Union of India v. M/S G.S. Atwal & Co (Asansole)

Union of India v. M/S G.S. Atwal & Co (Asansole), 1996 SCC (3) 568

This case explains a simple rule: an arbitrator cannot increase the scope of the reference on their own. Their power starts and ends with the arbitration agreement and the issues that were sent to them. The Supreme Court set aside a non-speaking award because new, large claims were entertained without proper consent. Also, once a party has placed a clear objection on record, their later participation does not count as consent (no acquiescence).

• Whether an arbitrator has jurisdiction to widen the scope of the reference under the Arbitration Act, 1940.
• Whether participation after objection amounts to consent by acquiescence.
• Whether a non-speaking award beyond reference can stand in court.

• The arbitration agreement fixes the scope of power and jurisdiction of the arbitrator.
• An arbitrator cannot add new claims or expand issues without clear consent of both parties.
• The rule of acquiescence does not apply where a party has already objected on record and then merely continues to participate.

Core Principle: The arbitrator’s authority is confined to the arbitration agreement and the specific reference. Any expansion of claims or issues requires express consent of both parties. Objection on record prevents any inference of acquiescence from mere participation.

• Guides arbitrators: stay within the four corners of the reference.
• Guides drafters: define scope precisely in arbitration clauses.
• Guides parties: record objections early; participation alone is not consent.
• Guides courts: non-speaking awards cannot shield jurisdictional overreach.

• Scope is fixed by agreement + reference.
• No unilateral widening by arbitrator.
• Objection on record defeats acquiescence.
• Non-speaking awards still face jurisdictional review.

Mnemonic: A-R-C — Agreement sets power, Reference limits issues, Consent is needed to add claims.

1. Check Agreement: What powers were given?
2. Check Reference: What questions were sent?
3. Check Consent: Any written consent for extra claims?

Issue: Can an arbitrator widen the scope of reference under the 1940 Act?

Rule: Arbitrator’s power is bounded by the agreement and the reference; fresh claims need consent; participation post-objection ≠ acquiescence.

Application: New claims (~₹32 lakhs) were introduced later. The Union had objected. The arbitrator still proceeded and passed a non-speaking award. This was beyond jurisdiction.

Conclusion: Award set aside; High Court reversed; trial court order restored.

Scope of Reference

The exact questions or claims sent to the arbitrator to decide.

Non-speaking Award

An award that does not give reasons for the decision.

Acquiescence

Implied consent inferred from silence or conduct; here, defeated by prior objection.

Section 30 (1940 Act)

Grounds to set aside an award, including misconduct or exceeding jurisdiction.

• Associated Engineering Co. v. Govt. of A.P. — Arbitrator must act within contract limits.
• ONGC v. Saw Pipes Ltd. — Public policy and patent illegality (reasoned awards).
• State of Orissa v. Damodar Das — Excess of jurisdiction in arbitration.