K.A. Abdul Gafoor, J. 1. An interesting question arises in this M.F.A. is as to whether the Arbitrator is duty bound to decide on reasons, the jurisdictional or maintainability aspects of the proceedings itself.
2. There was an agreement between the appellant and the respondent/claimant regarding the conduct of a work. According to the respondent, clause 3 of the agreement contains an arbitration clause and the said clause also named the Arbitrator as "Chief Engineer, Arbitration". According to him, he was entitled to certain amounts. The claim was not acceded to by the 1st appellant. Therefore, he referred the dispute to the named arbitrator. The proceedings are contested by the 1st appellant raising a preliminary objection regarding limitation. According to the appellant, the final bill has been paid to the contractor in July 1984. The claim if any available to the contractor ought to have been raised for decision of the arbitrator within three years thereafter. S.37 of the Arbitration Act, 1940 makes applicable all the provisions contained in the Limitation Act, 1963 to the proceedings before the arbitrator. The claim raised by the contractor is a simple money claim. Therefore, the period of limitation was only three years. That three year period began to run from the date of payment or signing of the cheque. Proceedings were initiated before the arbitrator by filing a statement by the contractor and that statement is dated 27.10.1987. This is beyond three years period form signing of cheque leaf on 20.7.1984. Even if payment of cheque on 30.7.1984 is taken, the proceedings initiated stood barred by the law of limitation, the appellants contended. The arbitrator over-ruling this preliminary objection simply stating "preliminary objection raised by the respondent is over-ruled". A petition was filed by the appellants to set aside the award, under Ss. 16, 30 and 33 of the Arbitration Act, 1940 raising certain objections including that relating to the limitation. The court below dismissed that petition as per the impugned judgment. It is in the above circumstances, this M.F.A. has been filed by the State.
3. It is contended by the Government Pleader that the question of limitation is not a matter arising out of the agreement. Therefore, it was incumbent on the arbitrator when such a preliminary objection is raised affecting the jurisdictional aspects itself, to give reasons while over-ruling the preliminary objections.
4. The question of limitation and the question of the claims raised by the parties, based on the agreement stand on different footings. The arbitrator may not be liable, unless the agreement specifies, so, to give reasons for his conclusions on the claims raised by the contractor. But when the claim raised by the contractor is objected to on the basis of the jurisdiction or limitation, it was incumbent on the arbitrator, that being not a matter arising out of agreement to decide that aspect with sufficient reasons. The records before the arbitrator manifestly showed that the claim was preferred before the arbitrator only on 27.10.1987, and that was beyond the period of three years from the date of receipt of the cheque. There was no notice to the Block Development Officer, who was a party to the agreement, intimating any initiation of the proceedings from an earlier date, as provided in S. 37(3) of the Arbitration Act. Therefore, the contractor could not thus save the limitation period. Thus, the arbitrator went wrong the deciding the matter. Therefore, that award has to be set aside, the Government Pleader contends.
5. It is contended on behalf of the contractor that the court cannot expect an arbitrator to give reasons for his conclusions. That is the settled law. Therefore, the ward over-ruling the preliminary objection regarding limitation also cannot be interfered with on the ground that the arbitrator has not stated any reasons. The agreement also does not cast a duty on the arbitrator to state reasons. In such circumstances, the arbitrator shall be the sole judge based on the facts, circumstances, evidence and materials placed before him, to answer one or other claims raised by the parties. It was taking into account the materials on record that the arbitrator has decided the issues before him including the relating to limitation. Therefore, the conclusion cannot be interfered with by the Court.
6. Counsel for the contractor has also relied on the decisions in Abooshahiman v. Union of India (ILR 1997 (2) Kerala 523) and State of Kerala v. Sainulabdeen (ILR 1997 (3) Kerala 348). All these cases are those relating to the reasons stated by the arbitrator in respect of the matter arising out of the agreement. It has been held in the former decision that, "Arbitrator being a creature of the contract must operate within the four corners of the contract and cannot travel beyond it either by misinterpreting the terms of the contract or otherwise."
But, it has to be borne in mind that a contention regarding limitation of a claim raised before the arbitrator is not a matter arising out of the contract; but it is a matter arising out of general law applicable. It is not a matter relating to the legality or otherwise of the individual claim raised by the contractor against the department but relates to the maintainability of the claim itself before the arbitrator. Therefore, it has a different facet rather than the factual aspects touching the claim.
7. As held in the Sainulabdeen's case (ILR 1997 (3) Kerala 348), when the award is not a speaking award, the court cannot go into the correctness contained therein unless a wrong proposition of law is adopted as the basis for passing the award. While considering the issue regarding limitation it was incumbent on the arbitrator to consider in as much simple words, the sustainability or otherwise of the contention. To the extent he did not say anything on that point and only said that "preliminary objection raised by the respondent is over-ruled", it has to be taken that such conclusion is based on "a wrong proposition of law" or rather arbitrator has adopted a wrong proposition of law as the basis for awarding the contract. Therefore, even going by that decision, if the award or reason stated is not based on correct proposition of law, necessarily, the court can interfere.
8. Concerning the delay aspect itself, there is another decision reported in Chennai Bottling Co. (P) Ltd. v. Travancore Tea Estates Co. Ltd. (1991 (2) KLT 903). This Court held, "The question of limitation can be decided only after taking into account the facts which are relevant in the context. The findings that the arbitrator would arrive at, after evaluating the facts and also the evidence available on record, that the claim is barred or not barred by limitation, in our view, cannot be interfered with in a proceeding under S. 30 of the Arbitration Act unless it is demonstrated to the Court that the reasons based on which the conclusion is arrived at, are erroneous as such as propositions of law or the conclusion the arbitrator has arrived as is one which could not possibly be sustained".
Even this decision is to the effect that the question of limitation can be decided "only after taking into account the facts which are relevant in the context". The minimum facts which are necessary to decide the question of limitation are (1) the date of receipt of cheque and (2) the date of initiation of the claim. Even those aspects have not been considered by the arbitrator. It is also discernible from the decision that if it is demonstrated to the Court from out of the records before the arbitrator that the reasons based on which the conclusion is arrived at are erroneous, necessarily, the court can step in. We closely examined the records of the arbitrator and we could find that the claim was initiated only on 27.10.1987. The statement of the Block Development Officer was that the contractor had received money in July 1984 itself. There was no other material like the notice issued under S. 37(3) to the other party to the agreement namely Block Development Officer on any day within the period of three years from 30.7.1984. Therefore, the conclusions that it is within the period of limitation, are not supported by even records. Therefore, this is a case where the arbitrator was bound to give minimum reasons as to the sustainability or otherwise of the preliminary objection regarding limitation. We set aside the award on that ground. The contention of the Government Pleader that the arbitrator also misconducted himself in awarding additional amount, in excess of his jurisdiction, when the agreement provided that the contractor will not be entitled to the additional amount, shall be left open for fresh decision. Accordingly, we set aside the judgment of the Court below as well as the award and remit back the matter to the arbitrator to decide the preliminary objection based on reasons on the basis of the materials available on records of the arbitrator and to decide further matters if necessary on the basis of the agreement.
9. It is submitted before us by the Government Pleader that there were altogether 13 agreements like the one, and all these agreements except that relating to the present case did not contain the arbitration clause. According to the appellants, this clause was subsequently inserted by reason of forgery by one among the officials and a vigilance case is now pending. Therefore, this issue goes to the root of the matter whether arbitration clause itself is available to invoke the arbitration. We are not speaking on this issue as the matter is now pending vigilance investigation and the arbitrator shall decide the matter without further delay after the close of such investigation.
M.F.A. is allowed. In the circumstances of the case there is no order as to costs.