NATIONAL DEVELOPMENT CORPORATION LTD. v. MADHAV DAS KHURANA
1989-04-14
B.P.SINGH
body1989
DigiLaw.ai
JUDGMENT B. P. Singh, J 1. This Miscellaneous Appeal under Section 39 of the Indian Arbitration Act, 1940 (hereinafter to be referred to as "the Act") has been preferred by the appellant-Corporation against the judgment and other passed by the Special Subordinate Judge, Ranchi, in Miscellaneous Case No. 71 of 1969 dated 23-12-1978 whereby he dismissed objections of the appellant and refused to set aside the award under Section 30 of the Act. 2. The facts of the case are that in December, 1963, the appellant invited tenders for construction of two Coal Handling Plants; one at Banki and the other at Surakachhar. The respondent submitted its tenders for both the works and his tenders were ultimately accepted. Letters accepting the two tenders were issued to the respondent on 21-2-1964 and the respondent expressed its willingness to do the construction work in respect of Banki by letter dated 29-2-1964 and in respect of Surakachhar by letter dated 2-3-1964. The formal agreements were executed on 13th May, 1964. According to the appellant, the respondent did not object to the rate fixed for doing the work relating to item Nos. 13 and 14 at the time of signing the agreements. On or about the 9th of June, 1966 when major portion of work relating to those two items was almost over, he for the first time raised objections saying that the rates were exclusive of centering and shuttering. The appellant did not accept the claim of the respondent for extra payment for centering and shuttering work. Ultimately in view of the arbitration clause in the agreement, on the request of the respondent Sri B. R. Pal the then Chief Engineer was appointed as Arbitrator. The terms of Reference were as follows : "Whether rates for reinforced cement concrete works envisaged under item Nos. 13 and 14 of the agreements for the construction of Coal Handling Plant at Banki and Surakachhar are inclusive of centering and shuttering required for the R.C.C. works. If not, what should be the extra amount payable to the contractor for centering for R.C.C. works." Item Nos. 13 and 14 of the agreement in respect of which there were disputes and difference between the parties are as follows : "Item No. 13 Quantity Rate Total amount R.C.C. 150 Banki Rs. Rs. 1,14,400 marks (1:2:4) 576 for Slab & beam20000 less 8.03% with 3/4" down Cft.
13 and 14 of the agreement in respect of which there were disputes and difference between the parties are as follows : "Item No. 13 Quantity Rate Total amount R.C.C. 150 Banki Rs. Rs. 1,14,400 marks (1:2:4) 576 for Slab & beam20000 less 8.03% with 3/4" down Cft. % and Surakachhar 40000 Stone chips Surakachhar 40000 including centering Cft. 8.03% less, and shuttering, but excluding the cost of reinforcement Rs. 2,38,140 Less : 8.03% Item No. 14 : R.C.C. 200 Banki Rs. Rs. 1,64,867.40. marks 27000 610.62 1:1.5:3 with 3/4" Cft. less 8.03% down stone chips less 8.03% including centering and shuttering Surakachhar 40000 -do- but excluding the of/ cost of steel of reinforcement" 3. It appears that before the Arbitrator, the appellant as well as the respondent in support of their respective cases produced certain documents. The appellant submitted his written submissions. This letter transpired that the respondent had also submitted a reply to the submissions made by the appellant in the absence of the representative of the appellant. The arbitrator gave his award on 6th November, 1969. The aforesaid award has been annexed as Annexure-4 to the memo of appeal. The award of the arbitrator is not a reasoned award inasmuch as it does not discuss the submission raised before him as also the reasons for the conclusion reached by him. It appears from the award that after stating the fact that he was appointed an arbitrator and producing the terms of the reference, the arbitrator proceeded to make an award in the following terms : "I award that the rates for the reinforced concrete works as envisaged under item Nos. 13 and 14 of the agreement for the construction of the Coal Handling Plant at Banki and item Nos. 13 and 14 of the agreements for the construction of the Coal Handling Plant at Surakachhar are not inclusive of centering and shuttering required for the R.C.C. works. 2. I award that the extra amount payable to the contractors for centering and shuttering for R.C.C. works is at the rate of Rs. 3006/- per sq. ft. of shuttering less 8.03 i.e., Rs. 2.81 per sq. ft. for the actual quantity of centering and shuttering involved for the R.C.C. works for the items 13 and 14 of the agreement referred to the Arbitrator. 3. I award that the Rs.
3006/- per sq. ft. of shuttering less 8.03 i.e., Rs. 2.81 per sq. ft. for the actual quantity of centering and shuttering involved for the R.C.C. works for the items 13 and 14 of the agreement referred to the Arbitrator. 3. I award that the Rs. 500/- lump sum being the remuneration of the Arbitrator and the cost of the stamp paper amounting Rs. 93/- which has been supplied by M/s. Madhav Das S. Khurana should be borne by the parties in equal shares. 4. I award that each party should bear his own costs of reference." 4. The appellant was not satisfied with the award and it therefore, filed an application for setting aside the award. The main submission urged before the learned Special Subordinate Judge as also before me was that there was an error of law apparent on the face of the record. According to the appellant, the item Nos. 13 and 14 of the agreement in terms mentioned that the rates were inclusive of centering and shuttering. In view of the fact that there was no ambiguity, the finding of the arbitrator that the appellant was liable to pay extra charges for centering and shuttering works was perverse. The arbitrator has, therefore, committed a grave error of law and has gone against the clear and unambiguous term mentioned in item Nos. 13 and 14 of the schedule of works for which he had no jurisdiction. It was submitted that when an agreement is reduced to writing no other evidence was admissible to vary or contradict or to interpret the terms of the contract. The arbitration in coming to his conclusion had taken into account extraneous matters. It was secondly contended that in the award the arbitrator had not mentioned the exact amount to be paid to the respondent. This, according to the appellant made the award a vague award. On the other hand the respondent contended that none of the grounds urged by the appellant were valid grounds for setting aside the award under Section 30 of the Act. It was contended that the Chief Engineer had made a formal written offer which was contained in the works order on or about 20th February, 1964. The respondent formally accepted that offer by its letters dated 20th February, 1964 and 2nd March, 1964 and respectively.
It was contended that the Chief Engineer had made a formal written offer which was contained in the works order on or about 20th February, 1964. The respondent formally accepted that offer by its letters dated 20th February, 1964 and 2nd March, 1964 and respectively. The work was commenced on the basis of such offer and acceptance and the formal contract documents were executed much later. According to the respondent, the work order of the Chief Engineer was incorporated as schedule C of the contract document and was, therefore an integral part of it. The aforesaid letter clearly established that the contractors were to be paid for separately in respect of centering and shuttering involved in R.C.C. works. The aforesaid work order directed for payment at a rate 8.03% less than the estimated standard rates which referred to Bhurkunda rates. The Bhurkunda rate for R.C.C. works in question was exclusive of centering and shuttering works and a separate rate was prescribed for centering and shuttering. It was therefore, asserted that the real intention of the parties had to be gathered by looking at the agreement as a whole including the works order which formed part of the agreement and which was accepted by the respondent. 5. As noticed above, the arbitrator has found the respondent entitled to extra payment for centering and shuttering works. The award does not disclose any reasons. The learned Special Subordinate Judge held that there was no justification for setting aside the award under Section 30 of the Act. 6. Having given the matter my serious consideration, I am also of the view that the award cannot be assailed on the grounds urged against it. It is well settled that the error of law on the face of the award means that one may find in the award or in the document incorporated thereto some legal proposition which is the basis of the award and which is erroneous (see Champsey Bhara & Co. v. Jivraj Balloo Spinning and Weaving Co. Ltd. (1923 (2) SC 480) and Dr. S. B. Dutt v. University of Delhi ( AIR 1958 SC 1050 ).
v. Jivraj Balloo Spinning and Weaving Co. Ltd. (1923 (2) SC 480) and Dr. S. B. Dutt v. University of Delhi ( AIR 1958 SC 1050 ). In the case of M/s. Kapoor Nilokheri Co-operative Dairy Farm v. Union of India ( 1973 (I) SCC 708 ), it was held that where the arbitrator was called upon to decide claims based on agreement and on nothing else, he had really to decide a question of law, that is, of interpreting the document. Such a decision of his not open to challenge, even if he committed an error interpreting the document. The same view was expressed by the Supreme Court in Tarapore Ltd. v. Cochin Shipyard Ltd. ( 1984 (2) SCC 680 ), It was observed that if the parties had faith in the Tribunal of their choice to decide even a pure question of law, there was nothing to preclude the parties from doing so. If a question of law is specifically mentioned and it becomes evident that the parties desired to have a decision on the specific question from the arbitrator rather than one from the court, then the court will not interfere with the award of the arbitrator on the ground that there was an error of law apparent on the face of the award even if the view of law taken by the arbitrator did not accord with the view of the law court. It is now well settled that in order to set aside an award there must be a legal proposition of law laid down in the award as the basis of the award (1989) 1 SCC 359 . 7. Having regard to the settled position in law, even in an award where an arbitrator is called upon to decide what may be termed as a pure question of law, the award cannot be set aside merely because the arbitrator commits an error of law. In order to set aside such an award, there must be a wrong proposition of law laid down in the award as the basis of the award. This pre-supposes that the award on the face of it discloses reasons for the conclusions reached by the arbitrator.
In order to set aside such an award, there must be a wrong proposition of law laid down in the award as the basis of the award. This pre-supposes that the award on the face of it discloses reasons for the conclusions reached by the arbitrator. If the award does not disclose reasons for the conclusions reached by arbitrator, it is not possible to contend that the arbitrator has committed an error of law apparent on the face of the record. In the instant case, it was contended that since item Nos. 13 and 14 of the schedule of works appended to the contract were clear and unambiguous, it was not possible for any reasonable person to hold that the rates did not include centering and shuttering charges. On the other hand, the respondent contends that the agreement must be read along with the works order which also formed part of the agreement as schedule G. According to the respondent the agreement must be read as a whole and, so read the claim of the respondent was justified. It cannot be said that the contention of the respondent is wholly devoid of force. However, it is not necessary in the instant case to go into this question because as observed earlier, the award does not disclose any reason and, therefore, it is not possible to hold that there was an error of law apparent on the face of the record or that there was a wrong proposition of laid down in the award as the basis of the award. 8. The second contention urged on behalf of the appellant must also be rejected. There is nothing vague in the award. In terms of the reference, arbitrator was required to find whether the rates for reinforced cement concrete work envisaged in item Nos. 13 and 14 of the agreement were inclusive of centering and shuttering required for the R.C.C. works. If not what should be the extra amount payable to the contractor for centering of the RCC works. The quantum of work done by the contractor was not in dispute. The only dispute was whether he was entitled to extra payment for centering and shuttering work and the amount payable for such work. The arbitrator found that the rates did not include centering and shuttering charges. He further found that the contractor was entitled for payment at the rate of Rs.
The only dispute was whether he was entitled to extra payment for centering and shuttering work and the amount payable for such work. The arbitrator found that the rates did not include centering and shuttering charges. He further found that the contractor was entitled for payment at the rate of Rs. 2.81 per sq. feet for the actual quantity of centering and shuttering involved. Since the quantity of centering and shuttering involved was not in dispute, calculation of the amount payable was a simple matter of arithmetic. One cannot lose sight of the fact that the dispute was between a professional contractor and the petitioner Corporation which employs experienced persons to supervise and co-ordinate such works. There could have been no confusion in their mind about the amount payable in terms of the award. The award can, therefore, not be assailed on the ground that it is vague. 9. I find no merit in this appeal and the same is, therefore, rejected. There shall be no order as to costs. Appeal dismissed.