Judgment :- K.K. Usha, J. Challenge at the instance of State of Kerala and another in this appeal is against the judgment in O.P. (Arb) No. 17/85 before the Sub Court, Parur. The petition was filed under Ss.14 and 17 of the Indian Arbitration Act by the respondent herein praying for a decree in terms of the award passed by the Chief Engineer (Arbitration) in the matter of a dispute between the respondent herein and the appellants. The respondent was the contractor to whom was awarded the work, P.V.I.P. constructing high level canal from chain age 17015 M to 17670M. The dispute related to the above mentioned work. The appellants filed objection challenging the award and prayed for setting aside the same. The court below accepted the award passed by the arbitrator and passed a decree in terms of the same. Interest at the rate of 12% p.a. was also awarded from the date of the decree till realisation of the amount. Aggrieved by the above, the State has come up in appeal. 2. The admitted case of both sides is that the respondent did not complete the work within the time originally granted. But while the appellants would contend that the delay was caused due to the laches on the part of the respondent/ contractor, according to the respondent, the inaction on the part of the department at appropriate time was the reason for the delay. Claims 1 to 19 were put forward by the contractor before the arbitrator, of which the arbitrator granted relief in the award only in respect of 4 claims. As far as claim (a) is concerned, the decision was not fully in favour of the claimant, The main contentions raised on behalf of the appellants before this Court are against the grant of claims (a) and (n). It was contended on behalf of the respondent that fee court below was perfectly justified in granting decree in terms of the award and that the award being a non-speaking award the court will not interfere with it unless there is proved mis-conduct on the part of the arbitrator. It was absent in this case. Elaborate submissions were made on both sides regarding the circumstances under which court can interfere with a non-speaking award passed by the arbitrator. 3. It was absent in this case. Elaborate submissions were made on both sides regarding the circumstances under which court can interfere with a non-speaking award passed by the arbitrator. 3. Heavy reliance was placed by learned Government Pleader on a Full Bench decision of this Court in State v. Jolly, 1992 (1) KLT 240. It has been held therein that if the arbitrator acts in violation of the terms of the main contract between the parties, such action would be without jurisdiction. For the purpose of finding out whether the arbitrator has so acted, it is open to the Court to look outside the award, including affidavits, pleadings and terms of the contract. In the facts of the above case, there was delay in execution of the work by the contractor. Time was extended and for that purpose a supplemental agreement was executed between the parties in which the contractor agreed not to claim additional compensation and extra rates. In spite of the above the contractor raised a dispute claiming extra compensation and higher rates. Though the State took up the specific condition that as per the terms of the agreement the contractor is not entitled to claim any extra amount, the arbitrator without referring to such contention passed a non-speaking award in favour of the contractor. This Court took the view that such action of the arbitrator would amount to misconduct coming under S.30 of the Arbitration Act, 1940. A decision of the Supreme Court in Associated Engineering Company v. Government, of Andhra Pradesh & another.. (1991) 4 SCC page 93, was referred to and relied on by this Court in the above mentioned decision. The Supreme, Court considered the question whether there is mis-conduct of the arbitrator when he has granted higher rate as claimed by the contractor when there was no escalation provision in the contract. It was held that the deliberate departure from the terms of the contract would amount to mis-conduct on the part of the arbitrator. 4. But the learned counsel for the respondent relied on P.M. Paul v. Union India, A.F.R 1989 SC 1034, Tarapore & Co. It was held that the deliberate departure from the terms of the contract would amount to mis-conduct on the part of the arbitrator. 4. But the learned counsel for the respondent relied on P.M. Paul v. Union India, A.F.R 1989 SC 1034, Tarapore & Co. v. State of M.P., (1994) 3 SCC 521, and State of U.P. v. Ramnath International Construction (P) Ltd., (1996) 1 SCC page 18, and contended that no misconduct has been committed by the arbitrator in the present case and the Court in its limited jurisdiction will not interfere with the award. We went through the above decision carefully. In AIR 1989 SC 1034 the dispute that was referred to the arbitrator was as to who was responsible for the delay, what are the repercussions (of the delay in completion of the building and how to apportion the consequences of the responsibility. The arbitrator granted 20% as compensation for escalation. The Supreme Court held that once it was found that the arbitrator had jurisdiction to find that there was delay in execution of the contract due to the conduct of the department then the department was liable for the consequences of the delay, namely, increase in prices. It is true that in the above decision there is an observation that escalation is a normal incident arising out of gap of time in this inflationary age. But it has to be noted that this was a case where Government had defaulted to handover the site as per the agreement and therefore the contention of the Union of India on the basis of the absence of an escalation clause was not accepted. The facts of the case were entirely different from those considered by the Supreme Court in (1991) 4 SCC 93 (supra) or 1992 (1) KLT 240 (supra). In (1994) 3 SCC 521 (supra) the dispute related to grant of additional amount by the arbitrator for the reason of enhancement of minimum wages. Under the terms of the contract the contractor was required not to pay less than fair wages. If such wages have not been notified, those wages would be the one prescribed by PWD, Irrigation Department for the division in which the work was done. These wages were being increased from time to time as per the decision of the Wage Committee. If such wages have not been notified, those wages would be the one prescribed by PWD, Irrigation Department for the division in which the work was done. These wages were being increased from time to time as per the decision of the Wage Committee. The Supreme Court took the view that since the contractor was required to pay fair wages at increased rate the authorities did not visualise that WKH contractor would not do so by cutting down his profit. By asking the contractor to give tender by taking into account the fair wages notified at the time of inviting tenders, the authorities did give an impression that fair wages to be paid would the one men notified or prescribed. In such a situation, if rates of fair wages are raised afterwards, the tendered sum cannot be taken to be agreed amount for completing the contract work, in the face of the directions of the authorities requiring the contractor to pay wages at rates higher than those prescribed or notified at the time of inviting tenders. In the light of the above. Supreme Court took the view that State had by necessary implication agreed to reimburse the increased payment. If that be so, grant of additional amount on this account cannot be treated as a mis-conduct on the part of the arbitrator. It is relevant to note, that a larger contention raised on the basis of AIR 1989 SC 1034 (supra) that the absence of escalation clause in the agreement is irrelevant and that in all cases of delay compensation has to be granted was not acceptable to the Supreme Court. In (1996) 1 SCC 18 (supra) it was found on the facts that in the course of execution of the contract, drawings and designs were changed as a result of which there was abnormal increase of the quantity of work and for such an increase of quantity of work when the contractor claimed a higher rate and gave the analysis before the arbitrator, which was not disputed by the State and the arbitrator accepted the rate, the court will not be justified in interfering with the same. It was a case where there was an escalation clause in the agreement between the parties. It was a case where there was an escalation clause in the agreement between the parties. It was observed in this case also that the arbitrator is a creator of the agreement itself and therefore is duty bound to enforce the terms of the agreement and cannot adjudicate the matter beyond agreement itself. 5. In State of Rajasthan v. Purl Construction Company Ltd.. & another (1994) 6 SCC 485, Supreme Court while considering the challenge against an award - which was not a non-speaking award - made a reference to the recent change in the strict view regarding interpretation of the term'legal misconduct'. It was observed as follows: "Since the arbitrator is a judge by choice of the parties, and more often than not, a person with little or no legal background, the adjudication of disputes by an arbitration by way of an award can be challenged only within the limited scope of several provisions of the Arbitration Act and the legislature in its wisdom has limited the scope and ambit of challenge to an award in the Arbitration Act Over the decades, judicial decisions have indicated the parameters of such challenge consistent with the provisions of the Arbitration Act. By and large the courts have disfavoured interference with arbitration award on account of error of law and fact on the score of misappropriation and misreading of the materials on record and have shown definite inclination to preserve the award as far as possible. As reference to arbitration of disputes in commercial and other transactions involving substantial amount has increased in recent times, the courts were impelled to have fresh look on the ambit of challenge to an award by the arbitrator so that the award does not get undesirable immunity. In recent times error in law and fact in basing an award has not been given the wide immunity as enjoyed earlier, by expanding the import and implication of "legal misconduct" of an arbitrator so that award by the arbitrator does not perpetrate gross miscarriage of justice and the same is not reduced to mockery of a fair decision of the lis between the parties to arbitration. Precisely for the aforesaid reasons, the erroneous application of law constituting the very basis of the award and improper and incorrect findings of fact, which without closer and instrinsic scrutiny, are demonstrable on the face of the materials on record, have been held, very rightly, as legal misconduct rendering the award is invalid." 6. In the back drop of the above judicial authorities we will now consider the facts in the present case. The claims made by the respondent, which are relevant for consideration in this appeal are: " 13(a). In spite of very many hindrances and impediments the claimants has carried out all the assigned contract work except remove in g of excess quantity of 1250M3 rock at Ch 17332.5M to 17442M. This could not be carried out since the authorities have failed to arrive at a workable rate for further rock basting work. In other words the claimant has carried out the entire work except the above excess rock blasting and the allied work thereon. It could be seen from the foregoing that the claimant has complied with every terms of the agreement and thereby the claimant has discharged the entire contractual obligations undertaken by him in his reciprocal contract. On the other hand, the impossibility of executing the balance work has been perpetrated due to very many laches and breaches of departmental authorities only. Instead of accepting the just position the authorities have choosed to terminate the agreement alleged to be at the risk and cost of the claimant to camouil agetlie very many breaches and lapses of autliorities vide Superintending Engineer's Order No. D3-161/78 dated 14.1.1982 which is illegal, improper and unsustainable either in law or on facts. Under such circumstances the said order by the authorities could be countenanced by the claimant only as a weapon meant to delay and defeat his just and proper claims and to throw him over board under flimsy grounds. Hence it is submitted that your good self may kindly accept the just position and to declare the above order as null and void and that he m ay be relieved off from all contractual obligations and the claim an t may be exonerated from the responsibility of executing the balance work. This maybe awarded by the Hon'ble Arbitrator. (n)The estimate is prepared on the basis of schedule rate of 1976. This maybe awarded by the Hon'ble Arbitrator. (n)The estimate is prepared on the basis of schedule rate of 1976. The claimant Is submitted his tender with the definite view that he will be able to complete the work within the targetted period itself. But the claimant could not carryout the work due to very many breaches and lapses of authorities. During this period, the prices of all materials and labour charges were increased exorbitantly. Taking this aspect into account even Government have revised schedule rate during 1978 and 1980 as well. But no corresponding enhancement has been effected in the agreement. On the other hand, he had to pay in par with the prevailing market rate whereby the claimant has sustained heavy losses. Hence, the claimant is entitled for enhancement of rates at least by 70% more over and above the estimate rate for all works excluding excess quantities and extra items done after 20.2.21978 (from 2nd C.C. onwards) the date of originally fixed for completion of work. This may be awarded.". As far as claim (a) is concerned, the finding of the arbitrator is as follows: "(a) The termination of the contract by the respondent is upheld subject to the condition that the claimant shall not be held liable for the excess cost occasioned to them due to rearrangements". Against claim (n) the finding is as follows: "(n) The respondents shall pay the claimant an excess of 35% (Thirty Five per cent) over the agreed rates for all items of work done after the date of completion originally fixed as per agreement, excluding the cost of materials issued by the Department for this work". Since the termination of the contract by the department was upheld by the arbitrator, it has to be taken that the arbitrator has not accepted the contention raised by the contractor that the delay in execution of the contract occurred due to the'laches and breaches of the departmental authorities'. The relevant clause in the agreement relating to the rate applicable are as follows: "Special conditions. "13. The percentage quoted by the contractor for items of shall be inclusive of all charges for the various T & P required for the proper execution of the work & all other incidental charges whether specifically mentioned here in or not. On no account claims for extra rates will be allowed after tender is decided. 14. "13. The percentage quoted by the contractor for items of shall be inclusive of all charges for the various T & P required for the proper execution of the work & all other incidental charges whether specifically mentioned here in or not. On no account claims for extra rates will be allowed after tender is decided. 14. The quantities shown in the schedule 'A' are approximate. The contractor is bound to carry out all excess over & above the agreed quantity if found necessary during execution at his agreed rates." The agreement between the parties was executed on 20-4-1974. Admittedly per the terms of the agreement the work had to be completed within 12 months. c it was not over, supplemental agreements were entered into from time to time period was extended upto 30.7.1980. Under the terms of the agreement the cr is not entitled to any enhanced rate. The respondent has no case that as per of the main agreement or the supplemental agreement he is entitled to re contended in claim(n). Therefore, we find that this i s a case coming dire the dictum laid down by the Full Bench of this Court in 1992 (1) KLT 2-rU (supra). In granting enhanced rate the arbitrator has travelled beyond the terms of the contract and has therefore, mis-conducted himself. The court below should have allowed the objection raised by the appellants to the above extent. We do not find any reason to interfere with the award in respect of claim (a) or any other claim granted in favour of the respondent. 7. In the circumstances we allow the appeal in respect of claim (n). The judgment and decree of the court below are modified to the above extent.