to A
 a conclusion that Government ofTamilnadu had rendered all possible assistance
 to the contractor for getting the foreign exchange clearance as the Government
 of Tamilnadu had approached the l.C.1.C.I. for that purpose, whom the
 contractor had approached on the advise of Government of India. Thus the
 state shall not be responsible for the delay in getting the foreign exchange.
 On the other two points the Division Bench held that time cannot be said to B
 be the essence of the contract since the agreement contained a clause for
 extension of time for justifiable reasons. It has also been found that the
 contractor could not carry on the work in accordance with its commitment of
 manufacturing 28 prestresscd concrete pipes per day and laying of 72 pipes
 per day. Whereas according to the contractor the target could not be achieved C
 due to frequent failures of electricity and dropping of voltage. The Division
 Bench ultimately came to the conclusion that the contractor alone had
committed the breach of contract in executing the work of Veeranam project.
 In so far it related to non-production of the file containing inter-departmental
correspondence including the handing over note by former Chief Engineer,
Veeranam project Exh.D-660, it was observed by the learned single Judge that D
it was a secret document which was not available on the record of the Board.
The case of the Board was that the note of the former Chief Engineer while
handing over the charge to his successor would not bind the Board in any
respect and other inter-departmental correspondence may not be admissible
in evidence and it would also not advance the case of the contractor. The E
Division Bench seems to have agreed with the submissions made on behalf
of the Board. The Division Bench, after discussing the case law, came to the
conclusion that the Award given by the Umpire cannot be set aside except
on the ground that the arbitrator or the umpire had mis-conducted himself or
the arbitration proceedings having become invalid or the Award was procured
improperly. The Court would not re-appraise the evidence. The Award of the F
Umpire awarding only a sum of Rs. 2,67,41,079 has been upheld by the
Division Bench. Thus it set aside the order passed by the learned single
Judge.

       Shri Deepankar Gupta, learned senior counsel appearing for the appellant
has first tried to submit that the Arbitration Tribunal has not been constituted G
in accordance with the arbitration clause. In that connection he has drawn our
attention to Clause 70 of the agreement which provides that the dispute shall
be referred to the arbitration of three persons, one of whom shall be nominated
by the contractor, the second by the Governor and the third shall be an
independent person selected by other two persons so nominated and this H
    740                     SUPREME COURT REPORTS [2003] SUPP. 5 S.C.R.
A provision shall be deemed to be a submission to the arbitration within the
  meaning of Indian Arbitration Act 1940. It is therefore submitted that there
  should have been three arbitrators instead of two arbitrators and an umpire
  chosen by the arbitrators, in the present case. It appears that this point was
  never raised by the appellant before any forum earlier as pointed out by Shri
  Nageshwar Rao, learned senior counsel appearing for the respondent. It is
B submitted that such a question cannot be allowed to be raised in this Court
  for the frrst time after the appellant had himself submitted to the jurisdiction
  of the arbitrators and the umpire. There is no dispute about the appointment
  of two arbitrators and the umpire having been appointed by the arbitrators.
  The arbitration proceedings concluded before the two arbitrators in which
C both parties participated without any objection. Thereafter all matters having
  been referred to the umpire, there too parties submitted to the proceedings
  before the umpire. No such objection was raised in the objections filed
  against the award nor before the High Court. That being the position, it is
  submitted that it is too late in the day to say that the dispute should have
  been decided by three arbitrators and not by two and then by umpire in the
D event of difference between the two arbitrators. No good reason could be
  indicated on behalf of the appellant for having kept silent on this point all
  throughout the proceedings. They still rely upon the award given by the
  arbitrator Shri Subramaniam in their favour. It is still their stand that the order
  passed by the learned Single Judge of the High Court records the correct
E finding. We find that the stage to have raised such an objection as to whether
  the dispute was liable to be decided by two arbitrators or a Board of three
  arbitrators had passed long before. The two arbitrators were appointed in
  accordance with the provisions of arbitration clause as well as the third
  arbitrator called umpire. The mode of hearing was adopted in the manner that
  the dispute was heard by two arbitrators appointed by the respective parties.
F The matter was referred to umpire since there was no agreement between the
  two arbitrators. There is no justification now at this stage to raise such an
  objection that Board of three arbitrators should have decided the matter. Such
  a plea contradicts their own action, and it seems to be taken now to wriggle
  out of the award ultimately given by the umpire, but it would not be permissible
G at this stage. Shri Nageshwar Rao, learned senior counsel, has placed reliance
  upon Russel on Arbitration "Loss of right to object". It states as under:

             "A party who objects to the award on the ground that the tribunal
             lacks substantive jurisdiction, should not only act promptly, but should
             also take care not to lose his right to object. A party who takes part
H            or continues to take part in the proceedings is in a different position
   SATIIYANARAYANBROS. (P) LID. ,.TAMIL NADUWATER SUPP.& DRAINAGE BOARD [BRIJESH KUMAR. I. J   741

         from someone who takes no part in the proceedings. The latter cannot A
         lose his right to object as long as he acts promptly to challenge the
         award once it is published. The former must, however, state his
         objection to the tribunal's jurisdiction "either forthwith or within such
         time as is allowed by the arbitration agreement or the tribunal". That
         statement, which should be recorded in writing and sent to the tribunal
         and the other parties, should not only mention the jurisdiction B
         objection but also make clear that any further participation in the
         arbitration will be without prejudice to the objection. If that is not
         done, the party concerned may not be able to raise that objection
         before the court "unless he shows that, at the time he took part or
         continued to take part in the proceedings, he did not know or could C
         not with reasonable diligence have discovered the grounds for the
         objection". A person alleged to be a party to arbitral proceedings but
         who takes no part in those proceedings may at any time apply to the
         court for a declaration, an injunction or other relief concerning the
         validity of the arbitration agreement, the proper. constitution of the
         arbitral tribunal and any matter submitted to arbitration in accordance D
         with the arbitration agreement."

      In view of the above position, we repel the contention raised on behalf
of the appellant pertaining to the jurisdiction of the arbitrators and the umpire
to decide the matter.
                                                                                                     E
       It is next submitted on behalf of the appellant that it is no doubt that
period of contract was specified to be 36 months in the agreement itself but
it has been rightly held by the learned Single Judge that time was not essence
of the contract for the reason that as per the terms of the contract time could
be extended for justifiable reasons and it is for this reason that the time was                      F
extended by the respondent but they initially extended the time in an
unreasonable manner. It is submitted that despite the best efforts made, the
equipment could not be imported prior to February 1972 at the first instance.
The result was that there was a delay of one year and 4 months as found by
the courts also, in starting the work itself. It is submitted that there was clear
understanding that the State Government wou Id get the clearance from the                            G
Central Government for foreign exchange necessary for import of the equipment.
The State Government did not provide proper assistance in the matter and the
appellant was referred to ICICI by the Central Government for foreign exchange.
As per conditions of ICICI, the appellant had to change its constitution
converting into a company as desired. After the clearance of the foreign                             H
    742                    SUPREME COURT REPORTS (2003) SUPP. 5 S.C.R.

A exchange, due to other intervening factors of Pak war etc., the import could
  not be possible. Therefore, the appellant was not responsible for the delay
  caused. It is then further submitted that after the factories were installed on
  receipt of foreign exchange, equipment were installed promptly. There have
  been problems of availability of electrical energy and low voltage which was
  so necessary for carrying on the work in the factory. For such difficulties the
B appellant could not be held responsible. It is also submitted that according
  to the agreement, trenches etc. were also to be dug out by the Board. It is
  submitted that the finding as recorded by the umpire and the Division Bench
  that the Board was not responsible for the delay, it will not necessarily lead
  to the inference that the appellant was responsible for it. For good reasons
C time was liable to be extended reasonably. It could not be cut short
  unreasonably. It is further submitted that the Board itself later on extended
  the time beyond 31.3.1975 but initially it was refused. It indicates that partial
  extension given by the Board was insufficient and not justified. Time was
  even thereafter extended but by that time the appellant was compelled to stop
  the work. The effort therefore which has been made before us by the appellant
D is that it was not a case of abandonment of contract on the part of the
  appellant rather the delay occurred for justifiable reasons on account whereof
  extension of reasonable time as prayed for by the contractor was not allowed
  by the respondent.

E        Shri Nageshwar Rao, learned counsel for the respondent submits that
  the Board had extended all possible assistance which was needed for the
  foreign exchange to import the machinery by the appellant but so far electricity
  is concerned it was to be arranged by the contractor himself. In this connection
  learned counsel for the appellant has drawn our attention to the observations
  made by the umpire in his award where it has been observed that no doubt
F failure of electricity or low voltage would have caused some dislocation but
  that cannot absolve the contractors from their contractual liability and certainly
  the failure of electricity cannot be the sole reason for the dismally poor
  performance of the contractors. It is submitted that the case of the appellant
  is not that the Board failed to arrange for the electricity but there is no denial
G of the fact that due to interrupted electric supply and low voltage the progress
  of the work got slowed down, may be Board is not responsible for it but it
  also cannot be said to be the responsibility of the contractor. Such a reason
  would be a justifiable reason to be considered for appropriate extension of
  time to complete the job.

H         Learned counsel for the appellant then submitted that the arbitrator
  SATIIYANARAYANBROS. (P)LID. •.TAMIL NADU WATER SUPP. & DRAINAGE BOARD [BRIJESHKUMAR, J.)   74J
 failed to summon the document, namely the inter-departmental correspondence A
of the Board and the "handing over note" of the Chief Engineer of the Project
to his successor. It is submitted that these documents contained relevant and
authentic material and facts and provide proper background to correctly
appreciate the points regarding obligation of the State Government to get the
foreign exchange, late arrival of equipments imported, the interrupted electric
supply, digging of trendies etc. by looking into which alone the question B
could properly be decided as to whether the appellant had abandoned the
work or how far the appellant was responsible for the delay and stoppage of
the work. It is submitted that there could not be any confidentiality about
such documents which related to the work of the project. So far the "handing
over note" is concerned, it is a document written by none else but the Chief C
Engineer of the Project who had first hand knowledge of all that was going
on pertaining to the work and he was competent to prepare a record of the
same in official discharge of his duties. It is submitted that the arbitrator erred
in not allowing the application moved before him for summoning of the
"handing over note" and the learned Single Judge, it is submitted, rightly held
that it vitiated the award of the arbitrator. It may be mentioned here that the D
Umpire also refused to get the "handing over note" and place it on record
and peruse the same so as to realize the relevance of the note for the
purposes of arriving at a just and correct finding on the questions involved.
It was necessary to have the proper background as contained in the note
prepared by the Chief Engineer of the Project.                                      E
       The learned counsel for the appellant has taken us through some of the
parts of the "handover note" just with a view to emphasize the relevance and
importance of the said note which is document D-660. A copy of the same
has been filed in this Court. In Paragraph 6.1. 7 and 6.1. 7. I. it is indicated that
Department had to carry out the work of trench excavation, the service roads, F
river, rail and road crossings besides many other things enumerated therein.
Para 6.1.10 deals with requirement of foreign exchange and the details thereof.
In Paragraph 6.1.10.3 the delay in arrival of the machinery imported due to
Indo-Pakistan war is also indicated. Paragraph 6.11 deals with the factors that
contributed to delay in execution of the project. Thereunder it is mentioned G
about the availability of power. Some problem relating to trench excavation
by the Board also finds mention in Para 7 onwards. A bare look of some of
the parts of the note indicates that it may have some material bearing on the
merits relating to the question of delay in execution of the project, and
throwing some light on the share of responsibility of the parties to the
contract and extent of- their responsibility as well.                                 H
    744                    SUPREME COURT REPORT) [2003) SUPP. 5 S.C.R.

A          Learned counsel for the appellant has placed reliance upon a decision
    reported in (1975] 2 SCC 236 K.P. Poulose v. State of Kera/a and Anr., to
    indicate that where it is a speaking award and the arbitrator fails to take note
    of the relevant documents or ignores the same, it vitiates the award. It was
    observed such documents which were ignored were material documents to
    arrive at a just and fair decision to resolve the controversy between the
B   parties. Our attention has particularly been drawn to the observations made
    in Paragraph 4 which reads as under:

            "We have been taken through all the relevant documents by the
            learned counsel for both sides and we are satisfied that Ex.P-11 and
            Ex.P-16 are material documents to arrive at a just and fair decision to
c           resolve the controversy between the Department and the contractor.
            In the background of the controversy in this case even if the
            Department did not produce these doc11,ments before the Arbitrator it
            was incumbent upon him to get hold of all the relevant documents
            including Ex.P-11 and P-16 for the purpose of a just decision. Ex.P-
D           11 dated September 8, 1966, is a communication from the
            Superintending Engineer to the Chief Engineer with regard to the
            objections raised by audit in connection with the construction of the
                    . ........."
            reservoirs

                                                       (emphasis supplied by us)
E
        Reliance has also been placed upon a decision reported in [2001] 5 SCC
  629 Sikkim Subba Associates v. State of Sikkim, particularly to the
  observations made in Paragraph 12 of the decision that an award, ignoring
  very material and relevant documents throwing light on the controversy to
  have a just and fair decision would vitiate the award as it amounts to
F misconduct on the part of the arbitrator. The case of K.P. Poulose (supra) has
  also been referred to. Yet another decision on the point referred to is reported
  in 2003 (7) Scale Page 20 Bharat Cocking Coal Ltd. v. Mis. Annapurna
  Construction where also· it has been held that passing award ignoring the
  material document would amount to mis-conduct in law, In such circumstances
G the matter was remitted to a retired Judge of the Jharkhand High Court instead
  of to the named arbitrator since only the question of law was involved and
  the parties had also agreed for the same.

          In so far the case in hand is concerned, learned counsel appearing for
  SAllNANARAYAN BROS. (P) L1D. '·TAMIL NADU WATER SUPP. & DRAINAGE BOARD (BRDESH KUMAR, l )   745

 the respondent first made a submission that no application was moved by the A
 appellant before the arbitrator for summoning the document, namely, the
"handing over'' note prepared by the Chief Engineer while handing over the
charge as Project in-charge to his successor but after verification he conceded
that such an application was moved before the Arbitrator but no orders had
been passed on it. The learned Single Judge has given it as one of the B
reasons to hold that it vitiated the award. We again find that before the umpire
also effort was made to get the document on record for perusal of the same
but the request was not accepted. We find that there is no question of
secrecy or confidentiality so far the "handing over note" of the Chief Engineer
is concerned. It is a note prepared by the Chief Engineer of the project in
official discharge of his duties. It contains relevant facts and information C
regarding questions involved in the case. The appreciation of the contents
of the 'note' and its effect would of course be a matter to be decided by the
appropriate authority/arbitrator/umpire but its perusal or consideration could
not be shut out on the meek ground that the department was not bound by
it or on the ground of confidentiality in the times when more stress is rather D
on transparency. In our view, the learned Single Judge was right in inferring
that such an infirmity would vitiate the award. That being the position, in our
view the order of the Division Bench, reversing the decision of the Single
Judge is not sustainable and the matter may be required to be remitted to be
considered in the light of the "handing over note" of the Chief Engineer in
respect whereof an application was moved by the appellant before the arbitrator E
as well as before the Umpire which remained unattended to by the forum and
later did not accede to the request.

      Considering the fact that it is an old matter and it being a speaking
award the matter having also been considered by the learned single Judge,
it would better serve ends of justice to ensure expeditious disposal of the                         F
matter, therefore, the Division Bench of the High Court may consider the
matter afresh, taking into account the "handing over note" of the Chief
Engineer of the Project and other relevant documents in respect of which
request may have been made but refused.

      In the result, these appeals are allowed. The order of the Division Bench                     G
of the High Court is set aside and the matter is remitted to the High Court
for being decided afresh by the Division Bench in the light of the observations
made above. Costs easy.

S.K.S.                                                                     Appeals allowed.         H