TMI Blog1955 (3) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... the agreement provided that all disputes arising out of or relating to the contract should be referred to the Superintending Engineer of the Circle for the time being. Accordingly, there was a reference on 21-1-1949 and an award followed on 8-5-1949. It was filed in the Court of the Subordinate Judge, Dhanbad, and the contractor prayed that it be accepted and that a decree be passed in terms of it. The Dominion of India filed objections under section 30 of the Arbitration Act, 1940 and prayed that the award be set aside and alternatively that it be modified or corrected. The contractor's application was registered as a suit under section 20(2) of the Act and a decree was passed in terms of the award on 18-3-1950. By that time the Constitution had come into force and the Union of India replaced the Dominion of India as a defendant. The Union of India filed an appeal to the High Court. The appeal was allowed in part. The contractor thereupon appealed to this Court. The dispute that was referred to the arbitrator consisted of 17 heads of claim but only three of them are contested here, namely items 5, 8 and 17. In the 5th head of claim the contractor claimed ₹ 75,9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Union Government relied on additional clause 6 of the agreement which is in these terms: The department will not entertain any claim for idle labour or for damage to unburnt bricks due to any cause whatsoever . The arbitrator held that this clause was not meant to absolve the department from carrying out their part of the contract and so he awarded the contractor ₹ 64,075 under this head. We are clear that the arbitrator went wrong in law. Government departments have their difficulties no less than contractors. There is trouble with labour, there is the likelihood of machinery breaking down in out of the way places and so forth; there was also the danger of thunder storms and heavy showers of rain in the month of May: it will be remembered that the last date of delivery was 25-5- 46. if, with that in view, Government expressly stipulated, and the contractor expressly agreed, that Government was not to be liable for any loss occasioned by a consequence as remote as this, then that is an express term of the contract and the contractor must be tied down to it. If he chose to contract in absolute terms that was his affair. But having contracted he cannot go back on h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred. If a question of law is specifically referred and it is evident that the parties desire to have a decision from the arbitrator about that rather than one from the Courts, then the Courts will not interfere, though even there, there is authority for the view that the Courts will interfere if it is apparent that the arbitrator has acted illegally in reaching his decision, that is to say, if he has decided on inadmissible evidence or on principles of construction that the law- does not countenance or something of that nature. See the speech of Viscount Cave in Kelantan Government v. Duff Development Co.(1) at page 409. But that is not a matter which arises in this case. The law about this is, in our opinion, the same in England as here and the principles that govern this class of case have been reviewed at length and set out with clarity by the House of Lords in F. B. Absalom Ltd. v. Great Western (London) Garden Village Society(1) and in Kelantan Government v. Duff Development Co.(1). In Durga Prasad v. Sewkishendas (3) the Privy Council applied the law expounded in Absalom's case(2) to India: see also Champsey Bhara Co. v. Jivraj Balloo Spinning and Weaving Co.(4) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sked to construe clause 6 of the contract or any part of the contract, or whether any question of law was specifically referred. We stress the word specifically because parties who make a reference to arbitration have the right to insist that the tribunal of their choice shall decide their dispute according to law, so before the right can be denied to them in any particular matter, the Court must be very sure that both sides wanted the decision of the arbitrator on a point of law rather than that of the Courts and that they wanted his decision oil that point to be final. The clause in the contract that requires disputes about the contract to be referred to arbitration is clause 14 and is in the following terms: Except where otherwise provided in the contract all questions and disputes relating to the meaning of the specification and instructions here in before mentioned and as to quality of materials or as to any other question, claim, right, matter or thing whatsoever in any way arising out of or relating to the contract, specification, instructions, orders or these conditions, or otherwise concerning the supplies whether arising during the progress of delivery or after t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 . The body of the award deals with this as follows: Claim No. 5. Payment for 88. lacs of katcha bricks destroyed by rain. The contractor argued etc The Executive Engineer stated .........The C.P.W.D. moreover were safeguarded by clause 6 of the contract............ The contractor maintained that clause 6 of the contract could not be invoked when the department was at fault as in this case. Clause 6 was meant to cover contingencies which were not of the department's own making. I hold that the removal of the bricks in such a manner or to prevent accumulation in excess of 60 lacs was an implied contractual obligation on the part of the C.P.W.D........ I further hold that the C.P.W.D. cannot take shelter behind clause 6 of the contract. This clause is not, in my opinion, meant to absolve the department from carrying out their part of the contract. It is impossible not to admit this without offending the rudiments of common sense reasoning . We are of opinion that this is not the kind of specific reference on a point of law that the law of arbitration requires. In the first place, what was shown to us is no reference at all. It is only an incidental matter introduced b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall arise ............. as to the construction of the contract or as to any matter or thing arising thereunder............ such dispute shall be and is hereby referred to the arbitration and final decision of etc. The arbitrator relied on that to invest him with juris- diction to determine,, as a matter of law, the construction of clauses 26-30 of that contract. The House of Lords held that in the absence of a specific reference about the construction of the contract the jurisdiction of the Courts was not taken away. Lord Russell of Killowen put it this way at page 610- No specific question of construction or of law was submitted. The parties had, however, been ordered to deliver pleadings, and by their statement of claim the contractor had claimed that the arbitrator should under his powers revise the last certificate issued etc...... It is at this point that the question of the construction of condition 30 arose as a question of law, not specifically submitted, but material in the decision of the matters which bad been submitted. This question of law the arbitrator has decided; but if upon the face of the award he has decided it wrongly his decision is, in my opinion, open ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; and later this promise is turned into a mutual understanding and to a moral responsibility in addition to a legal one. The arbitrator dealt with this as follows. He began by saying- The contractor stated that when he submitted his tender on 25-9-45 he did so in the bona fide belief that the department would make the necessary arrangements, etc. Then he sets out the following dates. On 1-11-45 the contractor was told that his tender had been accepted. On 9-11-45 the contractor warned the Executive Engineer about his immediate requirements in respect of rations . The contract was finally accepted and signed on 22-11-45. Now it is admitted that the contract contains no clause about rations and it is also evident that the question was not raised when the tender was accepted on behalf of the Dominion Government. The question was raised in a letter to the Executive Engineer, and the contractor signed the contract without waiting for a reply. It is well settled that governments can only be bound by contracts that are entered into in a particular way and which are signed by the proper authority. A reference to the agreement, Ex. A(1), will show that it was accepted on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... awarded ₹ 40,000 as compensation under this head. The error is apparent. -Facts must be based either on evidence or on admissions; they cannot be found to exist from a mere contention by one side especially when they are expressly denied by the other. The inference from the facts stated above is that the contractor entered into the agreement with his eyes open and whatever his one-sided hopes may have been he was content to enter into the agreement as it stood without binding the other side to the new conditions and without even waiting to ascertain the reaction of the other side to his further proposals. It has to be remembered that rationing was not a matter that was under the direction and control of the Dominion Government. It was a local matter handled by the then Provincial authorities and under their direction and contract. The C.P.W.D., as a department of the Dominion Government, was not concerned with rationing except that its employees had to submit to rationing like everybody else in the Sindri area. This confusion between the Dominion Government and the Provincial Government occurs in the arbitrator's opening sentence under this head where he sets out the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a heavy amount remained blocked up and we were compelled to take money from our bankers on interest. We therefore pray for interest for 16 months from 1-1-48 to 31-4-49 . The arbitrator held-- The contractor's contention that his claims should have been settled by January 1948 is, in my opinion, reasonable. I therefore award interest at 6% for 16 months on the total amount of the awards given i.e., ₹ 17,363 . Then the arbitrator sets out the amounts awarded under each head of claim. A perusal of them shows that each bead relates to a claim for an unliquidated sum. The Interest Act, 1839 applies, as interest is not otherwise payable by law in this kind of case (see Bengal Nagpur Ry. Co. v. Ruttanji Ramji(1)), but even if it be assumed that an arbitrator is a court within the meaning of that Act, (a fact that by no means appears to be the case), the following among other conditions must be fulfilled before interest can be awarded under the Act:- (1) there must be a debt or a sum certain; (2) it must be payable at a certain time or other- wise; (3) these debts or sums must be payable by virtue of some written contract at a certain time; (4) There must h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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