A. K. SIKRI ( 1 ) FIRST, the facts in brief: The respondent was awarded a contract by the Appellant-DDA for development of land Rohini Phase-ll SH: construction of SWD drains in Sector-IX. The disputes and differences have arisen between the parties and the Court appointed Shri V. D. Tiwari as the Sole Arbitrator to adjudicate upon the said disputes. The Arbitrator made an Award dated 14/05/1993 of Rs. 11,50,896. 00 along with interest. ( 2 ) WHEN the respondent filed application for making this Award rule of the Court, the appellant herein filed objections to the same. By impugned judgment and order dated 22/02/2000, learned Single Judge dismissed the objections and made the Award rule of the Court and it was directed that decree-sheet be drawn up accordingly. It is against that judgment and decree that the present appeal is filed. ( 3 ) A perusal of the Award shows that the respondent had made various claims in the arbitration. Even the appellant had filed its counter-claims. The objections which were filed by the appellant were in respect of some of these claims and counterclaims. However, in this appeal, the judgment and decree is challenged only in respect of two claims, namely, claims nos. 3 and 9 and one counter-claim, namely, counter-claim No. 2. ( 4 ) CLAIM No. 3 of the respondent herein was in respect of refund of security deposit of Rs. 1,00,000. 00. This was dealt with by the Arbitrator along with counterclaim No. 3 of the appellant as the appellant claimed forfeiture of the security deposit in recession of the contract. The learned Arbitrator came to the conclusion that delays cannot be attributed to the respondent and the factors involved in pushing the the contract period beyond the stipulated time were not within the control of the respondent and, therefore, action under Clause-3 of the Contract taken by respondent cannot be upheld as just and legal. Once that was the conclusion arrived at by the learned Arbitrator, he rightly ordered refund of the security deposit of Rs. 1,00,000. 00 lying with the appellant. The only contention raised in the present appeal was that since appellant had levied compensation under Clause-2 of the Contract to the tune of Rs. 97,200. 00, this amount could be adjusted against the same. The learned Arbitrator has held levy of this compensation as illegal. 1,00,000. 00 lying with the appellant. The only contention raised in the present appeal was that since appellant had levied compensation under Clause-2 of the Contract to the tune of Rs. 97,200. 00, this amount could be adjusted against the same. The learned Arbitrator has held levy of this compensation as illegal. The challenge of the appellant to counter-claim No. 2 is that this claim was not referable and, therefore, findings of the learned Arbitrator on this counter-claim are without jurisdiction. We will deal with this aspect at the appropriate stage while dealing with the counter- claim No. 2. Suffice it to state that even if it be so, we find no justification in withholding the security deposit inasmuch as the claim of the appellant in respect of levy of compensation is yet to be established. ( 5 ) INSOFAR as claim No. 9 is concerned, it was on account of extra rate due to rise in market price in building materials. Respondent had claimed a sum of Rs. 12,86,400. 00 on this account. The case of the appellant was that the respondent was not entitled to this amount inasmuch as the amount for rise in prices was covered by the provisions of Clause-10 (CC) of the Contract and the rates as per that clause had already been paid. A perusal of the Award shows that the learned Arbitrator awarded a sum of Rs. 2,85,000. 00 on this account stating it to be the payment of fair market price due to prolongation of contract period because of various reasons beyond the control of claimants. In the objection raised by the appellant the appellant contended that the learned Arbitrator misconducted by not adhering to the provisions of the contract, namely, Clause-10 (CC) of the Contract and by going beyond the terms of the contract. This aspect is not specifically dealt with by the learned Single Judge and, therefore, was argued at length before us. ( 6 ) LEARNED counsel for the appellant submitted that this issue is no more res integra and Division Bench of this Court had already dealt with precisely the same question in the case of Delhi Development Authority Vs. U. Kashyap, 1998 VII AD (DELHI) 300. That case related to interpretation of Clause-10 (CC) of same Agreement. ( 6 ) LEARNED counsel for the appellant submitted that this issue is no more res integra and Division Bench of this Court had already dealt with precisely the same question in the case of Delhi Development Authority Vs. U. Kashyap, 1998 VII AD (DELHI) 300. That case related to interpretation of Clause-10 (CC) of same Agreement. The respondent-contractor in that case had made the claim towards escalation in prices of material and labour beyond the stipulated date of contract. The learned Arbitrator allowed the claim to the extent of Rs. 9,67,433. 00 on the basis that there had been effective increase of 18. 3% over cost of construction as per the cost indices for building works in Delhi as circulated and adopted by the CPublic Witnessd from time to time. The DDA had made the payment under Clause-10 (CC) for the period beyond stipulated date of completion. The learned Single Judge had dismissed the objection of the DDA and in appeal before the Division Bench against the judgment of learned Single Judge in the aforesaid judgment the Court held that the contractor shall be compensated as per the provision of Clause-10 (CC ). While coming to this conclusion, the Court relied upon the judgment of Supreme Court in Associated Engineering Company Vs. Govt. of Andhra Pradesh 1991 (2) Arbitration Law Reporter 180. Para-10,which is the penultimate para of the judgment of Delhi Development Authority s. U. Kashyap, reads as under: "applying the ratio in Associated Engineering Company s case the Arbitrator obviously had exceeded his jurisdiction in making the award under claim No. 11 by adopting a formula different from that set out in clause 10 (CC) of the agreement. It will not be out of place to state that in response to the respondent s letter No. nil dated 20/07/1985 the Executive Engineer, Housing Division No. XIV, DDA, sent a letter dated 1/08/1985 to the respondent wherein it was pointed out that for any increase in the prices of material and labour respondent shall be compensated as per provision of clause 10 (CC) for the work done not only during the stipulated period of the contract but also for such period for which the contract is validly extended and, therefore, question of charging revised rates after 19/08/1985 did not arise. It was asserted that nothing extra is payable beyond clause 10 (CC ). It was asserted that nothing extra is payable beyond clause 10 (CC ). For the work done beyond 19/08/1985 respondent admittedly stand compensated under said clause 10 (CC) by the appellant. Thus, agreeing with the submission advanced by Ms. Anusuya Salwan we are of the opinion that the award under aforesaid claim no. 11 deserves to be set aside". ( 7 ) MR. RAMESH Chandra, learned senior counsel appearing for the respondent could not dispute that the facts in the present case were identical as that of the aforesaid case. However, in an attempt to set free from the tongs thereof, the learned counsel for respondent ventured to argue that the Division Bench in this case had relied upon the judgment of the Supreme Court in the case of Associated Engineering Company (supra) which was no longer good law and, therefore, aforesaid Division Bench judgment of This Court was per incuriam. For this learned counsel has relied upon order dated 13/08/1993 of the two Judges Bench of the Supreme Court in the case of K. R. Raveendranathan Vs. State of Kerala and another (1996) 10scc35. His submission was that in this case the Division Bench of the Supreme Court noticed apparent conflict between Sudarshan Trading Co. Vs. Govt. of Kerala (1989) 2scc 38 and Associated Engineering Company case (supra) and referred the matter to a three Judges Bench for decision. He then referred to three Judges Bench judgment in that case which is reported in the case of K. R. Raveendranathan Vs. State of Kerala (1998) 9 SCC 410 and as per which Sudarshan Trading Co. case (supra) was followed. From these events, he tried to argue that Associated Engineering Company case was impliedly overruled. ( 8 ) WE do not agree with the submission of learned counsel for the respondent. For this purpose it would be better to quote three Judges Bench order made in the case of K. R. Raveendranathan Vs. State of Kerala (1998) 9 SCC410 which reads as under: "1. Special leave granted. 2. The learned counsel for the appellant points out that the question in issue in the present appeals is squarely covered by the decision of this Court in Hindustan Construction Co. Ltd. Vs. State of Jandk. In particular, it drew our attention to para 10 of the judgment and the portion extracted from the decision in Sudarsan Trading Co. 2. The learned counsel for the appellant points out that the question in issue in the present appeals is squarely covered by the decision of this Court in Hindustan Construction Co. Ltd. Vs. State of Jandk. In particular, it drew our attention to para 10 of the judgment and the portion extracted from the decision in Sudarsan Trading Co. case wherein it was said that 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. That is exactly what the Court has done in the instant case. Therefore, the issue stands covered by this decision and the learned counsel for the respondents could not in the face of this decision argue otherwise. 3. In the result, we allow these appeals and set aside the impugned order of the Division Bench of the High Court with no order as to costs". ( 9 ) THE aforesaid order clearly demonstrates that the SLP was dismissed in limini following Sudarshan Trading Co. case (supra ). However, Associated Engineering Co. case (supra) is not even referred to. Respondent is not correct in projecting that this case was impliedly overruled, in the absence of any reference made to the said case. It appears that after arguments the Apex Court was of the opinion that the said case was more akin to the case of Sudarshan Trading Co. case (supra) and following that case the SLP was dismissed in limini. Therefore, Mr. Ramesh Chandra, learned senior counsel was not correct in arguing that Associated Engineering Co. case (supra) stands overruled. In fact, the perusal of the two judgments one in Sudarshan Trading Co. case and the other in Associated Engineering Co. case would show that the ratio decided in both the cases was different and there is no conflict. When a particular question of law is specifically referred to the Arbitrator for his determination, then the decision of the Arbitrator on that question of law would be final and cannot be challenged on the ground that the adjudication by the Arbitrator is erroneous in law. This is what Sudarshan Trading Co. case (supra) decided. ( 10 ) ON the other hand Associated Engineering Co. This is what Sudarshan Trading Co. case (supra) decided. ( 10 ) ON the other hand Associated Engineering Co. case (supra) decides that when the Arbitrator is entertaining the claims, he is supposed to take into consideration the provisions contained in the contract dealing with the aspects involved in adjudicating a particular claim and when for payment of a claim, a particular formula is provided in the contract applying some other formula and awarding the claim would amount to legal misconduct. Therefore, both the decisions hold different fields and it is this distinction in the two cases which has to be kept in mind. In fact, ratio of both the cases is same as the following passage from Sudershan Trading Co. case (supra) would demonstrate: "the same principle has been stated in Alopi Parshad and Sons, Ltd. Vs. Union of India. There this Court held that the award was liable to be set aside because of an error apparent on the face of the Award. An arbitration award might be set aside on the ground of an error on the face of it when the reasons given for the decision, either in the award or in any document incorporated with it, are based upon a legal proposition which is erroneous. But where a specific question is referred, the award is not liable to be set aside on the ground of an error on the face of the award even if the answer to the question involves an erroneous decision on a point of law. But an award which ignores express terms of the contract, is bad". ( 11 ) ASSOCIATED Engineer Co. case (supra) is still a good law, would be clear from the recent judgment of the Supreme Court itself in the case of Steel Authority of India Ltd. Vs. J. C. Budharaja, Government and Mining Contractor 1999 (3) Arbitration Law Reporter 335 (S. C.) and in the case of Rajasthan State Mines and Minerals Ltd. Vs. Eastern Engineering Enterprises and another 1999 (3) Arbitration Law Reporter 350 (S. C. ). In the first case mentioned above, following Associated Engineering Co. case (supra) the Court held that Award against the terms of contract would amount to misconduct on the part of Arbitrator and would be illegal. Eastern Engineering Enterprises and another 1999 (3) Arbitration Law Reporter 350 (S. C. ). In the first case mentioned above, following Associated Engineering Co. case (supra) the Court held that Award against the terms of contract would amount to misconduct on the part of Arbitrator and would be illegal. To the same effect is the decision in the second case and interestingly in this case the Court has taken note of the judgments in the case of Sudarshan Trading Co. as well as Associated Engineering Co. case. Para-22 of the judgment starts in the following manner: "it is settled law that the Arbitrator is the creature of the contract between the parties and hence if he ignores the specific terms of the contract, it would be a question of jurisdictional error which could be corrected by the Court for that limited purpose agreement is required to be considered. For deciding whether the Arbitrator has exceeded his jurisdiction reference to the terms of the contract is a must. It is true that arbitration Clause 74 is very widely worded, therefore, the dispute was required to be referred to the Arbitrator. Hence, the award passed by the Arbitrator cannot be said to be without jurisdiction but, at the same time, it is apparent that he has exceeded his jurisdiction by ignoring the specific stipulations in the agreement which prohibits entertaining of the claims made by the contractor". ( 12 ) AFTER referring to catena of earlier precedents, in para-42, the legal position is summarised as under: "from the resume of the aforesaid decisions, it can be stated that: (a) It is not open to the Court to speculate, where no reasons are given by the Arbitrator, as to what impelled Arbitrator to arrive at his conclusion. (b) It is not open to the Court to admit to probe the mental process by which the Arbitrator has reached his conclusion where it is not. disclosed by the terms of the award. (c) If the Arbitrator has committed a mere error of fact or law in reaching his conclusion on the disputed question submitted for his adjudication then the Court cannot interfere. (d) If no specific question of law is referred, the decision of the Arbitrator on that question is not final, however much it may be within his jurisdiction and indeed essential for him to decide the question incidentally. (d) If no specific question of law is referred, the decision of the Arbitrator on that question is not final, however much it may be within his jurisdiction and indeed essential for him to decide the question incidentally. In a case where specific question of law touching upon the jurisdiction of the Arbitrator was referred for the decision of the Arbitrator by the parties, then the finding of the Arbitrator on the said question between the parties may be binding. . . (e) In a case of non-speaking award, the jurisdiction of the Court is limited. The award can be set aside if the Arbitrator acts beyond. his jurisdiction. (f) To find out whether the Arbitrator has travelled beyond his Jurisdiction, it would be necessary to consider the agreement between the parties containing the arbitration clause. Arbitrator acting beyond his jurisdiction-is a different ground from the error apparent on the fact of the award. (g) In order to determine whether Arbitrator has acted in excess of his jurisdiction what has to be seen is whether the claimant could arise a particular claim from the Arbitrator, if there is a specific terms in the contract or the law which does not permit or give the Arbitrator the power to decide the dispute raised by the claimant or there is a specific bar in the contract to the raising of the particular claim then the award passed by the Arbitrator in respect thereof would be in excess or jurisdiction. (h) The award made by the Arbitrator disregarding the terms of the reference or the arbitration agreement or the terms of the contract would be a jurisdictionalerror which requires ultimately to be decided by the Court. He cannot award an amount which is ruled out or prohibited by the terms of the agreement. Because of specific bar stipulated by the parties in the agreement, that claim could not be raised. Even if it is raised and referred to arbitration because of wider arbitration clause such claim amount cannot be awarded as agreement is binding between the parties and the Arbitrator has to adjudicate as per the agreement. This aspect is absolutely made clear in Continental Construction Co. Ltd. (supra) by relaying upon the following passage from M/s Alopi Parshad Vs. Union of India (supra), which is to the following effect. This aspect is absolutely made clear in Continental Construction Co. Ltd. (supra) by relaying upon the following passage from M/s Alopi Parshad Vs. Union of India (supra), which is to the following effect. "there it was observed that a contract is not frustrated merely because the circumstances in which the contract was made, altered. The Contract Act does not enable a party to a contract to ignore the express covenants thereof, and to claim payment of consideration for performance of the contract at rates different from the stipulated rates, on some vague plea of equity. The parties to an executory contract are often faced, in the course of carrying it out, with a turn of event which they did it all anticipate, a wholly abnormal rise or fall in prices, a sudden depreciation of currency, an unexpected obstacle to execution, or the life. There is no general liberty reserved to the Courts to absolve a party from liability to perform his part of the contract merely because on account of an uncontemplated turn of events, the performance of the contract may become onerous. " (i) The Arbitrator could not act arbitrarily, irrationally, capriciously or independently of the contract. A deliberate departure or conscious disregard of the contract not only manifes the disregard of his authority or misconduct on his part but it may tantamount to mala fide action. (ii) The Arbitrator is not a conciliator and cannot ignore the law or misapply it in order to do what he thinks just and reasonable; the Arbitrator is a tribunal selected by the parties to decide the disputes according to law. " ( 13 ) SINCE the present case is squarely covered by the ratio of Associated Engineering Company case (supra) which was applied to by the Division Bench of this Court in DDA Vs. U. Kashyap (supra) interpreting Clause-10 (CC) itself, following this judgment, irresistible conclusion is that the Award rendered by the Arbitrator in respect of Claim No. 9 was erroneous and the Arbitrator committed legal misconduct by going beyond the provisions of Clause-10 (CC ). The Award of the Arbitrator and the impugned judgment and decree to this extent, therefore, has to beset-aside. ( 14 ) IN so far as counter-claim No. 2 is concerned, appellant had claimed compensation which Superintendent Engineer had levied in terms of Clause-2 of the agreement. The Award of the Arbitrator and the impugned judgment and decree to this extent, therefore, has to beset-aside. ( 14 ) IN so far as counter-claim No. 2 is concerned, appellant had claimed compensation which Superintendent Engineer had levied in terms of Clause-2 of the agreement. This claim was rejected by the Arbitrator on the ground that there was no delay on the part of the respondent. The argument of the learned counsel for the appellant is that the decision of Superintending Engineer under clause 2 of the Agreement, when he levies compensation is final and in respect of those matters where his decision is final, the Arbitrator has no jurisdiction to adjudicate upon such decisions as is clear from the Arbitration clause in the Agreement itself. In support of her submission appellant has relied upon the judgment of this Court in the case of Delhi Development Authority Vs. M/s. Sudhir Brothers reported in 1995 (2) Arbitration Law Reporter 306 and judgment dated 27/03/2000 passed in Suit No. 289a of 1989 titled Bhagat Construction Company versus Delhi Development Authority. ( 15 ) WE find substance in the contention of the appellant. It is not in dispute that counter-claim No. 2 falls in "excepted matter" i. e. as per arbitration clause dispute regarding counter-claim No. 2 was not referable. Such a matter, therefore, normally could not have been referred to Arbitrator. We have dealt with this aspect in detail in our recent judgment dated 7/09/2000 in the case of Delhi Development Authority s. M/s. Jagan Nath Ashok Kumar FAO (OS)No. 269/94 following the ratio of Bhagat Construction (supra) and holding that Arbitrator lacked inherent jurisdiction to deal with this counter-claim and, therefore, Award in respect of such counter-claim was nullity. Following that reasoning, the Award of the Arbitrator on counter-claim No. 2 is set-aside. ( 16 ) IN the result, we, therefore, partly allow the appeal to the extent indicated above i. e. Award of the Arbitrator on claim No. 9 and decree in respect thereof stands set-aside. Award of the Arbitrator on counter-claim No. 2 also stands set-aside. The decree stands modified accordingly. Parties shall, however, bear their own costs. ( 17 ) DURING the course of arguments, we were informed by learned counsel for the respondent that the appellant had deposited the amount in terms of decree in the Registry of this Court. Award of the Arbitrator on counter-claim No. 2 also stands set-aside. The decree stands modified accordingly. Parties shall, however, bear their own costs. ( 17 ) DURING the course of arguments, we were informed by learned counsel for the respondent that the appellant had deposited the amount in terms of decree in the Registry of this Court. Out of this amount the respondent shall be entitled to withdraw the decretal amount as per modified decree. Balance amount would be refunded to the appellant by the Registry.