JUDGMENT : Misra, J. - Messrs Kalinga Construction Company (Private) Limited (hereinafter to be referred to as the Company) did earthwork on the right dyke of the Hirakud Dam. The dyke is approximately 7 miles long and 28 feet high. Its average width at the base is 180 feet and at the top is 25 feet. The slope of the dyke is 3: 1 on the water storage side and 2: 1 on the other side. For the earthwork done, Government paid about 1 Crore and 8 lakhs of rupees. The Company made a claim on three heads: (i) for lifts in terms of leads; (ii) for machine leads and lifts; and (iii) for ramps not forming part of the dyke. Government disowned their liability. The matter was referred to arbitration. Shri. A.V. Viswanath Sastri, a retired Judge of the Madras High Court and a Senior Advocate of the Supreme Court, was appointed Arbitrator. By his award dated 19th July, 1959, he rejected the claims of the Company, who filed Title Suit No. 28 of 1959 in the Court of the Subordinate Judge, Sambalpur, for setting aside the award, and the suit was decreed. Union of India (Defendant No. 1) and the State of Orissa (Defendant No. 3) have filed this appeal against the judgment of the Subordinate Judge setting aside the award. The matter was heard by a Division Bench consisting of my learned bretheren Barman and Das, JJ Barman J. agreed with the Subordinate Judge and dismissed the appeal. Das J. agreed with the Arbitrator and allowed the appeal. There being thus difference of opinion, the matter has been referred to a third Judge. 2. In the suit the following Issues were framed: (i) Is the claimant entitled to any payment for lifts under the terms of the contract between the parties? Note-Both sides agree that I foot of lift is equal to 121 feet of lead. (ii) Whether the claimant is entitled to payment for machine leads where machines have been used for earth work and if so, on what basis and at what rates? (iii) Whether in the case of machine leads, lifts are not taken into account as pleaded by the Union of India? (iv) Whether the claimant is entitled to the cost incurred in putting up the ramps? (iii) Whether in the case of machine leads, lifts are not taken into account as pleaded by the Union of India? (iv) Whether the claimant is entitled to the cost incurred in putting up the ramps? (v) Is the Union of India estopped from denying liability for payment of lifts and machine leads for the reasons stated in paragraphs 11 to 14 of the statement of Claim of the Kalinga Construction Company (Private) Limited? (vi) Is the claimant entitled to interest for the period during which the amounts payable to the claimant remained unpaid by the Government, if so, at what rate? (vii) What is the amount due to the claimant from the Union of India? 3. The application was filed for setting aside the award u/s 30(a) of the Arbitration Act, 1940, on the ground that the Arbitrator misconducted himself and the proceedings. The learned Subordinate Judge set aside the award u/s 30(c) on the ground that it was otherwise invalid. Mr. Iyengar frankly conceded that he would not press the application on this ground. No prayer had been made to remit the award u/s 16. A Court should approach an award with a desire to support it if that would reasonably be possible rather than to destroy it by calling it illegal Smt. Santa Sila Devi and Anr. v. Dhirendra Nath Sen and Ors. 1964 S.C.D. 156. The Arbitrator in this case was a retired Judge of the Madras High Court and a Senior Advocate practising in the Supreme Court. The award shows that he dealt with disputed question fully like a Judge and not like a lay Arbitrator. It was open to him not to assign any reason for his conclusions, and he could have merely stated that on perusal of the evidence and the documents, he arrived at particular conclusions. Though the Evidence Act has no application to arbitration proceedings, he discussed the law pertaining to evidence Act. The conclusions in the award were reached after thorough discussion of the documents filed and oral evidence adduced before him. The award cannot be set aside by a Court of law unless there is an error of law apparent on the face of the award. The conclusions in the award were reached after thorough discussion of the documents filed and oral evidence adduced before him. The award cannot be set aside by a Court of law unless there is an error of law apparent on the face of the award. But the principle of law is well settled that where in the award or in any document or evidence incorporated in the award, the Arbitrator fully discusses the documents and evidence and arrives at erroneous conclusions, it is open to a Court of law to examine those reasons with reference to documents and evidence and come to a different conclusion. In AIR 1923 P.C. 66 their Lordships observed as follows: An error of law on the face of the award means, in Their Lordships view, that you can find in the award or a document actually incorporated thereto as for instance a note appended by the arbitrator stating the reasons for his judgment some legal proposition which is the basis of the award and which you can then say is erroneous. It does not mean that if in a narrative a reference is made to a contention of one party that opens the door to seeing first what that contention is, and then going to the contract on which the parties rights depend to see if that contention is sound. In AIR 1927 164 (Privy Council), their Lordships held that a mere error in construing the contract between the parties which is referred to in the award simply to earmark the origin of the dispute in question between the parties, was not an error of law on the face of the award. The observations of their Lordships in AIR 1923 P.C. 66 were quoted with approval in Alopi Parshad and Sons Ltd. Vs. Union of India (UOI), and Jivarajbhai Ujamshi Sheth and Others Vs. Chintamanrao Balaji and Others. In Seth Thawardas Pherumal Vs. The Union of India (UOI) the Arbitrator construed a clause in the written contract and gave reasons in the award itself. Their Lordships examined the terms of the contract and held that the Arbitrator gave a wrong construction and concluded that the error wag apparent on the face of the award. It is worthwhile to make a reference a passage in AIR 1923 P.C. 592. Their Lordships examined the terms of the contract and held that the Arbitrator gave a wrong construction and concluded that the error wag apparent on the face of the award. It is worthwhile to make a reference a passage in AIR 1923 P.C. 592. Lord Russel observed: There still remains the question whether this error of law is apparent on the face of the award. I think it is. The award recites the contract and refers in terms to the provisions of condition 30. Condition 30 is accordingly incorporated into and forms a part of the award just as if the Arbitrator had set it out verbatim and had then proceeded to set the construction which he placed upon it. The Court can look at it just as it looks at the answers of the Divisional Court in 1912 App. Cas. 673, at the contract in 1905 (2) K.B. 184 and at the pleadings in 1923 A.C. 395. It is thus clear that where the terms of a contract are incorporated into and made a part of the award, and the entire evidence is discussed and the Arbitrator proceeds to give his construction on the contract, and the construction is found to be wrong, there is an error of law apparent on the face of the award. It was contended by Mr. Iyengar that the Arbitrator has taken a part of the evidence of the Chief Engineer and of other witnesses which is favourable to the Union and the State and has completely ignored the other parts unfavourable to them and, in the circumstances, it is open to the Court to scrutinise the award in the light of the entire evidence. He also invoked the same principle with reference to various documents referred to and discussed in the award. Mr. Iyengar's contentions has considerable force and must be given full effect. It was open to the Arbitrator not to refer to and discuss certain oral evidence and documents. But once the Arbitrator chose to go into those and discussed them in the award, it was not open to him to ignore some relevant oral evidence and documents which constituted integral parts of the evidence considered by him. In Seth Thawardas Pherumal Vs. But once the Arbitrator chose to go into those and discussed them in the award, it was not open to him to ignore some relevant oral evidence and documents which constituted integral parts of the evidence considered by him. In Seth Thawardas Pherumal Vs. The Union of India (UOI) their Lordships held that Courts would interfere if it is apparent that the Arbitrator had acted illegally in reaching his decision, that is to say, if he had decided on inadmissible evidence or on principle of construction that the law does not countenance or something of that nature. The Arbitrator is not a conciliator and cannot ignore the law, but he must apply it in order to do what he thinks just and reasonable. He is a tribunal selected by the parties to decide their disputes according to law and is bound to follow and apply the law. If he does not, he can be set right by the Court provided errors appear on the face of the award. The single exception to this dictum is when the parties choose specifically to refer to a question of law as a separate and distinct law. The exception does not exist in this case and no question of law as a separate and distinct matter was specifically referred to the Arbitrator. In the Hght of the aforesaid principles, the controversies must be decided. 4. Under Issue No. (ii), the Arbitrator held that the Company is not entitled to payment for machine leads even where machines had been used for earth work. His conclusion was that the tender was accepted on the basis that the earthwork was to be done by manual labour. Clause (12) of the invitation for tender (Ext. P. 65) prescribed that the contractor should quote rates acceptable to him for doing the work-(a) by manual labour only and (b) by earth moving machinery of his own. Contractor should state clearly how many machineries of each type they (he?) will put in for this job. The tender (Ext. P. l/a) and its covering letter (Ext. P. 1) dated 25-12-1951, however, did not quote separate rates for work to be done by manual labour and by earth moving machinery. Item No. l(a) of the tender (Ext. P. l/a) quoted the rate at Rs. 45/- per 1000 eft. The tender (Ext. P. l/a) and its covering letter (Ext. P. 1) dated 25-12-1951, however, did not quote separate rates for work to be done by manual labour and by earth moving machinery. Item No. l(a) of the tender (Ext. P. l/a) quoted the rate at Rs. 45/- per 1000 eft. of earthwork in all kinds of soils laid in 6" layers with rough dressing including all lifts and average lead not exceeding 10. The relevant term in the accompanying letter (Ext. P. 1) was as follows- Subject Tender for the construction of Right Dyke. Dear Sir, We beg to submit herewith our tender for the above work. Earthwork: For earthwork, we have assumed measurements on borroswpits and average lead not exceeding 10. A though it may not be necessary to go beyond 10 leads (including lifts at 1 ft. lift equal to 2? ft. lead) of 50 ft., there is a possibility, in case suitable earth is not available to go longer distances. In such a case, each extra lead of 50 ft. may be paid at Rs. 1.12 as. per 1000 c. ft. If machines are used, ramps at suitable instance will be provided and these will be taken as a part of the Dyke. It is thus clear that even in the tender itself, there was contemplation for user of machine in the work. The Arbitrator, therefore, committed a serious error of record in stating in para 13(a) of his award to the effect- Since no reference to machinery or machine work was made in Ext. P.1 or P.1 (a) the tender was for earth work by manual labour. This is an error apparent on the face of the award which vitiated the perspective in having a fallacious basic assumption that the work was contracted to be done by manual labour only. The learned Advocate-General contended that the covering letter (Ext. P. 1/a) did not constitute a part of the tender (Ext. P. 1). Both the documents constitute integral parts of the tender. The Chief Engineer, Sri Kanwar Sain, stated- If Ext. P. 1 were not at variance with item 1 of P. 1(30) it would have some bearing, but as P. 1 is in conflict with P. l(a). the covering letter Ext. P. 1 has nobearing. There is no variance between the tender and the forwarding letter. They are complementary to each other and Ext. P. 1 were not at variance with item 1 of P. 1(30) it would have some bearing, but as P. 1 is in conflict with P. l(a). the covering letter Ext. P. 1 has nobearing. There is no variance between the tender and the forwarding letter. They are complementary to each other and Ext. P. 1 gives the dear definition of 'lead' as including "lift equivalents". The Chief Engineer further stated in his evidence- There is no document specifically stating that manual labour would be the basis of payment but that is the only inference possible on the documents referred to me. The Arbitrator held that the rate quoted in Ext. P. l(a) was on the basis of manual labour as after a year and two months from the date of acceptance of the tender, earth moving machinery was acquired and began to be employed by the Company. In this connection he overlooked the report of the Executive Engineer, Dyke Division (Ext. P. 68). The report states- Tenders are invited for the work and the work is allotted to M/s. Kalinga Construction Company Limited. The rates provided in the estimate are the tender rates. The earthwork will be done by the contractors and they will do the work both by manual labour and also by their own machinery. No machinery for the earthwork will be supplied to the contractor by the Department. The non-consideration of this document vitiated the conclusion of the Arbitrator. The Arbitrator held that if the earth moving machinery would be employed, the lead will be certainly greater than 10 leads traving regard to the distance to be travelled along the dyke and the sloping ramps through which heavy machines should have to climb up from the borrowpits of the dyke and back to the borrowpits after dumping the earth on the dyke and the entire work would never be completed within 10 leads. Admittedly borrowpits were marked out by the department within a distance of 500 feet. According to the report of the Rates and Costs Committee, earthwork by manual labour is generally confined to it maximum lead of 300 feet except in places where the quantity of work involved is too small to justify the use of the machines (see Part I, Chapter 7, page 135). The Arbitrator committed an error of law apparent on the face of the award in wrongly construing it. The Arbitrator committed an error of law apparent on the face of the award in wrongly construing it. In his letter dated 10-5-1954 (Ext. P. 58), the Superintending Engineer wrote to the Company that the latter had not brought the earth moving machines to site and were not in a position to do any serious work on the dyke. The Company in their reply dated 17-6-1954 (Ext. P. 59) stated as follows- Regarding earthwork there was no obligation on our part to bring in any machinery. If we have brought them it is for our convenience. The question therefore of machinery having arrived late does not arise. The Arbitrator drew adverse inference against the Company by observing that if there was no obligation to employ machinery on the part of the contractor, equally there was no obligation on the part of the Government to pay for machine leads. This inference suffers from a clear fallacy. The stand taken by the Company in Ext. P. 59 is consistent with their present case that no separate rates have been fixed for work done by machine and manual labour and that they are entitled to the stipulated rate irrespective of the user of manual labour or machinery. Ext. P. 59 is consistent with that stand and no adverse inference can be drawn from this document that manual labour was the basis for fixation of rate. The Arbitrator further held- The special condition Nos. 3 and 7 as well as Item No. 1 of the Schedule to Ext. p. 60 show that the basis of the contract was the same as in Ext. P. 1(a) and P. 2, that the rates were the same and that no further liability was undertaken by Government for payment in respect of machine leads at the rate fixed for manual labour in excess of 10 average leads. In Ext. P. 69 there was no reference to the use of machines or to the rates for machine work obviously because the rates originally fixed on the basis of manual labour were accepted and the Company was not obliged or required to employ machinery. This observation is erroneous on the face of it. Exts. P. l(a) and P. 2 do not at all refer to fixation of rate on the basis of manual labour. In Ext. This observation is erroneous on the face of it. Exts. P. l(a) and P. 2 do not at all refer to fixation of rate on the basis of manual labour. In Ext. P. 69 there is certainly no reference to the use of machine, but equally also there is no reference to work to be performed on the basis of manual labour. The initial assumption is fallacious and hence the conclusion has been vitiated. The acceptance by the Arbitrator of the evidence of Sri Kanwar Sain that when Exts. P. l(a), P. 2 and P. 69 were executed, rates and leads were fixed on the basis of manual labour is without foundation. The Arbitrator further observed- Machine work involves the construction of ramps. There was no limit fixed by the contract to the distance at which ramps had to be erected. By erecting ramps far apart, the Company could minimise its costs in erecting ramps and also claim for extended leads. On this basis the Government would have to pay for leads whose extent depended on the will of the Company. This is not reasonable construction. At the same time the Government could not go behind the manual labour rates because machines came to be employed and machine work was cheaper. The Arbitrator in coming to this conclusion has completely overlooked Ext. P. 9 dated 13-9-1954. The Company wrote to the Chief Engineer- We have been carrying out earthwork for the Right Dyke strictly in accordance with the instructions given by the Superintending Engineer and the Executive Engineer. Borrow areas and ramps are marked by them and we convey earth to places pointed out by them. The truth of the contents of this letter is not denied. The Chief Engineer, Sri Sain, even does not challenge this statement, as incorrect. The conclusion of the Arbitrator in the aforesaid passage is based on error of record. The Company was not free to select the site for erection of ramps and borrow areas. In para 6 of the Award, the Arbitrator defines "lead" as the shortest horizontal distance between the centre of gravity of the dyke on the basis that the entire earthwork was done by manual labour. Such a definition of lead is not found in any of books on Engineering, nor is it supported by any evidence. In para 6 of the Award, the Arbitrator defines "lead" as the shortest horizontal distance between the centre of gravity of the dyke on the basis that the entire earthwork was done by manual labour. Such a definition of lead is not found in any of books on Engineering, nor is it supported by any evidence. Sri Tarapore, on the other hand, has deposed that lead is the shortest practiable distance through which earth would be actually moved. This statement has not been challenged in cross-examination. Sri Kanwar Sain, the Chief Engineer and Sri Rama Rao, the Executive Engineer, have not challenged the accuracy of this definition in their evidence. The basic assumption on which the Arbitrator proceeded that 'lead' carried a particular connotation has vitiated his ultimate finding. Sri Tarapore also deposed. There is only one lead in Engineering parlance both for machine and manual labour and in either case the shortest practiable distance is taken into account. The lead is measured in the same way in either case. Sri Tarapore was examined first and the Chief Engineer and the Executive Engineer Sri Rama Rao were examined later. There is no evidence contra on behalf of the Union on this score. Calculation of the difference in rates between machine labour and manual labour in para 14 of the Award suffers from the infirmity that it overlooked the observation in Ext. P. 74 that earthwork by manual labour is generally confined to a maximum lead of 300 ft. except in places where the quantity of work involved is too small to justify use of machines. From various correspondence between the parties it will also be manifest that the Company was to use machinery in this big undertaking. The covering letter Ext. P. 1 clearly referred to use of machines. In Ext. P. 29 dated 4-4-1952, the Company wrote to the Chief Engineer that they had made arrangements for the purchase of about 12 lakhs worth of earth moving machineries for the work and the machines were expected to arrive within about 4 months time. They asked for payment of 90 percent of the actual costs when the machines would arrive at the site. In Ext. P.31 dated 23-4-1932, the Company protested against a condition introduced by the Government to the effect "no extra payment to be made for ramps". They asked for payment of 90 percent of the actual costs when the machines would arrive at the site. In Ext. P.31 dated 23-4-1932, the Company protested against a condition introduced by the Government to the effect "no extra payment to be made for ramps". The Company clearly asserted that payment for ramps would be reduced to the minimum possible consistent with practical working conditions for machines. In Ext. P. 68 dated 20-5-1952, the Executive Engineer in his report clearly stated that earthwork would be done by contractors both by manual labour and also by their own machineries. In Ext. P. 33 dated 3-11-1952, (the Company renewed their prayer to the Chief Engineer for advance against machineries and gave a list of the machineries. In Ext. P. 34 dated 21-11-1952, the Company informed the Executive Engineer regarding arrival of the machineries from United States and asked the department for making suitable arrangements for compaction. In Ext. P. 35 dated 30-12-1952, they intimated the fact that the earth moving machineries would reach Calcutta on that day and were expected to reach the spot by the first week of January 1953. In Ext. P. 4 dated 1-1-1953, the Executive Engineer was intimated that the earth-moving machineries had landed in India and certain points were to be cleared up soon. In Ext. P. 37 dated 3-1-1958, the Chief Engineer replied to the Company that their request for advance against machineries had been turned down by the Hirakud Control Board. In Ext. P. 38 dated 21-1-1953, the Company intimated the Executive Engineer that they hoped to start earthwork by machines early next week and requested them to have borrow areas exactly demarcated within which the department wanted the Company to work. In response to Ext. B. 39, the department replied under Ext. P.m. (a) dated 27-1-1953, that the borrow areas were already being marked on the site for starting the earthwork. In Ext. P.40 dated 27-1-1953, the Executive Engineer asked the Company to intimate as to when the machines were due to arrive on the site. In Exts. P. 41 dated 28 2-1953 and P. 42 dated 2-3-1953, the Company stated that the machineries were being used at the site. In Ext. P. 44 dated 10-4-1953 the S.D. O. was told that the borrow area between RD-9000 to 10,000 100 feet step adjacent to the berm was most unsuitable for working machinery. In Exts. P. 41 dated 28 2-1953 and P. 42 dated 2-3-1953, the Company stated that the machineries were being used at the site. In Ext. P. 44 dated 10-4-1953 the S.D. O. was told that the borrow area between RD-9000 to 10,000 100 feet step adjacent to the berm was most unsuitable for working machinery. The S.D.O. replied under Ext. P. 45 dated 24-4-1953, suggesting that manual labour my be put if machinery cannot do the work. In Ext. P. 49 dated 21-5-1953, the Superintending Engineer intimated the Company that they would not be able to complete the work in time unless the extent of machinery work was increased. They were asked to note that possible employment of manual labour had already been taken into account and still the progress was going to fall short. In Ext. P. 53 dated 1-7-1953, the Company intimated the Superintending Engineer that by then they had completed 22.5 percent of the work out of which 5 percent was done by manual labour and 17.5 percent by machines of the balance of 77.5 percent, they would do 70 percent by machines and 10 percent by manual labour making a total of 80 percent against 77.5 percent. In Ext. P. 7 dated 27-7-1953, the Company complained that ramps for machines for doing the earthwork were not being measured although the Company was entitled to payment for the same. In Ext. P. 54 dated 1-9-1953, the Executive Engineer intimated the Company that along with it was enclosed a copy of the programme of work on the Right Dyke for the season 1953-54 making necessary arrangements for machineries and labour so that the work might be carried on as per schedule. In Ext. P. 8 dated 22-2-1954 the Company asked for payment of ramps and extra leads including lifts. In Ext. P. 60 dated 13-9-1954, the Company asked the S.D.O. to point out places where the ramps were to be made for machines to work. In Ext. P. 61 dated 15-10-1954, the S.D.O. wrote to the Executive Engineer that even at that stage the Company was to do earthwork on the dyke with the help machines. In Ext. P. 62 dated 19-10-1954, the Executive Engineer asked the Company to strictly adhere to the programme by putting sufficient machines on work on the Right dyke. In Ext. P. 61 dated 15-10-1954, the S.D.O. wrote to the Executive Engineer that even at that stage the Company was to do earthwork on the dyke with the help machines. In Ext. P. 62 dated 19-10-1954, the Executive Engineer asked the Company to strictly adhere to the programme by putting sufficient machines on work on the Right dyke. In Ext. P. 63 dated 22-10-1954, the Executive Engineer insisted that more machines should be put on work. In Ext. P. 64 dated 22-10-1954, the Company wrote to the S.D.O. as follows: We had no intention of putting the machines on the dyke during this month. The Head Regulator involves about 21 laciest of earth work and we had always programmed to complete this first as soon as possible and then divert the machines to the dyke work. If unfortunately the quality of earth was not suitable for dyke and this had to be wasted, we cannot help this. Regarding earthwork on the dyke, we have to state that dewatering of cut off trench is holding up the work and machines have to be engaged in the area beyond 33700 which was reserved for manual labour. It would therefore be noted that we are depriving the manual labour of the work which they could have done, by engaging the machines in the area which was more suitable for manual labour. Only 4 pairs of rollers are working in two shifts on the compaction between RD-29000 to 35000 and these are not sufficient to prove work for even two machines which are working at present. In Ext. P. 10 dated 27-10-1954, the Chief Engineer was asked for confirmation that the Superintending Engineer and the Executive Engineer had authority from him to instruct the Company with regard to leading earth to various points on the dyke so that extra leads involved may be paid to them. The Company insisted upon a formal letter from the Chief Engineer as the department was unable to pay to the Company for extra leads and a large amount of claim was unnecessarily held up. It is unnecessary to give further details of many other letters dealing with the point. Those are Exts. P. 11 dated 1-11-1954, P. 13 dated 7-5-1955, P. 14 dated 24-5-1955. In Ext. P. 15 dated 24-5-1955, the Superintending Engineer replied to Ext. P. 14 stating that the matter was under consideration. In Ext. It is unnecessary to give further details of many other letters dealing with the point. Those are Exts. P. 11 dated 1-11-1954, P. 13 dated 7-5-1955, P. 14 dated 24-5-1955. In Ext. P. 15 dated 24-5-1955, the Superintending Engineer replied to Ext. P. 14 stating that the matter was under consideration. In Ext. P. 16 dated 2-6-1955, the Executive Engineer wrote that the bill was pending for decision of the Hirakud Control Board. In Ext. P. 17 dated 24-6-1955, the Company replied that it was the Chief Engineer with whom the Company had to deal with and the Hirakud Control Board was not concerned in the matter. The point was dealt with in Exts. P. 18 dated 24-6-1955, P. 19 dated 27-6-1955, P. 20 dated 4-7-1955, P. 21 dated 7-7-1955, P. 22 dated 16-8-1955, P. 23 dated 16-9-1955, P. 24 dated 27-9-1955, P. 25 dated 28-9-1955, P.26 dated 28-9-1 55, and P. 27 dated 20-10-1955. In many letters the department intimated the Company that the matter was under consideration. Ultimately the Superintending Engineer wrote to the Company in Ext. P. 28 dated 30-3-1956, that the Company's claim for conversion of leads into lifts was not acceptable. It is thus manifest that from the very start the Company gave clear intimation of their doing work both through machine and manual labour. Consistently in all correspondence the Company said that the machines would be used in such a work of great magnitude and had put in claims for machine leads. The agreement (Ext. P. 69) or any of the letters on beh'alf of the Union do not indicate that machines were not to be used and machine leads were not to be paid for. The department never challenged Company's stand that the machine leads would be taken into consideration. It is only on 30-3-1956 the department clearly stated in Ext. P. 28, that no payment was to be made for machine leads. I record an unhesitating conclusion that under the agreement payment for machine leads was contemplated or, at any rate, was not excluded. If the department so wanted, they could have clarified the position in the agreement by saying that leads for manual labour were only to be taken into account. The conclusion of the Arbitrator to the contrary suffers from misconstruction of material documents and evidence incorporated in the award, exclusion of admissible, evidence and errors of record. If the department so wanted, they could have clarified the position in the agreement by saying that leads for manual labour were only to be taken into account. The conclusion of the Arbitrator to the contrary suffers from misconstruction of material documents and evidence incorporated in the award, exclusion of admissible, evidence and errors of record. The cumulative effect of these was that error of law apparent on the face of the award was committed. The finding on this issue must be set aside. 5. Mr. Tarapore stated in his evidence- When machines are used lift may not be taken into account but everything depends on the quotation given. Mr. Iyengar frankly conceded that in case of machine leads, lifts are not taken into account. Ultimately Issue No. (iii) was not pressed before me by the Company. Thus my finding is that in case of machine leads, no separate payments are to be made for lifts. 6. The next point is whether in paying for leads, left equivalents are to be taken into consideration where the work has been done by manual labour. Construction of the dyke involved movement of loose earth both vertically and horizontally from the borrowpits to the dyke. Horizontal movements are technically styled as "leads" and vertical movements are "lifts". Payments are usually made in terms of leads after converting lifts into leads. Parties agree that one foot of lift is equal to 12 feet of leads. In the invitation calling for tender (Ext. P. 65), rates were invited for earthwork in all kinds of soils laid in 6" layers with rough dressing including all leads and lifts. Thus an overall flat rate was invited ignoring leads airlifts. In Item No. 1(a) of Ext. P. 1/a, a modification was introduced in the rates mentioned in Ext. P. 60 by addition of the words "not exceeding 10". Ext. P. 1 stated that lift would be taken into consideration with its conversion equivalent in terms of lead. The ratio of conversion was mentioned as 1 foot of lift equal to 12? feet of lead. Up to 10 leads, and overall rate of Rs. 45/- per 1000 ft. was quoted in Item No. l(a) of Ext. P. 1/a. The rate for each extra lead of 50 feet was quoted in Ext. P. 1 at Re. 1.12 as. Per 1000 c.ft. feet of lead. Up to 10 leads, and overall rate of Rs. 45/- per 1000 ft. was quoted in Item No. l(a) of Ext. P. 1/a. The rate for each extra lead of 50 feet was quoted in Ext. P. 1 at Re. 1.12 as. Per 1000 c.ft. The admitted position of the department that every extra lead beyond 10 is payable at the rate of Re. 1.12 as. per. 1000 eft. is wholly inconsistent with the contention that Ext. P. 1 is not a part of the tender. After the tenders were received, a comparative statement (Ext. P. 67) of the tenders was made by, the Superintending Engineer, Development Circle. In it the rate given by the Company was worked out as at Rs. 59/- per 1000 eft. The calculation was on the basis of the rates at Rs. 45/- up to 10 leads and Rs. 14/- for extra 8 leads. The rate of Rs. 45/- up to 10 leads tallies with quotation given by the Company in Item 1(a) of Ext. P. 1/a. The rate of Rs. 14/- for extra 8 leads tallies with the rate at Rs. 1.12 as per lead given by the Company in Ext. P. 1. Ext P. 67 fortifies the conclusion that exts. P. 1/a and P.1 together constitute the tender. In Ext. P. 2 dated 28-12-1951, the Superintending Engineer intimated the Company that their tender was accepted provisionally by the Chief Engineer subject to the following modification which had been verbally agreed to by the representative of the Company during discussion with the Chief Engineer. Relevant part of the letter is- Your tender for the Right Dyke has provisionally been accepted by the Chief Engineer subject to the following modification which has been verbally agreed to by you during your discussion with the Chief Engineer. 1. Earth work will be confined to average lead of 10 and in case where the lead is required to be extended beyond 10 on account of the unsuitability of soil or other reasons, orders of the Chief engineer shall have to be obtained in writing.... 4. You may start work immediately. The Chief Engineer in his deposition admits that the agreement Ext. P. 69 made no departure from the provisional acceptance made in Ext. P. 2. The construction of Ext. 4. You may start work immediately. The Chief Engineer in his deposition admits that the agreement Ext. P. 69 made no departure from the provisional acceptance made in Ext. P. 2. The construction of Ext. P. 2 thus constitutes a very important consideration in determining the terms of contract between the parties. Though in Ext. P. the department wanted an overall rate including all leads and lifts, they accepted the tender rate in Ext. P. 1/a that an overall rate was acceptable up to an average lead of 10. Ext. P. 2 conceives of cases of payment beyond 10 leads; but in all such cases, the orders of the Chief Engineer shall have to be obtained in writing. The extra payment at the rate of Re. 1.12 as per 1000 eft. mentioned in Ext. P. 1 was adhered to. Ext. P. 2 does not indicate any modification with regard to the definition of lead given by the Company in Ext. P. 1/a that 1 foot of lift is equal to 12? feet of lead. There being thus no modification in Ext. P. 2 of the tender rates, except as indicated above, it can be concluded that in the provisional acceptance, the Company's term that the lift equivalents in terms of leads were to be paid was accepted. Ext. P. 68 dated 20-5-1952 is the sanction estimate. An abstract of costs was prepared. Item 13 there of is: 13. Earthwork in filling from borrow pits mixed and laid in layers 6" to 12" including rough dressing average lead not exceeding 10-45/- per including all lifts (quantity as per 1000 eft. item 19 of abstract quantity).(T.R.) Item 14 is also to the same effect. The report contained details of measurement. Item 13 thereof relates to Item 13 of the abstract of costs. Item 29 relates to extra for 8 leads over the leads included in the tender rate (details attached). There is a Note which is as follows: The provision of extra leads is essential as the Deputy Director, Hirakud Research station has intimated that in most of the reaches impervious soil is not found on the up stream side close by. Copy of Deputy Director's letters is enclosed. Also there are orders of the C.E. that all part should be taken on the up stream side only. In Ext. Copy of Deputy Director's letters is enclosed. Also there are orders of the C.E. that all part should be taken on the up stream side only. In Ext. P. 3 dated 30-12-1952, the Company wrote to the Executive Engineer to the following effect Yesterday during your inspection at Right Dyke, you have given instructions to Sub-Divisional Office to mark the borrow area in such a way that the centre of dyke to centre of borrow area would be 500 feet. This would mean that you would like us to convey earth from average ten leads and that we would be paid extra for lifts. According to the letter of acceptance of our tender, the entire work has to be completed within ten leads and if any extra has to be paid, previous sanction of the Chief Engineer has to be obtained in writing. Kindly let us know whether this permission has been obtained by you and if so, we would like to have a copy of the same so that we can undertake the work according to the instructions given by you to the Sub-Divisional Officer. The claim for lifts was thus made from the very start of the work. In Ext. P. 4 dated 1-1-1953 the Company asked the Executive Engineer to mark the borrow area in such manner that the work can be done within ten leads including lifts converted into leads. In Ext. P. 5 dated 6-1-1953 the Executive Engineer replied to Ext. P. 4 in respect of point (iii) that the orders of the Superintending Engineer were awaited. Ext. P. 69 was signed on 21-2-1953. In Ext. P. 6 dated 30-3-1953 the Superintending Engineer Sri K.M. Josi on behalf of the Chief Engineer wrote to the Executive Engineer, Dykes Division as follows: The agreement of Messrs Kalinga Construction. I Company Limited for the construction of Right Dyke is sent herewith for record in your office duly accepted and registered as Chief Engineer No. 2, of 52-53. Sub: Agreement of Right Dyke. The words "Average ten leads" mentioned in the special conditions of the agreement include the initial lead and lift and all other lifts between the below area and the dyke. It is desirable that approach ramps to be constructed at places where the villagers are likely to cross the dykes for cultivation of harvest or forest produce in the marginal area. It is desirable that approach ramps to be constructed at places where the villagers are likely to cross the dykes for cultivation of harvest or forest produce in the marginal area. The Chief Engineer, Sri K. Sain deposed that it was not written under his authority and the Superintending Engineer had no authority to write paragraph 2 of the letter the evidence of Sri Sain in this regard may be quoted. In examination-in-chief he stated as follows: Ext. P. 6 is such a major alteration of the contract that the Superintending Engineer must have obtained my approval in writing on the file before the issue of Ext. P. 6. As long as item 1 of the Schedule of Ext. P. 69 stood as is unthinkable I would have authorised the issue of Ext. P. 6. Before 1955, I never knew of the existence of Ext. P. 6 and it was only then that it was brought to my notice for the first time. When it was brought to my notice in 1955, I was told and from the file I found that there was nothing in the file showing I had authorised the issue of Ext. P. 6 in so far as the penultimate paragraph is concerned. The rest of Ext. P. 6 is a routine matter which could be done by the Superintending Engineer himself. The last para of Ext. P. 6 is all instructions given by the Superintending Engineer to the Executive Engineer and it was in line with my thinking as recorded in the file. A copy of Ext. P. 6 should have been sent, but was not forwarded to the Financial Adviser and Chief Accounts Officer. It should have been sent to them because it has bearing in the question of payment. I gave no oral instructions to the Superintending Engineer to send Ext. P. 6 and it is unthinkable I would have given any such instruction. Mr. Joshi never brought Ext. P. 6 to my notice and if he had done, I would have immediately cancelled it as it is contrary to item 1 of the schedule in ext, 69. If the copy of Ext. P. 6 had gone to the Chief Accounts Officer I am sure he would have objected to it. Mr. Joshi never brought Ext. P. 6 to my notice and if he had done, I would have immediately cancelled it as it is contrary to item 1 of the schedule in ext, 69. If the copy of Ext. P. 6 had gone to the Chief Accounts Officer I am sure he would have objected to it. For such a big change involving Government in payment of a large sum my approval in writing should have been obtained and it was not. In cross-examination he stated- He (Mr. Joshi) had no authority to issue what is contained in the penultimate paragraph of Ext. 6. I did not see Ext. P. 6. Ext. P. 6 was sent without reference to me and without my knowledge. In respect of matters within the competence of the Superintending Engineer he dealt with them. In respect of matters within the competence of the Chief Engineer alone, his sanction should be obtained on the file and then alone the letter could issue. There is no sanction on the file and therefore Ext. P. 6 was not sent on my instructions. Two parts of Ext. P. 6 contained in paragraphs 1 and 3 did not require my specific sanction but paragraph 2 should have had my specific sanction but it was not obtained. Sanction was not obtained from me in writing or orally. It is such an important change that my sanction was essential. If the Superintending Engineer thought that no change in terms of the contract was made, the penultimate paragraph was unnecessary. On all important matters, particularly those involving financial commitment, orders are always taken in writing but in respect of routine matters oral directions may be given. Even if there was no question of any financial commitment, if it was an important technical matter, approval in writing would have to be obtained, The matter referred to in para 3 of Ext. P. 6 would be out of order. I am speaking from memory that such written approval was given by me earlier for the last paragraph of Ext. P. 6. The letter Ext. P. 6 came to my notice for the first time in 1955 when the question arose. I was a member of the Hirakud Control Board then. The Financial Adviser refused to pay for the lifts and we had to find out whether the payment claimed by the contractor was due. P. 6. The letter Ext. P. 6 came to my notice for the first time in 1955 when the question arose. I was a member of the Hirakud Control Board then. The Financial Adviser refused to pay for the lifts and we had to find out whether the payment claimed by the contractor was due. In that connection Ext. P. 6 was brought to my notice. I said that Ext. P. 6 was not authorised. My approval was not forthcoming. I would have given directions in the matter if Ext. P. 6 had been issued on my instructions. When I first looked at Ext. P. 6 I was even suspecting whether it was faked. In my report to the Government I stated that I never delegated the power to Mr. Joshi to modify the agreement. I can't say whether the penultimate paragraph of Ext. P. 6 is in conformity with or at variance with the contract between the parties. It does not seem to be quite clear. The genuineness of Ext. P. 6 is admitted. The only ground on which it is questioned is that the Superintending Engineer mentioned the penultimate paragraph therein without any authority. The files of the Chief Engineer and the Superintending Engineer dealing with the order leading to issue of Ext. P. 6 have not been produced by the Union. Privilege was claimed in respect of this document. It does not relate to affairs of the State. This file has not been produced as it might defeat the defence made by the State. I am unable to agree that this is a privileged document (see AIR 1964 S.C. 1058). Absence of orders on the file would have established that the Superintending Engineer wrote Ext. P. 6 without authority. From the course of correspondence it is very clear that in dealing with the contractor or the Executive Engineer almost all the letters on behalf of the Chief Engineer were being dealt with by the Superintending Engineer. The Arbitrator committed an error of record in starting that the Chief Engineer's file does not show that he gave that authority. In fact the Chief Engineer's file was not before the Arbitrator. The Arbitrator committed an error of record in starting that the Chief Engineer's file does not show that he gave that authority. In fact the Chief Engineer's file was not before the Arbitrator. Once the letter is admitted to be genuine and was issued by the Superintending Engineer in ordinary course of correspondence, as was throughout being done by him, it was for the State Government to establish by production of the relevant records that Ext. P. 6 was without authority of the Chief Engineer. I have no hesitation in holding that Ext. P. 6 was written under authority of the Chief Engineer and is binding between the parties. In fact under this very letter, the Agreement Ext. P. 69 was sent to the Executive Engineer for record in his office as duly accepted and registered as C.E. No. 2 of 52-53. The penultimate paragraph defines lead as including lift equivalent. It does not appear to be at variance with the terms of the agreement. Ext. P. 69 does not give a definition of the lead. The provisional acceptance of the tender Ext. P. 2 did not make any departure from the tender rates given in Exts. P. 1 and P. 1(a) except as mentioned therein. The definition of lead as including lift equivalent given in Ext. P. 1 must be taken to have been carried over to Ext. P 69 there being no express term to the contrary. Ext. P. 6 merely clarified the position which was not expressed in Ext. P. 69. It did not introduce any new term in the agreement which was not accepted by the parties under, Ext. P. 2. The penultimate paragraph in Ext. P. 6 cannot be treated as at variance with Ext. P. 69. Even if it be assumed that it was written without authority of the Chief Engineer, the position is not very much effected. The lead under Ext. P. 69 must be construed as including lift equivalent even without the assistance of Ext. P. 6. Ext. P. 2 preceding the agreement concludes the matter and Ext. P. 69 did not purport to introduce a term saying that the definition of lead including lift equivalent as given in Ext. P. 1 was varied or modified. The subsequent course of conduct leads to the same conclusion. In Exts. P. 6. Ext. P. 2 preceding the agreement concludes the matter and Ext. P. 69 did not purport to introduce a term saying that the definition of lead including lift equivalent as given in Ext. P. 1 was varied or modified. The subsequent course of conduct leads to the same conclusion. In Exts. P. 7 dated 27-7-1953, P. 8 dated 22-8-1954, P. 9 dated 13-9-1954, P. 10 dated 27-10-1954, P. 11 dated 1-11-1954, P. 12 dated 9-2-1955, the Company went on asserting their claim for payment of leads including lifts equivalent. In Ext. P. 13 dated 7-5-1955, the Company stated that the S.D.O., Right dykes Sub-Division No. 1 started taking measurement of leads and lifts along with our representative for which no payment had been made and they enclosed a bill both for leads and lifts. In Ext. P. 14 dated 24-5-1955, a reminder was issued to the department for payment of leads. In Ext. P. 15 dated 21-4-1955, the Superintending Engineer replied to Ext. P. 14 that the matter was under consideration of the Chief Engineer Hirakud Dam Project. In Ext. P. 16 dated 2-6-1955, the Executive Engineer replied that the case was pending for decision of the Hirakud Control Board. In Ext. P. 17 dated 24-6-1955, the Company stated that the agreement was between the Chief Engineer and the Company and there was no reason why the matter was referred to the Hirakud Control Board. In Ext. P. 18 dated 24-6-1955, the Company asked for payment including lifts. In Ext. P. 19 dated 27-6-19, 35, Ext. P. 20 dated 4-7-1955 and P. 21 dated 7-7-1955 which are respectively from the Superintending Engineer, the Executive Engineer and the Chief Engineer, it was stated that the matter was under consideration. In Ext. P. 22 dated 16-8-1955 the Company insisted on their claims. There was some representation to Minister and Government and ultimately the Superintending Engineer wrote to the Company as per Ext. P. 29 dated 30-3-1956 that the conversion of lifts into leads was not acceptable. Thus not only the Company indicated in the tender rates Ext. P. 1 that lifts were to be included in the calculation of leads, but from the beginning till end they had been making claims for payment of the lifts equivalent. P. 29 dated 30-3-1956 that the conversion of lifts into leads was not acceptable. Thus not only the Company indicated in the tender rates Ext. P. 1 that lifts were to be included in the calculation of leads, but from the beginning till end they had been making claims for payment of the lifts equivalent. The department was cognizant of the fact and at no stage gave a reply that the Company was not entitled to payment of lift until the claim was rejected in Ext. P. 28. The course of conduct is clearly against the stand taken by the Union. The next point for consideration is whether the payment for extra leads beyond 10 are to be rejected, because the Chief Engineer's orders in writing had not been obtained before the work involving additional leads was executed. Both under Ext. P. 2 and Ext. P. 69 this term had been incorporated. In the peculiar circumstances of this case, however, it must be taken that the condition had been fulfilled even though there was no order in writing. It was for the Executive Engineer and the Superintending Engineer, who were getting the work done by the Company, to obtain the order in writing or not to allow the Company to work beyond 10 leads including lifts without obtaining the order of the Chief Engineer in writing. The work was done directly under their unrevision. They were aware of the work being done beyond 10 leads. The Company's claim for lifts equivalent was open and unambiguous. In many letters addressed to the Superintending Engineer, the Executive Engineer and the Chief Engineer, the Company stated that it presumed that the orders in writing of the Chief Engineer had been obtained for the extra leads. No reply clarifying the position was given to the Company and always it was said that the matter was under consideration. If the writing from the Chief Engineer was not obtained and the work was allowed to progress beyond 10 leads including gifts to the very knowledge of the Chief Engineer, it is not open to the department to say that the order in writing was essential or a condition precedent to the payment of leads or extra leads beyond 10. I am clearly of opinion that the company is entitled to the lifts equivalent. 7. I am clearly of opinion that the company is entitled to the lifts equivalent. 7. The Arbitrator found that the Company is not entitled to recover the costs incurred in putting up the ramps. He mainly relied on Ext. P. 69 expressly providing as special condition No. 1 that all service and haul roads necessary for execution of the work should be made and maintained by the contractor. The construction put by the Arbitrator is that the ramps are haul roads within the meaning of Ext. P. 69. The company did not advance any claim for that portion of the ramps which were absorbed in the dyke and had been paid for on measurement as a part of the dyke. The view of the Arbitrator that ramps mean haul roads cannot be said to be erroneous on the face of the award. Some cogent arguments were first advanced by Mr. Iyengar on the basis of various documents that the distinction had been made between ramps and other haul roads though etimologically ramps may also mean haul roads. As ultimately he did not press this issue assailing the finding of the Arbitrator that ramps are haul roads, the finding is confirmed. I am satisfied that the view of the Arbitrator cannot be said to be erroneous on the face of the award. 8. To sum up, my findings on the various Issues may now be separately recorded- Issue No. (i) The Company is entitled to payment for lifts where the work was done by manual labour only. Issue No. (ii) The Company is entitled to payment for machine leads where machines have been used for the e earthwork and the payments is to be made at the contractual rate. Issue No. (iii) In case of machine leads, lifts are not to be taken into account. Issue No. (iv) The Company is not entitled to costs incurred in putting up the ramps. Issue No. (v) Estoppel is not pressed. There is no estoppel. Issue No. (vi) The Company is entitled to interest at six per sent (6%) for the period during which the amounts payable to the Company remained unpaid. Issue No. (vii) The amount of claim need not be determined in this appeal as it is not open to the Court to decree a particular amount as to claims in respect of which the award is set aside. Issue No. (vii) The amount of claim need not be determined in this appeal as it is not open to the Court to decree a particular amount as to claims in respect of which the award is set aside. 9.In view of the aforesaid conclusions, the award can not be set aside on Issues (iii) and (iv). On these two Issues I agree with the view of my learned brother Das J...On Issues (i) and (ii), the award is liable to be set aside as there is an error of law apparent on the face of the award. On these two Issues I agree with the views of my learned brother Barman J.... 10. The next question for consideration is whether the award must be set aside as a whole or only in respect of the findings which are erroneous on the face of the award. In Jivarajbhai Ujamshi Sheth and Others Vs. Chintamanrao Balaji and Others their Lordships observed that the Arbitrator's jurisdiction not possessed by the Arbitrator renders the award, to the extent to which it is beyond the Arbitrators' jurisdiction, invalid. If it is not possible to sever such invalid part from the other part of the award, it must fail in its entirety. Each of the Issues is severable from others. The award must accordingly be confirmed on Issues (iii) and (iv) and set aside on Issues (i) and (ii). It is not necessary to express any view as to the exact amount to which the Company is entitled under issues (i) and (ii), or in respect of interest on Issue No. (vi). After setting aside the award u/s 30(a), the Civil Court has no jurisdiction to determine the quantum. The suit must accordingly be decreed in part. 11. In the result, the appeal succeeds in part as indicated above. In the circumstances, parties are to bear their own costs throughout. In view of the majority decision Miscellaneous Appeal No. 53 of 1962 succeeds in part as indicated in the judgment of Misra J...In the circumstances, parties are to bear their own costs throughout.