ANSAL PROPERTIES & INDUSTRIES LTD. v. HIMACHAL PRADESH STATE ELECTRICITY BOARD
1997-06-12
KAMALESH SHARMA, R.L.KHURANA
body1997
DigiLaw.ai
JUDGMENT R. L. Khurana, J. - This appeal, under Section 39 of the Arbitration Act, 1940, has been by plaintiffs against the order dated 12-12-1996 of the learned single Judge (Surender Sarup, J.), passed in civil suit No. 227 of 1995. The defendants have preferred cross-objections. 2. The defendants-Himachal Pradesh State Electricity Board, invited tenders for the construction of civil works of Baner Project. Five tenders were received. Being the lowest, the tender of M/s. Sutlej Construction Company Ltd., Chandigarh, was accepted and the work was accordingly awarded to the said company. Subsequently, the contract came to be rescinded and the plaintiff being the second lowest tenderer, was invited by the defendant to execute and complete the remaining work at the rates and on the terms and conditions which were earlier contracted with M/s. Sutlej Construction Company Ltd. The plain accepted the invitation, except for revision of their rates of open excavation, underground excavation and final concreting. The plaintiff required that the rates as quoted by them in their original tender in respect of these works should be applicable. After considerable correspondence, an agreement came to be entered into between the parties on 12-2-1991. As per the agreement, the plaintiff was to execute the remaining work of Baner Hydel Project at a cost of Rs. 4.20 lakhs within a period of 24 months on the rates quoted by M/s. Sutlej Construction Company Limited. 3. During the execution of the work, disputes and differences arose between the parties relating to performance as also with regard to the application and interpretation of certain terms and conditions of the agreement. Therefore, in terms of Clause 25 of the agreement, the disputes between the parties was referred for determination to the sole arbitrator. Shri O. C. Kaushal, Chief Engineer, Larji Hydel Project, Sarabhai, Bhuntar, District Kullu, thus came to be appointed as the sole arbitrator. 4. On the basis of claims and counter-claims submitted by the parties, the arbitrator framed the following issues : (1) Whether there is a valid and binding contract between the parties and whether the claim filed by the claimant is arbitrable ? (2) Whether the claimants are entitled to claim revised rates of tunneling and if so, to what extent ? (3) Whether the claimants are entitled to claim on account of provision of steel supports and if so, to what extent ?
(2) Whether the claimants are entitled to claim revised rates of tunneling and if so, to what extent ? (3) Whether the claimants are entitled to claim on account of provision of steel supports and if so, to what extent ? (4) Whether the claimant are entitled to claim on account of disposal of soil beyond specified limits and if so, to what extent ? (5) Whether the claimants are entitled to claim on account of provision of centering and if so, to what extent ? (6) Whether the claimant are entitled to claim for deviated quantities at market rates and if so, to what extent ? (7) Whether the claimant are entitled to claim for deviated quantity of steel reinforcement at market rates and if so, to what extent ? (8) Whether the claimants are entitled to interest on account of the claims and if so, at what rates ? The arbitrator made his award on 21-8-1995. Under issue No. 1, the claim preferred by the plaintiff was held to be arbitrable. While deciding issue No. 2, the arbitrator held that the plaintiff was entitled to a sum of Rs. 19,86,655/-. The plaintiff was found entitled to a sum of Rs. 90,000/-, under issue No. 4. The arbitrator did not find the plaintiff to be entitled to any amount under issues Nos. 3 and 5 to 7. Resultantly, an award for a sum of Rs. 20,76,655/- was made in favour of the plaintiff. Pendente lite interest at the rate of 15% per annum was also allowed to the plaintiff for the period 23-8-1993 to 21-6-1995 on the amount awarded. 5. On the award having been filed in this court, both the parties preferred objections under Sections 30/33 of the Act to the award being made the rule of the court. 6. The plaintiff, in its objections, prayed for : (a) the setting aside of the award; (b) appointment of an impartial and independent arbitrator for the fair adjudication of the disputes between the parties; and (c) alternatively, if the award is not liable to be set aside, as a whole or in part, interest at the rate of 18% per annum may be allowed from the date of award till the date of payment of the amount awarded.
It was averred that the arbitrator had mis-conducted himself as well as the proceedings by not giving a speaking award as required under the terms of the agreement. The oral and written sub-missions have been completely ignored and the conclusions arrived at on hypothetical basis. The terms of the agreement have been misinterpreted to the detriment of the plaintiff. Being an employee of the defendant, the arbitrator had given as highly biased, unfair and erroneous award and as such had mis-conducted himself. The award even otherwise suffered from errors, which were apparent on the fact of it. Various legal proposition cited have been completely ignored by the arbitrator. 7. The defendant, while pleading for the setting aside of the award, in so far as issues Nos. 2 and 4 are concerned, pleaded that the arbitrator had mis-conducted himself and the proceedings. The award being a speaking one, the court was entitled to go into the same. There has been erroneous application of settled principles of law. The award was based on misconstruction of law and evidence produced. The award was vitiated inasmuch as interest (pentende lite) at the rate of 15% per annum had been granted against the prohibition contained in the agreement. The arbitrator acted beyond jurisdiction in awarding such interest. 8. The learned single Judge, upon consideration of the material placed before him, by the parties, came to the conclusion that though the agreement containing the arbitration clause provided for a reasoned award, the arbitrator in making his award had failed to give reasons therefore. The learned Judge also came to the conclusion that the arbitrator had mis-conducted himself and the proceedings, since in making the award he had infringed Clauses 9-B and 9-C of the agreement. The objections filed by both the parties were accordingly allowed. The award was set aide and the defendant was directed to appoint another arbitrator, other than Shri O. C. Kaushal, to go into the dispute between the parties and give a reasoned award in terms of Clause 25 of the agreement between the parties. It was further directed that the arbitrator shall not deviate from the terms of the agreement. 9.
It was further directed that the arbitrator shall not deviate from the terms of the agreement. 9. Feeling aggrieved by and being dissatisfied with the impugned order dated 12-12-1996 of the learned single Judge, the plaintiff has come up by way of the present appeal under Section 39 of the Act, while the defendants have preferred cross-objections thereto under Order 41 Rules 22 and 33 of the Code of Civil Procedure. 10. Section 39(1) of the Act insofar as it is relevant for the purpose of the present case, reads : "An appeal shall lie from the following orders passed under this Act (and from no others) to the court authorised by law to hear appeals from original decree of the court passing the orders - (i) ............... (ii) .............. (iii) ............. (iv) .............. (v) ............... (iv) setting aside or refusing to set aside an award : Provided that the provisions of this section shall not apply to any order passed by a Small Cause Court." 11. The scope and ambit of an appeal under Section 39 of the Act came up for consideration before the Supreme Court in Union of India v. Kalinga Construction Co. (AIR 1971 SC 1646). In the said case, the award was filed by the arbitrator before the Subordinate Judge, Sambalpur. The respondent company preferred objections under Sections 30 and 33 of the Act challenging the award on various grounds and praying that the same be set aside. A further prayer was made for the appointment of another arbitrator for going into the dispute between the parties. The Subordinate Judge allowed the objections. The award was accordingly set aside. The Union of India went up in appeal before the High Court of Orissa, which came to be heard by a Division Bench comprising of Barman and Dass JJ. learned Judges gave dissenting judgments. While Barman J., was of the view that the award could not be sustained, Dass J., was of the opinion that the award was not liable to be set aside.
learned Judges gave dissenting judgments. While Barman J., was of the view that the award could not be sustained, Dass J., was of the opinion that the award was not liable to be set aside. The appeal, therefore, came to be heard by a third Judge, G. K. Misra, J., who agreed with Barman J., on issues No. 1 and 2 but on issues No. 3 and 4, he concurred with the findings of Das J. According to the third learned Judge, the award could not be set aside on issues No. 3 and 4, whereas the same was liable to be set aside on issues No. 1 and 2. As the issues were severable, be set aside the award only on issues No. 1 and 2. On further appeal having been carried, by the Union of India, the Supreme Court held that in proceedings to set aside award, appellate court cannot sit in appeal over the conclusion of the arbitrator by re-examining and re-appraising the evidence considered by the arbitrator and hold that the conclusion reached by the arbitrator is wrong. 12. The Supreme Court in para 9 of its judgment observed : "A bare perusal of the judgment of Misra J. would show that he decided the matter as if he was entertaining an appeal against the award itself. He re-examined and reappraised the evidence which had been considered by the arbitrator and held that the arbitrator was wrong in coming to the conclusion that the work was contemplated by the contract to be done by manual labour alone. According to him under the agreement payment for machine leads was contemplated from the very beginning or at any rate was not excluded. He examined a large volume of evidence including Ext. P-6 as also the oral evidence of the Chief Engineer Shri Kanwar Sain and held that from the course of correspondence it was clear that in dealing with the contractor or the Executive Engineer almost all the letters on behalf of the Chief Engineer were being dealt with by the Superintending Engineer.
P-6 as also the oral evidence of the Chief Engineer Shri Kanwar Sain and held that from the course of correspondence it was clear that in dealing with the contractor or the Executive Engineer almost all the letters on behalf of the Chief Engineer were being dealt with by the Superintending Engineer. Once Ext.P. 6 was admitted to be genuine and was issued by the Superintending Engineer in the ordinary cause of correspondence it was for the appellant to establish by production of the relevant records that the letter had been issued without authority of the Chief Engineer, Misra J., had no hesitation in holding that Ex.P. 6 was written under the authority of the Chief Engineer and was binding between the parties. Here again what Misra J., did was to appreciate the evidence which had been considered by the arbitrator, in particular, the testimony of the Chief Engineer. The arbitrator had believed the statement of the Chief Engineer that Ext.P. 6 had neither been issued under his authority nor with the approval. Once this part of his statement was believed by the arbitrator it was not open to Misra J., to sit in appeal over the conclusion of the arbitrator in proceedings for setting aside the award." 13. This principle was reiterated in Trustees of the Port of Madras v. Engineering Constructions Corporation Ltd. ((1995) 5 SCC 531). 14. In State of U.P. v. Ram Nath International Construction (P.) Ltd. ((1996) 1 SCC 18 = 1996 (Suppl.) Arb. LR 457), the Apex Court held : "The jurisdiction of the Court to interfere with an award of an arbitrator is a limited one. The adjudication of the arbitrator is generally binding between the parties and it is not open to the court to attempt to probe the mental process by which the arbitrator has reached his conclusion. Award of an arbitrator can be set aside by a court only on the grounds indicated in Section 30 of the Arbitration Act. It is not open to the court to reassess the evidence to find out whether the arbitrator has committed any error or to decide the question of adequacy of evidence and the court cannot sit on the conclusion of the arbitrator by re-examining and re-appreciating the evidence considered by the arbitrator." 15.
It is not open to the court to reassess the evidence to find out whether the arbitrator has committed any error or to decide the question of adequacy of evidence and the court cannot sit on the conclusion of the arbitrator by re-examining and re-appreciating the evidence considered by the arbitrator." 15. In the present appeal, the following points were raised on behalf of the plaintiffs : (1) What is meant by a reasoned award ? Whether the award in this case is a reasoned award ? (2) Whether the award on having been set aside, the proceedings can be referred back to another arbitrator under Sections 16(1)(c) of the Arbitration Act, 1940 ? (3) Whether an oral objection raised for the first time in the court be taken cognizance of and especially when the period of limitation has expired ? (4) Whether the arbitrator was debarred from awarding interest in view of Clause 9-C of the agreement ? (5) Whether an arbitrator, who is an expert in the filed of engineering be denied the right to interpret the conditions of the agreement ? 16. Having heard the learned counsel for the parties and having gone through the record of the case, we proceed to record our point wise conclusions, as under : Point No. 1 Clause 25 of the agreement dated 21-2-1991 provides for the settlement of disputes/questions, relating to : (a) the meaning and interpretation of the terms of contract; or (b) specifications, designs, drawings and instructions contained therein; or (c) the quality of workmanship or material used in the work; or (d) any other question, claim, right, matter or thing whatsoever in any way arising out of or relating to the contract, designs, drawings, specification, estimates, instructions, orders or the conditions or otherwise concerning the works, or the execution or failure to execute the same whether arising during the progress of the work or after the completion or abandonment thereof; or (e) termination or recission, or delay in the execution and all consequences thereof of the contract; by a sole arbitrator, to be appointed by the defendant Board. One of the conditions contained in this clause is that "in all cases referred for arbitration, the arbitrator/umpire shall assign reasons under all circumstances on which his decision is based." 17.
One of the conditions contained in this clause is that "in all cases referred for arbitration, the arbitrator/umpire shall assign reasons under all circumstances on which his decision is based." 17. In view of the terms contained in Clause 25 of the agreement, it is the admitted case of the parties that in the present case, it was obligatory on the arbitrator to give and record detailed reasons for his conclusions. 18. While assailing the award by way of objections under Sections 30 and 33 of the Act, the plaintiffs have averred in ground 'B' of their objection petition dated 26-2-1996 in the following terms : "That the learned arbitrator has mis-conducted himself as well as the proceedings by not giving a speaking award as was required under the terms of the arbitration agreement between the parties, inasmuch as he has only given his conclusions against each claim and not the findings." 19. In reply to the above, the defendant-Board pleaded : "Ground-'B' is wrong and denied. It is denied that the arbitrator's award is not speaking award. The arbitrator has given reasons and conclusions for his findings. The award cannot be challenged. It is submitted that the arbitrator was not required to given reasons." 20. In the rejoinder, dated 9-5-1996, the plaintiffs have reiterated : "A bare perusal of the award would reveal beyond even an iota of doubt that all that the learned arbitrator has done is to give his conclusions, whereas he was required to give reasons. The award of the learned arbitrator being without reasons and thus against the provisions of Clause 25 of the agreement is liable to be set aside." 21. Objections under Sections 30 and 33 of the Act were also preferred by the defendant-Board to the award being made the rule of the court. Ground No. 1 of the objection petition dated 27-9-1995 reads : "That the learned arbitrator has mis-conducted himself and the proceedings and there is an error apparent on the face of the award. The award being a speaking award, this Hon'ble court is entitled to go into the same .........." 22. The plaintiffs in their reply dated 22-4-1996 to the objections preferred by the defendant-Board, have averred in para 1, as under : "The contents of this para, as stated are wrong and incorrect and hence denied.
The award being a speaking award, this Hon'ble court is entitled to go into the same .........." 22. The plaintiffs in their reply dated 22-4-1996 to the objections preferred by the defendant-Board, have averred in para 1, as under : "The contents of this para, as stated are wrong and incorrect and hence denied. It is wrong and incorrect on the part of the objectors to state that this Hon'ble Court can go into the speaking award, since it is a well settled law that the scope of enquiry by the courts is limited one even in the case of a speaking award. The reasonableness of reasons given by the learned arbitrator cannot be gone into by the courts, since the courts do not sit as an appellate forum over the verdict of the arbitrators ..........." Be it stated, that in such reply the plaintiffs have not averred and pleaded anywhere that the award was not a speaking award inasmuch as the arbitrator had failed to give and record the reasons for his conclusion. The tenor of the reply points out as if the plaintiffs admit the award to be a speaking award. 23. The defendant-Board in its rejoinder dated 1-6-1996, has reiterated the award being a speaking award and that there being an error apparent on the face of the award, the same was liable to be set aside. 24. The apex court in Municipal Corporation of Delhi v. M/s. Jagan Nath Ashok Kumar and another (AIR 1987 SC 2316), has held that it would be unreasonable to expect an exact definition of the word 'reasonable'. Reason varies in its conclusions according to the idiosyncrasy of the individual, and the times and circumstances in which he thinks. The reasoning which built up the old scholastic logic sounds now like the jigdling of a child's toy. But mankind must be satisfied with the reasonableness within reach; and in cases not covered by authority, the verdict of a jury or the decision of a judge sitting as a jury usually determines what is 'reasonable' in each particular case. The word 'reasonable' has in law the prima facie meaning of reasonable in regard to those circumstances of which, the actor, called on to act reasonably, knows or ought to know. 25.
The word 'reasonable' has in law the prima facie meaning of reasonable in regard to those circumstances of which, the actor, called on to act reasonably, knows or ought to know. 25. In Union of India v. Mohan Lal Kapoor ((1972) 2 SCC 838), the Apex Court has defined the word 'reasons' in the following terms : "Reasons are the links between the materials on which certain conclusions are based and the actual conclusions." 26. A perusal of the award shows that the Arbitrator, while giving his conclusions issuewise, has merely reproduced the various contentions raised before him by the parties, whether orally or in writing and after the reproduction of such contentions he had given his conclusions issuewise by merely observing that he had gone through the statements/documents of both the parties and had carefully considered the same. 27. The basic issue before the arbitrator was 'whether there is a valid and binding contract between the parties and whether the claim filed by the claimants (plaintiffs) was arbitrable'. The arbitrator came to the conclusion that : "The scope and ambit of arbitration Clause 25 of contract agreement has widest amplitude, according to which the arbitrator has very wide powers to adjudicate upon and claim, dispute, question, right, matter or anything whatsoever arising out of or in relation to the contract. The instant claim of the claimants arose out of the contract and in relation to the contract and as such, the claim is covered under the arbitration clause. Further mere claims and disputes have been specifically referred to me and has the full legal and factual jurisdiction of arbitration. Hence the claim of claimants are arbitrable." 28. In arriving at the conclusions that there exists a valid and binding agreement between the parties, the learned arbitrator, after reproducing the various contentions, raised before the him by the parties, concluded : "I have thoroughly examined and considered all the documents, arguments, Contract Act, 1872, ad its relevant sections and finally the contentions of both the parties carefully in depth and have come to the conclusion that the agreement signed by both the parties is valid and binding insofar as it relates to all matters contained therein except for the tunneling rates of excavation and final concreating ......." 29.
The same method has been adopted by the arbitrator, as regards his findings on other issues and it is not necessary for us to repeat the same. 30. In our considered view what has been stated by the arbitrator, while recording his findings, cannot be considered to be the reasonings for his findings. The award nowhere contains any reasons for the conclusions nor does it even obliquely mention that in giving the findings the arbitrator has even sought to adopt the reasoning of either of the parties and if so, why. We are, therefore, in agreement with the findings of the learned single Judge that the award in the present case is vitiated for want of reasons for the conclusions arrived at by the arbitrator, which reasons the arbitrator was under an obligation to give in view of the condition contained in Clause 25 of the agreement. This point is accordingly answered in the negative. Point No. 2 Section 16(1) of the Act empowers the court to remit the award to the arbitrator for reconsideration only in three cases specified therein. Section 16(1) reads : "Power to remit award - (1) The Court may from time to time remit the award or any matter referred to arbitration to the arbitrators or umpire for reconsideration upon such terms as it thinks fit. (a) where the award has left undermined any of the matters referred to arbitration, or where it determines any matter not referred to arbitration and such matter cannot be separated without affecting the determination of the matters referred; or (b) where the award is so indefinite as to be incapable of execution; or (c) where an objection to the legality of the award is apparent upon the face of it. (2) Where an award is remitted under sub-section (1) the Court fix the time within which the arbitrator or umpire shall submit his decision to the court : Provided that any time so fixed may be extended by subsequent order of the Court. (3) An award remitted under sub-section (1) shall become void on the failure of the arbitrator or umpire to reconsider it and submitted his decision within the time fixed." 31. Clause (c) of Section 16(1) provides that the award shall be remitted to the arbitrator by the court where an objection to the legality of the award is apparent on the face of it.
Clause (c) of Section 16(1) provides that the award shall be remitted to the arbitrator by the court where an objection to the legality of the award is apparent on the face of it. There is no denying that in case the arbitrator, under the law, is under an obligation to give reasons in support of his conclusions, his failure to give such reasons would tantamount to an objection to the legality of the award apparent on the face of it. In the absence of any other thing to show that the arbitrator had mis-conducted himself or the proceedings in any other manner or to show that the award had been improperly procured or that the arbitrator was biased or unfair or he had not heard both the parties or he had not fairly considered the submissions of the parties in making the award, the award has to be remitted to the arbitrator for decision afresh after recording the reasons in support of the conclusions arrived at by him. While acting under Section 16(1)(c) of the Act, court cannot refer the proceedings back to another arbitrator. Point No. 3 Clause 9-B of the agreement between the parties provides that no claim for interest or damages shall be entertained or payable by the Board in respect of any money or balance which may be lying with the defendant Board owing to any disputes, differences or mis-understanding between the parties or in respect of any delay or omission on the part of the Engineer-in-Chief in making intermediate or final payments or in any other respect whatsoever. 32. The case of the defendant-Board is that the arbitrator, under issue No. 2 in utter violation of Clause 9-B has entertained the claim of the plaintiffs and allowed them higher rates of tunneling for two items, namely, underground excavation and final concreting, by awarding an amount of Rs. 19,86,655/- in their favour. 33. Admittedly, an objection with regard to the violation of Clause 9-B on the part of the arbitrator, was never raised by the defendant-Board in their objections preferred under Sections 30 and 33 of the Act.
19,86,655/- in their favour. 33. Admittedly, an objection with regard to the violation of Clause 9-B on the part of the arbitrator, was never raised by the defendant-Board in their objections preferred under Sections 30 and 33 of the Act. "The learned single Judge allowed the defendant-Board to raise such an objection during the course of arguments on the ground that infringement of Clause 9-B by the arbitrator goes to the root of the matter and even if such a ground has not been specifically raised, the defendant-board cannot be debarred from challenging the impugned award on this purely legal ground attacking on the very jurisdiction of the arbitrator. The learned single Judge further observed that since in the rejoinder file by the defendant-Board it has been pleaded that having travelled outside the provisions of the contract agreement, the arbitrator has acted without jurisdiction the same in substance would cover the ground and the objection taken regarding infringement of Clause 9-B of the contract agreement by the arbitrator in the impugned award." 34. It is well settled that if a party seeks to get an award set aside, an application for that purpose has to be made under Section 33 of the Act on any of the grounds specified in Section 30 of the Act within the statutory period of 30 days from the date of service of notice of the filing of the award as contemplated by Article 119(b), Limitation Act, 1963. 35. The question, which arises for determination, is whether a party can take an objection to the award when such an objection was not taken in the application, under Section 33 of the Act within the prescribed period of limitation. 36. In Principal Chief Engineer-cum-Secretary Sikkim P.W.D. v. M. B. Chettai (1994(2) Arb. LR 263). an objection as to the jurisdiction of the arbitrator was sought to be raised on behalf of the State Government even though such an objection was not raised in the application under Section 33 of the Act within the period of limitation prescribed under Article 119 (b), Limitation Act, 1963. It was contended that where an award suffered from patent lack of jurisdiction, the award was a nullity and such an objection could be taken at the time of arguments, even if it was not mentioned in the written objections filed within time. 37.
It was contended that where an award suffered from patent lack of jurisdiction, the award was a nullity and such an objection could be taken at the time of arguments, even if it was not mentioned in the written objections filed within time. 37. Repelling the contention, the Division Bench of the High Court of Sikkim, held : "After a careful consideration of the law on the subject, we are of the firm view that where an award has been filed and a party seeks to challenge the validity of that award, even if that challenge is based on the ground of being in excess of jurisdiction, the challenge can be made only on the basis of an application which may be filed within the period of limitation prescribed under Article 119(c) of the Limitation Act. A party cannot be allowed to circumvent the law of limitation by saying that he is challenging the award on the ground of want of jurisdiction." 38. The High Court of Rajasthan also in Devendra Singh v. Kalyan Singh (AIR 1978 Rajasthan 134), after considering several decisions on the point including a Full Bench decision of Calcutta High Court in Saha & Company v. Ishar Singh Kirpal Singh &. Company (AIR 1956 Cal 321), has held : ".... the Act contemplates that all applications challenging the award must be made under Section 33 irrespective of the ground of the challenge and that they must be the applications for setting aside the award. The non-existence or invalidity of the reference may be the ground of application for setting aside the award passed on such invalid or non-existent reference including the cases of award in an arbitration proceeding. Section 33 clearly and unmistakably points out that the Indian Arbitration Act, does not distinguish between an application for setting aside the award and an application for adjudication of an award to be a nullity. This section does not contemplates that an application of the former kind should be made under Section 30 of the Act and application of the later kind under Section 33 of the Act." 39. In Jagan Nath v. Des Raj and others (AIR 1985 Pun. & Har. 115), the permission to amend the objections preferred under Sections 30 & 33 of the Act was declined on the ground of limitation.
In Jagan Nath v. Des Raj and others (AIR 1985 Pun. & Har. 115), the permission to amend the objections preferred under Sections 30 & 33 of the Act was declined on the ground of limitation. It was held that if such a course were to be permitted, it would transgress the salutary rule of limitation prescribed by the statute. 40. In Bijendra Nath Srivastava (Dead) through LRs. v. Mayank Srivastava and others (AIR 1994 SC 2562 = 1994(2) Arb. LR (SC) 277), the award sought to be challenged on the ground of misconduct. A paragraph was sought to be introduced by way of an amendment of the objection petition to the effect that arbitrator had mis-conducted the proceedings by returning the papers and documents specified in the sub-paragraphs to the parties who had submitted the said papers and documents, during the course of the proceedings. In subsequent paragraph, it was alleged that the arbitrator had mis-conducted the proceedings in falsely showing the presence of one of the respondents in the proceedings on certain dates, inspite of the fact that he fully knew that the said respondent was absent from the proceedings. Although, in the original objections, various acts of misconduct were impugned to the arbitrator in several paragraphs, there was no averment in any of the paragraphs of the original petition imputing misconducts of the nature sought to be introduced by way of an amendment. The apex court held that such amendments could not be allowed. 41. Following the above ratio of the apex court, the High Court of Karnataka in C. C. Subbaraya Setty v. C. V. Ananthanarayana Setty and others (AIR 1996 Kar 41), has held that when a new plea cannot be allowed to be raised by way of amendment after the period of limitation, it necessarily follows that such a plea cannot be allowed to be raised for the first time in appeal. 42. In the present case, as stated above, the objection with regard to infringement of Clause 9-B of the agreement by the arbitrator was not raised by the defendant-Board in their objection petition filed under Sections 30 & 33 of the Act.
42. In the present case, as stated above, the objection with regard to infringement of Clause 9-B of the agreement by the arbitrator was not raised by the defendant-Board in their objection petition filed under Sections 30 & 33 of the Act. Such an objection even though taken to have been raised in the rejoinder filed by them to the reply of the plaintiffs cannot be considered simply on the ground that the rejoinder was filed after the expiry of the prescribed period of ninety days. 43. The learned single Judge has, therefore, gravely erred in permitting the defendant-Board to raise such an objection during the course of arguments. This point is accordingly answered in the negative. Point No. 4 Clause 9-C of the agreement provides : "No omission on the part of the Engineer-in-charge to pay the amount due upon measurement or otherwise shall vitiate or make void the contract, nor shall be the contractor entitled to interest upon guarantee or payments in arrears nor upon any balance which may on the final settlement of his accounts be due to him." 44. In his award, the arbitrator has allowed pendente lite simple interest for the period 23-8-1993 (the date of reference) to 21-8-1995 (the date of awards) at the rate of 15% per annum on the amounts awarded. 45. The learned counsel for the defendant-Board has contended that Clause 9-C, quoted above, specifically prohibits the grant of interest and since the arbitrator has awarded interest, he has travelled outside the permissible territory and as such has exceeded his jurisdiction in making his award. 46. In Board of Trustees for the Port of Calcutta v. Engineers-De-Space-Age ((1996) 1 SCC 516), the relevant Clause 13(g) of the contract read : "No claim for interest will be entertained by the Commissioners with respect to any money or balance which may be in their handsowing to any dispute between themselves and the Contractor or with respect to any delay on the part of the Commissioners in making interim or final payment or otherwise." 47. The arbitrator, in the said case, allowed pendente lite interest to the contractor. It was contended on behalf of the Port Trust that such interest was awarded notwithstanding the prohibition contained in the contract. The apex court held : "We are not dealing with a case in regard to award of interest for the period prior to the reference.
The arbitrator, in the said case, allowed pendente lite interest to the contractor. It was contended on behalf of the Port Trust that such interest was awarded notwithstanding the prohibition contained in the contract. The apex court held : "We are not dealing with a case in regard to award of interest for the period prior to the reference. We are dealing with a case in regard to award of interest by the arbitrator post reference. The short question, therefore, is whether in view of sub-clause (g) of Clause 18 of the contract extracted earlier the arbitrator was prohibited from granting interest under the contract. Now the term in sub-clause (g) merely prohibits the Commissioner from entertaining any claim for interest and does not prohibit the arbitrator from awarding interest. The opening words 'no claim for interest will be entertained by the Commissioners' clearly establish that the intention was to prohibit the Commissioner from granting interest on account of delayed payment to the contractor. Clause has to be strictly construed for the simple reason that as pointed out by the Constitution Bench, ordinarily, a person who has a legitimate claim is entitled to payment within a reasonable time and if the payment has been delayed beyond reasonable time he can legitimately claim to be compensated for that delay whatever nomenclature, one may give to his claim in that behalf. If that be so, we would be justified in placing a strict construction on the term of the contract on which reliance has been placed. Strictly constructed the term of the contract merely prohibits the Commissioner from paying interest to the contractor for delayed payment but once the matter goes to arbitration the discretion of the arbitrator is not, in any manner, stifled by this term of the contract and arbitrator would be entitled to consider the question of grant of interest pendente lite and award interest if he finds the claim to be justified. We are, therefore, of the opinion that under the clause of the contract the arbitrator was in no manner prohibited from awarding interest pendente lite.
We are, therefore, of the opinion that under the clause of the contract the arbitrator was in no manner prohibited from awarding interest pendente lite. Looked at from another point, if there was a dispute as to whether under this term of the contract the arbitrator was prohibited from awarding interest pendente lite, that was a matter which fell within the jurisdiction of the arbitrator, as the arbitrator would have to interpret sub-clause (g) of Clause 13 of the contract and decide whether that clause prohibits him from awarding interest pendente lite. In that case it cannot be said that the arbitrator had wandered outside the contract to deny to him jurisdiction to decide the question regarding payment of interest pendente lite. Even if we were to accept the contention urged by the learned counsel for the appellant placing reliance on paragraphs 26 and 29 of the Associated Engineering Co. case, we think that the arbitration was well within his jurisdiction in awarding interest pendente lite." 48. Following the ratio laid down by the apex court, we hold that Clause 9-C of the agreement does not prohibit the arbitrator to award pendente lite interest. Besides, the dispute whether under the term of the agreement the arbitrator was prohibited from awarding pendente lite interest, was a matter which fell within the jurisdiction of the arbitrator, as the arbitrator has to interpret the clause in question and to decide whether that clause prohibits him from awarding pendente lite interest. The arbitrator was therefore, well within his jurisdiction in awarding such interest. The findings of the learned single Judge, which are to the contrary are, therefore, wrong and cannot be sustained. The point is answered accordingly. Point No. 5 The arbitrator appointed in this case is a Chief Engineer of the defendant-Board. He is, therefore, an expert or well versed in engineering and his field. He was selected by the agreement of the parties. The election of a Chief Engineer shows that the parties wanted to appoint a person who was an expert in the line. 49. In Jagdish Chander v. Hindustan Pegetable Oils Corporation and another (AIR 1990 Delhi 204), dealing with a similar question, it was held : "It is now well settled that an award can be set aside only for the reasons specified in Section 30 of the Arbitration Act.
49. In Jagdish Chander v. Hindustan Pegetable Oils Corporation and another (AIR 1990 Delhi 204), dealing with a similar question, it was held : "It is now well settled that an award can be set aside only for the reasons specified in Section 30 of the Arbitration Act. When the parties, by agreement, refer the disputes to an arbitrator then the decision of the arbitrator is not to be lightly interfered with by the court. It is also pertinent to notice, in a case like the present, that the arbitrator who has been appointed was a serving officer of the Government of India holding a very high rank, namely, he was a Chief Engineer of the P.W.D." 50. The apex court in M/s. Tarapore & Company v. Cochin Shipyard Ltd. Cochin and another (AIR 1984 SC 1072), has held in the following terms : "With the ever widening expansion of international trade and commerce, complex questions of private International Law, effect of local laws on contracts between parties belonging to different nations are certainly bound to crop up. Arbitration has been considered a civilised way of resolving such disputes avoiding court proceedings. There is no reason why the parties should be precluded from referring a specific question of law to an arbitrator for his decision and agree to be bound by the same. This approach manifests faith of parties in the capacity of the Tribunal of their choice to decide even a pure question of law. If they do so, with eyes wide open, and there is nothing to preclude the parties from doing so, then there is no reason why the court should try to impose its view of law superseding the view of the Tribunal whose decision the parties agreed to abide by. Therefore, on principle it appears distinctly clear that when a specific question of law is referred to an arbitrator for his decision including the one touching upon the jurisdiction of the arbitrator for his decision including the one touching upon the jurisdiction of the arbitrator, the decision of the arbitrator would be binding on both the parties and it would not be open to any of the two parties to wriggle out of it by contending that the arbitrator cannot clutch at or confer jurisdiction upon himself by misconstruing the arbitration agreement." 51.
Clause 25 of the agreement specifically provides that 'all questions and disputes relating to the meaning and interpretation of the terms of the contract' shall be referred to arbitration. Thus under this clause, the arbitrator has all the powers to interpret the terms and conditions of the agreement. Therefore, the arbitrator cannot be denied the right to interpret the terms and conditions of the agreement. The point is answered in the negative. 52. The defendants in their cross-objections have averred that the learned single Judge has erred in remitting the case to the arbitrator in respect of Claim No. 2 of issue No. 3, Claim No. 4 of issue No. 5, Claim No. 5 of issue No. 6 and Claim in issue No. 7 as well as issue No. 8 to the arbitrator inspite of the fact that reasons therefore had been duly recorded by, the arbitrator for arriving at his conclusions. It has further been contended that an error has been committed in remitting the award to the arbitrator and not setting aside the same in view of the fact that there were errors apparent on the face of the award. 53. It has already been held above under point No. 1 that the conclusions arrived at by the learned arbitrator are not supported by the reasons which he was under obligation to record in terms of Clause 25 of the agreement. In so far as there being an error apparent on the face of record, is concerned, it has been held under points No. 3 and 4 that the arbitrator never mis-conducted himself or the proceedings and that there is no error apparent on the face of the record. The award is not liable to be set aside under Section 30 of the Act and that it only requires to be remitted to the arbitrator under Section 16(1)(c) of the Act. The cross-objections are as such without merit and are dismissed accordingly. 54. Resultantly, the present appeal is partly allowed.
The award is not liable to be set aside under Section 30 of the Act and that it only requires to be remitted to the arbitrator under Section 16(1)(c) of the Act. The cross-objections are as such without merit and are dismissed accordingly. 54. Resultantly, the present appeal is partly allowed. The impugned order of the learned single Judge setting aside the award and directing the defendant-Board to appoint, another arbitrator to go into the disputes between the parties and to give a reasoned award is modified to the extent that the award dated 21-8-1995, is remitted to the arbitrator, Shri O. C. Kaushal, under Section 16(1)(c), Arbitration Act, 1940, for reconsideration and to give reasons for the conclusions arrived at by him, after affording an opportunity to the parties of being heard. The arbitrator shall decide the matter within a period of three months of appearance of the parties before him. 55. The parties are directed to appear before the arbitrator on 5-8-1997. The record of the arbitration proceedings be remitted forthwith to the arbitrator, so as to reach well before the dated fixed. No orders as to costs. Appeal partly allowed.