Continental Construction Ltd. Vs. State of U.P
 Insc 459 (22
& S.B. Sinha.
WITH C.A. No. 8453 of 1997 S.B. SINHA, J:
two appeals involving common questions of law and fact were taken up for
hearing together and are being disposed of by this common judgment.
parties hereto entered into a contract dated 20th August, 1964 for the purpose of construction of Obra dam, Power house,
structures and appurtenant works. Disputes and differences having arisen
between the parties as regard supply of extra quantity of earth and rock, the
matter was referred to an arbitrator.
back as on 23.8.1972, the appellant herein invoked the arbitration agreement
contained in Clause 17 of the contract in connection with earthfill and rockfill
which was recorded from 53rd running bill upto the 88th running bill. One Shri
J.S. Pujji was appointed as an arbitrator by the appellant. As the respondent
did not appoint any arbitrator the appellant requested the said arbitrator to
proceed in the matter as a sole arbitrator whereupon he entered into a
reference. The respondent herein filed application before the Court of District
Judge purported to be in terms of Sections 33 and 9 of the Arbitration Act,
1940 which was allowed. Being aggrieved by and dissatisfied with the judgment
of the District Judge, the appellant filed appeal before the High Court of Allahabad.
The High Court by an order dated 17.4.1980 directed that both the contractor
and the State Government shall nominate their respective arbitrators for
resolving the disputes with regard to the claim for extra charges for earth and
rock work made by the contractor for the period subsequent to 28.12.1967 and
15.6.1968 respectively. The parties thereafter filed their respective statements
of claim, statements of defence and replications before the arbitrators.
However, no award could be made by the learned arbitrator within the statutory
period as the disputes and differences were referred to the Umpire in
accordance with the arbitration agreement.
Umpire was appointed by the Court of Civil Judge, Sonebhadra with the consent
of the parties.
appellant herein filed a statement of claim for a sum of Rs. 43,50,958.48 on
extra quantity of 8,45,319.471 cu. m. of earthfill excavated from the external
sources obtained from borrow areas at the rate of Rs. 880.91 per 100 cu.m. It
also made a claim of Rs. 26,47,746.34 for extra quantity of 1,66,524.927 cu.m. of
rock excavated from the external sources/quarries at the rate of Rs. 1590/- per
100 cu.m. The Umpire appointed for determination of disputes between the
parties who was a retired Engineer-in-chief of the respondent herein awarded a
sum of Rs. 7,29,764.00 in respect of the claim for extra quantity of earthfill
and a sum of Rs. 8,74,256.00 in relation to its claim for rockfill. The
appellant herein filed applications for making the said awards as rule of the
Court. Respondent, however, filed objections thereto in terms of Section 30 of
the Arbitration Act, 1940.
reason of an order dated 23.8.1995 the said applications of the respondent were
allowed and the awards were set aside by the Civil Judge, (Senior Division) Mirzapur.
The appellant herein preferred appeals thereagainst which were dismissed by the
High Court inter alia on the ground that in terms of the provisions of the
contract the appellant herein could not make any extra claim for supply of
earth or rock.
Kumar Suri, the learned counsel appearing on behalf of the appellant would
inter alia submit that the question as to whether the claim as regards extra
item of earth and rock work can be claimed or not was considered by the Allahabad
High Court in FAFO No. 155 of 1975 Others) disposed of on 17th April, 1980
holding that such claim is maintainable. It was contended that the award being
a non-speaking one, the learned Civil Judge, Mirzapur and the High Court must
be held to have acted illegally and without jurisdiction in entering into the
merit of the matter. The learned counsel would urge that the arbitrator had the
requisite jurisdiction to construe the contract independently and in absence of
any finding to the effect that the awards ex facie were perverse, the same
could not have been set aside by reason of the impugned judgments.
attention has been drawn to the fact that even before the Umpire the respondent
admitted that the appellant herein is entitled for the extra items of admitted
total quantity of earth and rock to the extent of 8,45,319.471 cu.m. and
1,66,524.927 cu.m. respectively and only in terms of such admission the awards
have been passed.
learned counsel would contend that from the awards it would appear that
although the claims of the appellant were for a sum of Rs. 43,50,958.48 and Rs.
26,47,746.34; the learned Umpire awarded only a sum of Rs. 7,29,764.00 and Rs.
8,74,256.00 in its favour.
Markandeya, learned senior counsel appearing on behalf of the respondents, on
the other hand, would submit that the umpire was bound by the terms of the
contract and could not have travelled beyond the same. The learned counsel
would contend that before the Civil Judge, Mirzapur an affidavit was filed to
the effect that the Department has not admitted any claim of the opposite
party. In support of the said contention, the learned counsel has produced
before us the affidavit of one Shri Uma Nath Misra filed in Case No. 91 of 1993
and 92 of 1993 in the Court of Civil Judge, Mirzapur.
is no dispute that there existed an arbitration agreement between the parties as
would appear from the fact of the matter, as referred to hereinbefore, that the
learned umpire passed a non-speaking award.
Umpire in his award has recorded:
No. 1 amounting to Rs. 43,50,958.48 (plus interest and costs) on account of the
work of earthfill in Dam Embankment from the 53rd running bill upto the 88th
running bill, involving a quantity of 10,33,702.306 cum of earthfill with earth
obtained from borrow area. Against the said quantity, the Respondents admitted
the quantity of 8,45,319.471 cu.m. for this claim and this was accepted by the
Claimants. The Claimants have claimed a rate of Rs. 420.91 per 100 cu.m. over
and above the rate of Rs. 460.00 per 100 cu.m. provided in item No. 64 of the
schedule, and have furnished analysis of rates for earthfill in Dam Embankment
after borrowing material from borrow areas and sources other than the
excavations of the Dam, Power House, Spillway, Approach and Tail Race Channels.
this, I award Rs. 7,29,764.00 (Rs. Seven lacs twenty nine thousand, seven
hundred and sixty four) only." A similar award has been passed in respect
of claim of the appellant relating to rock fill. A bare perusal of the said
awards would clearly go to show that the respondent herein admitted a part of
the claim of the appellant which in turn was accepted by it.
an admission presumably was made having regard to the documents which were
filed by the parties before the Umpire as also decisions of the Allahabad High
Court in The respondent did not raise any question as regard the said admission
of part of the quantity of earth fill and rock fill before the Umpire. A vague
statement was made that the claim of the appellant was not admitted while
dealing with the question as to whether the award should have been a reasoned
one or not.
submission that no such admission is made is not borne out from the records. On
the other hand, such admission must have been made in view of the documents
maintained by the respondent as otherwise the exact figure of earthfill or rockfill
was not possible to be mentioned in the awards.
view of the order of the High Court dated 17.4.1980 the Umpire was required to
adjudicate upon the claim of the appellant. For the said purpose he was
required to take into consideration the terms and conditions of contract vis-`-vis
the conduct of the parties. It is not a case where the learned Umpire has travelled
beyond the contract.
matter relating to construction of the contract and/ or application thereof
fell for consideration before the arbitrators.
to the appellant, the work in question did not fall within the purview of the
excepted matter. Determination of the said question was, thus, clearly within
the jurisdiction of the Umpire.
award is a non-speaking one. It is trite that the Court while exercising its
jurisdiction under Section 30 of the Arbitration Act, 1940 can interfere with
the award only in the event the arbitrator has misconducted himself or the
proceeding or there exists an error apparent on the face of the award.
learned Civil Judge and the High Court have not found that the Umpire acted
arbitrarily, irrationally, capriciously or independent on the contract. No
finding has been arrived at that the Umpire has made conscious disregard of the
contract which was manifest on the fact of the award.
court exercises a very limited jurisdiction while adjudicating upon an
objection to the award in terms of Section 30 of the Arbitration Act, 1940.
instant case, the Umpire has merely set out the claims, given the history of
the claims and awarded certain amount. He has not disclosed his mind indicating
as to why he had done so or what was done.
Courts, therefore, could not interfere with the award merely on ipse dixit.
2 SCC 38] this Court has laid down the law in the following terms:
in the instant case the court had examined the different claims not to find out
whether these claims were within the disputes referable to the arbitrator, but
to find out whether in arriving at the decision, the arbitrator had acted
correctly or incorrectly. This, in our opinion, the court had no jurisdiction
to do, namely, substitution of its own evaluation of the conclusion of law or
fact to come to the conclusion that the arbitrator had acted contrary to the
bargain between the parties.
a particular amount was liable to be paid or damages liable to be sustained,
was a decision within the competency of the arbitrator in this case. By
purporting to construe the contract the court could not take upon itself the
burden of saying that this was contrary to the contract and, as such, beyond
to be determined that there is a distinction between disputes as to the
jurisdiction of the arbitrator and the disputes as to in what way that jurisdiction
should be exercised. There may be a conflict as to the power of the arbitrator
to grant a particular remedy." The question again came up for
consideration before a three-Judge [2003 (6) SCALE 265]. This Court held:
award made by an arbitrator can be set aside only if one or the other term
specified in Sections 30 and 33 of the Arbitration Act, 1940 is attracted. It
is not a case where it can be said that the arbitrator has misconducted the
proceedings. It was within his jurisdiction to interpret Clause 47 of the
Agreement having regard to the fact-situation obtaining therein.(sic) It is
submitted that an award made by an arbitrator may be wrong either on law or on
fact and error of law on the face of it could not nullify an award. The award
is a speaking one. The arbitrator has assigned sufficient and cogent reasons in
support thereof. Interpretation of a contract, it is trite, is a matter for
arbitrator to determine (see M/s. Sudarsan Trading Co. versus The Government of
Kerala, AIR 1989 SC 890). Section 30 of the Arbitration Act, 1940 providing for
setting aside an award is restrictive in its operation. Unless one or the other
condition contained in Section 30 is satisfied, an award cannot be set aside.
The arbitrator is a Judge chosen by the parties and his decision is final.
Court is precluded from reappraising the evidence. Even in a case where the
award contains reasons, the interference therewith would still be not available
within the jurisdiction of the Court unless, of course, the reasons are totally
perverse or the judgment is based on a wrong proposition of law. As error
apparent on the face of the records would not imply closer scrutiny of the
merits of documents and materials on record. Once it is found that the view of
the arbitrator is a plausible one, the Court will refrain itself from
interfering." The aforementioned decisions constitute binding precedents.
the reasons aforementioned, we are of the opinion that the impugned judgments
cannot be sustained. The impugned judgments are, therefore, set aside. The
awards made by the learned Umpire are directed to be made rule of court. These
appeals are allowed accordingly. No costs.