Union of India through Executive Engineer v. Mehta Construction
1996-11-09
B.P.SARAF, D.G.DESHPANDE
body1996
DigiLaw.ai
JUDGMENT - Dr. B.P. SARAF, J.:---This is an appeal of the Union of India from the judgment and order of the learned Single Judge dated 18th October, 1994, rejecting the Arbitration Petition of the appellants for setting aside the award of the arbitrator. 2.The facts of the case briefly stated are as follows. The appellants entered into an agreement with the respondents, M/s. Mehta Construction Co., for the construction of the G.M.T. Office Block at Cadell Road, Dadar, Bombay. The value of the work was Rs. 2,06,97,162.35. The contract was executed by and between the parties for execution of the above work. Under the terms of the contract, the work was to be completed by 20th February, 1983. However, the time for completion was extended by the appellants upto 20th August, 1985 and the work was also completed by the respondents by that time. During the progress of the work, payments were made by the appellants to the respondents from time to time. After the completion of the work, the respondents by their letter dated 21st January, 1987 raised several disputes and claims and the same having not been settled by the appellants, requested the Chief Engineer (Construction), North West Zone, to refer the said disputes and claims for arbitration under clause 25 of the contract. Accordingly, the disputes were referred to one Mr. J. Pal, Superintending Engineer (Civil), Telecom Civil Circle, Bhopal, as the sole arbitrator. The arbitrator gave his award on 12th June, 1989. By the said award, a sum of Rs. 6,37,472/- was awarded by the arbitrator in favour of the respondents together with interest at the rate of 18% from 12th September, 1989 i.e. from three months after the date of the award till final payment. The above amount awarded by the arbitrator comprised of various amounts awarded under the claims No. 1,2,10,12,21,24 25. The appellants challenged the above award before the learned Single Judge by filing an arbitration petition and prayed that the award should be declared null and void and set aside. 3.In the arbitration petition, the appellants had prayed that the entire award should be set aside. At the time of hearing before the learned Single Judge, the challenge was confined to the award in so far as it pertained to the amounts awarded against claims No. 1,2,10,12,24 25.
3.In the arbitration petition, the appellants had prayed that the entire award should be set aside. At the time of hearing before the learned Single Judge, the challenge was confined to the award in so far as it pertained to the amounts awarded against claims No. 1,2,10,12,24 25. The learned Judge considered the submissions of the appellants in regard to each of the above claims and came to the conclusion that no case has been made out by the appellants for interfering with the award in regard to any of the claims mentioned above. The learned Single Judge observed that the appellants, in fact, were seeking to challenge the reasons or the reasonableness of the reasons given by the arbitrator in support of the award. The learned Single Judge held that it was not open for the parties to the arbitration to challenge the award of the arbitrator on these grounds. The learned Single Judge, therefore, did not find any merit in any of the contentions of the appellants and hence dismissed the arbitration petition and made the award rule of the Court. 4.Aggrieved by the above order of the learned Single Judge, the Union of India is in appeal before us. Though before the learned Single Judge, the award was challenged in respect of a number of claims, the challenge before us in this appeal is confined to the amounts awarded against claims No. 1,2 25 only. Under the claim No. 1, a sum of Rs. 2,06,039/- was awarded by the arbitrator. This amount was awarded to the respondents in respect of steel bars supplied by the Government on the ground that they were not of specific weight. The arbitrator found that though the steel bars were issued by the Government to the contractors on actual weighment basis, the payment was made on the basis of the weight by measuring actual linear measurements multiplied by standard specific weight. The arbitrator came to the conclusion that the standard specific weight, which was a multiplier, was not as per the specification. In those circumstances, the arbitrator held in favour of the respondents and awarded the sum of Rs. 2,06,039/- on that count.
The arbitrator came to the conclusion that the standard specific weight, which was a multiplier, was not as per the specification. In those circumstances, the arbitrator held in favour of the respondents and awarded the sum of Rs. 2,06,039/- on that count. The challenge to the award of the above amount by the Union of India before the learned Single Judge was on the ground that the arbitrator failed to consider the evidence on record while arriving at the above conclusion and the reasons given by him for accepting the claim did not constitute proper reasons. According to the appellants, the award for Rs. 2,06,039/- against claim No. 1 was, therefore, erroneous. The learned Single Judge turned down the above challenge of the appellants on the ground that it was not open to the Court to sit in appeal over the reasons given by the arbitrator. The challenge of the appellants in respect of the above claims was therefore rejected by the learned Single Judge. 5.Claim No. 2 pertained to claim for compensation of Rs. 77,718/- on account of statutory increase in the prices of steel bars. The contention of the appellants was that the arbitrator acted against the terms of the contract in allowing the above claim. The learned Single Judge observed that the above compensation was awarded by the arbitrator in terms of clause 10(c) of the contract and, therefore, there was no merit in the contention of the appellants that the said claim was beyond clause 10(c) of the contract. 6.The last challenge before us is to the award of Rs. 1,04,461/- by the arbitrator against the claim No. 25 which pertains to increase in labour charges. This claim was also allowed by the arbitrator in view of clause 10(c) of the contract which specifically provides for reimbursement to the contractor in respect of increase in the labour charges. The learned Single Judge observed that the arbitrator did not commit any error on the face of the award in allowing the above claim which might justify interference of the Court. He, therefore, also rejected the challenge of the appellants to the award of Rs. 1,04,461/- against claim No. 25. 7.We have heard the learned Counsel for the appellants who submits that the arbitrator exceeded his jurisdiction in allowing the above claims.
He, therefore, also rejected the challenge of the appellants to the award of Rs. 1,04,461/- against claim No. 25. 7.We have heard the learned Counsel for the appellants who submits that the arbitrator exceeded his jurisdiction in allowing the above claims. According to the Counsel, the arbitrator travelled beyond the bounds of the terms and conditions of the contract, particularly, clauses 10(c), 42(i) and 42(ii). The learned Counsel further submits that the arbitrator committed manifest error of law in awarding interest pendente lite. 8.We have considered the submissions of the learned Counsel for the appellants. We however, do not find any merit in any of them. So far as award of sum of Rs. 2,06,039/- under claim No. 1, Rs. 77,718/- under claim No. 2 and Rs. 1,04,461/- under claim No. 25 are concerned, there is nothing to show that the arbitrator in any manner acted contrary to the clauses of the agreement or contract, or exceeded his jurisdiction. On the other hand, we are satisfied that the arbitrator has awarded the above amounts on a proper construction of clause 10(c) of the contract and appreciation of the facts of the case. That being so it is not open to the Court to reappreciate the evidence or to substitute its own opinion on the construction of the terms of the agreement for that of the arbitrator. 9.The law is well-settled by a catena of decisions of the Supreme Court that the jurisdiction of the Court to interfere with an award of an arbitrator is undoubtedly a limited one. The Court does not sit in appeal over the award and review the reasons. The reasonableness of the reasons given by an arbitrator in making the award cannot be challenged before the Court. The arbitrator is the sole Judge of the quality as well as the quantity of evidence and it is not for the Court to take upon itself the task of being a Judge of the evidence before the arbitrator. It may be possible that on the same evidence the Court might have arrived at a different conclusion than the one arrived at by the arbitrator but that by itself is no ground for setting aside the award of an arbitrator.
It may be possible that on the same evidence the Court might have arrived at a different conclusion than the one arrived at by the arbitrator but that by itself is no ground for setting aside the award of an arbitrator. It is not open to the Court to re-assess the evidence to find out whether the arbitrator has committed any error or to decide the question of adequacy of the evidence considered by the arbitrator. Nor the reasonableness of an award is a matter for the Court to consider unless, as observed by the Supreme Court in (Gujarat W.S. S.B. v. Unique Eretors, Gujarat (P) Ltd.,)1 A.I.R. 1989 , S.C. 793, the award is per se preposterous or absurd. The Court can, however, set aside the award only if it is apparent from the award that there is no evidence to support the conclusion or if the award is based upon on erroneous proposition of law. Though an award may be set aside on the ground of error on the face of the award, an award would not be invalid because by a process of inference and argument, it may be demonstrated that the arbitrator has committed some mistake in arriving at the conclusion. Bearing in mind the above principles, we are clear in our minds that in the instant case, the learned Single Judge was fully justified in rejecting the challenge of the appellants to the award in so far as it pertains to allowance of claims No. 1,2 and 25. 10.So far as award of interest pendente lite is concerned, it is well settled by the decision of the Supreme Court in (Secretary, Inspection Department v. G.C. Roy)2, (1992), 1 S.C.C. 508, that the arbitrator has the power to grant interest pendente lite. 11.In view of the above, we do not find any merit in this appeal and the same stands dismissed. No costs. Appeal dismissed. *****