TMI Blog2017 (2) TMI 1322X X X X Extracts X X X X X X X X Extracts X X X X ..... er retaining 5% of the enhanced amount so received. However, there was no such stipulation in the contract entered into between the appellant and the respondent. Entire thrust in the argument of the learned counsel for the appellant before us was that there was back to back contract as according to him the aforesaid stipulations contained in a contract between HSCL and the respondent stood incorporated in the contract entered into between the appellant and the respondent as well. However, we do not find it to be so. Since that was the basis on which the learned arbitrator awarded the claim, the High Court has rightly held that it is a fundamental error committed by the arbitrator. Though the respondent has been able to get the benefit of enhanced rate in respect of Item Nos.1 and 6 and is able to retain the same thereby depriving the appellant to get this benefit. However, in a matter of contract where the parties have to stick to govern by the provisions of the contract entered into between them, equity has no role to play. Insofar as contract between the appellant and respondent is concerned, appellant was satisfied with escalation clause. Respondent, while entering into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8, 1996 and HSCL sub-contracted the work to PCL and contract between them is dated July 16, 1991, third contract which is between PCL (the respondent) and SAPL (the appellant) is dated February 09, 1990, sealed on April 15, 1992. 2) Disputes arose between the appellant and the respondent in respect of execution of the work. According to the appellant, certain payments were not made to it by the respondent though it had executed work. Those, disputes were referred to for adjudication to the arbitration as per arbitration clause in the contract between appellant and respondent by the High Court in petition filed by the appellant under Section 20 of the Arbitration Act, 1940. After adjudication of these disputes, the arbitrator rendered his award dated February 18, 1999. Since this was an award under Arbitration Act, 1940, the same was filed in the Court for making it rule of the court and was registered as Suit No. 492/99. Respondent filed objections thereto which were dismissed by the learned Single Judge vide its judgment dated November 18, 2004. In respect of six claims raised by the appellant, award was passed by the arbitrator allowing Claim Nos. 1 to 3 which was upheld by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 40 cubic metre then respondent would be agreeable to execution of job on HSCL's tendered rate subject to retention of the 5% of the proceeds by HSCL. Thus, at the time of entering into the contract between HSCL and the respondent, sum negotiations were going on between HSCL and the employer, i.e., NHPC for revision of the rates and respondent had indicated that once the said rates are revised benefit thereof shall be given to the respondent. In one of the letters dated February, 1990 issued by PCL to HSCL, which was incorporated in the contract, the aforesaid demand of the respondent was mentioned in the following manner: In the event of M/s. HSCL getting the enhanced rate for earth work excavation item no. 1 due to division in the overall contracted quantity between M/s. HCL and M/s. NHPC, we shall be paid at the enhanced rate for the quantity on earthwork executed by us. As and when the rate for item no. 1 is enhanced at least to ₹ 25 (rupees twenty five) per cum and the amount is received by us, the amounts paid to us towards 10% as per para 7 above, may be adjusted from the additional amount so received by us, provided the enhanced rate for item no. 1 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to get extra payment in respect of item Nos.1 and 2, HSCL had to pass on the said benefit to the respondent after retaining 5% of the enhanced amount so received. However, there was no such stipulation in the contract entered into between the appellant and the respondent. Entire thrust in the argument of the learned counsel for the appellant before us was that there was back to back contract as according to him the aforesaid stipulations contained in a contract between HSCL and the respondent stood incorporated in the contract entered into between the appellant and the respondent as well. However, we do not find it to be so. Since that was the basis on which the learned arbitrator awarded the claim, the High Court has rightly held that it is a fundamental error committed by the arbitrator. On the other hand, what emerges from the contract between the appellant and the respondent is that the appellant could claim revised rates based only on escalation as per the provisions of Clause 16. Under this head, appellant was entitled to a sum of ₹ 7,17,560/-. Following discussion in the impugned judgment is pertinent: 12. Another aspect of the matter which perhaps had a beari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In support, the learned counsel referred to the following judgments of this Court: (i) B.V. Radha Krishna v. Sponge Iron India Ltd. ( (1997) 4 SCC 693) 11. The disposal of the matter by the High Court in the manner shown above does not come within the ambit of Section 30 of the Arbitration Act. This Court, time and again, has pointed out the scope and ambit of Section 30 of the Act. In State of Rajasthan v. Puri Construction Co. Ltd. [(1994) 6 SCC 485] after referring to decisions of this Court as well as English cases, the Court observed as follows: (SCC p. 492, para 12) On the scope and ambit of the power of interference by the court with an award made by an arbitrator in a valid reference to arbitration, various decisions have been made from time to time by Law Courts of India including this Court and also by the Privy Council and the English Courts. Both the parties have referred to such decisions in support of their respective contentions. The factual contentions of the respective parties are proposed to be scrutinised and then the facts are proposed to be tested within the conspectus of judicial decisions governing the issues involved. This Court aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of India v. Bungo Steel Furniture (P) Ltd. [AIR 1967 SC 1032 : (1967) 1 SCR 324], N. Chellappan v. Secy., Kerala SEB [(1975) 1 SCC 289], Sudarsan Trading Co. v. Govt. of Kerala [(1989) 2 SCC 38], State of Rajasthan v. Puri Construction Co. Ltd. [(1994) 6 SCC 485] as also in Olympus Superstructures (P) Ltd. v. Meena Vijay Khetan [(1999) 5 SCC 651] has stated that reappraisal of evidence by the court is not permissible and as a matter of fact, exercise of power to reappraise the evidence is unknown to a proceeding under Section 30 of the Arbitration Act. This Court in Arosan Enterprises [(1999) 9 SCC 449] categorically stated that in the event of there being no reason in the award, question of interference of the court would not arise at all. In the event, however, there are reasons, interference would still be not available unless of course, there exist a total perversity in the award or the judgment is based on a wrong proposition of law. This Court went on to record that in the event, however, two views are possible on a question of law, the court would not be justified in interfering with the award of the arbitrator if the view taken recourse to is a possible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained by the learned arbitrator on the basis of provisions in the contract entered into between HSCL and the respondent and said provisions were not made applicable in the contract which was entered into between the appellant and the respondent, the approach of the learned arbitrator is clearly perverse in justifying the claim on the basis of provisions which were not even applicable. Whether contract entered into between the HSCL and the respondent governed the relationship between the appellant and the respondent was a fundamental and jurisdictional issue and such an exercise is permissible by the Court while examining the validity of an award. Undertaking this exercise did not amount to appraising the evidence or dealing with the matter as an appellate court. On the contrary, the approach taken by the Division Bench of the High Court is on the principle that arbitrator is a creature of contract between the parties and if he ignores the specific term of the contract, it would be a question of jurisdictional error which can be corrected by the Court. A deliberate departure or conscious disregard of the contract not only manifests the disregard of his authority or misconduct on his ..... X X X X Extracts X X X X X X X X Extracts X X X X
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