TMI Blog2002 (7) TMI 800X X X X Extracts X X X X X X X X Extracts X X X X ..... tractor by another agreement no.CECZ/GOA/40 of 1991-92 was entrusted with the work of construction of married accommodation for MCOs/CPOs and JCOs at Goa. The work order was placed vide letter no.8305/88/E-8, dated 5-2-1992. The date of commencement of the work was 24-2-1992 and the work was to be completed by 23-2-1994. Before the work could be completed certain differences/disputes arose between the parties. Under Clause 70 of the General Conditions of the Contract all disputes [(other than those for which the decision of the CWE (Commander Works Engineer) or any other person is by the contract expressed to be final and binding)] shall, after written notice by either party to the contract to the other of them, be referred to sole arbitration of an Engineer Officer to be appointed by the Authority mentioned in the tender document. In the said clause it was further provided that unless both the parties agree in writing, such reference shall not take place until and unless after completion or alleged completion of the work or termination or determination of the contract under Conditions 5, 56 and 57 thereof. The contractor gave notice for appointment of arbitrator specifying the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Interest on Serial Nos.1,2,3 above Not indicated 5 Costs of reference 50,000-00 The arbitrator by his Award dated 28th February, 1994 accepted the claims raised by the contractor. In respect of CECZ/GOA-12/1990-91 the award reads as follows: Reference made to the Arbitrator Award given by the Arbitrator CLAIM NO.1 Reimbursement of additional cost in procurement of stone aggregate from crushers of Belgaum, Hubli etc. in Lieu of Local sources of Goa. ₹ 8,00,000/-. 13.10 Union of India shall reimburse for the increase in rates to the contractor M/s.Shyama Charan Agarwala Sons as under:- (i) For the quantity of stone aggregate already brought after Aug.92 and upto 24-01-94. 20 mm/12.5mm 2268 cm @ ₹ 250/-per cm ₹ 5,67,000/- 40 mm-100 cm @ ₹ 230/- per cm ₹ 23,000/- ----------------- Rs.5,90,000/- ============ (ii) For the quantities of stone aggregate brought after 24-01-94, reimbursement for increase in rates shall be made at the rate of ₹ 250/- per cm for 20mm/ 12.5 mm, Rs.230/- per cm for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted. (b) Further, reimbursement/ refund for works done in future as in (ii) above shall be worked out as per conditions 18 and 19 of special condition of CA and shall be paid in the RARs as per CA. CLAIM NO.3 Reimbursement of additional costs due to working in restricted area in lieu of unrestricted area ₹ 25,00,000/- 15.5 AWARD (i) It has been brought out that the amount of work done including material collected upto 24-01-94 is ₹ 2,03,00,000/-. Considering 9% on ₹ 2,03,00,000/- a sum of ₹ 18,27,000/- is allowed on this account, which should be paid to the contractor by the Union of India. (ii) The Respondent, Union of India shall also pay 9% extra on this account for the works carried out including material collected beyond ₹ 2,03,00,000/- to the contractor in each RAR, till such time the work is completed. (iii) As regards contractor claim of reimbursement/refund on variation of prices, as per conditions 18 and 19 of special condition of CA, this should also be paid, as the value of work done is increased on account of this factor, I award as under :- (a) A sum of ₹ 1,83,718/- towards reimbursement on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 83,500/- 40 mm-662cm @ ₹ 230/- per cm ₹ 1,52,260/- ----------------- Rs.11,35,760/- ============ (ii)For the quantities of stone aggregate brought after 24-01-94, reimbursement for increase in rates shall be made at the rate of ₹ 250/- per cm for 20mm/ ₹ 230/- per cm for 40 mm. This reimbursement shall be made in each RAR for the actual quantity brought at site. (iii) Reimbursement/refund on variation in prices of material/fuel and labour wages, as per conditions 18 and 19 of special condition on pages 95A,96 to 99 of the contract shall also be paid in RARs for the stone aggregates stone metal stone chipping brought after 24-01-94 as per the said conditions, excepting that the value of WO as in condition 18(a) for stone aggregate stone metal/stone chipping shall be taken as on 24- 01-94 or any date immediately after 24-01-94 as published by the Economic Adviser, Govt. of India. CLAIM NO.2 Reimbursement of additional costs in excavation encountering rock other than soft/disintegrated rock/laterite rock, ₹ 12,00,000/- 14.7 Union of India shall pay to the contractor M/s.Shyama Charan Agarwala Sons as per d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Union of India. (b)Reimbursement/refund on variation of prices for works done beyond 24-01-94 shall also be made on the principle that the value of work done including material collected, as assessed in the normal manner, shall be increased by 9% to cater for the restriction and reimbursement/ refund shall be worked out on this increased value of work done including material collected as per conditions 18 and 19 of the special condition of CA and paid to the contractor by the Union of India in RAR as per condition 18 and 19 ibid. CLAIM NO.4 Interest in SL 1 to 3 above. Amount not indicated Interest on claim no.1 to 3 (Past, Pendente lite and future) (ii) Past interest I allow a sum of ₹ 4,14,761/- for past interest on claim No.1(i), 2(i) and 3(i) vide pages 13, 19 21 respectively herein before. (iii) Pendente lite interest There is no delay. I have been appointed Arbitrator on 30-12-93 and had entered upon the reference on 21-01-94 and the award has also been finalized. Therefore, claim of pendente lite interest is rejected. (iv) Future interest This is allowed. The Union of India shall pay interest @ 18% per annum if the amount of award as in item (i) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the future claim in respect of stone aggregate would be subject to various factors including market conditions and whether the shortage continued. The High Court further held that under the circumstances, the Arbitrator could not have granted relief relating to future claim of the contractor with reference to stone aggregate. The High Court recorded the following finding in this regard:- Therefore, while sustaining claim no.1 in both the appeals for the quantity of stone aggregate already brought after August 1992 upto 24-1-1994, and Award of ₹ 11,35,760/- in Arbitration Appeal No.2 of 1996 and ₹ 5,90,000/- in Arbitration Appeal No.3 of 1996, the remaining part of Order on claim no.1 is set aside. [See page 31 para 21 last portion] On claim no.2 the High Court interpreted clauses 3.3.2, 3.3.3 and 3.3.4 of the contract and held that excavation in any type of laterite rock, that is to say, soft or hard shall be treated as excavation in soft/disintegrated rock. The High Court further held that the Arbitrator had totally overlooked Clause 3.3.4 while coming to the conclusion on the basis of Clauses 3.3.2 and 3.3.3 alone. The High Court was of the view that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the interest awarded by the arbitrator in relation to the claim for quantity of stone aggregate already brought after August, 1992 to 20-4-1994 could not be interfered with and that the pre-reference interest in respect of other items falls on account of rejection of claim nos.2 and 3. On such findings the High Court allowed the appeal in part and to the extent noted earlier. Shri V.A.Mohta, learned senior counsel appearing for the contractor i.e. the appellants in Appeals arising out of SLP (C) Nos.10526-527/2000 and respondents in Appeals arising out of SLP (C) Nos.880-881 of 2001, strenuously contended that the High Court exceeded the limits of the jurisdiction vested under Section 39 of the Act in deciding the appeals filed by the UOI, and in setting aside the Award of the Arbitrator in respect of claim nos.2 and 3. Shri Mohta further contended that even assuming that the High Court found that the arbitrator had mis-interpreted the relevant clauses of the agreement, then it was not open to it to interfere with the Award since there was no error of law apparent on the face of the award and the matter relating to interpretation of the conditions in the agreement was within t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstruing Section 30 of the Act, observed : The law on this aspect is, however, settled. In Union of India v. A.L.Rallia Ram, (1964) 3 SCR 164, this Court reiterated that in order to make arbitration effective and the awards enforceable, machinery was devised by the Arbitration Act for lending the assistance of the ordinary courts. The court was also entrusted with the power to modify or correct the award on the ground of imperfect form or clerical errors, or decision on questions not referred, which were severable from those referred. The Court had also power to remit the award when it had left some matters referred undetermined, or when the award was indefinite, where the objection to the legality of the award was apparent on the face of the award. The court might also set aside an award on the ground of corruption or misconduct of the arbitrator, or that a party had been guilty of fraudulent concealment or willful deception. But the court could not interfere with the award if otherwise proper on the ground that the decision appeared to it to be erroneous. The award of the arbitrator was ordinarily final and conclusive, unless a contrary intention was disclosed by the agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the award can be set aside if the arbitrator had mis-conducted himself or the proceedings and had proceeded beyond his jurisdiction; that these are separate and distinct grounds for challenging an award; that where there are errors apparent on the face of the award it can only be set aside if in the award there is any proposition of law which is apparent on the face of the award, namely, in the award itself or any document incorporated in the award. Reference was made to the decision of the Judicial Committee in Champsey Bhara Co. v. Jivraj Balloo Spinning Weaving Co. Ltd., AIR 1923 PC 660. Considering the point that only in a speaking award a Court can look into the reasoning of the award, this Court observed : ..It is not open to the court to probe the mental process of the arbitrator and speculate, where no reasons are given by the arbitrator, as to what impelled the arbitrator to arrive at his conclusion . In this connection reference was made to the observations in Hindustan Steel Works Construction Ltd. vs. C.Rajasekhar Rao, (1987) 4 SCC 93. Drawing a distinction between the disputes as to the jurisdiction of the arbitrator and the disputes as to in what way that jurisd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ator to grant a particular remedy. Xxx xxx xxx In the instant case, the High Court seems to have fallen into an error of deciding the question on interpretation of the contract. In the aforesaid view of the matter, we are of the opinion that the High Court was in error. It may be stated that if on a view taken of a contract, the decision of the arbitrator on certain amounts awarded, is a possible view though perhaps not the only correct view, the award cannot be examined by the court in the manner done by the High Court in the instant case. In light of the above, the High Court, in our opinion, had no jurisdiction to examine the different items awarded clause by clause by the arbitrator and to hold that under the contract these were not sustainable in the facts found by the arbitrator. In the case of Steel Authority of India Ltd. vs. J.C.Budharaja, Government and Mining Contractor, (1999) 8 SCC 122, this Court considering the point on lack of jurisdiction of the arbitrator held that when the conditions in the agreement specifically prohibited granting claim or damages for the breaches mentioned therein it was not open to the arbitrator to ignore the said conditions whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this case, the agreement between the parties clearly says that in measuring the built-up area, the balcony areas should be excluded. The arbitrators could not have acted contrary to the said stipulation and awarded any amount to the appellant on that account. In the case of Grid Corporation of Orissa Ltd. Anr. vs. Balasore Technical School, (2000) 9 SCC 552, this Court considered the question of Courts interference in case of a non-speaking award. This Court referred to the decision in New India Civil Erectors (P) Ltd (supra) in which it was held that the arbitrator being a creature of the contract must operate within the four corners of the contract cannot travel beyond it and he cannot award any amount which is ruled out or prohibited by the terms of the agreement and the decision in Associated Engg. Co. v. Govt. of A.P., (1991) 4 SCC 93, in which it was held that if the arbitrator commits an error in the construction of the contract, that is an error within his jurisdiction; but if he wanders outside the contract and deals with matter not allotted to him, he commits a jurisdictional error and an umpire or arbitrator cannot widen his jurisdiction by deciding a question no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being put to the necessity of procuring the stone material from far off places was not visualized and the parties proceeded on the basis that such material was available locally. He further noted that the sample kept in the office of the concerned Engineer admittedly pertained to the material procured from local sources. A letter addressed by the Chief Engineer in support of contractor s claim was also relied on in this context. Hence, in these circumstances, the Arbitrator can be said to have taken a reasonably possible view and therefore the High Court rightly declined to set aside the award in so far as the quantity of stone aggregate/stone metal brought to site up to 24.1.1994 is concerned. The Arbitrator acted within the confines of his jurisdiction in making the award on this part of the claim. As already noted, the award in so far as the future period is concerned, i.e. subsequent to 24.1.1994 which is the date of filing of claim statement, the High Court set aside the award on two grounds : (i) Such a claim did not form part of terms of reference, though the contractor had filed claim in respect of stone aggregate to be brought in future and (ii) the future claim in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ources other than local. It has never been the case of Union of India either before the Arbitrator or the High Court or even this Court that the situation had changed after 24.1.1994 and that the stone aggregate could be secured at lesser rates from local sources or otherwise. For all these reasons, we are of the view that the High Court ought not to have interfered with the award in so far as claim No.1 is concerned in any respect. To this extent, the appeals filed by the Contractor i.e. arising out of SLP Nos. 10526- 10527 of 2000 are partly allowed. As regards the other two items viz. 2 and 3, on a perusal of the judgment of the High Court and on consideration of the relevant clauses, we are of the view that the judgment does not suffer from any serious error in the approach to the matter. In regard to item No.2, though the High Court may not be justified in observing that the Arbitrator took undue interest in trying to ascertain the classification of strata, the High Court is well justified in holding that the view taken by the Arbitrator is not at all a reasonably possible view and in fact he ignored one of the relevant clauses, namely, 3.3.4. The Arbitrator was carried awa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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