Case Law Details
The Supreme Court held last week that an arbitrator is bound to give detailed reasons for his award and if he does not do so, the award will be invalid. In this case, State of Uttar Pradesh vs Combined Chemicals Co Ltd, the company agreed to supply zinc sulphate to the state agricultural department. However, when the government received a lower offer, it did not carry forward with the arrangement with Combined Chemicals.
It led to litigation and arbitration. The state did not appear before the arbitrator. The latter then gave an award against the state. The government challenged it in the Allahabad high court which dismissed its objections. However, on appeal, the Supreme Court stated that the arbitrator passed an award without assigning any reason whatsoever and without even recording a finding that the company suffered losses. The award was made in a ‘casual’ manner. Therefore, the court ordered a fresh arbitration.
State of U.P. & others Vs. M/s. Combined Chemicals Company Pvt. Ltd. – Supreme Court
G.S. Singhvi, J.
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