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1999 DIGILAW 513 (MP)

INDIAN RAILWAY CONSTRUCTION COMPANY LTD. v. SINGH CONSTRUCTION COMPANY, BILASPUR

1999-07-27

D.M.DHARMADHIKARI, USHA SHUKLA

body1999
JUDGMENT D.M. Dharmadhikari, J. This is an appeal u/s 39 of the Arbitration Act, 1940 against the judgment dated 6-9-1995 of the Court of District Judge, Bilaspur whereby the objections raised by the appellant Company u/s 30 of the Act have been rejected, and the award of the Sole Arbitrator dated 21-8-1989 has been up-held with the passing of the decree in terms thereof. Bare facts necessary for decision of the appeal are as under:-- The appellant Indian Railway Construction Company Ltd. (for short IRCON) awarded civil Work of the construction of WCL Railway Siding Ex- Gevra Road Junadih to the non-applicant Singh Construction Company (hereinafter referred to as 'the Contractor' for short). The tender submitted by the contractor was accepted in February 1986. During progress of the work the Contractor asked for an advance of Rs. 17 lacs for purchasing L & T Poclain Machine. The appellant Indian Railway Construction Company Ltd. agreed to advance the above amount but on the condition of furnishing bank guarantee. The contractor then furnished two Bank guarantees in the sum of Rs. 4 lacs and 5 lacs respectively. The Indian Railway Construction Company Ltd. then made an advance of Rs. 17,00,000/- (17 lacs) for purchase of machinery. Thereafter disputes arose and the Chief Project Manager of Indian Railway Construction Company Ltd. directed the Contractor to stop the work forthwith and the contract was terminated. The remaining part of the contract work was then given on tender to another contractor M/s Karamjeet Singh Bhullar. The appellant Indian Railway Construction Company Ltd. then tried to negotiate the Bank guarantee, whereupon the contractor approached the Civil Court u/s 20 of the Arbitration Act for invoking the Arbitration clause in the agreement for decision of the dispute through the Arbitrator i.e. the Managing Director of Indian Railway Construction Company Ltd. or his nominee. The Civil Court at Bilaspur passed an order on 7th May, 1988 directing the Managing Director as the named Arbitrator to adjudicate upon the disputed matter himself or through his nominee. On the basis of the reference made u/s 20 of the Act by the Civil Court Virendra Kumar Civil Engineer of Indian Railway Construction Company Ltd. was designated as the sole Arbitrator who entered upon the dispute and after allowing the parties to lead evidence and giving them hearing passed an award on 21-8-1989 in the sum of Rs. On the basis of the reference made u/s 20 of the Act by the Civil Court Virendra Kumar Civil Engineer of Indian Railway Construction Company Ltd. was designated as the sole Arbitrator who entered upon the dispute and after allowing the parties to lead evidence and giving them hearing passed an award on 21-8-1989 in the sum of Rs. 22,46,000/- with simple interest at the rate of 15% per annum from the date of the award in favour of the Contractor. When the award was filed in the Court by the Arbitrator the appellant Indian Railway Construction Company Ltd. raised objections to the award u/s 30 of the Act for setting it aside. By the impugned judgment dated 6th September, 1995 the learned District Judge, Bilaspur rejected all the objections raised by the appellant Indian Railway Construction Company Ltd. to the award and on confirming the same passed a decree in terms of the award against which this appeal has been preferred by Indian Railway Construction Company Ltd. Learned Sr. Counsel Shri Anoop Choudhary appearing for the appellant Indian Railway Construction Company Ltd. submits that the award passed by the Arbitrator is liable to be set aside on the ground that he has committed a legal misconduct and error of jurisdiction in passing an unreasoned lump sum award by ignoring the objections of the Indian Railway Construction Company Ltd. that some of the claims laid by the contractor before him were 'excepted matters' and were non-arbitrable. It is submitted that even in case of an unreasoned lump sum award, this Court is empowered to examine by looking into the terms of the contract whether the award discloses of any error of jurisdiction. Very strong reliance has been placed on the decision of the Supreme Court in the case of Tamil Nadu Electricity Board Vs. M/s. Bridge Tunnel Constructions and others, and the subsequent decision of the Supreme Court relying on the case (supra) in the case of M/s Premier Fabricators vs. M/s Heavy Engineering Corporation Ltd., AIR 1997 SC 3603 . Reliance is also placed on the decision of the Supreme Court in the case of Associated Engineering Co. Vs. Government of Andhra Pradesh and another, and Union of India (UOI) Vs. G.S. Atwal and Co. (Asansole), . Reliance is also placed on the decision of the Supreme Court in the case of Associated Engineering Co. Vs. Government of Andhra Pradesh and another, and Union of India (UOI) Vs. G.S. Atwal and Co. (Asansole), . The latter two cases (supra) have been considered by the Supreme Court in the subsequent decisions in the case of Tamilnadu Board and M/s Premier Fabricators (supra). Shri Abhay Sapre Learned Counsel appearing for the contractor in opposing the appeal submits that the objection to the conduct of the arbitrator of having exceeded his jurisdiction in adjudicating on the 'excepted matters or claims' was never raised at any earlier stage of the proceedings for appointment of arbitrator u/s 20 of the Act before the Court, during proceedings of the arbitrator, and in objections u/s 30 of the Act before the Court. It is submitted that the order of reference passed by the Civil Court u/s 20 of the Arbitration Act was not appealed against in which there is no restriction imposed on the Arbitrator not to adjudicate upon the so called 'excepted matters'. The order, therefore, dated 16-3-1988 of the Court passed in proceedings u/s 20 of the Arbitration Act is binding on the parties and operates as res-judicata. The submission made is that before the Arbitrator the Indian Railway Construction Company Ltd. never raised any objections to any of the claims that they are 'excepted matters' in terms of the contract and not arbitrable. It is pointed out that in fact certain points and claims for determination of arbitration were given in writing by the counsel for the Indian Railway Construction Company Ltd. to the Arbitrator which does not contain any issue or point about nonarbitrability of so called 'excepted matters'. In this respect attention is also invited to the order sheet of the Arbitrator recorded by him during course of proceedings before him on 14-5-1989 in which the agreed issues or claims have been recorded by the Arbitrator to determine the scope of adjudication. In this respect attention is also invited to the order sheet of the Arbitrator recorded by him during course of proceedings before him on 14-5-1989 in which the agreed issues or claims have been recorded by the Arbitrator to determine the scope of adjudication. With the consent of parties as also in the light of order passed by the Civil Court u/s 20 of the Act on the above basis, the contention advanced on behalf of the contractor, is that Indian Railway Construction Company Ltd. is estopped by acquiescence and res-judicata from urging for the first time in this Court that the arbitrator in adjudicating upon some of the 'excepted matters' exceeded his jurisdiction and the award is bad on that account. Learned Counsel for the Contractor submits that the arbitrator is a forum chosen by the parties by mutual agreement and unless there is any contractual or legal compulsion placed in terms of reference made by the Court, he is not obliged in law to record reasons for his decisions. The unreasoned award directing lump sum payment in favour of the contractor, therefore, is not liable to be set aside on this count because an award is liable to be set aside on limited grounds mentioned in section 30 of the Act. Reliance is placed on the case of AIR 1990 1426 (SC) , State of Orissa and Others Vs. Lall Brothers, , Sudarsan Trading Co. Vs. Government of Kerala and Another, , N. Chellappan Vs. Secretary, Kerala State Electricity Board and Another, and U.P. Hotels and Others Vs. U.P. State Electricity Board, . The Learned Counsel for the contractor tried to distinguish on facts the decision of the Supreme Court in the case of Tamilnadu Electricity Board (supra) and M/s Premier Fabricators (supra) by stating that in those cases the Civil Court made specific references to the arbitrator u/s 33 of the Act, authorising the Arbitrator to decide both the questions of arbitrability as also merits of the case as laid by the parties before him. It is submitted that in this case neither the Court has made any such specific reference on the question of arbitrability nor such question was raised and pressed by the Indian Railway Construction Company Ltd. before the Court and the Arbitrator. It is submitted that in this case neither the Court has made any such specific reference on the question of arbitrability nor such question was raised and pressed by the Indian Railway Construction Company Ltd. before the Court and the Arbitrator. After hearing and examining the relevant record of the proceedings before the Arbitrator and the Court, we find that there is great force in the submission made on behalf of the contractor that non-arbitrability of 'excepted matters' was neither raised nor pressed before the Court below or the arbitrator. In the order dated 7th May, 1988 passed u/s 20 of the Act by the Court appointing the arbitrator and referring the disputes to him, the only contention made on behalf of the Indian Railway Construction Company Ltd. finds recorded as under:-- "According to the non-applicant the dispute raised by the applicant is beyond the scope of the agreement and hence the application deserves to be rejected. He further submits that despite such factual position the applicant feels that there is any dispute or difference which needs adjudication then the matter may be referred to the sole arbitrator (i.e.) Managing Director as per agreement." The Court in the order made on 7th May, 1988 on application u/s 20 of the Act of the contractor then made the following directions referring the matter to the Arbitrator: "Thus it is apparent that a dispute has arisen between the parties with regard to the operation and execution of the contract in respect of rights and liabilities of the parties thereof. It is also evident that in spite of the fact that the Plaintiff preferred his claim and gave notice for the same, the Defendant failed to decide it till now and as such the Plaintiff s claim with interest, if any, is still lying unadjudicated upon. As per terms of the agreement quoted above, the claim of the Plaintiff needs to be referred for arbitration, of which the Managing Director of the Company shall be the sole arbitrator. The parties have consented that the matter be referred accordingly on the basis of the said photo-stat copy of the original agreement disclosing such provisions. As per terms of the agreement quoted above, the claim of the Plaintiff needs to be referred for arbitration, of which the Managing Director of the Company shall be the sole arbitrator. The parties have consented that the matter be referred accordingly on the basis of the said photo-stat copy of the original agreement disclosing such provisions. Accordingly this issue is answered in affirmative." Learned Counsel for the IRCON laid much emphasis that on the objection on behalf of the Company about arbitrability of certain dispute the learned Judge preferred the entire matter both of arbitrability and merits of the claim to the Arbitrator and it is in view of the said objection that the expression has been used in the order "that a dispute has arisen between the parties with regard to the operation and execution of the contract and in respect of rights and liabilities of the parties thereof." From the operative part of the order quoted above of the Civil Court, the counsel for the IRCON desires us to read much more than what is conveyed by that part of the order. In making reference to the Arbitrator the Court did not specifically refer any question or questions for determination. There is no specific mention of reference of question of arbitrability of any of the claims described as 'excepted matters'. In our opinion the above quoted order of the Court passed u/s 20 of the Act does not in any manner conclusively convey that the questions both of arbitrability and merits of the claim were referred to the arbitrator. Admittedly the order dated 7-5-1988 passed by the Court u/s 20 of the Act was not appealed against by any of the parties. On the basis of the above reference when the proceedings commenced before the arbitrator on 11-4-1989 the counsel for the IRCON submitted a list containing 18 points or items of dispute for determination, those are to be found at page 63 of the paper book. In 18 points placed in writing on behalf of IRCON before the arbitrator no point or item of dispute was raised about the arbitrability of so called 'excepted matters' of the agreement. The aforesaid question which is raised now as an objection to the award was not raised at any stage before the arbitrator. It is evident from the order sheet of the arbitrator recorded on 14-5-1989. The aforesaid question which is raised now as an objection to the award was not raised at any stage before the arbitrator. It is evident from the order sheet of the arbitrator recorded on 14-5-1989. Before the arbitrator, on that day, the counsel for the claimant expressly stated that he did not desire framing of any issues by the arbitrator. On behalf of IRCON, however, it was stated that issues be framed and certain issues were suggested. The suggested issues 10 in number have been recorded by the Arbitrator in proceedings of 14-5-1989. In none of the 10 proposed issues the issue about arbitrability of some of the claims as 'excepted matters' was suggested. After so recording the proposed issues of IRCON the arbitrator further records as under:-- "The arbitrator noted the points for determination/issues suggested by both the parties which remained on record. The parties are given liberty to proceed while arguing their respective cases on the basis of these points along with matters referred to him for determination through the Court. The arbitrator while making his award will limit himself to the matters referred to him through the Court." The purport of the above order made by the Arbitrator clearly appears to be that in deciding the dispute the Arbitrator resolved to take into consideration the proposed issues as also to abide by the orders made by the Court u/s 20 of the Act. After concluding the hearing of the parties before him and with the aid of evidence led in the case the Arbitrator passed a lump sum award but recorded no reasons in support of the award. After notice of making of the award was given to the parties IRCON preferred an objection in writing to the award on 31-8-1989. In the objection so filed within limitation u/s 30 of the Act no specific objection was raised that the Arbitrator had exceeded his jurisdiction in accepting claims which were 'excepted matters' under the terms of the contract. Additional objections beyond the prescribed period of limitation for application u/s 30 of the Act were filed on 3-10-1989 by way of an amendment application to the original objections. Additional objections beyond the prescribed period of limitation for application u/s 30 of the Act were filed on 3-10-1989 by way of an amendment application to the original objections. The application for amendment containing additional objections came up for consideration before the Court on 24-4-1990 and the learned District Judge on the so called concession of the counsel for the contractor allowed the objections to be brought by amendment stating that 'they are merely to elaborate the objections already taken'. One of the additional objections introduced by amendment after the prescribed period of limitation for the application u/s 30 of the Act is that the sole Arbitrator had no jurisdiction to take any decision in respect of 'the excepted matters'. The objection so taken is also not specific in relation to any particular clauses of the contract. It is true that the amendment introduced to the original objections beyond prescribed period of time was allowed on the alleged concession of the counsel on behalf of the contractor. Thus statement on behalf of IRCON was accepted by the Court that the additional objections are mere elaboration of the original objections. As has been stated above the original objections filed u/s 30 of the Act on 31-8-1989 did not contain any objection with regard to jurisdiction of the arbitrator on 'excepted matters'. Raising such an objection specifically by amendment cannot be held to mere elaboration of the original objections. It is settled that objections which are not raised u/s 30 within the prescribed period of limitation cannot be allowed to be urged. An erroneous concession regarding the provision of law can neither bind the party nor this Court. The objection about the jurisdiction of the arbitrator to arbitrate on 'excepted matters' having not been raised within the prescribed period of limitation could not have been allowed to be urged. See also Madan Lal Vs. Sunderlal and Another, . That apart since the question of limitation in raising additional objections u/s 30 of the Act has not been pressed on behalf of the counsel for the contractor in the Court below and in this Court. See also Madan Lal Vs. Sunderlal and Another, . That apart since the question of limitation in raising additional objections u/s 30 of the Act has not been pressed on behalf of the counsel for the contractor in the Court below and in this Court. We assume that such additional objections were raised in the pleading; but from the impugned order dated 6th September, 1995 passed u/s 30 of the Act by the Court, we find that the additional objections on the jurisdiction of the arbitrator with regard to 'excepted matters' were not pressed before the Court as no mention of it finds place in the order under appeal. Having thus gone through the relevant record of the proceedings before the arbitrator and the Court under sections 20 and 30 of the Act, we find that the objection about the arbitrability of some of the claims described as 'excepted matters' was not raised at the appropriate time and, therefore, cannot be allowed to be raised for the first time in this appeal. We hold that on the conduct on the part of the IRCON in not insisting upon its objection to the non-arbitrability of some of the claims as 'excepted matters' under the relevant clauses of the contract, such objection would be deemed to have been abandoned or waived. We are supported to some extent in taking this view by the latest decision of the Supreme Court in the case of Food Corporation of India Vs. Sreekanth Transport, . In that case under any 'excepted matters' clause some matters were excluded from the purview of arbitration and a senior officer of the department was given authority and power to adjudicate such matters. The decision of such officer was to be treated as final and binding. In that case there was a positive act on the part of Food Corporation of India, with whom the opposite party had entered into a transport contract in filing the Civil Suit in the case against the contractor. In the above fact and situation the Supreme Court treated the act on the part of Food Corporation of India to be an act of express 'abandonment' of its right under the 'excepted clauses' of the contract. In the above fact and situation the Supreme Court treated the act on the part of Food Corporation of India to be an act of express 'abandonment' of its right under the 'excepted clauses' of the contract. The relevant observations are:-- "In the normal circumstances, the course of events as they are, this Court would not have dealt with the matters as being presently dealt with but as has been pointed out by the High Court itself that the matters have been dealt with upon consideration of the cause of justice and to sub-serve the need of justice, we also do deem it fit and proper that by reason of the factual situation in the matter, the High Court was not left with any option but to direct such a course of action more so by reason of an express 'abandonment of right' as noticed above." As in the case of Food Corporation of India (supra), the issue of non-arbitrability on 'excepted matters' was expressely abandoned by filing a suit on those claims. In this case there is deemed abandonment of such right based on 'excepted matters' by IRCON in not insisting before the Court for a restricted reference of disputes on matters other than 'excepted matters' and in not raising any specific issue on 'excepted matter's before the arbitrator in the course of arbitration proceedings and after their conclusion in its objection before the Court u/s 30 of the Act. See the following observations in the latest decision of the Supreme Court in M/s. M.K. Shah Engineers and Contractors Vs. State of Madhya Pradesh, :-- "In any case the appellant approached the Court for appointment of arbitrator u/s 20 of the Act. The State of M.P. yielded to the appellants demand by voluntarily appointing an arbitrator. There also an objection to maintainability of the arbitration proceedings was taken up as a second thought and then given up followed by appointment of a new arbitrator in place of the previous one. The subsequent conduct of the respondents in voluntarily agreeing to the appointment of the arbitrators in both the cases and not pursing their objections u/s 33 of the Arbitration Act amounts to waiver on their part of the plea of non-compliance with the earlier part of Clause 3.3.29, if only there was such non-compliance. The subsequent conduct of the respondents in voluntarily agreeing to the appointment of the arbitrators in both the cases and not pursing their objections u/s 33 of the Arbitration Act amounts to waiver on their part of the plea of non-compliance with the earlier part of Clause 3.3.29, if only there was such non-compliance. The respondent-State of M.P. has acquiesced in the appointment of arbitrators and the proceedings for settlement of disputes by arbitration. The respondent cannot be permitted to turn around and plead invalidity or non-maintainability of arbitration proceedings by reference to Clause 3.3.29." Even on the interpretation and construction of the relevant terms or clauses of the contract, we do not find that any of the claims considered and awarded in lump sum by the arbitrator can be held to be 'excepted matters' over-which the arbitrator would be said to have no jurisdiction. In the decision cited on behalf of IRCON in case of Associated Engineering Co. Vs. Government of Andhra Pradesh and another, in considering the question of legal misconduct of the arbitrator u/s 30 of the Act, a distinction has been drawn between 'an error apparent on the face of the award' and 'a jurisdictional error' of the arbitrator. It is observed:-- "A dispute as to the jurisdiction of the Arbitrator is not a dispute within the award, but one which has to be decided outside the award. Therefore, evidence of matters not appearing on the face of the award would be admissible to decide whether the arbitrator travelled outside the bounds of the contract and thus exceeded his jurisdiction. In order to see what the jurisdiction of the arbitrator is, it is open to the Court to see what dispute was submitted to him. If that is not clear from the award, it is open to the Court to have recourse to outside sources. The Court can look at the affidavits and pleadings of parties; the Court can look at the agreement itself." Keeping aside, therefore, the plea of estoppel, acquiescence and res judicata as set up on behalf of the contractor, we proceed to consider whether there is any merit in the objection on behalf of IRCON that the arbitrator exceeded his jurisdiction in making an unreasoned lump sum award including on claims which are 'excepted matters'. The contention advanced on behalf of IRCON by the Learned Counsel is that in an unreasoned lump sum award it is not possible to ascertain the claims on which award is passed which are 'excepted matters' under the contract and the other claims not so 'excepted'. For the aforesaid reason the whole award is liable to be set aside being vitiated by the conduct of the arbitrator in exceeding his jurisdiction in entertaining and awarding the claims on 'excepted matters'. Reliance is placed on the cases Tamilnadu Electricity Board and M/s Premier Fabricators (supra). In order to find out whether the arbitrator has committed any such jurisdictional error by adjudicating upon 'excepted matters or claims', it is necessary to examine the relevant clauses of the contract on which reliance has been placed on behalf of IRCON to submit that they were 'excepted matters' falling outside the jurisdiction of the arbitrator. The expression 'excepted matters' has to be understood from Clause 63 of the contract which reads as under: "Clause 63. Settlement of dispute and scope of arbitration.-- All disputes or differences of any kind whatsoever arising out of or in connection with the contract, whether during the progress of the work/service or after its completion and whether before or after the determination of the contract; shall be referred by the Contractors to the Company and the Company shall within reasonable time after their presentation make and notify decisions thereon in writing. The decisions, directions and certificates with respect to any matters, decision of which is specially provided for by these conditions given and made by the Company or by the Engineer/Officer on behalf of the Company which matters are referred to hereinafter as excepted matters, shall be final and binding upon the Contractor's and shall not be set aside or attempt to be set aside on account of any infirmity. By omissions, delay or error in proceeding in or about the same or on any other ground or for any other reason and shall be without appeal. By omissions, delay or error in proceeding in or about the same or on any other ground or for any other reason and shall be without appeal. If the contractors be dissatisfied with the decision of the Company/Engineer on any matter or question, dispute or differences on any account or as to the withholding by the Company/Engineer of any certificate to which the contractor may claim to be entitled, or if the Company/Engineer fails to make a decision within a reasonable time then an in any such case but except in any of the excepted matters referred to in the above para of these conditions, the Contractor may within reasonable time but not exceeding 30 days of the receipt of communication of such decision take steps to refer the matter in question, dispute or difference to arbitration under Clause 64 as hereunder provided. The work under the contract shall, unless otherwise directed by the Arbitrator, be continued by the contractors during the arbitration proceedings, and subject to other rights and remedies of the company as provided in this contract and the claims of the company if any, against the contractors no payment which has become due and payable by the company to the contractor shall be withheld on account of such proceedings." (emphasis supplied). The underlined portion of the clause makes it clear that 'excepted matters' are those on which decision is sought and given by the Company or by the Engineer/Officer on its behalf. The second part of the said Clause (shown in underlining) provides forum of arbitration in all matters excepting 'excepted matters' as mentioned in the earlier part of the Clause (underlined). On a reasonable construction of the clause therefore, 'excepted matters' are only those on which the contractor seeks a decision, direction or certificate and they are so given by Company or by the Engineer on its behalf. The other Clause 40 which is also said to be outside the sphere of arbitration reads as under:-- "Clause 40. Possession of Site for construction works.-- The Principals/Engineer/officer shall make available to the Contractor the whole or part of the site, free from encumbrance of any kind, sufficiently in advance so as to enable the contractor to commence the works, or part thereof, in due time in strict compliance with the programme of work, as described in Clause 20 hereof. Possession of Site for construction works.-- The Principals/Engineer/officer shall make available to the Contractor the whole or part of the site, free from encumbrance of any kind, sufficiently in advance so as to enable the contractor to commence the works, or part thereof, in due time in strict compliance with the programme of work, as described in Clause 20 hereof. If the contractor suffers delay or incurs expense from failure on the part of the Company/Principals to give possession in a manner as to enable the Contractor to proceed with the work in an uninterrupted manner (not arising out of Contractor's fault) the Engineer shall grant extension of time for the completion of the works, as provided under Clause 22 hereof but with no financial liability on the part of the company unless otherwise provided for in the contract." On the basis of the above clause, it is contended that for the delay in handing over the work sites the contract is required to be granted extensions. The same will be granted but with no financial liability on the part of the company. The above clause cannot be held to be 'an excepted matter' under Clause 64. Whether in a given case the non-availability of site has caused any loss or damage to the contractor for which the company is payable is a matter not expressly stated to be beyond the arbitration clause. The subject matter of Clause 40, therefore, cannot prima facie be held to be outside the jurisdiction of the arbitrator. The company in its written statement and in its counter claim as well has made a reference to finality Clause 40 but, as has been stated and noted above, while proposing the points of determination on the date of hearing before the arbitrator on 14-5-1989 non-arbitrability of any matter concerning Clause 40 was not said to be one of the issues for determination of the arbitrator. The next clause in the contract which is said to be non-arbitrable is Clause 53 on 'measurement of works'. The said clause reads as under:-- "Clause 53. Measurement of works. The next clause in the contract which is said to be non-arbitrable is Clause 53 on 'measurement of works'. The said clause reads as under:-- "Clause 53. Measurement of works. -- The contractor shall be paid for the works at the rates in the accepted schedule of rates and for extra works at rates determined under Clause 18 of these conditions on the measurements taken by the Engineer/Officer or the Engineer's representative in accordance with the rules prescribed for the purpose by the company. The quantities for items the unit of which in the prevalent accepted schedule of rates is ten or hundred, or one thousand, shall be calculated to the nearest whole number, any fraction below half being dropped and half and above being taken as one; for items the unit of which in the accepted schedule of rates is single the quantities shall be calculated to two places of decimals. Such measurements will be taken of the work in progress from time to time and at such intervals as in the opinion of the Engineer/officer shall be proper having regard to the progress of works. The date and time on which 'on account' or final measurement are to be made shall be communicated to the Contractor who shall be present at the site and shall sign the results'of the measurements (which shall also be signed by the Engineer/Officer or the Engineer's representative) recorded in the official measurement book as an acknowledgment of his acceptance of the accuracy of the measurement. Failing the Contractor's attendance the work may be measured up in his absence and such measurement shall, notwithstanding such absence, be binding upon the contractor whether or not he shall have signed the measurement book, provided always that any objection made by him to any measurement shall be duly investigated and considered in the manner set out below:-- (a) It shall be open to the contractor to take specific objection to any recorded measurement and/or classification on any ground within 17 days of date of such measurement. Any remeasurements taken by the Engineer/Officer or the Engineer's representative in the presence of the contractor or in his absence after due notice has been given to him in consequence of objections made by the contractor shall be final and binding on the contractor and no claim whatsoever shall thereafter be entertained regarding the accuracy and classification of the measurements." (emphasis supplied) What is to be noted from the underlined portion is that any remeasurements done in the presence or absence of the contractor after due notice to him are said to be final and binding on the contractor with no right to him to raise any claim whatsoever "regarding the accuracy and classification of the measurements." As would be apparent from the relevant contents of the statement of claim submitted by the contractor before the arbitrator, the claim made was not by questioning any measurement but for payment for balance of the work done and which remained unpaid due to alleged illegal termination of the contract in the midst of its progress. As has been found above in respect of so called 'excepted matter' a plea of general nature was raised on behalf of IRCON in the written statement and counter claim but when the matter reached the final stage before the arbitrator, in the proposed points of determination submitted by its counsel and in the course of hearing before the arbitrator on 14-5-1989 no such specific issue about non-arbitrability of claim for value and payment for balance of work done before termination of the contract, was raised. Lastly, on the terms of the contract, it is contended that there is no clause in the contract justifying claim towards escalation. Such a contention has absolutely no merit. The claim towards escalation resulting from breach of contract is one of the heads of damages which can be raised u/s 73 of the Contract Act irrespective of existence or non-existence of any such clauses regarding escalation in the contract document. We do not find that any of the claims laid before the arbitrator by the contractor can in the factual background discussed above can be held to be 'excepted matter' under the terms of the contract and the parties to the dispute also proceeded on that basis. We do not find that any of the claims laid before the arbitrator by the contractor can in the factual background discussed above can be held to be 'excepted matter' under the terms of the contract and the parties to the dispute also proceeded on that basis. That is the reason why a wholesale reference made by the Civil Court u/s 20 of the Act was not objected to before the lower Court and no appeal was preferred against the order of reference. Before the arbitrator, in the proposed points for determination and proposed issues recorded by the arbitrator on 14-5-1989, as were suggested by the IRCON, no issue of jurisdiction of the arbitrator on 'excepted matters' under the contract was posed for consideration/adjudication or decision by the arbitrator. We find it necessary to reproduce for the above purpose in two separate columns respectively the points for determination proposed by the counsel for the 1989: POINTS FOR DETERMINATION proposed by IRCON ISSUES framed by Arbitrator Whether claimant was willing to perform and execute his part of the agreement all along? Whether the claimants are entitled to be paid for the value of the balance work done but not yet been paid, as claimed under Matter No. 1. If so, to what extent.? Whether claimant abandoned the contract and wanted to finalise his bill and make final payment? Whether the claimant waived his right, if any, under the Agreement by participating in the second tender? Whether the respondents were under obligation to fulfil the condition of precedence detailed in para 6 of the Statement of Claims of the claimants or not. If so, whether they have fulfilled the said condition precedence and, if so, whether they are liable to the claimants for all consequences? Whether IRCON terminated the contract? If so whether termination was not justified? Whether the claimants are entitled to be paid for escalation on the work value executed beyond the contract period or not, particularly when the work was prolonged and minimum rate of wages of labourers were increased by the Government of Madhya Pradesh by 33%? Whether termination was illegal? Whether the claimant did not bring the machine to site in time? Whether the claimant did not mobiliselabour? Whether the claimant did not show satisfactory progress in execution of the contract? Whether termination was illegal? Whether the claimant did not bring the machine to site in time? Whether the claimant did not mobiliselabour? Whether the claimant did not show satisfactory progress in execution of the contract? Whether the claimants are entitled to be paid for idle charges as claimed under Matter 3 of the Statement of Claims of the Claimants, particularly when the respondents vide their letter dated 2-8- 1986 (C-19), abruptly ordered for closer of work in cutting region; stopped the work in borrow area vide their letter dated 8-2-1987 (C-37) as well as letter dated 8-2-1987 (C-12). If so, to what extent the claimants are entitled to be compensated.? Whether IRCON illegally encashed the bank Agreement? If so whether IRCON is liable to compensate for it? Whether the claimants are entitled to reimbursement of interest payment to the department and other agencies as detailed in Matter No. 4. If so, to what extent? Whether the claimant created obstructions and made impossible to work in Sec.II by the second Contractor? Whether the claimants are entitled to reimbursement of loss on account of under utilisation of overhead establishment arising out of various failures of the respondent, and if so, to what extent? Whether the site was not handed over to the claimant promptly? 13A. If so what is the consequence under the Agreement? Whether the claimants are entitled to be compensated for the losses due to loss on turnover as contracted value of the work was not allowed to be completed during the contract period as claimed under Matter No. 6 of Statement of Claims and, if so, to what extent? Whether the claimant could not fix up the soil testing Laboratory in time and thus failed to perform his obligations? Whether IRCON made delay in payment for the work done by the claimant? Whether the claimants are entitled to be compensated for loss of profit on the balance work not allowed to be done as claimed under Matter No. 7 of the Statement of Claims and if so, to what extent? Whether claimant is entitled for any damages? Whether IRCON is entitled for any damages? Whether the claimants are entitled to interest and if so, to what amount or amounts and for what period or periods and at what rate or rates? Relief. Whether the claimants are entitled to costs and other relief or not? Whether claimant is entitled for any damages? Whether IRCON is entitled for any damages? Whether the claimants are entitled to interest and if so, to what amount or amounts and for what period or periods and at what rate or rates? Relief. Whether the claimants are entitled to costs and other relief or not? In the face of the above specific points and issues proposed by the IRCON before the arbitrator, the submission made on behalf of IRCON cannot be accepted that merely because in the statement of claim before the arbitrator preference was made to clauses 40, 53, 63 and 64 as 'excepted matters', such a issue of jurisdiction was raised before the arbitrator and he committed a legal misconduct in deciding the same by an unreasoned lump sum award. It has already been mentioned above that in proceedings u/s 20 of the Arbitration Act for reference of the dispute, no specific reference was sought from the Court by IRCON on the issue of jurisdiction of the arbitrator or non-arbitrability of 'excepted matters'. As has been mentioned in the order dated 7th May, 1988 of the Court in proceedings u/s 20, the contention of the IRCON as reproduced above was to the effect that the disputes raised are beyond the scope of agreement. The learned Judge who passed the order dated 7th May, 1988 while deciding the application u/s 20 of the Act had not recorded that any objection by the IRCON was raised to the arbitrability of some of the claims describing them as 'excepted matters' under the contract. It is noteworthy that not only before the arbitrator such jurisdictional issue on 'excepted matters' was not raised but even in the original objections filed within limitation u/s 30 of the Act no such specific objection was raised about the arbitrability of so called 'excepted matters'. The IRCON having agreed for a wholesale reference of all disputes for decision on merit by the arbitrator, and having not raised the question of jurisdiction at any earlier stage of the proceedings of the Court u/s 20 or 30 of the Act and before the Arbitrator, this Court cannot hold that the arbitrator had committed any legal misconduct of acting beyond his jurisdiction and outside the terms of the contract. We have also held above, for the reasons already mentioned that in the absence of the decisions sought and given on certain claims and issues in the course of execution of the contract, none of the claims referable to clauses 40,53,63 and 64 were 'excepted matters' beyond the ken of arbitration. It is settled that mere fact that there is an unreasoned award, is no ground to set it aside. See the following observations in State of Orissa and Others Vs. Lall Brothers, : "Lump sum award is not bad per se, as such. As award is conclusive as a judgment between the parties and the Court is entitled to set aside an award only if the arbitrator has misconducted himself or the proceedings or it is made after an order of Court superseding the arbitration or when an award has been improperly procured or is otherwise invalid u/s 30 of the Act. An Award may be set aside by the Court on the ground of error on the face of the award, but an award is not invalid merely because by a process of inference and argument it may be demonstrated that the arbitrator has committed some mistake in arriving at his conclusion. It is not open to the Court to speculate, where no reasons are given by the arbitrator, as to what impelled him to arrive at his conclusions". See also the following observations of the Supreme Court in the case of M/s M.K. Shah Engineers and Contractors (supra) "It is well settled that an arbitration award is not vitiated merely because the arbitrator has not given item-wise award and has chosen to give a lump sum award. A lump sum award is not a bad award. So also it is well settled that an award need not formally express the decision of the arbitrator on each matter of difference nor is it necessary for the award to be a speaking one. It will be presumed that the award disposes of finally all the matters in difference (see State of Rajasthan Vs. R.S. Sharma and Co., , State of Orissa and Others Vs. Lall Brothers, , Firm Madanlal Roshanlal Mahajan Vs. Hukumchand Mills Ltd., Indore, , Smt. Santa Sila Devi and Another Vs. It will be presumed that the award disposes of finally all the matters in difference (see State of Rajasthan Vs. R.S. Sharma and Co., , State of Orissa and Others Vs. Lall Brothers, , Firm Madanlal Roshanlal Mahajan Vs. Hukumchand Mills Ltd., Indore, , Smt. Santa Sila Devi and Another Vs. Dhirendra Nath Sen and Others, ." As has been held by the Supreme Court in the case of M/s Chokhamal Contractors (supra) there is no obligation on the arbitrator chosen by the parties to make a reasoned award unless the parties agree for a reference with stipulation that the arbitrator would decide the case with a reasoned award or there is a specific reference by the Court on issues referred with directions of passing a reasoned award. This legal position under the Act of 1940 has not undergone any change and the decisions in the case of Tamilnadu Electricity Board (supra) which was followed in subsequent decision in the case of M/s Premier Fabricators (supra), on which strong reliance has been placed on behalf of IRCON are clearly distinguishable. In one of the cases i.e. Tamilnadu Electricity Board (supra) a specific reference was made by the Court to the Arbitrator while determining the scope of arbitration clause u/s 33 and there was a direction to decide the question of arbitrability of the dispute by giving reasons in support thereof. In the subsequent case M/s Premier Fabricators (supra) the two arbitrators appointed, one each by the parties, differed and one of them held some of the claims as non-arbitrable. The matter then was referred to the Umpire. It is on those circumstances that it was held that since nonarbitrability of some of the claims was also an issue for decision before the Umpire he could not have passed an award in a consolidated sum without formally expressing as to whether some of the claims or items which were held by one of the arbitrators to be non-arbitrable are arbitrable or not. It is in the absence of such reasons in the award of the Umpire that it was found to be a case of legal misconduct on the part of the Umpire in not passing a reasoned award. Such being not the situation in this case there was no obligation to record any reasons by the arbitrator. It is in the absence of such reasons in the award of the Umpire that it was found to be a case of legal misconduct on the part of the Umpire in not passing a reasoned award. Such being not the situation in this case there was no obligation to record any reasons by the arbitrator. No misconduct was committed by the arbitrator in not deciding the question of arbitrability of certain claims which was not raised before him and in passing an award in a consolidated sum. As we have seen above, there was a wholesale reference of all disputes to the arbitrator for decision on merits and the IRCON participated in proceedings before the arbitrator. It did not raise specifically any issue of arbitrability on any 'excepted matters'. The arbitrator was, therefore, competent to construe the terms of the contract and on the basis of the evidence led by the parties and after hearing them pass an unreasoned award in lump sum. In case of a whole-sale reference of all disputes the arbitrator could place construction on terms of the contract and even if there is any error in doing so, it is not amenable to correction even in a reasoned award, much less in an unreasoned award. The Supreme Court in the case of Sudarsan Trading Co. Vs. Government of Kerala and Another, observes: "There is a distinction between disputes as to the jurisdiction of the arbitrator and the disputes as to in what way the jurisdiction should be exercised. There may be conflict as to the power of an arbitrator to grant a particular remedy. One has to determine the distinction between an error within the jurisdiction and an error in excess of the jurisdiction. Court cannot substitute its own evaluation of the conclusion of law or fact to come to the conclusion that the arbitrator had acted contrary to the bargain between the parties. Whether a particular amount was liable to be paid or damages liable to be sustained, was a decision within the competency of the arbitrator in this case. By purporting to construe the contract the Court could not take upon itself the burden of saying that this was contrary to the contract and, as such, beyond jurisdiction. Whether a particular amount was liable to be paid or damages liable to be sustained, was a decision within the competency of the arbitrator in this case. By purporting to construe the contract the Court could not take upon itself the burden of saying that this was contrary to the contract and, as such, beyond jurisdiction. If on a view taken of a contract, the decision of the arbitrator on certain amounts awarded, is a possible view though perhaps not the only correct view, the award cannot be examined by the Court." In the case of Sudarsan Trading Company (supra) in fact the Court deprecated the procedure of the High Court in examining different claims to find out whether claims were within the jurisdiction of the arbitrator and to find out whether in arriving at a decision the arbitrator has acted correctly or incorrectly. In the light of the subsequent decisions of the Supreme Court in the case of Tamilnadu Electricity Board and M/s Premier Fabricators (supra), we were persuaded to go into the question whether some of the claims were 'excepted matters' and, therefore, not arbitrable. Even on examination of the terms of the contract in its relevant clauses, we do not find that any of the claims could be held to be non-arbitrable. We have also found that as it was a wholesale reference it was open to the arbitrator to construe the term of the contract and make an award with or without recording reasons. There was no specific reference to the arbitrator on any question of arbitrability of any of the claims or items. See also the decision of the Supreme Court in U.P. Hotels and Others Vs. U.P. State Electricity Board, , particularly the following observations made therein: "Even assuming that there was an error of construction of the agreement or even that there was an error of law in arriving at a conclusion, such an error is not an error which is amenable to correction even in a reasoned award under the law. In order to set aside an award, there must be a wrong proposition of law laid down in the award as the basis of the award. XXX XXX XXX The view taken by the Umpire was a possible view in the light of the decision of the Supreme Court. In order to set aside an award, there must be a wrong proposition of law laid down in the award as the basis of the award. XXX XXX XXX The view taken by the Umpire was a possible view in the light of the decision of the Supreme Court. In the premises, a question of law arose certainly during the course of the proceedings. Such a question has been decided by the Umpire on a view which was a possible one to take. Even if there was no specific reference of a question of law referred to the Umpire, there was a question of law involved. Even on the assumption that such a view was not right, the award was not amenable to interference or correction by the Courts of law as there was no proposition of law which could be said to be the basis of the award of the Umpire, and which was erroneous." We may also refer and rely on the latest decision of the Supreme Court in the case of Himachal Pradesh State Electricity Board Vs. R.J. Shah and Company, . In that case also a non speaking award was sought to be challenged on the ground that on proper interpretation of the terms of the contract certain claims could not have been awarded. On such challenge the Supreme Court made a distinction between 'error of want of jurisdiction 'and any error committed in exercise of jurisdiction'. This distinction is maintained to find out whether the arbitrators were directly or incidentally required to construe and consider the terms of the contract in deciding the dispute. Where there is an wholesale reference both on the question of the interpretation of the terms of the contract as also the merits of the claim and a lump sum non- speaking award is passed, it cannot be held that the arbitrator lacked any jurisdiction in respect of so called 'excepted matters'. Where there is an wholesale reference both on the question of the interpretation of the terms of the contract as also the merits of the claim and a lump sum non- speaking award is passed, it cannot be held that the arbitrator lacked any jurisdiction in respect of so called 'excepted matters'. See the following observations in paragraphs 25 and 26 in the case of R.J. Shah & Company (supra): "From the aforesaid decision of this Court, and the last one in particular, it is clear that when the arbitrator is required to construe a contract then merely because another view may be possible the Court would not be justified in construing the contract in a different manner and then to set aside award by observing that the arbitrator has exceeded the jurisdiction in making the award. In order to determine whether the arbitrator has acted in excess of jurisdiction what has to be seen is whether the claimant could raise a particular dispute or claim before an arbitrator. If the answer is in the affirmative then it is clear that the arbitrator, would have the jurisdiction to deal with such a claim. On the other hand if the arbitration clause or a specific term in the contract or the law does not permit or give the arbitrator the power to decide or to adjudicate on a dispute raised by the claimant or there is a specific bar to the raising of a particular dispute or claim then any decision given by the arbitrator in respect thereof would clearly be in excess of jurisdiction. In order to find whether the arbitrator has acted in excess of jurisdiction the Court may have to look into some documents including the contract as well as the reference of the dispute made to the arbitrators is limited for the purpose of seeing whether the arbitrator has the jurisdiction to decide the claim made in the arbitration proceedings." From all the angles, therefore, we are unable to hold that the arbitrator either acted beyond his jurisdiction, i.e. outside the scope of contract or misconducted the proceedings. The award, therefore, cannot be set aside on the ground that it is unreasoned, in lump sum and beyond the terms of the contract. The award, therefore, cannot be set aside on the ground that it is unreasoned, in lump sum and beyond the terms of the contract. Lastly, the argument advanced on behalf of IRCON on the alleged excess rate of interest at the rate of 15% per annum from the date of the award needs mention. Undoubtedly there is power with the arbitrator to award interest from the date of the award. Looking to the prevalent rate of interest in commercial parlance, award of future interest at the rate of 15% per annum is not such which would permit any interference by this Court as an error apparent. See the case of The Board of Trustees for the Port of Calcutta Vs. Engineers-De-Space-Age, 516, Hindustan Construction Co. Ltd. Vs. State of Jammu and Kashmir, , and Oil and Natural Gas Commission Vs. M.C. Clelland Engineers S.A., . For the reasons aforesaid, we find no merit in this appeal. It is accordingly dismissed but in the circumstances, without any order as to costs. Final Result : Dismissed