Tamil Nadu Cements Corporation Ltd. v. Sathiapal and Company
1991-09-20
JANARTHANAM, MISHRA
body1991
DigiLaw.ai
Judgment :- Mishra, J.: This Appeal has arisen out of a proceeding under Sec.30 of the Arbitration Application No.5374 of 1988 and O.P.No.129 of 1981 on the Original Side of this Court. Tamil Nadu Cements Corporation Limited (appellant and M/s.Sathiapal and Company, partnership firm represented by its partner, S.Sathiapal, carrying on business in the Madras (first respondent) had fallen in dispute with respect to a works contract for (1) Lime stone crusher Building vide agreement No.36/77-78, dated 10.10.1977. (2) Sub Station building vide agreement No.50/ 77-78 dated 28.12.1977. (3) Central Control Room Building, vide agreement No.14/78-79, dated 22.7.1978; and (4) Lime stock piles contruction, vide agreement No.77/78-79, dated 29.11.1978. 2. The dispute, with the agreement of the parties, was referred to arbitration in terms arbitration clause in the agreement between the parties with the second respondent Mr.S.P.Namasivayam, an Engineer, as the Arbitrator made this award as follows: and accordingly the award was sought to be made a rule of the Court. petitioner/appellant has challenged the award on the grounds inter alia that the committed error in awarding certain amounts related to matter, either prohibited contract, or not contemplated in the contract, something more than asked for contractor and interest for which he had no authority. On the question that the had awarded certain amounts with respect to matters either prohibited in the contract contemplated in the contract, the petitioner/appellant relied upon the tender for piece which stated as follows: “ We hereby distinctly and expressly declare and acknowledge that before the submission our tender we have carefully followed the instructions in the tender notice and have Tamil Nadu Detailed Standard Specifications and the relevant clauses of the Preliminary Specification of the Tamil Nadu Detailed Standard Specifications and that we have such examinations of the contract documents and of the location where the said work be done and such investigation of the work required to be done and in regard to the required to be furnished as to enable us thoroughly to understand the intention of and the requirements, covenants, agreements, stipulations and restriction contained contract and in the said specifications, and distinctly agree that will not thereafter make claim or demand upon the Corporation based upon or arising out of any alleged misunderstanding or misconception or mistake on our part of the said requirements, covenants, agreements, stipulations, restrictions and conditions.” 3.
Shanmukham, J., who heard the matter, however, found that the claim made by Contractor under this head did not relate to any alleged misunderstanding or misconception or mistake at the part of the requirements, covenants, agreements, stipulations, restrictions, and conditions set out in the contract document and quoted clause 3(2) of the tender substantiate his conclusion under which clause it was stated. “Tenderers must satisfy themselves fully before tendering by a personal examination of site of the proposed work to study about soil conditions, availability of water, power etc. examination of the plans and specifications attached with tender enquiry and by other means as they prefer as to the accuracy and sufficiency of the statement of quantities and all and conditions attached with tender enquiry and shall not at any time after the submission of their offer dispute or complain of such statement of quantities nor assert that there any misunderstanding in regard to the nature or amount of the work to be done or facilities mentioned above nor in consequence apply for extension of time for completion beyond date of completion of job as covered in the agreement. “On that basis, the learned Judge observes, “The claim made by the petitioner is that the quantity of hard rock was not as expected was something more, but then there is no dispute with regard to the total quantity involved in the work. The dispute only related to the quantity of hard rock, compared to soft soil. long as there is no dispute regarding the total quantity of work to be done, there is no for the application of this provision. There is nothing in the contract which has disabled contractors to make the claim relating to the excavation in hard rock. If there is no prohibition even impliedly the contractor is entitled to be paid because the petitioner had benefit of such work. As a matter of fact, there is no dispute about the quantity of work done. Then the matter is certainly within the competence of the Arbitrator, because arbitration clause II-1 at page 30 Vol.III the arbitrator shall also have power to open review and revise any certificate, opinion, decision, requisition or notice, save in regard the matters expressly exempted and to determine all matters in dispute which shall submitted to him and of which notice shall have been given as aforesaid.
Thus, the arbitrator has wide powers to determine all matters between the two contracting parties, namely petitioner and the Contractor. Consequently, any decision of the arbitrator turns on a question of fact and cannot be impeached under Sec.30 of the Arbitration Act, because a decision will not amount to an error apparent on the face of the record.” 4. Coming to the second objection, the learned Judge held that the dispute under this turned on pure question of fact and to the third objection that it arose from the combined effect of the agreement and the assurance given to the contractor on behalf of petitioner, to the fourth objection that as material had been placed before him as to how award suffered and to the fifth objection that a reading of clause 9(2) of the agreement meant that if there is any cause beyond the control of both the contracting parties, then Project Manager of the Appellant Corporation will be provided an opportunity to assess delay and hindrance observed: “In the instant case, it is common ground that there were delays by the petitioner supplying the drawings with complete and required details piecemeal without resulting in the contract, applied for clarification, and so it is not necessary to recapitulate several causes for the delay, as they are attributable to the petitioner. According contractor, it is because of this delay for which the petitioner is solely responsible, constrained to extend their stay at the project which caused them loss to the Rs.1,10,056-26 P.Though this contingency was not contemplated under the contracts petitioner is entitled to be paid damages that he has suffered on account of the which the petitioner alone is responsible. As long as the delay was not due to any laches on the part of the contractor, certainly, it is not only just but also legal petitioner shall pay for the extended stay. I do not find, therefore, any error to interference with the award under Sec.30 of the Arbitration Act. 5. Similarly, the learned Judge examined certain other items, such as overhead charges the claim of interest to conclude that those were the questions not indicating any error committed by the Arbitrator, of misconduct of any kind by him. 6.
I do not find, therefore, any error to interference with the award under Sec.30 of the Arbitration Act. 5. Similarly, the learned Judge examined certain other items, such as overhead charges the claim of interest to conclude that those were the questions not indicating any error committed by the Arbitrator, of misconduct of any kind by him. 6. The ambit under which the court can examine the validity of award of this kind is a judgment of the Constitution Bench of the Supreme Court in Raipur Development v. Mls.Chokramal Contractors, (1989)2 S.C.C. 721 . The Supreme Court has said: “The scheme of the Arbitration Act is to provide a domestic forum for speedy and justice, untrammelled by legal technicalities, by getting the dispute resolved by a whom the parties have full faith and confidence. The award given by such a person scheme of the Act can be assailed only on very limited ground like those mentioned of the Act. The result is that most of the awards at present are made rules of despite objections to their validity by the party against whom those awards operate a provision making it obligatory for the arbitrator to give reasons for the award asking for the introduction of an infirmity in the award which in most cases is likely fatal. Many honest awards would thus be set aside. Once the arbitrators are compelled to give reasons in support of the award, the inevitable effect of that would be that the validity of most of them would be challenged on the ground that the reasons or at least some of them are bad and not germane to the controversy. Sometimes, if four reasons are given in support of the award and one of the reasons shown to be not correct or not germane the award would be challenged on the ground is difficult to predicate as to how far the bad reason which is not germane has influenced decision of the arbitrator. Many awards would not survive court scrutiny in circumstances. It is also noteworthy that in a large number of cases the arbitrator would be laymen. Although their final award may be an honest and conscientious adjudication controversy and dispute, they may not be able to insert reasons in the award as may the legal requirements and the scrutiny of the court.
It is also noteworthy that in a large number of cases the arbitrator would be laymen. Although their final award may be an honest and conscientious adjudication controversy and dispute, they may not be able to insert reasons in the award as may the legal requirements and the scrutiny of the court. The arbitrators having been chosen the parties, it would, in our opinion, be not correct to put extra burden on them of also reasons which are strictly rational and germane in the eye of law in support of their Once the parties have voluntarily chosen the arbitrators, presumably because they have in their impartiality, the law should not insist upon the recording of reasons by them in award. The previous experience, in fact, points out that it is awarded incorporating reasons have generally been quashed in court. The awards not giving reasons have survived attack on their validity, unless the arbitrator is otherwise shown to have misconducted himself or his award suffers from some other technical defect." Before we refer to another judgment of the Supreme Court in M/s.Hind Builders v. Union India, A.I.R. 1990 S.C. 1340, we may take notice of the fact that the grounds of attack award are based solely on the award having been made for specific items of enumerated therein in the manner extracted by us earlier. Otherwise, it is conceded that award is not a speaking award. In M/s.Hind Builders the Supreme Court considered arguments for the Union of India that award having been granted in respect of each claim was really a speaking award so far as it specified the amount granted in respect each item of claim. The Supreme Court rejected the contention stating: "We have considered the respective contentions of the parties and we are of the opinion the Division Bench erred in setting aside the award in so far it related to the Rs.25,96,000. Though the annexure sets out the award of the arbitrators as against items of claims, the mere enumeration of the heads of claim cannot be equated incorporation of the statement of claim by the contractors into the award.
Though the annexure sets out the award of the arbitrators as against items of claims, the mere enumeration of the heads of claim cannot be equated incorporation of the statement of claim by the contractors into the award. At any rate, award does not relate the claims to the various clauses of the contract and the mere fact the statement of claim refers to various items in the schedule to the contract does not in the contract itself being incorporated as part of the award. No error can be found award unless one reads into it first the statement of claim and then the relevant clauses the contract. But this cannot be done unless these documents are treated as incorporated the award. This cannot be done." This judgment of the Supreme Court is authority for proposition that merely because is made for each item of claim, it cannot be treated as a speaking award or award reasons slated there for and further that items of claims enumerated in the award will related to the various clauses of the contract and conditions of contract will not be the award or deemed to have been incorporated in the award. In the instant case, therefore, unless the said declaration of law by the Supreme Court is ignored it will not be permissible to read in the award contents of the various clauses of the contract and then to find whether there has been any error of law or calculation done by the arbitrator. counsel for the appellant however has placed reliance upon a judgment of the Supreme in Continental Construction Co. Ltd. v. State of U.P., 1988 S.C. 1166, to contend that case the award of interest by the arbitrator and award beyond the claim of the contractor the arbitrator have to be set aside as atleast in this matter the arbitrator could be have misconducted himself. According to the learned counsel, there would always inherent objection to any award beyond the claim of the party and to the interest which is not stipulated in the contract. The arbitrator will be to have misconducted himself in not deciding the objections in this behalf. In Continental Construction Co. Ltd. v. State of U.P., 1988 S.C. 1166, a specific issue had been referred the arbitrator.
The arbitrator will be to have misconducted himself in not deciding the objections in this behalf. In Continental Construction Co. Ltd. v. State of U.P., 1988 S.C. 1166, a specific issue had been referred the arbitrator. The arbitrator however had answered the issue by a non-speaking after referring to an earlier judgment of the Supreme Court in Seth Thawardas v. Union India, (1955)2 M.L.J. (S.C.) 23: 1955 S.C.T. 445: (1955)2 S.C.R. 48: A.I.R. 1955 S. the court observed: “If no specific question of law is referred, the decision of the arbitrator on that question final however much it may be within his jurisdiction and indeed essential for him to the question incidentally. The arbitrator is not a conciliator and cannot ignore the misapply it in order to do what he thinks is just and reasonable. The arbitrator is a selected by the parties to decide their disputes according to law and so is bound to follow apply the law, and if he does, he can be set right by the Court provided his error appears the face of the award. In this case, the contractor having contracted, he cannot go the agreement simply because it does not suit him to abide by it.” The Supreme Court also rejected the contention that if specific issues referred arbitrator are answered by a non-speaking award, there is no mistake of law apparent face of record. The Supreme Court approved the view of the District Judge saying: “this being a general question, in our opinion, the District Judge rightly examined question and found that the appellant was not entitled to claim for extra cost in view terms of the contract and the arbitrator misconducted himself by not considering objection of the State before giving the award.” This is evidently distinguishable on facts. Since there were specific issues framed referred by the District Judge to the arbitrator, the terms of the contract were very incorporated in the reference and the consequent award. Moreover to answer a objection, it had become necessary to refer to the terms of the contract and once the referred to the terms of contract and found that any claim for extra cost was contemplated and also that such objection has been raised before the arbitrator, there no other conclusion possible.
Moreover to answer a objection, it had become necessary to refer to the terms of the contract and once the referred to the terms of contract and found that any claim for extra cost was contemplated and also that such objection has been raised before the arbitrator, there no other conclusion possible. We are afraid if we permit any reference to the terms contract to find out whether the arbitrator has misconducted himself or not, we shall committing a serious error of law. We also think that any examination of the question interest in the award therefore is not possible in the instant case. The only inhibition courts have recognised upon the jurisdiction of the arbitrator to award interest interest could not be awarded for the period prior to the suit in the absence of an agreement for the payment of interest or any usage of trade having the force of law or any provision the substantive law entitling the plaintiff to recover interest and that it must be assumed the arbitrator will have the same power to award interest as the court see Nachiappa v. Subramaniam Chettiar, A.I.R. 1960 S.C. 307, Satindar Singh v. Umarao Singh, 1961 S.C. 909, Union of India v. Sungo Steel Furniture Pvt. Ltd., A.I.R. 1967 S.C. 1032 State of Madhya Pradesh v. Saith and Skeleton Pvt. Ltd., A.l.R. 1972S.C. 1507. In Builders v. Union of India, A.I.R. 1990 S.C. 1340, however, Supreme Court has added: “While this is the position in cases which arose prior to the coming into force of the Act, 1978 in cases arising after the coming into force of the Acts, the position now though the award of pendente lite interest is still governed by the same principles, award of interest prior to the suit is now governed by the Interest Act, 1978. Under Interest Act, 1978, an arbitrator is by definition, a court and may now award interest in the cases to which the interest Act applies.” Thus, it is not a case in which without reference to the contents of the contract and various terms and conditions therein, it will be possible to say that award of interest has been illegal and thus the arbitrator misconducted himself in making such an award.
In view of above, we do not find any force in the contentions of the learned counsel for the appellant that there are questions of any legal misconduct of the arbitrator to be examined reference to the various terms of the contract. The award for all purposes is final learned single Judge has committed no error of law in rejecting the objections of appellant. There is no merit in the appeal. The appeal is accordingly dismissed. However, the facts and in the circumstances of the case, there will be no order as to costs. Appeal dismissed.