Kerala State Electricity Board v. G Gopinathan — 1990 DIGILAW 178 (KER)

JUDGMENT 1. Appellant in these appeals is the Kerala State Electricity Board (for short 'the Board'). Two awards were passed by an Arbitrator in favour of the Board and against a contractor who is the first respondent in these appeals; As per one award, a sum of Rs. 74,49,116 was found due from the contractor to the Board and as per the other award, a sum of Rs. 28,64,965.27 was found due from him to the Board. The contractor was directed to pay the said sum with interest at the rates specified in the awards. But both the awards were set aside by the Sub Court, Trivandrum, on petitions filed by the contractor in that behalf. The Sub Judge went further and removed the Arbitrator and also superseded the order of reference to arbitration. Hence these appeals. 2. The backdrop of the two awards can be narrated in the following lines: "Kakkad Hydro-electric Project" is one of the prized projects of the Board. A major part of the project involves construction of a huge underground tunnel through the mountainous terrain. The tunnel is intended to utilize the tail waters of Moozhiar Power Station (which is a wing of "Sabarigiri Project") for augmenting power generation. For practical convenience in the construction process the tunnel was divided into two segments, one having a length of about 7 1/2 km. (7512 metres) and the other having a length of about 3 km. (3036 metres). The former segment is described in the connected documents as "Power Tunnel" and the latter is described as "Inter Connecting Tunnel". Though separate tenders were invited from approved contractors for construction of the two segments, the first respondent (hereinafter referred to as the contractor for convenience) was selected by the Board to execute the work in both. Agreements were duly signed on 10th March 1980, though he began the work a little earlier with the consent of the Board's officials. 3. However, the progress of work was slow at a far slower pace than the time schedule fixed in the agreements. The Board blamed the contractor for lethargy and dereliction in carrying out the work while the contractor pointed to certain imponderables which stood in the way of keeping pace with the time schedule. 3. However, the progress of work was slow at a far slower pace than the time schedule fixed in the agreements. The Board blamed the contractor for lethargy and dereliction in carrying out the work while the contractor pointed to certain imponderables which stood in the way of keeping pace with the time schedule. He also blamed the Board's officials for inaction in regard to certain matters- The situation dragged on to a stage when both the contracts were terminated on 18th June 1981. Within a month, the contractor filed two suits in the Sub Court, Trivandrum (O.S. Nos. 285 & 286 of 1981) for declaration that termination of the contracts was illegal and also for settlement of accounts besides some other incidental reliefs. The Board filed written statements and contested the suits. During pendency of the suits, both sides jointly applied before the Sub Court for orders referring all disputes to arbitration. The court appointed Mr. Justice M. Madhavan Nair (retired Judge of Kerala High Court) as Arbitrator with the consent of both sides and referred to him 18 items of reference in each suit. 4. The Arbitrator entered on reference on 14th March 1984. After holding sittings on many days, taking evidence and hearing arguments, the Arbitrator passed the two awards on 29th November 1984 and filed them in court on 30th November 1984 being the last day of the extended period for passing the awards. But before the awards were passed, the contractor lost confidence in the Arbitrator and filed a petition in court on 22nd November 1984 seeking leave of the court to revoke the authority of the Arbitrator and/or to remove him. On 26th November 1984 the Board filed a petition in court seeking extension of period for passing awards. Those petitions were, however, not disposed of, nor did the court pass any orders thereon. The Arbitrator, in his speaking awards found, inter alia, that the contracts were validly terminated and that the contractor had repudiated the contracts and hence the amounts were found due to the Board. The Arbitrator further held that the Board is entitled to get interest and provision is made in the awards regarding the rate at which and the date from which interest is to accrue. 5. The Arbitrator further held that the Board is entitled to get interest and provision is made in the awards regarding the rate at which and the date from which interest is to accrue. 5. After the awards were passed the contractor filed petitions in the Sub Court to set aside the awards [O.P. (Arb.) 320/84 in O.S. 285/81, O.P. (Arb.) 321/84 in O.S. 286/81] as well as to remove the Arbitrator and/or to revoke his authority. The contractor alleged that the Arbitrator misconducted himself and the proceedings, that the awards are vitiated by errors apparent on the face of them and that the Arbitrator had gone beyond his authority in regard to some of the findings. Learned Sub Judge has accepted almost all the contentions raised by the contractor and set aside both the awards, removed the Arbitrator, superseded the arbitration agreement and also cancelled the appointment of the Arbitrator. The Board was directed to pay costs to the respondents. Hence these appeals. 6. Learned counsel for the Board made a scathing attack against the reasoning of the learned Sub Judge. When we perused the lengthy judgment, we came across certain passages from which one would doubt whether the learned Sub Judge has applied his mind over the reasons advanced in the application or in the argument notes submitted by the counsel for the contractor. (Learned counsel for the contractor has said that argument notes were submitted to the Sub Judge). We have come across from the judgment in the context where the Sub Judge referred to D. W. 1's evidence, the following observation: "The plaintiff will be placing other important evidence regarding this question at the time of argument". Further down in the judgment learned Sub Judge has stated thus: "It is with great regret that the plaintiff is constrained to point out in this connection the judicial dishonesty on the part of the arbitrator". We feel that the learned Sub Judge would have given a blanket direction to his stenographer to type down the contents of the voluminous petition as part of the common order passed by him without himself applying his mind to such averments. 7. As the Arbitrator was also made a party in these appeals, notice was issued to him also. We feel that the learned Sub Judge would have given a blanket direction to his stenographer to type down the contents of the voluminous petition as part of the common order passed by him without himself applying his mind to such averments. 7. As the Arbitrator was also made a party in these appeals, notice was issued to him also. Sri S. Narayanan Potti, Senior Advocate, who appeared for the Arbitrator before this Court said that the Arbitrator is least concerned whether the awards are upheld or set aside. However, learned counsel submitted that the Arbitrator is concerned about the disparaging comments made against him by the learned Sub Judge in the impugned order. Learned counsel drew our attention to some such remarks which, according to the learned counsel, pained the Arbitrator. At one place learned Sub Judge remarked that the Arbitrator made "intentional disregard of the law" (at page 81 of the printed judgment), at another place learned Sub Judge remarked that the Arbitrator has "in his anxiety to find out some material" in the order of termination has picked up a sentence therefrom (at page 87) and at another place learned Sub Judge observed that the Arbitrator "had to strain a lot to get over these difficulties and therefore strange construction is put on Exts. B-88 and B-89 in the award". Further down learned Sub Judge commented that ''the Arbitrator strains hard to wriggle out of the apparent tenor of Ext. B-89". Learned Sub Judge scornfully commended that the Arbitrator had adopted "double standards". Serious objection is taken against such comments. Some of those comments are disparaging and others are at least unpleasant, Even learned counsel for the contractor has submitted, in fairness, that the Sub Judge should not have used such unpleasant epithets against the Arbitrator. Justice Madhavan Nair was in a way compelled to take up this laborious work when the court appointed him as both sides jointly expressed confidence in him. Having heard arguments on both sides in extenso and having considered the relevant evidence. We have no hesitation to say, at this stage itself, that those remarks of the learned Sub Judge are quite unwarranted. According to us, learned Sub Judge should have adopted restraint and avoided such remarks. We do not say that such remarks should have been avoided because the Arbitrator was a retired Judge of a High Court. We have no hesitation to say, at this stage itself, that those remarks of the learned Sub Judge are quite unwarranted. According to us, learned Sub Judge should have adopted restraint and avoided such remarks. We do not say that such remarks should have been avoided because the Arbitrator was a retired Judge of a High Court. We say that such remarks should have been avoided because they were quite unwarranted as well as unnecessary. If men like him are exposed to such unkind and unwarranted epithets, that too after holding tedious and laborious proceedings in deference to the order passed by a court of law, we are apprehensive that such men would in future hesitate to accept such assignment. We express our distress that the learned Sub Judge had failed to exercise restraint in passing those comments against the Arbitrator. 8. Learned Sub Judge found that the conduct of the Arbitrator in proceeding with the case and making the awards after he was informed of the filing of two interlocutory applications (one for revocation of the authority of the Arbitrator and the other for his removal) " is misconduct of himself and the proceeding within S.30 (a) of the Act". The Sub Judge expressed inclination to set aside the awards "on this solitary ground". 9. Reference to some facts, on this point, is necessary. Arbitrator heard counsel for the contractor for nine days and then heard counsel for the Board for six days. (Before commencing arguments the Arbitrator had held proceedings on a number of days for taking evidence). Then reply arguments were heard on 16th and 17th of November, 1984. Since the Board's counsel had addressed arguments till 4.30 p.m. on 17th, the cases were posted to 25th November 1984 "for further arguments if any". In the meanwhile the contractor filed I.A. 5887 on 22nd November 1984 in court for revocation of authority and for removal of the Arbitrator. The Arbitrator was informed about this motion on the next day, but he told the counsel that unless the court issues any direction, he would have to pass the awards before the expiry date. On the 25th of November, 1984 the Board's counsel alone was present to argue before the Arbitrator. No direction was issued, nor had any order been passed by the court on the applications for removal of the Arbitrator. On the 25th of November, 1984 the Board's counsel alone was present to argue before the Arbitrator. No direction was issued, nor had any order been passed by the court on the applications for removal of the Arbitrator. The awards were passed on the 29th and they were forwarded to the court on the next day through one Assistant Executive Engineer of the Board. According to the Arbitrator, a copy each of the awards were forwarded to the counsel for the contractor and since he refused to receive them they were sent by registered post on 1st December 1984. It is admitted by the contractor that he received the copy of the awards so sent through registered post. 10. Two questions are involved here. First is whether the Arbitrator misconducted himself when he passed the awards even after he was told that one of the parties had applied for his removal. The second is whether the awards are liable to be consigned to records inasmuch as the Arbitrator forwarded a copy of the awards to the party without sending separate notice to him. 11. To support the conclusion that the Arbitrator ought not to have passed the awards when he was sought to be removed, learned Sub Judge made reference to Dhanpatmal v. Kishinlal XXV Indian cases 536, Union of India v. Gupta AIR 1978 NOC 214 (Delhi) and Koshy v. K.S.E.Board ILR 1983 (2) Ker. 540 (the decision of a Single Judge of this Court). On the facts in those decisions the Arbitrator in each of those cases was found to have misconducted himself by proceeding with the reference so long as the propriety of doing so was still sub judice. 12. There cannot be any broad principle that it would be misconduct if an Arbitrator passes the award after being informed that his authority is sought to be revoked. The totality of facts and circumstances must be taken into account for arriving at a decision on that score in each case. As the Arbitrator has to pass the award before the expiry of the period fixed in Art.3 of the First Schedule of the Act, a prudent and conscientious Arbitrator may think that the entire exercise invoking lot of public money and many hours and days of tedious proceedings is likely to go waste unless he passes the award before the expiry of time. Simply because one of the parties, at the fag end of the proceedings, expressed want of confidence in him, the Arbitrator need not refrain from passing awards till the period expires. It is possible that from questions put by the Arbitrator during arguments a party may draw his own impression as to how the arbitrator's mind works. If the party senses from such questions that the Arbitrator is likely to pass the award against him such party cannot have the choice to stultify the entire proceedings unilaterally by expressing want of confidence just before passing the award. The facts in this case would show that the Arbitrator never wanted to stand in the way of the court considering and passing orders on the applications filed to remove him. That is why he told the counsel that some direction or orders may be obtained from court. This is also the reason why the arbitrator suggested to one of the parties to move for further extension of the period. When the Arbitrator found that the court did not pass any order on any of these applications, as a responsible arbitrator he passed the awards before the expiry of the time. 13. In Ramshai v. Harischandra AIR 1963 MP 143 a Division Bench has sounded a note of caution that mere expression of a desire of one of the parties to have the authority of the arbitrator revoked should not oblige the arbitrator to keep the award pending. "The position would be different if a petition is already filed and a stay order is made by the court, but otherwise there is nothing in the law that the mere desire on the part of a party to revoke the reference can be have the effect of automatically staying further proceedings". Here the Arbitrator knew that from 80th November, 1984 he would become functus officio. The consequence will be loss of valuable time of all concerned, and huge waste of public money. The judicial discipline acquired by him over the years would have impelled him to pass the awards before the expiry date to save public time and money. Here the Arbitrator knew that from 80th November, 1984 he would become functus officio. The consequence will be loss of valuable time of all concerned, and huge waste of public money. The judicial discipline acquired by him over the years would have impelled him to pass the awards before the expiry date to save public time and money. The Arbitrator could have legitimately thought that if the awards are liable to be set aside on any of the legal grounds otherwise, that remedy is even otherwise available to the parties which is a better course than allowing the time to get expired without submitting the awards. 14. Learned Sub Judge found that there was violation of S.14(1) of the Act inasmuch as the Arbitrator has not served notice of the award to the contractor. The aforesaid finding is made on the assumption that the Arbitrator did not give notice of the award. Sub-section(1) enjoins on the Arbitrator to do two things after making the award. First, to sign the award and second to give notice of the award to the parties in writing. There is no requirement that the notice should also be signed by the Arbitrator himself or that the same should be served by the Arbitrator personally. S.42 of the Act deals with service of notice. It says that any notice required by the Act shall be served if there is no provision in the arbitration agreement regarding service of notice, by delivering it to the person on whom it is to be served Or by sending it by post in a letter addressed to that person. When the arbitrator sends a copy of the award to the party concerned it can be treated as giving notice of the award to the party. The object of giving notice of the award to a party is to keep him in the know of the making of the award. The object is achieved when the copy of the award itself is sent to the party. 15. In Parasramka Commercial Co. v. Union of India AIR 1970 SC 1654 , the Supreme Court considered a case where the arbitrator without sending any separate notice of the making and signing the award sent a copy of the award to the parties. The Supreme Court held that it amounted to giving him notice in writing of the making of the award. v. Union of India AIR 1970 SC 1654 , the Supreme Court considered a case where the arbitrator without sending any separate notice of the making and signing the award sent a copy of the award to the parties. The Supreme Court held that it amounted to giving him notice in writing of the making of the award. The said decision was followed in State of M. P. v. S. & S. Ltd. AIR 1972 SC 1507 . We have no reason to take a hyper technical view that if the Arbitrator does not send separate notice in addition to sending a copy of the award to the party, there will be non-compliance with S.14(1) inviting the consequence of rendering the award invalid or liable to permanent consignment to records. 16. The contractor made certain allegations against the Arbitrator Mr. Justice Madhavan Nair in the affidavit filed by him in support of the petition for removal. Those allegations were repeated in the Original Petitions filed for setting aside the awards. Those allegations included that the Arbitrator hurled much abuses and unwarranted personal observations against the contractor, and also against P.W. 1 who was examined as a witness in the arbitration proceedings, that the Arbitrator was biased against the contractor and was partial to the Board and its advocates, that the Arbitrator remarked during the proceedings that he was considering a suggestion by one of his friends as to whether a one line award would be sufficient, that the Arbitrator persuaded the counsel for the Board to emphasis certain points which are not covered by pleadings or evidence, that the Arbitrator openly commented that he was not going to believe the evidence of P.W. 1 at all and that the Arbitrator found fault with the contractor about the language was as well as the contents of the letters addressed to various officers and that the Arbitrator was repeatedly saying that he would ignore material documents etc, (The rest of the allegations are vague and mere impressions formed by the contractor). In this connection it is appropriate to make a reference to the statement submitted by the Arbitrator before the lower court on receipt of a notice issued to him from court. The Arbitrator denied to have uttered any word meaning insolent in reference to any one during proceedings. The contractor did not adduce any evidence to substantiate the allegations. In this connection it is appropriate to make a reference to the statement submitted by the Arbitrator before the lower court on receipt of a notice issued to him from court. The Arbitrator denied to have uttered any word meaning insolent in reference to any one during proceedings. The contractor did not adduce any evidence to substantiate the allegations. About the comments which the Arbitrator is said to have passed during proceedings touching the merits of the documents and evidence, we may say that the Arbitrator is not expected to keep his mouth shut, during proceedings. No legal principle can be laid down that an Arbitrator should not make his comments about the merits of the case during arguments. If the Arbitrator, who sat through many days of proceedings, felt some opinion about the merits of evidence, there is nothing wrong in giving expression to such opinion. At any rate, giving expression to such opinions cannot be treated as misconduct on the part of the Arbitrator. 17. We, therefore, hold that the contractor failed to substantiate his case that the awards were vitiated on account of personal misconduct of the Arbitrator. 18. The first term of reference to the Arbitrator was this: "Whether the termination of the contract by the defendants (the Board and its Chief Engineer) is legal and valid in the circumstances of the case". The Arbitrator found for the reasons stated in the awards that the orders of termination are legal and valid in law. The termination orders in both cases were issued by the Chief Engineer. Since it was disputed that the Chief Engineer was competent to terminate the contract, the Arbitrator considered that point and found that the Chief Engineer was competent to terminate the contract. Learned Sub Judge found that the Arbitrator committed an error of law in deciding that the Chief Engineer was competent to terminate the contract. While the finding of the Sub Judge is based on Clause.28 of the "Annexure" read with Clause.27 and 28 of the "Specifications", the Arbitrator's finding is based on Clause.16 of the "Printed General Conditions of Contract". Learned Sub Judge found that the Arbitrator committed an error of law in deciding that the Chief Engineer was competent to terminate the contract. While the finding of the Sub Judge is based on Clause.28 of the "Annexure" read with Clause.27 and 28 of the "Specifications", the Arbitrator's finding is based on Clause.16 of the "Printed General Conditions of Contract". Learned counsel for the contractor, in support of the finding of the Sub Judge, contended that in construing the contract the Arbitrator ought to have found that the "Annexure" in conjunction with the "Specifications" contained express provision for termination, while the "Printed General Conditions of Contract" contained only a general provision. The maxim "expressio unius est exclusio alterim" (Express mention of one thing implies exclusion of another) was cited by the learned counsel and contended that the relevant clauses in the "Annexure" and "Specification" need alone have been looked into for the purpose of deciding the question whether the Chief Engineer had the power to terminate the contract. 19. Before we proceed to consider this point, some facts relevant for this issue have to be stated. The "Contract Agreements"' for the construction of the tunnels were executed on 10th March 1980 between the Chief Engineer (Civil) of the K.S.E.Board, on behalf of the Board and the contractor. The agreement incorporated, among other things, three documents as integral parts of the contract. The first document is called "General Conditions of Contract and Instructions" which is a booklet printed in 1978 containing general conditions of the contract. For practical purposes, the said booklet can be referred to hereinafter as "P.G.C.C.". The first clause of P.G.C.C. contains definitions of some words used therein. The word "Engineer" is defined as Chief Engineer (Civil) of the Board or his duly authorised representative. The word "Specification" shall mean specifications annexed to the P.G.C.C. The second document attached with the agreement is called "Annexure to Printed General Conditions of Contract and Instructions to Tenderers". (For practical purposes, this will be referred to as "Annexure"). This contains only stencilled sheets. The third document is called "Specifications". In fact, "Specifications" contain clauses which are specially applicable to this contract while the other two documents form part of every contract for construction in which Board is a party. P.G.C.C. and Annexure would have been formulated and prepared long prior to the contemplation of Kakkad Project. 20. This contains only stencilled sheets. The third document is called "Specifications". In fact, "Specifications" contain clauses which are specially applicable to this contract while the other two documents form part of every contract for construction in which Board is a party. P.G.C.C. and Annexure would have been formulated and prepared long prior to the contemplation of Kakkad Project. 20. Clause 28 of the Annexure says that if progress of the work is found not satisfactory "the Board will have the option either to terminate the contract or supplement the work through other agency, both at the risk and cost of the contractor". 21. Clause 27 of the Specifications deals with the rate of progress to be achieved by the contractor. It insisted that average minimum progress of 75 metres per month for that part of the tunnel which is driven through the rock, 100 metres per month for "adits" and 750 metres per month for concreting the floor portion of the tunnel should be achieved. The said clause further says that progress will be checked each month and if it falls below the minimum without adequate cause "the department" will notify the contractor to speed up the progress and if despite such notice the contractor continues to delay the work without reasonable cause, "the department" will have the right to cancel the contract. 22. The main contention based on the aforesaid clauses is that it is only the Board which can terminate the contract. Even if there were no such clauses either in the Annexure or in the Specifications, the Board being a party to the contract has power to terminate the same, under general law of contract, if the other party commits breach of terms of the contract. So, it cannot be held that power for termination of the contract proceeds from Clause.28 of the Annexure and/or Clause.27 of the Specifications. Such clauses can at best be regarded as re-statement of the general powers which every party to a contract possesses. However, a closer look at Clause.28 of the Annexure indicates that the same is intended to serve another purpose. It provides an alternative remedy to the Board, since the Board has the option either to terminate the contract or supplement the work through other agency . 23. In this context, Clause.16 of the P.G.C.C. has to be referred to. Its title is "Negligence and Termination of contract". It provides an alternative remedy to the Board, since the Board has the option either to terminate the contract or supplement the work through other agency . 23. In this context, Clause.16 of the P.G.C.C. has to be referred to. Its title is "Negligence and Termination of contract". The first paragraph of the clause says that if the contractor neglects to execute the work with due diligence and expeditions the Engineer (i.e., the Chief Engineer) may give seven days notice in writing to the contractor to make good the failure and if the contractor fails to comply with the notice the Engineer shall be at liberty (1) to employ other workmen and forthwith perform such work as the contractor may have neglected to do or (2) to take the work wholly or in part out of the contractor's hand and re-contract the same at a reasonable price with any other person. In the further portion of the same paragraph and also in the two succeeding paragraphs details to be done as the follow up have been delineated. In the last paragraph of Clause.16 it is stated that "in the event of termination of the contract the contractor must forthwith make available to the department all the working areas and access thereto as well as sites which were in his occupation for the performance of the contract" etc. We have no doubt that Clause.16 of the P.G.C.C. is intended to confer power on the Chief Engineer to , terminate the contract. Without such a clause the Chief Engineer has no power to terminate the contract. 24. It is here that the learned counsel for the contractor emphasised that since the Annexure contains special provisions of contract, such provisions must be given overriding effect. The following passage from Chitty on Contracts (General Principles) has been relied on (vide Para.626 of the book): ''Where the contract is contained in a printed form with writing superadded, the written words, if there should be any reasonable doubt about the sense and meaning of the whole, are to have greater effect attributed to them than the printed words inasmuch as the written words are the immediate language and terms selected by the parties themselves for the expression of their meaning, and the printed words are a general formula adapted equally to their case and that of all other contracting parties upon similar occasions and subjects. And in the event of a difference between words and figures, the written words normally prevail." 25. The legal position that handwritten clauses in a contract agreement should be given more effect than printed clauses is based on the common sense reasoning that parties would have applied their mind specially to the portions written in hand and they might perhaps have not carefully read all clauses in printed sheets. Here the position is different. Though P.G.C.C. is in printed sheets, the Annexure is in stencilled sheets. Both were formulated and prepared long before Kakkad Project was in contemplation. We find no particular reason to attach greater importance to clauses in stencilled sheets than the terms in printed sheets, as both were prepared through mechanical process and both were formulated much earlier. 26. A contract agreement should not be truncated for interpretation. The interpreter must have the whole contract terms in mind before he gives his construction of the terms of the contract. Of course, ho may have to give greater strees to certain clauses, and it may not be necessary to refer to all the terms of the contract. In -this context it is of advantage to refer to Para.620 of "Chitty" on contracts (General Principles): "Every contract is to be construed with reference to its object and the whole of its terms, and accordingly, the whole context must be considered in endeavouring to collect the intention of the parties, even though the immediate object of inquiry is the meaning of an isolated clause. It is a true rule of construction that the sense and meaning of parties in any particular part of an instrument may be collected ex antecedentibus et consequentibus, every part of it may be brought into action in order to collect from the whole one uniform and consistent sense, if that be done". Quoting Lord Davey from the judgment in N. E. Railway v. Hastings 1900 AC 260, learned author has stated thus: "The deed must be read as a whole in order to ascertain the true meaning of its clauses, and the words of each clause should be so interpreted as to bring them into harmony with the other provisions of the deed if that interpretation does no violence to the meaning of which they are naturally susceptible". 27. 27. Learned counsel for the contractor invited our attention to Clause.44 of the Annexure to support his contention that Clause.16 of the P.G.C.C. should have submerged beneath Clause.28 of the Annexure. The said Clause.44 of the Annexure reads thus: "This Annexure to general conditions together with specifications should be read in conjunction with the Printed Conditions of Contract and where there is conflict of expression or meaning or variation, the conditions given in the former (stencilled sheets) shall prevail". It is clear that the terms in the Annexure get predominance over the clauses in P.G.C.C. when Loth are mutually conflicting or varying, but not when one is supplementary to the other. We do not, and cannot, read Clause.16 of the P.G.C.C. as a term which conflicts or is at variance with Clause.28 of the Annexure. 28. Learned Sub Judge took the view that Clause.27 of the Specifications superseded Clause.16 of the P.G.C.C. The said reasoning is devoid of merits. The word "department" in the Specifications is sought to be construed as the Board itself. Learned counsel for the Board rightly contended that the word "department" as used in the Specifications refers to the particular department under the Board, the lead of which is the Chief Engineer of that department. It is true that the word "department" is not defined in any of the documents attached to the agreement. But the contractor cannot have its meaning in the manner he chooses. There is inherent evidence in the Specifications to show that the word "department" is used therein in a different sense or at least as distinguished from the Board. (Vide Clause.11, 13 and 19.01 of the Specifications). A reading of Clause.13 will make it abundantly clear that the words "department" and "Board" are used in two different senses. 29. The upshot of the said discussion is this. The Arbitrator's finding that the Chief Engineer was competent to terminate the contract cannot be termed as legally erroneous. 30. Learned counsel for the contractor contended that the awards are invalid as the Arbitrator is guilty of legal misconduct. In support of the said contention the counsel invited our attention to that part of the award which dealt with the question of termination of the contract. 30. Learned counsel for the contractor contended that the awards are invalid as the Arbitrator is guilty of legal misconduct. In support of the said contention the counsel invited our attention to that part of the award which dealt with the question of termination of the contract. The following observations of the Arbitrator have been given accentuation by the learned counsel: "I hold that Clause.16 of the P.G.C.C. does empower the Chief Engineer to terminate the concerned contracts on the ground and conditions specified in it. If Clause.16 of the P.G.C.C. concerns power on the Chief Engineer to terminate the contract, it is unnecessary to consider whether he can claim such power under Clause.28 of the Annexure and Clause.27 of the Specifications". He invited our attention to the decision in K. P. Paulose v. State of Kerala AIR 1975 SC 1259 in which the Supreme Court held that misconduct under S.30(a) comprises legal misconduct which is complete "if the Arbitrator on the face of the award arrives at an inconsistent conclusion even on his own finding or arrives at a decision by ignoring very material documents which throw abundant light on the controversy to help a just and fair decision". 31. In considering the above contention, we have to notice that the Arbitrator has reproduced in the award the material portion of Ext. B-44 in O.S. 285 (which is the same as Ext. B-40 in O.S. 286). The said document contained the order of termination of the contract. TheChief Engineer who passed the order of termination has said that he was constrained to terminate the contract by virtue of provisions. in Clause.16 of the P.G.C.C. Clause.28 of the Annexure and Clause.27 of the Specifications. Counsel for the Board urged before the Arbitrator that under Clause.16 of the P.G.C.C., the Chief Engineer was competent to terminate the contract, whereas counsel for the contractor contended that the Chief Engineer "can only deal with the work but not with the contract". So, the Arbitrator proceeded to consider the said rival contentions and found authority from Clause.16 of the P.G.C.C. itself. It was in the aforesaid context that the Arbitrator remarked that it was unnecessary to consider whether the Chief Engineer can claim such power under Clause.28 of the P.G.C.C. or Annexure or the Specifications. This approach cannot be described as ignoring material documents so as to amount to legal misconduct. 32. It was in the aforesaid context that the Arbitrator remarked that it was unnecessary to consider whether the Chief Engineer can claim such power under Clause.28 of the P.G.C.C. or Annexure or the Specifications. This approach cannot be described as ignoring material documents so as to amount to legal misconduct. 32. The next point for consideration is whether the Chief Engineer, if he is the competent authority to terminate the contract, could have validly terminated the contract in the context. The Arbitrator found that the termination was valid. He rests on three premises to reach the conclusion. (1) The execution of work was far behind the schedule of progress stipulated in the Specifications. (2) There was negligence on the part of the contractor which resulted in non-compliance with the schedule. (3) The contractor by sending Ext. B-88 letter (in O.S. 286 - which is the same as Ext. B-91 in the other suit) repudiated the contract. 33. Ext. B-44 in O.S. 285 (which is the same as Ext. B-40 in the other suit) is the letter issued by the Chief Engineer to the contractor on 18th June, 1981 terminating the contract with effect from the date thereof. In that letter the Chief Engineer mentioned that the work had been at stand still from 17th March 1981 and that the contractor was requested to take effective measures to resume work and that he was again reminded of it through letter dated 6th May 1981 (Ext. B-85) as also the consequences of non-compliance with the request within a further period of seven days. The Chief Engineer further mentioned in the termination letter that the contractor had not been able to resume work and that "it is felt that you have no intention to resume the work and that you want to back out of the contract". 34. The Arbitrator has treated Ext. B-88 as amounting to repudiation of contract (vide Para.39 of the award). Learned counsel contended that it is an erroneous construction of Ext. B-88 which amounts to an error of law. Ext. B-88 was sent by the contractor to the Board with a copy thereof to the Chief Engineer on 12th May 1981. In that letter he pointed out his difficulties in resuming the work. He mentioned further that there were several precedents where the Board had "granted magnanimous compensation and advances to other contractors". Ext. B-88 was sent by the contractor to the Board with a copy thereof to the Chief Engineer on 12th May 1981. In that letter he pointed out his difficulties in resuming the work. He mentioned further that there were several precedents where the Board had "granted magnanimous compensation and advances to other contractors". He expressed his feeling that he alone should not be singled out from the aforesaid practice. Hence he requested that in case a settlement could be arrived at regarding enhancement of wages and payment of advances to workers the Board should consider and decide payment of a suitable compensation to the contractor "for the financial commitment and impacts which I will have to suffer in view of the settlement". His alternate suggestion in Ext. B-88 letter is this : "If by any chance my above cited proposal is not acceptable to the Board, then, as the only other alternative. I request that a commission acceptable to the Board and myself be appointed to enquire into the contract work already carried out by me, weigh the pros and cons of the matter bearing in mind my present state of health and the various or deals that I have faced in the past and arrive at a fair decision in the matter and that I should be relieved of my present contractual obligation without any risk and cost to me at the earliest". 35. None of the suggestions contained in Ext, B-88 was accepted by the Board. The Secretary of the Board sent a reply to the contractor saying that the proposals were not acceptable to the Board. However, the Secretary informed him that he may approached the Chief Engineer with the said proposals. 36. Under S.39 of the Contract Act "when a party to a contract has refused to perform, or disabled himself from performing, his promise in its entirety, the -promisee may put an end to the contract, unless he has signified, by words or conduct, his acquiescence in its continuance". Here the contention is that since Ext. B-88 proposal was not accepted by the Board, this will not amount to repudiation. Asquith, L.J. has observed in Howard v. Pickford 1951 (1) KB 417: "an unaccepted repudiation is a thing writ in water and of no value to anybody; it confers no legal rights of any sort or kind". Here the contention is that since Ext. B-88 proposal was not accepted by the Board, this will not amount to repudiation. Asquith, L.J. has observed in Howard v. Pickford 1951 (1) KB 417: "an unaccepted repudiation is a thing writ in water and of no value to anybody; it confers no legal rights of any sort or kind". In answer to the said contention learned counsel for the Board pointed out that though the proposals contained in Ext. B-88 were not acceptable to the Board, the whole letter was in the mind of the Chief Engineer when he terminated the contract. In other words, according to the learned counsel, the repudiation of the contract suggested by the contractor in Ext. B-83 was accepted by the Chief Engineer through Ext. B-44. 37. The Arbitrator has, no doubt, said that Ext. B-83 letter amounts to repudiation in law. But this cannot be regarded as a proposition of law. According to the learned counsel for the contractor an award by an Arbitrator may be set aside for an error of law on the face of it. 38. In Kelantan Government v. Duff Dev. Co. 1923 All England Law Reports 349 the House of Lords held that an award by an Arbitrator may be set aside for an error of law on the face of it. "If it appears by the award that the arbitrator has proceeded illegally for instance, that he has decided on evidence which in law was not admissible, or on principles of construction which the law does not countenance. Then there is error in law which may be ground for setting aside the award, but the mere dissent of the court from the arbitrator's conclusion on construction is not enough for that purpose. Unless it can be shown by something appearing on the face of the award that the arbitrator has proceeded illegally, his award must stand". The said decision has been followed by the Supreme Court in Thawardas v. Union of India AIR 1955 SC 468 . If an award is to be set aside on the ground of an error apparent on the face of the award, it is not enough that the Arbitrator adopted some erroneous reasoning. An award is not invalid merely because by a process of Inference and arguments it could be demonstrated that the Arbitrator has committed some mistake in arriving at his conclusion. An award is not invalid merely because by a process of Inference and arguments it could be demonstrated that the Arbitrator has committed some mistake in arriving at his conclusion. Reasonableness of the reasons given by the Arbitrator cannot be challenged in court vide M/s Sudarsan Trading Co. v. Government of Kerala AIR 1989 SC 390. The award of an Arbitrator can be set aside on the ground of an error on the face of the award only when in the award or in any document incorporated with it, any legal proposition is made and such legal proposition is erroneous and such erroneous legal proposition was made the basis of the award. The exception to the aforesaid principle is that when a specific question of law is submitted to the Arbitrator, his award cannot be set aside even if the Arbitrator has answered the question erroneously. M/s Alopi Parshad v. Union of India AIR 1960 SC 588 , Union of India v. Rallia Ram AIR 1963 SC 1685 ; and Alien Berry & Co. v. Union of India AIR 1971 SC 696 . 39. Ext. B-88 letter, no doubt, contains some proposal. But it is also clear from Ext. B-88 that, the contractor was not willing to continue with the contract unless his proposals (contained in the first part of the letter) were accepted. This is made further clear in the second part of the letter wherein the contractor put it in clear terms that his only other alternative proposal is to relieve him of the contractual obligations without any risk and cost and to appoint a commission to enquire into the work already carried out by him. 40. The Arbitrator found that Ext. B-88 letter was staring at the Chief Engineer when he issued the termination letter. This must be correct because a copy of Ext. B-88 was marked to the Chief Engineer also. Though the Chief Engineer did not refer to Ext. B-88 in the order of termination, there is nothing erroneous in the Arbitrator holding that the said letter was also in the mind of the Chief Engineer. 41. The finding of the Arbitrator that the contractor was negligent in executing the work is not open to question in this court. No question of law is involved in the said finding. B-88 in the order of termination, there is nothing erroneous in the Arbitrator holding that the said letter was also in the mind of the Chief Engineer. 41. The finding of the Arbitrator that the contractor was negligent in executing the work is not open to question in this court. No question of law is involved in the said finding. Therefore, the only conclusion which we can reach is that the Arbitrator has not committed any legal error in concluding that the termination of the contract was validly made by the Chief Engineer. In the result, we hold that the court below has gone wrong in setting aside the awards. We, therefore, allow these appeals and set aside the impugned common order. We direct the lower court to proceed further with the awards in accordance with law. We direct the parties to bear their respective costs.