Arun Kumar Goel, J.

1. This appeal under Section 39 of the Arbitration Act, 1940 is directed against the judgment dated 17.6.1996 in Civil Suit No. 166 of 1993, passed by a learned Single Judge of this Court. By means of the impugned judgment, objections filed by the Respondents (hereinafter referred to as "the Defendants"), have been allowed and consequently the award passed by the Arbitrator on 11.6.1993 has been set aside.

2. Admitted facts of this case are that the Appellant (hereinafter referred to as "the Plaintiff"), entered into an Agreement CA No. GE CHZ-16/82-83 for providing water supply at Karcham. This agreement contained Clause No. 70, whereunder disputes between the parties to the contract as mentioned in this clause were referable to sole Arbitrator/Engineer Officer to be appointed by the authority mentioned in the tender documents.

3. Since disputes had arisen between the parties in relation to the aforesaid contract, Arbitrator was appointed the then Engineer, Chandigarh Zone, Chandigarh. Parties appeared before the Arbitrator. Submitted their respective claims/counter-claims and also filed documents in support thereof. Impugned award suggests, that the Arbitrator after examination of the record and after having heard learned Counsel for the parties gave his award on 11.6.1993. After the same was filed in this Court, notices were ordered to be issued to the parties.

4. This award was objected by the Defendants. According to them, the Arbitrator had mis-conducted himself by acting beyond the terms and conditions of the agreement and thus allowed certain amounts. Further objection of the Defendants was that the amount allowed on account of non-issuance of completion certificate as well as allowing interest were not tenable in pursuance to the agreed terms and conditions and in any case were in excess of his powers in addition to the interest being exorbitant.

5. Similarly, it was also urged in the objections that the claim made by the Defendants towards minus amount of the final bill was wrongly disallowed and lastly that the Arbitrator had failed to appreciate material placed on record by the objectors, misread the evidence, contract agreement, as he assumed the role of conciliator by not considering the facts on record and consequently denied reasonable opportunity to them (Defendants).

6. All these objections were controverted on behalf of the Plaintiff, as according to it, the objections raised are not tenable. Objections were time-barred. Arguments, that the Arbitrator exceeded his jurisdiction were denied. A prayer was made for upholding the award and making it Rule of Court, since it has been passed after consideration of pleadings as well as evidence of the parties before him (the Arbitrator). Regarding the objection about interest having been allowed as well as its being exorbitant, it was urged that the Arbitrator had the jurisdiction to have allowed the same and it was not exorbitant.

7. On the pleading of the parties, following issues were framed:

1. Whether the objection petition has been preferred within the statutory period of limitation O.P. Objector.

2. Whether the Arbitrator has exceeded his jurisdiction, as alleged O.P. Objector.

3. Whether the Arbitrator has mis-conducted the proceedings himself, as alleged, if so its effect O.P. Objector.

4. Whether the Arbitrator has acted beyond the terms and conditions contained in contract agreement, as alleged, if so, its effect O.P. Objector.

5. Relief.

8. Issue No. 1 was not pressed. Issues No. 2 and 4 were held by learned Single Judge not surviving for decision after having decided Issue No. 3. This was held in favour of Defendants by holding that it is a case of non-speaking award, therefore, the Arbitrator has mis-conducted himself. Consequently, their objections were allowed.

9. Thus, in the light of the observations and reasons contained in the impugned judgment dated 17.6.1996, case was sent back to the Arbitrator to proceed as per law. It is in this background that the present appeal has been filed by the Plaintiff against the said judgment of learned Single Judge.

10. Mr. Bhogal, Senior Counsel appearing for the Plaintiff submitted that learned Single Judge has gravely erred in recording the findings against his client so far Issue No. 3 is concerned and consequently, by not recording findings under Issues No. 2 and 4. He submitted that this is a case where learned Single Judge committed not only a serious mistake in law, but also committed grave impropriety after having noted down the decisions referred to at Page-7 of the impugned judgment and having not dilated on those, and also by placing reliance on two decisions of the Supreme Court in Union of India v. Jain Associates and Anr. : (1994) 4 SCC 665 [LQ/SC/1994/446] and K.P. Poulose v. State of Kerala and Anr. : AIR 1975 SC 1259 [LQ/SC/1975/169] . According to him, on this ground alone, this appeal deserves to be allowed by setting aside the impugned judgment and consequently making the award dated 11.6.1996, Rule of the Court. Lastly, he submitted that this is a case of non-speaking award passed by the Arbitrator which is permissible in law, unless, of course, if the arbitration clause required the arbitrator to give reasons or while referring the disputes, the Arbitrator is called upon to pass a reasoned award or parties by agreement called him to pass a speaking award. Per Mr. Bhogal, none of these conditions exist in the present case.

11. Mr. Sood, learned Additional Central Government Standing Counsel appearing for the Defendants forcefully controverted all these pleas urged on behalf of the Plaintiff. He submitted that no exception can be taken to the impugned judgment of learned Single Judge. Per him, the impugned judgment calls for no interference. While further supporting the impugned judgment, Mr. Sood pointed out that the Arbitrator ought to have given reasons while passing the award even if he was not called upon to do so either in the agreement or in the reference made to him or the parties having called upon him to do so. According to him, process of reasonings shows that the Arbitrator had in fact really gone into the matter and then decided the same. In the alternative and without in any manner conceding, Mr. Sood submitted that if this Court accepts the plea of the Plaintiff, in such a situation, findings on Issues No. 2 and 4 having not been recorded by learned Single Judge, this case needs to be sent back to learned Single Judge for recording his findings on these two issues.

12. By now, it is well settled, that an Arbitrator is a mutually appointed Judge by the parties to adjudicate the disputes between them. In law, the Arbitrator is the master of law and facts. High Court while dealing with objections under Section 30 or 33 of the Arbitration Act, 1940 does not sit as a Court of appeal over such award nor it will substitute its view to that of the Arbitrator on re-appraisal of evidence. Only exception to this situation is when a case fairly and squarely falls within the ambit of Sections 30 and 33 of the Arbitration Act, 1940. Similarly, the Court while examining the objections would not go into the question as to how the award has been passed by the Arbitrator, unless the award can be said to be either perverse or could not have been reasonably arrived at after examination of the material before the Arbitrator. These are some of the illustrative parameters on which an award can be upheld or set-aside.

13. So far the matter relating to a non-speaking award is concerned, it is no more res integra in view of the authoritative pronouncements by the Supreme Court of India by the Constitution Bench in Raipur Development Authority etc. etc. v. Chokhamal Contractors etc. etc. : AIR 1990 SC 1426 [LQ/SC/1989/311] . What is relevant in this behalf for the present case in this judgment is extracted herein below:

19. It is now well-settled that an award can neither be remitted nor set aside merely on the ground that it does not contain reasons in support of the conclusion or decisions reached in it except where the arbitration agreement or the deed of submission requires him to give reasons. The arbitrator or umpire is under no obligation to give reasons in support of the decision reached by him unless under the arbitration agreement or in the deed of submission he is required to give such reasons and if the arbitrator or umpire chooses to give reasons in support of his decision it is open to the Court to set aside the award if it finds that an error of law has been committed by the arbitrator or umpire on the face of the record on going through such reasons. The arbitrator or umpire shall have to give reasons also where the Court has directed in any order such as the one made under Section 20 or Section 21 or Section 34 of thethat reasons should be given or where the statute which governs an arbitration requires him to do so.

38. Having given our careful and anxious consideration to the contentions urged by the parties we feel that law should be allowed to remain as it is until the competent legislature amends the law. In the result we hold that an award passed under the Arbitration Act is not liable to be remitted or set aside merely on the ground that no reasons have been given in its support except where the arbitration agreement or the deed of submission or an order made by the Court such as the one under Section 20 or Section 21 or Section 34 of theor the statute governing the arbitration requires that the arbitrator or the umpire should give reasons for the award. These cases will now go back to the Division Bench for disposal in accordance with law and the view expressed by us in this decision. Order accordingly.

14. To the similar effect is the decision in Kundale and Associates v. Ronkan Hotels () Ltd. (1999) 3 Supreme Court Cases 533, [LQ/SC/1999/356] wherein it was held as under:

2. The High Court appears to have emphasised the fact that no reasons are given in the award. However, under the law then in force it was open to the arbitrator to give an award without giving reasons since the parties had not stipulated that the arbitrator should give a reasoned award. The High Court also commented on the fact that summary proceedings were not envisaged under the Arbitration Act, 1940. The trial Court has, however, noted that both sides led evidence before the arbitrator and tendered documents which were considered by the arbitrator for giving his award. The trial Court has noted that on behalf of the Respondents oral evidence of their architect Shri Bhagat and their Director Shri N.G, Bhave was adduced along with documentary evidence. On behalf of Appellant, no oral evidence was led but documentary evidence consisting of letters and other documents was produced. The Respondents did not, at any time, protest before the arbitrator against the documents being taken on record without a formal proof as envisaged under the Evidence Act, 1872. Documents oh both sides have been taken on record by the arbitrator. The arbitrator had also before him joint measurements taken by the architect of the Respondents in respect of the work done by the Appellants. The arbitrator himself visited the site and inspected the construction of the building. On the basis of this evidence before him the arbitrator gave the award in question. This does not show any legal misconduct on the part of the arbitrator.

15. Reliance is also being placed on this aspect in the case of Ispat Engineer and Foundary Works, B.S. City Bokaro v. Steel Authority of India Limited B.S. City Bokaro (2001) 6 Supreme Court Cases 347 [LQ/SC/2001/1506] .

16. Even while dealing with a reasoned award, the Supreme Court in Trustees of The Port of Madras v. Engineering Constructions Corporation Limited : AIR 1995 SC 2423 [LQ/SC/1995/785] , held that error of law must appear from the award itself or from any document or note incorporated to it and it was not permissible to travel beyond that. It was further held that the Court cannot re-appraise evidence/material before umpire and come to a different finding of fact. It was also held that it was not open to the High Court Bench to record the said finding of fact for the first time, at the stage of letter patent appeal and hold on that basis that the Board was guilty of not performing the obligation within a reasonable time. The order of the High Court setting aside the award was, therefore, held to be illegal especially. when it was not indicated on which ground it had set aside and the award was shown vitiated by an error of law apparent on the face of it, or that umpire was guilty of any misconduct in conducting the proceedings or otherwise.

17. In Industrial Development Corporation of Orissa Limited v. Jajodia (Overseas) Pvt. Ltd. (1993) SCC 106, it was held that Court should be very circumspect about setting aside an award reached by an arbitrator for parties having agreed that the disputes that may arise or have arisen between them should be resolved not by a Court of law but by arbitration. When there are no inconsistencies upon the face of the award as can be characterised as errors that vitiate the award, as in this case, arbitrator had made a mere reference in the award to the pleadings filed before him by stating that parties had filed their statements before him and that he had given careful consideration to all, i.e., written statement, documents and arguments. While dismissing the appeal of the Industrial Development Corporation, Orissa, the appeal of the Appellant Jajodhia Private Limited was allowed.

18. In a recent decision of the Supreme Court reported as J.G. Engineers Pvt. Ltd. v. Calcutta Improvement Trust and Anr. : (2002) 2 SCC 664 , [LQ/SC/2002/128] while considering the provisions of Sections 14, 30 and 33 of the Arbitration Act, 1940 when Arbitrator had stated having considered the claims and counter-claims of the parties, the appeal was allowed and judgment of the Division Bench of the High Court was set aside, thus, restoring that of the Single Judge of Calcutta High Court. This was also a case of non-speaking award as is evident from paras 14 and 15 of the judgment, which are reproduced herein below:

14. Regarding the second ground on which decision of learned Single Judge was reversed by the impugned judgment, we are concerned in this case within a non-speaking award. Perusal of the award shows that the arbitrator has considered the claims and counter-claims of the parties. The arbitrator says that "and whereas I have considered the claim and the counter-claim amounts as per statement of facts and the counter statement of facts...." Again while formulating the award, the arbitrator awards the amount in all and final settlement of the claim of the claimant as set out in the statement of facts and the counter-claims of the Respondent. In this view, the conclusion of the Division Bench that the arbitrator has not considered the counter-claim of the CIT, is contrary to the record. Therefore, the second ground is also not sustainable.

15. For the foregoing reasons, we set aside the impugned judgment of the Division Bench and restore that of the learned Single Judge. The appeal is, thus, allowed with costs.

19. Reference in this behalf may also be made to the decision of the Supreme Court reported as Sudarsan Trading-Co. v. The Government of Kerala and Anr. : AIR 1989 SC 890 [LQ/SC/1989/98] . Para 29 of the judgment deals with this aspect of the case and is extracted herein below:

29. The next question on this aspect which requires consideration is that only in a speaking award the court can look into the reasoning of the award. It is not open to the court to probe the mental process of the arbitrator and speculate, where no reasons are given by the arbitrator, as to what impelled the arbitrator to arrive at his conclusion. See the observations of this Court in Hindustan Steel Works Construction Ltd. v. C. Rajasekhar Rao : (1987) 4 SCC 93 [LQ/SC/1987/521] . In the instant case the arbitrator has merely set out the claims and given the history of the claims and then awarded certain amount. He has not spoken his mind indicating why he has done what he has done; he has narrated only how he came to make the award. In absence of any reasons for making the award, it is not open to the Court to interfere with the award. Furthermore, in any event, reasonableness of the reasons given by the arbitrator cannot be challenged. Appraisement of evidence by the arbitrator is never a matter which the Court questions and considers. If the parties have selected their own forum, the deciding forum must be conceded the power of appraisement of the evidence. The arbitrator is the sole judge of the quality as well as the quantity of evidence and it will not be for the Court to take upon itself the task of being a Judge on the evidence before the arbitrator. See the observations of this Court in Municipal Corporation of Delhi v. Jagan Nath Ashok Kumar : (1987) 4 SCC : AIR 1987 SC 2316 [LQ/SC/1987/656] .

20. A reference made to the impugned award shows that it is a case of non-speaking award. Therefore, unless error is shown either in the award itself or is pointed with reference to the material produced by the parties before the Arbitrator, it cannot be said that the award suffers from error apparent on record to call for interference under Section 30 or 33 of the Arbitration Act, 1940.

21. Though Mr. Sood tried to find fault with the impugned award, however, we are not satisfied with his submission either on the face of the award itself or on the basis of the documents which were before him. In this case what is said in the impugned award after having referred to in the circumstances whereunder the Arbitrator was appointed and is relevant for the present case, is as under:

Now I, Col. B.S. Dhaliwal Cdr Diploma Wing, CME-31 having taken upon burden of reference and heard and examined and considered the pleadings submitted by and on behalf of the parties and all the documents and oral evidence produced before me by them as also their oral omission and arguments.

22. In the present case, suffice it to say that there is nothing on record nor it was brought to our notice that either the arbitration clause or parties or by the Court, Arbitrator was called to give a reasoned award. In these circumstances, in our considered view, learned Single Judge was in error in having decided Issue No. 3 in favour of Defendants and against the Plaintiff more specifically when the award does not suffer from any of the grounds on which it can be set aside under Arbitration Act, 1940.

23. In view of the aforesaid discussion, submission urged by Mr. Sood to accept the decisions relied upon by learned Single Judge and then uphold the impugned Judgment, cannot be accepted. Reason being that where a decision by a larger Bench of the Supreme Court is there earlier in point of time, then there is no question of the later decision by a Smaller Bench of the Court being followed, as is the situation in the present case. This controversy has also been set at rest by the Supreme Court and is no more res integra. In these circumstances, on the question of judicial propriety and discipline at least decision in the case of Raipur Development Authority, supra, after it was noted by learned Single Judge, he should have been dilated upon by giving reasons for not following.

24. Faced with this situation, Mr. Sood did persist that in the circumstances of this case, impugned judgment deserves to be upheld. This is an argument of frustration and is accordingly rejected.

25. Now coming to the plea of Mr. Sood, that since findings on Issues No.2 and 4 have not been given by learned Single Judge and/or interest having been allowed by the Arbitrator that too at an excessive rate, for remand of this case for decision on these issues. We are of the view that no fruitful purpose is going to be served by remanding the case. As such, remand order will be against the very purpose of referring the matter for adjudication to alternate redressal forum. In this behalf, it may be noted that reference was made as far back as in the year 1989. The award was passed by the Arbitrator in the year 1993. This was set-aside in the year 1996 and if the case is remanded back in the year 2003, that will defeat the very object and purpose intended to be achieved by having recourse to out of Court settlement of disputes through arbitration as has happened in the present case. In these circumstances learned Counsel were also called upon to address us on merits of the case, which Mr. Sood reluctantly did. At the same time, he reiterated that he is not giving up his prayer to remand of the case to learned Single Judge.

26. So far matter relating to interest is concerned, again it need not detain us in view of the decision in the case of Executive Engineer, Dhenkanal Minor Irrigation Division, Orissa and Ors. v. N.C. Budharaj (Deceased) By LRs. and Ors. (2001) 2 SCC 721 [LQ/SC/2001/94] .

27. This decision was followed by the Supreme Court in the case of T.P. George v. State of Kerala and Anr. (2001) 2 SCC 758 [LQ/SC/2001/330] . What is observed and is relevant in the present case while dealing with the matter of interest, is extracted herein below:

9. While overruling Jena case on the above principles, this Court applied the principle of prospective overruling making it clear that their decision shall not entitle any party nor shall it empower any court to reopen proceedings which have already become final and that the law declared shall apply only to pending proceedings.

10. The area of consideration and the question which fell for the determination of the case is Jena case and Roy case have been adverted to in Roy case itself and in para 8 of the judgment it has been observed as follows: (SCC pp. 514-15)

8. Generally, the question of award of interest by the arbitrator may arise in respect of three different periods, namely: (i) for the period commencing from the date of dispute till the date the arbitrator enters upon the reference; (ii) for the period commencing from the date of the arbitrators entering upon reference till the date of making the award; and (iii) for the period commencing from the date of making of the award till the date the. award is made the rule of the Court or till the date of realisation, whichever is earlier. In the appeals before us we are concerned only with the second of the three aforementioned periods. In Jena case, two questions arose for consideration of the Court, namely: (i) the power of the arbitrator to award interest for the period prior to his entering upon reference, and (ii) the powers of the arbitrator to award interest for the period the dispute remained pending before him pendente lite. Since, the Court dealt with the second question in detail and held that the arbitrator had no jurisdiction or authority to award interest pendente lite, we think it necessary to consider the reasons for the decision. Justice Chinnappa Reddy, J. speaking for the Bench held that neither the Interest. Act, 1839 nor the Interest Act, 1978 conferred power on the arbitrator for awarding interest pendente lite. The learned Judge observed that Section 34 of the Civil Procedure Code which provides for the same did not apply to an arbitrator inasmuch as an arbitrator is not a court within the meaning of the said provision. Consequently, the arbitrator could not award interest pendente lite.

28. In Maharashtra State Electricity Board v. Sterilite Industries (India) and Anr. : (2001) 8 SCC 482 , [LQ/SC/2001/2313] while dealing with Section 30 of the Arbitration Act, 1940 so far grounds for setting aside of an award are concerned, it was held as under:

12. In the light of this enunciation of law, we are of the view that unless the error of law sought to be pointed out by the learned Counsel for the Petitioner in the instant case is patent on the face of the award, neither the High Court nor this Court can interfere with the award. The exercise to be done by examining clause 14(ii) of the contract entered into between the parties, construing the same properly and thereafter applying the laws to come to a conclusion one way or the other, is too involved a process and it cannot be stated that such an error is apparent or patent on the face of the award. Whether under the context of the terms and conditions of a contract, a stipulation in the form and nature of clause 14(H) operates as a special provision to the exclusion of Section 73 of the Indian Contract Act is a matter of appreciation of facts in a case, and when the decision thereon is not patently absurd or wholly unreasonable, there is no scope for interference by courts dealing with a challenge to the award. Therefore, we think, the view taken by the High Court in this matter is correct and calls for no interference.

13. If as construed by the arbitrators that Clause 14(ii) excludes applicability of Section 73 of the Indian Contract Act and the proposition of law stated by the arbitrators is correct, then Section 73 is not attracted to the case.

29. This was the position of law as found by the Supreme Court in the cases reported, viz., Union of India v. A.L. Ralia Ram : AIR 1963 SC 1685 [LQ/SC/1963/119] and Firm Madanlal Roshanlal Mahajan v. Hukamchand Mills Ltd. : AIR 1967 SC 1030 [LQ/SC/1966/150] . In these cases, it was held that the Arbitrators award both on facts and law is final; that there is no appeal from his verdict; that the Court cannot review his award and correct mistake unless the mistake is apparent on the face of it.

30. We have been taken through the agreement by learned Counsel while submitting that there is no prohibition in it to allow interest either pre-reference or post reference or pendente lite. That being the position, in our considered view, no exception can be taken to the grant of interest by the Arbitrator in the impugned award. There appears to be some ambiguity in the impugned award so far grant of interest is concerned. As such, it is clarified that Defendants shall be liable to pay interest from 1.4.1985 to the date of the award only on items at serial Nos. 1 to 5. We have also examined the submissions of Mr. Sood that while allowing claims of the Plaintiff under item Nos. 1 to 5, the Arbitrator has either exceeded his jurisdiction or has acted beyond the terms and conditions as contained in the contract agreement. We have again examined the award, documents and other materials on the file of the Arbitrator including the claims and counter-claims, and we find nothing to uphold the plea of Mr. Sood. Accordingly Issues No. 2 and 4 as extracted hereinabove are decided against the Defendants.

31. No other point is urged.

32. In view of the aforesaid discussion and subject to above, this appeal is allowed and consequently the impugned judgment passed by learned Single Judge in Civil Suit No. 166 of 1993, dated 17.6.1996 is hereby quashed and set-aside and the objections filed by the Defendants against the award dated 11.6.1993, shall stand dismissed. Resultantly, the said award is ordered to be made Rule of the Court. Decree sheet be drawn accordingly. Costs on the parties.