Judgment 1. THE firm, M/s. Engineers Collaborated, preferred this appeal under Section 39 of the Indian Arbitration, act,1940, against the judgment and order dated 15th July, 1982 passed by the learned Subordinate Judge, 5th Court, Alipore, 24-Parganas setting aside in part an award of Sri A. K. Sen, Arbitrator, in respect of certain disputes between the appellant contractor firm and the respondent No. 1, Institute, relating to a contract for construction of the Institute's boy's Hostel at 206, Barrackpore Trunk road, Calcutta. 2. IN response to the tenders invited by the respondent No. 1 Institute for construction of the Boys' Hostel, the appellant had submitted tender which was accepted. Under the terms and conditions of the said building contract, the appellant was to complete the works within twelve months from the date of the receipt of the instructions from the respondent No. 1 to commence the work and that in view of the urgency of the work, the claimant| appellant submitted his tender stipulating the time limit of 10 months and based his rates accordingly. The accepted value of the contract was Rs.2216541.35 p. The date of commencement of work was 13th May, 1978 and the time allowed for performance was 10 months thus 12th March, 1979 was the scheduled date of completion. Admittedly, the works could not be completed within the time specified and that the same was completed on 30th May, 1980. According to Clause 17 of the Instructions to the tenderer "no variation in the rates of materials and labour will be entertained". Clause 27 of the said tender agreement provided that in case of any delay on the part of the contractor/claimant in the matter of completion of work, the claimant/contractor would be liable to pay liquidated damages at certain specified rates. According to the appellant/contractor firm the aforesaid delay in completion of the works was because of failure on the part of the respondent No. 1, Institute, to ensure the complete site at the date of commencement and because of its failure to supply departmental materials, like, cement and steel in proper time as also failure to convey decision, drawing etc. in proper time and other lapses and/or negligence on its part. T 3. FOR the aforesaid reasons the claimant appellant was prevented; from completing the work within stipulated period. in proper time and other lapses and/or negligence on its part. T 3. FOR the aforesaid reasons the claimant appellant was prevented; from completing the work within stipulated period. As there was delay in the matter of completion of the said works because of failure and/or delay on the part of the respondent No. 1 and in the mean time the prices of materials and rates of labour had increased, the appellant firm had lodged a claim before the respondent No. 1 by its letter dated 21st March, 1979 for enhancing the rates along with a detailed analysis. The claimant appellant by its letter dated 23rd April, 1979 reiterated it said demands and also informed the respondent No. 1 that there had been further increase in the prices. Pursuant to the claimant/appellant's request, the architect of the respondent no. 1, M]s. Ballardi Thompson and Mathews, under the direction from the respondent No. 1, recommended 10% increase in the rates in of about May, 1979, but the respondent No. 1 had- kept silent over the matter. When the claim ant appellant was making repeated requests for enhancement of rates, the officer on Special Duty (Administration and Finance) of the respondent No. 1 by the letter dated 2nd November, 1979 informed the claimant/appellant that regarding the claim for bailing out water, the Works Advisory Committee had recommended that compensation to the extent of additional expenditure due to unprecedented rain on 27th, 28th and 29th September, 1978 could be paid to the claimant appellant. Regarding the price escalation the said letter stated "regarding price escalation, you will appreciate that there is no provision in the contract for allowing escalation price. We have, however, taken note of your desire to refer the matter to an arbitrator in case the escalation claim is not admitted by the Institute. Accordingly, director will appoint an arbitrator to go into this issues as per the terms of the contract". Thereafter, Shri A.K. Sen the respondent No. 2 herein was appointed by the Director of the respondent no. 1 as the sole Arbitrator with the following terms of the reference i) Whether the Contractors firm is entitled to any payment on account of escalation in the prices of building materials, labour rates etc during the period of construction. ii) If the answer to item (i) is yes, the amount that may be payable. 1 as the sole Arbitrator with the following terms of the reference i) Whether the Contractors firm is entitled to any payment on account of escalation in the prices of building materials, labour rates etc during the period of construction. ii) If the answer to item (i) is yes, the amount that may be payable. iii) Whether the Contractors firm is entitled to any payment for pumping out water from the foundation and removal of such over and above, the value provided in the tender. iv) If the answer to item (iii) is yes, the amount that may be payable. v) The amount that may have to levied as penalty on the firm in terms of the contract. " 4. THE said sole arbitrator, Shri A. K. Sen after hearing the parties, their counsels and representatives and after holding several sittings and on consideration of the evidence on record gave his award on the said issues as follows : "firstly : I answer the above issues in seriatim as below : item (i) I Award and direct that the contractors firm is entitled to payment on account of escalation of prices of building materials and labour rates etc. during the construction, under the circumstances of the case. Item (ii) I Award and direct that the claimants Contractors are entitled to a sum of Rs.2,77,329|- (Rupees Two Lakhs Seventy seven thousand three hundred twenty nine) only on account of aforesaid issue and that the respondent shall pay the aforesaid sum of Rs.21,77,329/- (Rupees Two lakhs Seventy Seven thousand three hundred Twenty nine)only to the claimants in full and final settlement of the said dispute. Item (iii) I Award and direct that the contractor firm is entitled to payment for pumping out water from foundation and removal of slush, over and above, value provided in the tender, under the circumstances of the case. Item (iv) I Award and direct that a sum of Rs.8,000/- (Rupees Eight thousand) only is payable to the claimants Contractors on account of item No. (iii) above and that the Respondent shall pay the aforesaid amount of Rs.8,000|- (Rupees Eight thousand) only to the Claimants in full and final settlement of the said dispute. Item (iv) I Award and direct that a sum of Rs.8,000/- (Rupees Eight thousand) only is payable to the claimants Contractors on account of item No. (iii) above and that the Respondent shall pay the aforesaid amount of Rs.8,000|- (Rupees Eight thousand) only to the Claimants in full and final settlement of the said dispute. Item (v) I Award and direct that the respondents are not entitled to levy and penalty on the claimants firm under the circumstances of the case and therefore, claimants contractors shall pay nothing whatsoever to the respondents in connection with item (v)above. " At the instance of the claimant, the said award was filed by the said arbitrator before the 5th Subordinate Judge, alipore, District 24 Parganas for judgment on award under "the provision of section 31 of the Arbitration Act, 1940. In the said proceeding, the respondent no. 1 filed a petition for setting aside the said award, inter alia, on the ground that the said tender agreement did not contain any provision for escalation of the prices and that the arbitrator was wrong in allowing the claim of the claimant] contractor to the extent of Rs.2,77,329/ -. 5. THE court below by the judgment dated 15th July, 1982 passed in Title suit No. 88 of 1981 set aside the award of the said arbitrator in respect of the amount allowed for escalation of building materials, labour rates etc. together with the interest thereon solely, upon the consideration that under clause 17 of the instruction to the tenderer, no variation in the rates of materials and labour could be entertained and that the subsequent agreement between the parties to change the rate of the materials due to the escalation of price was illegal Inasmuch as according to the learned judge, the agreement could not override or supersede the clause in the said tender. According to the learned Judge, if the respondent No. 1 had really allowed extra payment due to escalation of prices and labour etc. within the said period, the same ought to have been included in the tender agreement by way of amendment. The learned Subordinate Judge did not, however, set aside the award so far as the same had disallowed the respondent Institute's claim for penalty against the appellant contractor firm. 6. MR. within the said period, the same ought to have been included in the tender agreement by way of amendment. The learned Subordinate Judge did not, however, set aside the award so far as the same had disallowed the respondent Institute's claim for penalty against the appellant contractor firm. 6. MR. Jayanta Kumar Mitra, learned advocate on behalf of the appellant, has submitted that the point whether the appellant contractor firm was entitled to any payment on account of escalation in the prices of the building materials during the period of construction and the computation of the amount that may be payable, the learned Subordinate Judge; was not entitled to interfere with the award of the learned Arbitrator even it the view taken by the learned Arbitrator did not accord with his own view. The learned Subordinate Judge himself was also wrong in holding that although the opposite party Institute (the respondent herein) agreed in writing to allow the petitioner contractor firm (the appellant herein) to change the rate of materials and labour due to escalation of prices, the same could not override or supersede the point No. 17 of the terms of the tenderer. Lastly, Mr. Mitra has; submitted that the contract was not completed within the time agreed and by refusing to award against the appellant contractor "penalty for the said delay, the learned Arbitrator had in effect held that the appellant contractor was not responsible for said delay. When the contract was not performed due to no fault of the appellant contractor, the respondent institute could not insist that the rates fixed under the original contract would remain unaltered in relation to the extended period of the contract. Mr. Bhaskar Gupta, learned advocate on behalf of the respondent Institute, has not disputed the well-settled principle of law that when a question of law is specifically referred and it is evident that the parties desired to have a decision on the specific question from the Arbitrator, then the court would not interfere with the award of the Arbitrator on the ground that there was an error law apparent on the face of the record even when the Arbitrator's views are not in accord with the views of the court. But according to Mr. Gupta, in answering Point Nos. But according to Mr. Gupta, in answering Point Nos. 1 and 2 regarding escalation in prices of the term's of reference the learned Arbitrator was required to decide according to the terms of the contract between the parties and nothing else could have been looked into by the learned Arbitrator. The said terms of contract expressly ruled out escalation of rates and the parties had agreed that no claim whatsoever would be entertained on account of delay in supply materials by the Institute. Mr. Gupta has, therefore, submitted that the learned arbitrator had committed an error apparent on. the face' of the record by allowing escalation of prices and the same being perverse, the learned Subordinate judge had rightly set aside the same. 7. THE learned advocates for both parties have relied upon the recent decision of D. A. Desai and O. Chinnappa reddy, JJ. in the case of M/s. Tarapore and Co. vs. Cochin Shipyard Ltd. AJ. R. 1984 S. C. 1072, which considered the case law regarding the extent of court's jurisdiction to interfere with an arbitration award on the ground of error of law. Their Lordships of the Supreme Court in the case of M/s. Tarapore and Co vs. Cochin Shipyard Ltd. (supra), reiterated the view taken in the earlier Supreme Court decision in the case of Seth Thawardas Pherumal vs. Union of India AJ. R. 1955 S. C. 468, that in determining what is an error of law apparent on the face of the record a distinction must be drawn between the cases in which a question of law is specifically referred and those in which a decision on a question of law is incidentally material (however necessary) ' in order to decide the question actually referred. 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. ' 8. ' 8. WE have already set out the terms of reference to Sri A. K. Sen, Arbitrator under which the point whether or not the contractor firm was entitled to any payment on account of escalation in the prices of building materials, labour rates, etc. during the period of construction was expressly referred for decision of the learned Arbitrator. Mr. Gupta himself admitted that the same was a question of law. We, however, do not accept his further contention that in deciding the said point of escalation, the learned arbitrator was bound to confine himself to the terms of the written contract entered into at the time of the acceptance of the appellant contractor firm's tender. The learned Arbitrator was required to give consideration not to only to the said written contract but also to the subsequent agreement of the parties and also of other materials placed before him. The learned Arbitrator did not give reasons for allowing the claim of the contractor firm for escalation of prices in the original contract between the parties, the learned Arbitrator was at liberty to take into consideration the fact that the contract was not performed within the stipulated period. We have already noted that the learned Subordinate Judge did not interfere with the learned arbitrator's decision that no amount could be levied as penalty upon the contractor firm in terms of the contract. The basis of the claim of the contractor firm was not merely the terms of the original contract but also the subsequent act and conduct of the parties in relation to the said contract. The learned Arbitrator was at liberty to take into consideration any subsequent agreement and/or express or implied representation on the part of the respondent Institute regarding the escalation of prices and rates and therefore it cannot be said that the Arbitrator's decision on the escalation of prices and rates was made on inadmissible evidence. The said decision or express point of law referred to the learned Arbitrator was not something, which the law could not countenance. On the other hand, on the said question of escalation of prices and rates which was one of law, even if another view was possible or probable, the court under section 33 of the Arbitration Act cannot override and/or set aside the view taken by the learned Arbitrator. 9. On the other hand, on the said question of escalation of prices and rates which was one of law, even if another view was possible or probable, the court under section 33 of the Arbitration Act cannot override and/or set aside the view taken by the learned Arbitrator. 9. THE earlier decision of the Supreme Court in the case of M/s. Alopi Par-shad and Sons Ltd. vs. Union of India a. I. R. 1960 S. C. 588, upon which Mr. Gupta relied is clearly distinguishable in fact. (See paragraphs 21 of- the decision in M/s. Tarapore and Co. vs. Cochin shipyard Ltd. J. C. Shah, J. (as he then was) in case of M/s. Alopi Parshad and sans Ltd. vs. Union of India (supra) observed inter alia "if a reference is of specific question of law, even if the award is erroneous the decision being of the arbitrator's selected by the parties to adjudicate upon those question, the award will bind the parties. But in M/s". Alopi Parshad, and Sons Ltd. vs. Union of India (supra), it was found that the particular reference made was of a general reference and not a specific reference on any question of law. The award therefore might be set aside if it be demonstrated to be erroneous on the face of it (vide paragraph 18 of the reports)In the context of the said general reference made to the learned Arbitrator, the Supreme Court upheld the view taken by the Punjab High Court that 'the arbitrators were not justified in ignoring the express terms of the contract prescribing remuneration payable to the agents and in proceeding upon the basis of quantum meruit. In the instant case before us the learned Arbitrator did not pass any reasoned order and there is not thing to, show that he had awarded escalation in the prices of materials and rates of labour etc on such basis of quantum meruit. It cannot be also said that the learned Arbitrator had awarded said escalation by ignoring the express even ants on account of an un-contemplated turn of events. It was possible and permissible in law to modify by subsequent agreement the stipulations of the point No. 17 of the tender. The learned subordinate Judge himself referred to a letter of the Institute by which it had allegedly agreed to increase in the rates and prices. It was possible and permissible in law to modify by subsequent agreement the stipulations of the point No. 17 of the tender. The learned subordinate Judge himself referred to a letter of the Institute by which it had allegedly agreed to increase in the rates and prices. The contract as already mentioned, was performed within the extended time and at least the stipulation that the time was the essence of the corn tract was given a go bye. The contractor firm was found by the learned Arbitrator not to be liable to pay penalty on account of the delay in completion of the contract. Therefore, it cannot be said that the learned Arbitrator in deciding the express point of law referred to him had relied upon any inadmissible evidence or on principles of construction that the law does not countenance. For the foregoing reasons, it is appeal ought to be allowed and the decision of the learned Subordinate Judge under appeal ought to be set aside and the respondent institutes application under Section 33 of the Arbitration Act ought to fail in its entirety. 10. WE accordingly allow the appeal, set aside the judgment, passed by the court below and dismiss the respondent no. 1's application under section 30 and 33 of the Arbitration Act against the award of Sri A.K. Sen, Arbitrator. We hold that in addition to sum of Rs.8,000/- on account of cost of pumping of water etc. the appellant is entitled to receive a sum of Rs.2,77,329 with interest in terms of the award of the learned Arbitrator. The court below will now pass a decree in respect of the entire sum awarded by the learned Arbitrator. There will be no order as to costs. 11. LET the operation of this order be stayed for two months. No formal decree need be drawn up.