N. CHELLAPPAN V. SECRETARY, KERALA STATE ELECTRICITY BOARD AND ANR INSC 248; AIR 1975 SC 230; 1975 SCR 811; 1975 SCC 289

N. Chellappan v. Secretary, Kerala State Electricity 21st November, 1974. Kuttyil Kurien Mathew, A.N. Ray, N.L. Untwalia

Facts The Kerala State Electricity Board contracted Chellappan for the construction of the Kuttiyadu Dam. However, due to incomplete work disputes arose. During this time a second contract was signed for completing the remaining work. Chellappan stopped the work again following which the Chief Engineer had to terminate the contract. The matter was referred to two arbitrators to settle the dispute with Justice G. Kumara Pillai as the umpire. However, the arbitrators failed to issues an award within the extended timeline following which the appellant moved to court to revoke the authority of the two arbitrators alleging bias and delays and sought Justice Pillai to act as the sole arbitrator. The petition was allowed by the court and Justice Pillai became the sole arbitrator. The umpire issued an award favoring the appellant which was challenged by the Board

Issues Whether the Board can retain the amount under the contract? Whether the umpire as sole arbitrator had jurisdiction to enter upon the reference and pass the award? Whether the High Court was right in its view that the claim of the appellant in respect of the two matters dealt with by it was validly allowed by the umpire

Holding The Court upheld the award made by Justice Pillai who at the time was acting as the sole arbitrator. The Kerala State Electricity Board's challenges under Sections 16, 30, and 33 of the Arbitration Act were dismissed as the Court found no sufficient grounds to set aside the award. It was also held that the award in favour of the appellant was enforceable. The appeal was allowed and the High Court's judgement was set aside

Rationale The court held that there was no apparent error of law on the face of the award and hence rejected the contention of the Kerala State Electricity Board regarding the bar of limitation on the appellants claim. It was also held that the Umpire who was acting as the sole arbitrator was not required provide a reasoned award. The Court stated that the umpire had considered the Board's objections and awarded the amount without expressly addressing the limitation issue which is not viewed as a legal error Moreover, the High Court's remittance of the case to the arbitrators for a fresh award was not required as the findings made by the umpire showed no bar of limitation and hence the award was legally sound since an award could only be set aside if there was an error of law in the legal proposition forming the basis of the award was erroneous.