An Unreasoned Arbitration Award Is Against The Public Policy: Orissa High Court

The Single Bench of Justice Arindam Sinha has held that an award bereft of reasons, goes against the mandate of the Act and therefore is against the public policy.

The Court further held the reasons given by a Court while adjudicating a challenge under Section 34 of the A&C Act would not suffice the requirement of reasons in the award. The challenge is not akin to a first appeal being in continuation of the suit.

The appellant challenged the order of the court below on the ground that it has failed to appreciate that the arbitrator has failed to assign reasons regarding the quantum of compensation to be paid to his client on the acquisition by the National Highways Authority of India (NHAI), therefore, the award is liable to be set aside.

The appellant contended that there were two technical evaluations done to determine the compensation payable to it and the second evaluation had recommended a higher compensation. The arbitral tribunal has not given any reasons as to why it rejected the latter evaluation.

The appellant further contended that the General Manager/ Respondent No.4 had also signed the technical report with a dissent note and recommended a higher compensation.

The respondent argued that the comments to the recommendation of the Technical Committee were personal opinion of the General Manager, not approved by the State. The arbitrator was correct in accepting the reassessed recommendation of the technical committee; therefore, no interference is required.

The Court observed that the controversy before the arbitrator was not regarding the dispute between the Technical Committee (State) and the General Manager (NHAI), rather it was to decide the claim of the appellant for higher compensation, therefore, the arbitrator erred in directing its attention to settling the dispute between the State and NHAI regarding the reassessed compensation.

The Court held that the arbitrator has not given any reason for accepting the reassessed report of the technical committee and awarded the same amount. It held that Sub-section (3) in section 31 mandates that the arbitral award shall state the reasons and the parties have not agreed to have the award without reasons, therefore, the arbitrator was bound to assign reasons for accepting the report of the technical committee.

The Court held that an unreasoned arbitral award would be against the public policy. The Court set aside the award as the arbitrator failed to give any reasons for reaching the conclusion in the award.

Case Title: Jayaram Panda v. Project Director, M/s. National Highway Authority of India and others, ARB.A. No. 58 of 2018.

Citation: 2022 LiveLaw (Ori) 62

Date: 09.05.2022

Counsel for the Appellant: Mr. S.K. Sarangi, Advocate

Counsel for the Respondents: Mr. A.K. Sharma, AGA Mr. U.C. Mohanty, Advocate.

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