Arbitral Award With Contradictory Findings Is Liable To Be Set Aside: Calcutta High Court

The Bench of Justice Krishna Rao reiterated that an arbitral award wherein no reasons are given for arriving at a particular finding is also liable to be set aside.

Facts

The parties entered into an agreement dated 09.01.1997 whereby the respondent agreed to carry out construction work. The project work could not be completed on time, therefore, the agreement was terminated without the execution of the entire project work, thus, a dispute arose between the parties. The final bill amount and the security deposit were released on 01.07.1999 and 26.07.1999 respectively.

The respondent invoked the arbitration clause and intimated the petitioner of its claims on 29.05.2002. Accordingly, an arbitrator was appointed who partly allowed the claims of the respondent. Aggrieved by the arbitral award, the petitioner challenged it under Section 34 of the A&C Act.

The Contention of the Parties

The petitioner challenged the award on the following grounds:

• The arbitrator has allowed the claims of the respondent without recording any reasons for the same.
• The arbitrator has given contradictory findings regarding the issue of delay in the execution of the work as on one hand it has observed that not a single party cannot be held responsible for the delay and on the other hand it has allowed the consequent claim of the respondent.
• The arbitrator has further erred in awarding an amount of compensation that is more than the claim of the respondent.
• The claims of the respondent were time barred as the contract was terminated on 14.07.1998 and the respondent submitted its claims for arbitration only on 05.07.2022, therefore, the limitation period of three years stood expired much before.

The respondent raised the following arguments in favour of the award:

• The claims of the respondent were within limitation as the final bill was only paid on 01.07.1999 and the respondent raised its claim before the petitioner on 22.05.2002, therefore, the objection of the petitioner is without any merit to it.
• The arbitrator has rightly observed that the respondent is not responsible for the delay in the completion of the work, further, the arbitrator has given reasons for allowing the claims.
• The Ld. Arbitrator is an engineer, therefore, his award cannot be compared to an award passed by a person having legal background.

Analysis by the Court

The Court held that the arbitrator has made a contradictory observation regarding the delay in the completion of the project work as on one hand it has observed that not a single party cannot be held responsible for the delay and on the other hand it has allowed the consequent claim of the respondent.

The Court also observed that the arbitrator has awarded a sum of amount regarding one particular claim that is more than the actual claim made by the respondent, therefore, the arbitrator has committed an error.

The Court further observed that the arbitrator has not ascribed any reason for allowing two other claims as the arbitrator has not furnished any arithmetical basis or any documentary evidence to support the claim awarded. It held that a party is entitled to know the grounds on which the arbitrator allows or disallows any claim.

Accordingly, the Court allowed the petition to set aside the arbitral award.

Case Title: State of West Bengal v. Tapas Kumar Hazra, AP 1036 of 2011

Citation:2022 LiveLaw (Cal) 299

Date: 08.08.2022

Counsel for the Petitioner: Mr. Dhruba Ghosh, Sr. Adv. Mr. A. Alim, Adv. Mr. P. Sinha, Adv. Mr. A. Mandal, Adv.

Counsel for the Respondent: Mr. Nirmalya Dasgupta, Adv. Mr. R. L. Mitra, Adv

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