TMI Blog2005 (10) TMI 559X X X X Extracts X X X X X X X X Extracts X X X X ..... dent, therefore, moved an application under Section 20 of the Arbitration Act, 1940 for referring the claims mentioned therein to arbitration. By an Order dated 11th November 1982, the District Judge held that only one claim was referable to arbitration and refused to refer the other three claims to arbitration. The Respondent filed an Appeal before the High Court. The High Court by its Order dated 7th June 1984 held that it was for the Arbitrator to decide whether the claims were to be awarded or not. The High Court held that reference could not be refused and, therefore, directed that all the four claims be referred to arbitration. Even before the High Court passed the Order dt. 7th June 1984, the Respondent had, on 31st March 1983, filed another application under Section 20 of the Arbitration Act, 1940. By this application the Respondent sought reference of 24 more claims. The District Judge by an Order dated 1st March 1985 allowed the application. The disputes were referred to two Arbitrators. One Shri M.K. Gambhir was appointed by the Appellants and Shri Leeladhar Aggarwal was appointed by the Respondent. The Respondent, however, filed 39 claims amounting to ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Claims except F.D.R. amounts beyond 29.5.95 upto the date of payment or decree of the Court whichever is earlier. I further award that the Respondents shall pay a part of the cost of arbitration and part of fees of arbitrator and Umpire to the extent of ₹ 20,000/- to the Claimants. The Appellants filed objections under Sections 30 and 33 of the Arbitration Act 1940, which were dismissed by the Trial Court on 16th July 1996. The Appellants filed an Appeal before the High Court and the Respondent filed a Cross-Appeal claiming compound interest. The High Court by the impugned Judgment dismissed both the Appeals. Civil Appeal No.2500 of 2001 is by the Appellants who are aggrieved by the dismissal of their objections. Civil Appeal No.2501 of 2001 is by the Respondents against dismissal of their claim for compound interest. Mr. Mohta has assailed the Award on five grounds: (1) that the Umpire was biased against the Appellants inasmuch as he was person, who regularly appeared for the Respondent in arbitration matters and assisted the Respondent in their arbitration cases; (2) that the Court had referred only 28 claims yet all the 39 claims have been allowed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be documents showing his name/ appearance. None have been produced. So far as the second ground is concerned, we have seen the two applications made by the Respondent. It prima facie appears that the two applications were for referring, in all, 28 claims to arbitration. The Respondent then made 39 claims before the Arbitrators. The Umpire has awarded in respect of all the 39 claims. If claims not referred to Arbitration have been dealt with and awarded the Umpire would have exceeded his jurisdiction. However Mr. Moolchand Luhadia, partner of the Respondent who appeared in person, contended that all the claims were referred to the Arbitrators by the Order dt. 1st March 1985. He submitted that this is clear from the directions to the Arbitrators to decide all disputes arising between the parties. We are unable to accept this submission. The Order dt. 1st March 1985 allows application dt. 9th April 1983 as part of application dt. 5th October 1981 . It is in the context of claims raised in these two applications that the Arbitrators are instructed to decide all disputes between the parties. Mr. Lohadia then submitted that all claims were included in the two applications made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith by an Umpire does not mean that the Umpire should give reasons for his Award. We further clarify that the Umpire now being appointed by us need not give reasons. Mr. Mohta had next contended that the Umpire has misconducted himself inasmuch as he had ignored the terms of the contract and awarded contrary to the terms of the contract. To this objection, the Respondent had submitted that such a point had neither been urged before the District Judge nor before the High Court. We, however, find that this point has in fact been urged both before the District Judge as well as before the High Court. This point, therefore, requires to be considered. In order to consider this point, some of the terms and conditions of the tender documents and the contract are required to be set out. The Respondent has given a declaration which inter-alia reads as follows: 1. I/We have visited the Site and fully acquainted myself/ourselves the local situation regarding materials, labour and other factors pertaining to the work before submitting this order. 2. I/We carefully studied the N.I.T. conditions of contract, specification, additional instructions, general rules and directions a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it exists and such last mentioned class of work is not entered in the schedule of rates of the district, then the contractor shall, within seven days of the date of this receipt of the order to carry out the work, inform the Engineer-in-Charge of the rate which it is his intention to charge for such class of work and if the Engineer-in-Charge does not agree to this rate he shall, by notice in writing, be at liberty to cancel his order to carry out such class of work and arrange to carry it out in such manner as he may consider advisable, provided always if the contractor shall commence work or incur any expenditure in regard thereto before the rates shall have been determined as lastly herein before mentioned, then and in such case he shall only be entitled to be paid in respect of the work carried out or expenditure incurred by him prior to the date of the determination of the rate as aforesaid according to such rate or rates as shall be fixed by the Engineer-in-Charge. In the event of a dispute, the decision of the Chief Engineer will be final. ...................................................................... Clause 23Except where otherwise specified in the contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contractor may sum required to estimate to be required for making good the loss suffered by a worker by reasons of non-fulfillment of the conditions of the contract for the benefit of the worker or workers non-payment of wages or deductions made therefor which are not justified by the terms of contract or as a result of nonobservance of the aforesaid regulations. (e) Vis- -vis the Government of Rajasthan the contractor shall be primarily liable for all payments to be made and for the observance of the regulations aforesaid without prejudice to his right to claim indemnity from his sub-contract. (f) The regulations aforesaid shall be deemed to be part of this contract and breach thereof shall be deemed to be breach of contract. Special Conditions of the contract inter-alia provide as follows: 31 LABOUR CONDITIONS:- (a) The contractor shall comply with the labour laws viz. Contractor Labour Regulation Act, Minimum Wages Act. Workman s Compensation Act, Industrial Disputes Act, etc. as may be current and shall furnish the returns and information as any required and be specified from time to time. The contractor will have to carry out registration with the offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all employee upon such parts of the works are suitable for unskilled labour, any persons certified to him by the Engineers or by a duly authorized agent of the Engineers, in writing to be in need or relief and the contractor shall pay to such persons wages not below the minimum which the Government may have fixed in this behalf. Any disputes which may arise in the implementation of this provision shall be decided by the Engineer whose decision shall be final and binding on the contractor. (i) The contractor shall provide reasonable facilities to the satisfaction of the Engineer, for the labour employed by him, where no such natural facilities exists. The usual facilities are weather proof shelter for rest and supply or whole some drinking water, facilities for obtaining food reasonable washing and sanitary facilities special facilities for women workers, suitable residential accommodation, recreation and cultural activities, general sanction and health measures etc. (j) The implementation of any provision of this clause shall, in no way, entitle the contractor to claim compensation or rates higher than tendered in his contract. ................................ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... _________________________ 1. Stone Ballast Local 1 km. 1 km. 2. Sand Piplia river 46 km. 46 km. 1) Any extra items if involved will be paid on the basis of the B.S.R. 1975 of Ajmer Irrigation on which G Schedule is prepared plus the tendered premium of the Contractor. 2) If any construction material is not available at the sources indicated in the Lead Statement and has to be obtained from other sources intimated in writing by the Executive Engineer and if such other sources are nearer or further than the original source indicated recovery or extra payment will accordingly be made for the leaser or greater distance involved as per B.S.R. on which G Schedule is based plus the premium tendered by the contractor. (emphasis supplied) Thus the Respondents had fully acquainted themselves with the local conditions and had agreed to execute the work as per specifications and at the rates specified in Schedule G . It is only in respect of additional work that the Respondents were entitled to be paid at rates set out in B.S.R. 1975. Clause 12 provides that the Respondents had to make their own arrangements for petrol, diesel and lubricants. Clause 31 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ily 66,079.74 16. Claim No. 16 Shuttering of stair case in Galleries 2,231.60 17. Claim No. 17 Cement concrete in saturated condition 29,223.81 18. Claim No. 18 Shuttering at the junction of the Dam heel and the Down stream Protection 5,126.49 19. Claim No. 19 Mechanical mixing of cement concrete 2,463.26 20. Claim No. 20 Carriage of Air vent pipe 2,497.50 21. Claim No. 21 Crusher broken aggregate 33,669.00 22. Claim No. 22 Cleaning the foundation surface handed over by the department 28,092.00 23. Claim No. 23 Increased in rates of royalty 17,216.87 24. Claim No. 24 Increased in rates of Diesel 1,22,604.36 25. Claim No. 25 Increased in minimum labour wages 5,27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tract to the contrary, it would amount to the Arbitrator mis-conducting himself and that such an award would be required to set aside. Mr. Mohta took us through a number of claims and pointed out that under most of the claims additional/higher amounts were being claimed in respect of works covered by the Contract. He submitted that there were a number of claims where, for doing the contracted work during the extended period, higher rates were claimed and the Umpire has awarded those claims not on the basis of contracted price but on basis of rates given to the new contractor who was appointed to complete the work left unfinished by the Respondent. Mr. Mohta submitted that the letters extending time categorically provided that the work would be done at the contracted rate. He submitted that this had been accepted by the Respondent. As we propose to remit the matter back to an Umpire we do not deal with each instance pointed out by Mr. Mohta. Only by way of example we refer to two claims. As set out hereinabove claim no. 2 is in a sum of ₹ 2,78,737.92 and it is for chisel dressed face stones. Under this claim, the Respondents have claimed extra amounts for chiseling the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e it has been held that it is only in a speaking award that the Court can look into the reasoning of the award. It is held that it is not open to the Court to probe the mental process of the arbitrator and speculate, where no reasons are given, as to what impelled the arbitrator to arrive as to his conclusions. He also relied on the cases of S. Harcharan Singh vs. Union of India reported in AIR (1991) SC 945; Hindustan Constructions Co. Ltd. vs. State of J. K. reported in AIR (1992) SC 2192 and Continental Construction Ltd. vs. State of U. P. reported in (2003) 8 SCC 4. In these cases the question was regarding interpretation of the terms of the contract. It was held that the Court cannot substitute its own interpretation to that of the arbitrator so long as the interpretation of the arbitrator is a possible one. Reliance was also placed upon the case of M/s. Sudarsan Trading Co. vs. State of Kerala reported in AIR (1989) SC 890. In this case also it has been held that it is for the arbitrator to interpret terms of the contract and that if the view taken by the arbitrator is a possible view then the court would not interfere. In the case of P. M. Paul vs. Union of India reported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus the award could not be set aside. In support of this submission he relied upon the case of Paradip Port Trust Ors. vs. Unique Builders, reported in AIR (2001) SC 846. In this case the claim had been for ₹ 1293260. The arbitrator awarded as follows: M/s Unique Builders Ltd. the claimant is entitled to receive from Paradeep Port Trust a sum of ₹ 851315 with interest. It was contended in that case that claims 2 and 7 (therein) could not have been awarded. This Court held that as the award was a lump sum award and as only ₹ 851315 had been awarded against a claim of ₹ 1293260 it was not possible to say whether any amounts had been awarded against claims 2 and/or 7. relying on this Mr. Lohadia submitted that even in this case it cannot be said whether any amounts have been awarded against claims alleged to be covered by the contract. We are unable to accept this submission. In this case the award itself states that the award of ₹ 29,96,060/- is against claims 1 to 39, except claim no. 30. Therefore this award is in respect of claims covered by the contract and to that extent the Umpire has misconducted himself. Even otherwise the claim for da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed term of the contract that he would not be entitled to claim the additional amount. However, it must be noted that, in this case, there was no term in the contract which prohibited any extra claims being made because of the increase in wages. Clause 31 of the Special Conditions of the Contract, which has been reproduced hereinabove, specifically bars the contractor from claiming any compensation or an increase in rate under such circumstances. Not only that but the Respondents had with their initial tender put in a term which provided that if there was any increase in the minimum wages by the Government the rates quoted by him would be increased by the same percentage. At the time of negotiation this clause was dropped. Thus, the Respondents had themselves specifically agreed not to claim any compensation or increase by reason of increase in wages. This claim could therefore not have been granted. It prima-facie appears that the majority of the claims are against the terms of the Contract. However, there are also other claims which are not against the terms of the Contract. To merely set aside the Award on ground of misconduct would work hardship on the Respondent as the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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