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Himachal Pradesh High Court · body

2001 DIGILAW 393 (HP)

H. P. HOUSING BOARD Objector v. MADHO SINGH AHUJA

2001-12-14

K.C.SOOD

body2001
JUDGMENT Kuldip Chand Sood, J.:- H.P. Housing Board (Objector for short) has filed these objections under Section 34 of the Indian Arbitration and Conciliation Act. 1996. (Act for short), for setting aside of the award made by shri R.K. Makkar. then Superintending Engineer, of the Objector Board who was appointed as Arbitrator by the Chairman of the Board on the dispute raised by shri Madho Singh Ahuja. hereinafter referred to as "the respondent". 2. It appears, the work for the construction of Police Housing Colony (construction of 24 Police Houses type-I and II and Police Chowki at Mandi) was awarded to the respondent in April. 1993 by an agreement executed between the parties. After the building was completed, the Objector filed certain claims which were referred to Shri R.K. Makkar. then Superintending Engineer of the Objector Board on June 7. 1994 in terms of clause 25 of the Contract Agreement. The award was made by the Arbitrator on September 29. 1996 which vas set-aside by this Court in Civil Suit No. 100 of 1996 along with Civil suit No.54 of 1997 Madho Singh Ahuja-v- H.P. Housing Board on July 23. 1997 and remanded the matter back to the arbitrator for deciding it afresh taking into consideration the observations made in the judgment. 3. The Arbitrator, after remad. again made a similar award and sent it to this Court on April 20. 1998 which was registered as civil suit No.42 of 1998 for making it rule of the Court. Objections were once again filed by the Housing Board. However, in view of the law laid down by the Apex Court in Thyseen Stahlunoin GMBH v. Steel Authority of lndia Ltd. 1999 (1) SCC 334. this Court observed that the case is governed by the provisions of the Act and. therefore objections preferred under Section 30 of the Arbitration Act. 1940 were not maintainable. It was further observed by this Court that the award was not required to be made the rule of the Court as the same is executable as a decree of Civil Court as contemplated under Section 36 of the Act. Objections were accordingly rejected. However, the parties were given liberty to raise objections as may be available to them in accordance with the provisions of the Act. 4. The Objector thereafter filed the present objections. Objections were accordingly rejected. However, the parties were given liberty to raise objections as may be available to them in accordance with the provisions of the Act. 4. The Objector thereafter filed the present objections. The case of the Objector is: (a) that the arbitrator has acted illegally in not considering the objections raised by the Objectors: (b) the Arbitrator, in making his award, acted in total violation of the provisions of the Act and mis conducted himself: (c) the award made by the arbitrator is beyond the scope of the Arbitration Act and relates to the disputes not contemplated and not falling within the terms of the agreement: (d) the award made by the arbitrator is in conflict w ith the Public Policy inasmuch as it is against the law as laid down by the Legislature and interpreted by the Courts: (e) the award was made by the arbitrator without there being any material on record or evidence to support it which would be "violative of public policy of India": (g) the arbitrator illegally invoked clause 12A of the agreement to made the award in favour of the respondent though clause 12A of the Agreement was not invokable in the facts and circumstances of the case: (g) the award of the arbitrator in respect of all the matters is based on no evidence, is inconsistent with the terms of the agreement, against the public policy and the law as laid down by the courts and is without jurisdiction. 5. The respondent in his reply submits that: (a) the award made by the Arbitrator is reasoned and has been made-on the basis of the material placed before him. The arbitrator was not required to give a detailed judgment and there is no misconduct on the part of the arbitrator: (b) the arbitrator did not act either in violation of the provisions of the Act or the law laid down by the Courts: (c) it is maintained that the impugned award cannot be said to be beyond the scope of the arbitration agreement nor in conflict with public policy of India: (d) the award in respect of Claim No.l was made for substituted additional items in terms of the agreement which were not included in the agreement. The claimant was not bound to provide items which were not included in the agreement after the expiry of the period of agreement. The claimant was not bound to provide items which were not included in the agreement after the expiry of the period of agreement. According to the respondent- claimant, he wrote a letter to the Objector on November 25. 1985 that he would charge for the extra items on the rates prevailing in the market which was accepted by the Housing Board and it was. according to the claimant, decided that the rates would be worked out at the time of settlement of the final bill after the completion of the work and it is in these circumstances that the Objector Housing Board after the completion of the work wrote a letter to the respondent through its Executive Engineer asking for prevailing market rates which were duly supported by the analysis of the rate of each item. The rates were accepted by the respondent and. therefore, have rightly been allowed by the arbitrator in view of the ratio laid down by the Apex Court in Union of India v. Khetra Mohan: (e) the objections raised by the Objector are not tenable: The record shows that against Claim No.I. the respondent claimed rupees 3.20.501/- for extra, substituted additional items for the reason that these items were provided after the date of completion of the works as stipulated in the agreement and. therefore, they were to be paid to the contractor-respondent at the. rates demanded by him. According to the claimant-respondent, the rates so demanded by him were not rejected by the Department and. therefore, he was entitled to the rates quoted by him under clause 12 and 12A of the agreement. 6. It appears, during the course of hearing, the claimant-respondent restricted his claim to rupees 2.87.148.76 paise which was allowed by the arbitrator for the reason that the respondent informed the Objector by his letter dated 25.11.1985 that he would charge market rate for the extra items executed beyond the deviation limit. The Objector Board did not either reject or accept the demand of the claimant and therefore, the respondent was entitled to the rates demanded by him. The arbitrator also took note of the fact that the respondent did not refute the demand raised by the claimant within reasonable time to charge market rates for extra items. The respondent was not asked to stop the work. The arbitrator also took note of the fact that the respondent did not refute the demand raised by the claimant within reasonable time to charge market rates for extra items. The respondent was not asked to stop the work. The Objector by his letter dated 2.5.1990 had asked the claimant to submit rates for extra items which would show that there was some understanding between the respondent and Objector to pay the rates for extra items for market rates. The arbitrator drawing support from the ratio in Union of India v. Khetar Mohan Banerjee and Madho Singh Ahuja v. State of Himachal Pradesh, allowed the claim of the respondent-claimant. 7. Mr. Deepak Gupta, learned counsel for the Objector Board submits that ratio of Khetar Mohan Banerjee and Madho Singh Ahuja was not applicable in the facts of this case. It is his contention that the arbitrator in spite of the observations made by this Court, while remanding the case back to the Arbitrator on July 23. 1997. relied upon the ratio in Khetar Mohan Banerjee. without there being any material on record. In civil suit No. 100 of 1996. a contention was raised that ratio of judgment in Khetar Mohan Banerjee was not applicable. This Court remanding the matter took a view that in Khetar Pals case, the site was measured by the Arbitrator himself and he looked into all the material placed on record "to arrive at a conclusion in respect of the claim to be granted to the Plaintiff in that case, whereas, the arbitrator in this case had not considered any material on record to justify the award made by him in respect of claim No.l to the claimant-respondent. This Court observed: "1 am of the considered view that no reasons have been given by the Arbitrator to reach the conclusion in respect of the calculation of the amount granted to the plaintiff. If there exists material on record, reference should have been made to it and only thereafter by applying his independent mind, the claim could have been accepted or rejected. I am purosely refraining myself from making any observation lest it may influence the Arbitrator one way or the other in reaching a just decision. The matter, in my view, needs re-examination at the level of the Arbitrator". 8. I am purosely refraining myself from making any observation lest it may influence the Arbitrator one way or the other in reaching a just decision. The matter, in my view, needs re-examination at the level of the Arbitrator". 8. The Arbitrator even in the fresh award made against Claim No.l has failed to refer t any material on record which may justify the claim of the respondent. There is nothing in the award of the Arbitrator which may show how the arbitrator came to the conclusion that the respondent was entitled to rupees 2.87.148.76 paise against Claim No.l. 9. Mr. Deepak Gupta, contends that the payments for all the extra/substituted items of the work done by the claimant were made to him by the Objector in respect of the contract agreement for the work and nothing remains to be paid. The record shows that this contention was raised before the Arbitrator. The Arbitrator has not said a word about it. He has simply ignored the contention raised before him. 10. Mr. Gupta farther submits that the total tender amount of the work awarded to the respondent contractor was rupees 12. 49.872/-with a deviation limit of 50%. Therefore, the claimant, under the provisions of the agreement was required to execute the work on the rates stipulated in the agreement to the extent of 18.74.808/-. whereas, the entire work concluded by the claimant was to the extent of rupees 17.83.861/- which was within the deviation limit. As per the terms of the contract agreement, it was stipulated that the claimant respondent was liable to execute the works referred to in the tender documents including deviations to the maximum limit of 50% at the rates already quoted in the tender documents and it is only the additional/substituted works in excess of the limit for which the rates were to be determined in accordance with the provisions of clause 12A of the contract agreement. 11. Clause 12 of-the agreement provides for he alterations in specifications and designs. 11. Clause 12 of-the agreement provides for he alterations in specifications and designs. The clause stipulates that the engineer-in-charge of the work shall have the power to make any alterations, additions to or substitute for the original specifications, drawings, designs and inspections that may appear to him to be necessary during the progress of the work and the contractor shall earn out the work in accordance with any instructions that may be given to him in writing, signed by the Engineer-in-charge and such alterations, additions or substitutions shall not invalidate the contract. It further stipulates that any altered, additional or substituted work which the contractor may be directed to execute as part of the work under agreement "shall be carried out by the contractor on the same conditions in respect of which he agreed to do the main work. 12. Clause 12 and 12-A may be reproduced for convenience: "12. The Engineer-in-charge shall have power to made any alterations in. omissions from, additions to or substitutions, for. the original specifications, drawings, designs and instructions that may appear to him to be necessary during the progress of the work, and the contractor shall earn, out the work in accordance with any instructions which may be given to him in writing signed by the Engineer-in-charge. and such alterations, omissions, additions or substitutions shall not invalidate the contract and any altered, additional or substituted work which the contractor may be directed to do in the manner above specified as part of the work shall be carried out by the contractor on the same conditions in all respect on which he agreed to do the main work. The time for the completion of the work shall be extended in the proportion that the altered, additional or substituted work bears to the original contract work, and the certificate of the Engineer-in-charge shall be conclusive as to such proportion. Over and above this, a further period to the extent of 25 per cent of the time so extended shall be allowed to the contractor. Over and above this, a further period to the extent of 25 per cent of the time so extended shall be allowed to the contractor. The rates of such additional, altered or substituted work under this clause shall be worked out in accordance with the following provisions in there respective orders: (i) If the rates for the additional, altered or substituted work are specified in the contract for the work, the contractor is bound to earn out the additional, altered or substituted work at the same rates as are specified in the contract for the work. (ii) If the rates for the additional, altered or substituted work are not specifically provide in the contract for the work, the rates will be derived from the rates for a similar class of work as are specified in the contract for the work, (iii) If the altered, additional or substituted work includes any work for which no rate is specified in the contract for the work and cannot be derived from the similar class of work in the contract, then such work shall be carried out at the rates entered in Himachal Pradesh Public Works Department Standard Schedule of Rate. 1979 with upto date correction slip minus/plus percentage with the total tendered amount bears to the estimated cost of the entire work put to tender. (iv) If the rates for the altered, additional or substituted work cannot be determined in the manner specified in clauses (i) to (iii) above, then the rates for such work shall be worked out on the basis of the schedule of rates of the district specified above minus/plus the percentage which the total tendered amount bears to the estimated cost of the entire work put to tender. Provided always that if the rate of a particular part or parts of the item is not in the schedule or antes, the rate for such part or parts will be determined by the Engineer-in-charge on the basis of the prevailing market rates when the work was done. Provided always that if the rate of a particular part or parts of the item is not in the schedule or antes, the rate for such part or parts will be determined by the Engineer-in-charge on the basis of the prevailing market rates when the work was done. (v) If the rates for the altered, additional or substituted work cannot be determined in the manner specified in sub-clauses (i) to (iv) above, then the contractor shall, within days of the date of receipt of order to carry out the work, inform the Engineer-in-charge of the rate which it is his intention to charge for such class of work, supported by analysis of the rate or rales claimed, and the Engineer-in-charge shall determine the rate or. rates on the basis of prevailing market rates, and pay the contractor accordingly. However, the Engineer-in-charge. by notice in writing, will be at liberty to cancel his order to carry out such class of work and arrange, to carry it out in such manner as he may be consider advisable. But under no circumstances, the contractor shall suspend the work on the plea on non-settlement of rates of items falling under this class. (vi) Except in case of items relating to foundations, provisions referred to in Annexure A" below contained in sub- clause (i) to (v) above shall no apply to contract or substituted items as individually exceed the percentage set out in the tender documents (referred to herein below as deviation limit1 subject to the following restrictions:- (a) The deviation limit referred to above is the net effect (algebrical sum) of all additions and deductions ordered. (b) In no case shall the additions/deductions (arithmetical, sum) exceed twice the deviation limit. (c) The deviations ordered on items of any individual trade included in the contract shall not exceed plus/minus 50% of the value of that trade in the contract as a while or half of the deviation limit, whichever is less. (d) The value of additions of items of any individual trade not already included in the contract shall not exceed 10% of the deviation limit. ANNEXURE "A" For the purpose of operations of Clauses 12 (vi) the following works shall be treated as work relating to foundations. (d) The value of additions of items of any individual trade not already included in the contract shall not exceed 10% of the deviation limit. ANNEXURE "A" For the purpose of operations of Clauses 12 (vi) the following works shall be treated as work relating to foundations. (i) For building plinth level or 1_2 meter (4ft) above ground level which-ever is lower, excluding items of flooring and D.P.C. but inlcuding base concrete below the floors, (ii) For abutments piers retaining wall of culverts and Bridges walls of water reservoirs, the bed or floor level, (iii) For retaining wall, where floor level is not determined 1.2 meters above the average ground level or bed level, (iv) For roads all items of excavation and filling including treatment of sub base and soling work, (v) For water supply line, sewer lines, under-ground storm water drain and similar work, all items of work below ground level except items of pipe work proper masonary work. (vi) For open storm water drains all items of work except lining of drains. Note: Individual trade means the trade section into which a schedule of quantities annexed to the agreement has been divided or in the absence of such division, the individual section of the Himachal Pradesh Public Works Department schedule of rates specified above, such as. excavation and earth-work, concrete, wood work and joinery, etc. 13. The rates of any such work except the items relating to foundations which is in excess of the deviation limit shall be determined in accordance with the provisions contained in clause 12A. CLAUSE 12-A: In the case of contract or substituted item which individually exceed the quantity stipulated in the contract by more than the deviation limit, except the items relating to foundation work, which the contractor is required to do under clause 12 above, the contractor shall, within 7 days from the receipt of order, claim revision of the rates supported by proper analysis in respect of such items for quantities in excess of the deviation limit notwithstanding the fact that the rates for such items exist in the tender for the main work or can be derived in accordance with the provisions of sub-clause (ii) of clause 12. and the Engineer-in-charge may revise their rates, having regard to the prevailing market rates and the contractor shall be paid in accordance with the rates so fixed. The Engineer-in-charge. and the Engineer-in-charge may revise their rates, having regard to the prevailing market rates and the contractor shall be paid in accordance with the rates so fixed. The Engineer-in-charge. shall, however, be at liberty to cancel his order to earn, out such increased quantities of work by living notice in writing to the contractor and arrange to earn it out in such manner as he may consider advisable. But. under no circumstances the contractors shall suspend the work on the plea of non-settlement of rates of items falling under this clause. All the provision of the preceding paragraph shall equally apply to the decrease in the rates of items for quantities in excess of the deviation limit, notwithstanding the fact that the rates for such items exist in the tender for the main work or can be derived in accordance with the provisions of sub-clause (ii) of the preceding clause 12. and the Engineer-in-charge max revise such rates having regard to the prevailing market rates", (emphasis supplied). 14. A bare perusal of clause 12 shows that the rates for additional, altered or substituted works undertaken by a Contractor have to be worked out in accordance with the provisions of clause 12(i) to (vi). Now in the Memorandum of agreement under the heading "General rules and directions for the guidance of the contractor", the contractor-respondent covenanted that if his tender documents upon the terms and conditions contained in the tender document and shall cam out such deviations as max be ordered-.upto the maximum of 50% at the rates quoted in tender documents and those in excess of that limit at the rates to be determined in accordance with the provisions contained in clause 12-A of tender document. The relex ant portion of the Memorandum reads: (ii) to execute all the works referred to in the tender documents upon the terms and conditions contained or referred to therein and to carry out such deviations as maybe ordered, upto a maximum of 50% at the rates quoted in the tender documents and those in excess of that limit at the rates to be determined in accordance with the provisions contained in clause 12-A of the tender form. (emphasis supplied) 15. There is force in the contention of Mr. (emphasis supplied) 15. There is force in the contention of Mr. Deepak Gupta learned counsel for the Objector that the total amount of the work awarded to the respondent, as accepted by the Board, was rupees 12. 49.872/-and with 50% of deviation limit, the claimant was required to execute the work to the extent of rupees 18.74.808/- at the rates quoted in the tender document. It is only for works executed in excess of rupees 18.74,808/- the respondent- contractor would be entitled to the rates as may be determined in accordance with the provisions contained in clause 12-A of the agreement. 16. Sub-clause (i) of clause 12 provides that if rates of additional, altered or substituted work are specified in the contract/agreement for the work, then the contractor is bound to cam out the additional, altered or substituted work at the same rates as are specified in the contract for the work. In case, the rates for additional, altered or substituted work are not specifically provided in the contract for the work, then the rates have to be derived from the rates for the similar class of work as are specified in the contract for work. If the altered, additional or substituted work includes the work for which no rates are specified in the contract for the work and cannot be derived from the similar class of work in the contract, then such work shall be carried out at the rates entered in Himachal Pradesh Public Works Department Standard of Schedule of rates 1979 with up-to-date correction slips. In the event, the rates for the altered, additional or substituted work cannot be determined under clauses (i) to (iii). then the rates for such work have to be worked out on the basis of the Schedule of rates of the District specified minus/plus the percentage which the total tendered amount bears to the estimated cost of the enter work put to tender. In the event, the rates for the altered, additional or substituted work are not determinable under sub- clauses (i) to (iv). In the event, the rates for the altered, additional or substituted work are not determinable under sub- clauses (i) to (iv). then the contractor, as per clause 12(v) of the agreement, has to within 7 days of the receipt of order to earn but the work, inform the Engineer-in-charge of the rate which he intends to charge for such class of work supported by analysis of the rate or rates claimed and the Engineer-in-charge is to determine the rate or rates on the basis of the prevailing market price and pay the contractor accordingly. 17. It is not the case of the respondent that additional, altered or substituted works do not fall within clause (i) to (iv) of Clause 12 of the agreement. 18. The arbitrator in the present case, allowed the claim of the claimant-respondent for additional items on the ground that the claimant-respondent had informed the Executive Engineer that he would charge the market rates for those extra items executed beyond the deviation limit and the respondent Board failed to communicate their response to the contractor, moreso. when the Executive Engineer did not stop the work and permitted the claimant to complete the work. Another reason which weighed with the arbitrator was that on 2.5.1990. the respondent Board asked the claimant to submit the rates for extra items based on the market rates which indicate that "there was some understanding given by the Respondent to pay the rates of extra items on market rates". 19. In my view, it was not open to the Arbitrator to have traveled outside the contract agreement and make an award dehors of the provisions of the agreement. Under the provisions of the agreement, the Arbitrator was required to determine if the deviations were within the overall limit of 50% and not exceeding 10% for individual items. If the deviations of individual items were within the stipulated percentage or the additional items were within the limits provided in the agreement, then the Contractor was entitled to the rates for extra additional items in terms of clause 12(i) to clause (v). 20. No evidence was led by the Contractor to show that the rates for additional, altered or substituted works were neither specified in the contract agreement nor similar class of work as specified in the contract agreement. 20. No evidence was led by the Contractor to show that the rates for additional, altered or substituted works were neither specified in the contract agreement nor similar class of work as specified in the contract agreement. It is also not the case of the Contractor nor the arbitrator has concluded that altered, additional or substituted work carried out by the contractor does not find mention in the Standard Schedule of the H.P. Public Works Department in terms of sub-clause (iii) of clause 12. On the other hand the Objector took a specific plea before the arbitrator that the responded has been paid for additional, substituted items in accordance with sub clause (iii) of clause 12. This assertion of the objector is not disputed. 21. This apart, even if the case of the Contractor, under sub-clause (i) to (iv). the Contractor, under sub-clause (v) to clause (xii) was required to communicate and inform the Engineer-in-charge within seven days of the receipt of the order, to cam out the additional, substituted or altered works, the rates which he intended to charge for such class of works duly supported by analyss of the rate or rates claimed in terms of sub-clause (v) to clause (xii). Admittedly the respondent-contractor did not inform the Engineer-in-charge about the rates he intended to charge duly supported by analysis of the rate or rates within seven days of the orders to earn out the additional, altered or substituted works. It was also pleaded before the Arbitrator that the claimant did not inform the Engineer-in-charge in writing about the rates he intended to charge for the "execution of such extra, substituted and additional items" duly supported by the analysis of rates. It is noticed that the claimant did not inform the Engineer-in-charge in writing about the rates he intended to charge for the "execution of such extra, substituted and additional items" duly supported by the analysis of rates. It is noticed that the claimant only preferred his claim on 18.3.1991 for payment towards extra/substituted items on market rate after two and half years of the completion of the work, which was completed on 29th September. 1988. For this reason also the claimant-contractor was not entitled to any amount towards extra/additional works in terms of the agreement. It is noticed that the claimant only preferred his claim on 18.3.1991 for payment towards extra/substituted items on market rate after two and half years of the completion of the work, which was completed on 29th September. 1988. For this reason also the claimant-contractor was not entitled to any amount towards extra/additional works in terms of the agreement. The Objector Board submitted to the arbitrator that the value of the additional items of any individual trade in terms of clause 12(vi) (d) did not exceed 10% of the over all deviation limit, i.e. 50% of the tendered amount of rupees 12.49.872/-. The value of the extra additional substituted items of any individual trade at 10% of the deviation limit (6.24.936/-) works out to rupees 62.494/- and claimant had not executed any such item in any individual trade upto this limit. The silence of the arbitrator on this aspect is more revealing than hiding. 22. In these facts and circumstances, in my view clause 12-A of the agreement was not invokable. 23. The arbitrator while making a award against this claim, relied upon the ratio in Khetra Mohan Banerjee. This Court while remitting back this case to the arbitrator for decision afresh unambiguously observed that in Khetarpal. there was material on the record to justify the claim of the plaintiff, whereas, there was no material on record, as noticed, to justify the market rates as claimed by the respondent-claimant. 24. It is well settled that if the arbitrator travels outside the provisions of the contract agreement, then he acts without jurisdiction. However, if he merely interprets the provisions of the contract agreement, then the award cannot be interfered with unless the award made is without reason. 25. In Associated Engineering Co. v. Government of Andhra Pradesh. AIR 1992 SC 232. the Apex court observed that the arbitrator cannot act arbitrarily and irrationally or independent to the provisions of the contract agreement. Their Lordships in para 26 of the judgment observed: "26. The arbitrator cannot act arbitraily, irrationally, capriciously or independently of the contract. His sole function is to arbitrate in terms of the contract. If he has traveled outside the bounds of the contract, he has acted without jurisdiction. Their Lordships in para 26 of the judgment observed: "26. The arbitrator cannot act arbitraily, irrationally, capriciously or independently of the contract. His sole function is to arbitrate in terms of the contract. If he has traveled outside the bounds of the contract, he has acted without jurisdiction. But if he has remained outside the parameters of the contract and has construed the provisions of the contract, his award cannot be interfered with unless he has given reasons for the award disclosing a error apparent on the face of it", (emphasis supplied) 26. The contractor-claimant in Associated Engineering Company under claim VI. claimed payment for extra lead of water, i.e. 3 K.Ms. over the specified lead of 2 K.Ms, in the agreement, for items 4.5.6.10 and 11 of Schedule. The Government counsel referred to the specific provisions of the agreement regarding lead water which provided that contractor had to make his own arrangements for the supply of water at work site for all purposes including quarry. There was no provision in the contract for making any payment to the Contractor for water brought by him to the site. In the absence of the provision, it was contended, it was not open to the arbitrator to have awarded extra amount for additional lead of water. The High Court accepted the contention of the State holding "in view of the unequivocal agreement that the contractor should make his own arrangements for supply of water for the purpose of curing, the award of compensation is outside the purview of the agreement and is vitiated". Under claim No. IX. contractor claimed extra expenditure incurred due Co flattening of canal slopes and consequent reduction in top width of banks used as roadway. The arbitrator allowed the claim for 50% of the work done at extra rate of rupees 4/- per sq. mtr. of lining work. Rejecting the contention of the contractor, the High Court held that contract agreement did not provide for any payment whatsoever for the maintance of canal slopes consequent reduction in top width of banks. High Court found that it was the responsibility of the contractor to repair the banks and the contract agreement did not contain any provision for payment of any amount towards the decrease in the width or otherwise. High Court found that it was the responsibility of the contractor to repair the banks and the contract agreement did not contain any provision for payment of any amount towards the decrease in the width or otherwise. The Apex Court in appeal held that the High Court was right in stating that the arbitrator acted outside the contract in awarding extra claims. Their Lordships upheld the judgment of the High Court and observed in para 27 of the judgment: . "A deliberate departure from contract amounts to not only manifest disregard of his authority or misconduct on his part, but it men- tantamount to a mala fide action. A conscious disregard of the law or the provisions of the contract from which he has derived his authority vitiates the award". (emphasis supplied) 27. An arbitrator is bound to act within the parameters of the j contract agreement. It is not open to him to decide a question otherwise than in accordance with the contract. In para 29 of the judgment, the Apex Court in Associated Engineering Co. ruled: "If the arbitrator commits an error in the construction of the contract, that is an error within his jurisdiction. But if he wanders outside the contract and deals with matters not allotted to him the commits a jurisdictional error......" 28. The arbitrator, as pointed out in Associated Engineering Co. cannot widen his jurisdiction "by deciding a question otherwise than in accordance with the contract. He cannot say that he does not care what the contract says. He is bound by it", 29. in the present case, the arbitrator, in my view, acted illegally in ignoring the provisions of the contract agreement as discussed above. The arbitrator in the present case, allowed claims in total disregard to the provisions of the contract agreement, thus exceeded his jurisdiction which falls within the mischief of Section 34(2)(a)(iv)of the Act. 30. To be fair to Mr. Kapil Dev Sood. learned counsel for the claimant-contractor, it may be noticed that the learned counsel relying upon H.P.S.E.B. v. RJ. Shah and Company. JT 1999 (3) SC 151.urged that the scope of interference with the award of the arbitrator under Section 34 is limited and the Court would stay its hands off even if the claim is unjustified. Kapil Dev Sood. learned counsel for the claimant-contractor, it may be noticed that the learned counsel relying upon H.P.S.E.B. v. RJ. Shah and Company. JT 1999 (3) SC 151.urged that the scope of interference with the award of the arbitrator under Section 34 is limited and the Court would stay its hands off even if the claim is unjustified. In R.J. Shah, the claimant contractor informed the Superintending Engineer that he had executed the work in excess of the deviation limit of 20% stipulated in the agreement and was entitled to the revision of the rates in respect of the works he had carried out beyond the deviation limit. It was contended on behalf of the appellant that on the correct interpretation of clause 12-A. the arbitator had no jurisdiction to revise the rates of any item merely because the over all value of the contract which was executed, had exceeded by 20%. The argument was that the contract permitted increase only if there was a deviation in individual items by more than20% and no increase was permitted if there was an overall increase of more than 20% without there being increase in individual items. On behalf of the respondent, it was submitted that the claim of the respondents for revised rates was based upon the interpretation of the contract and this point was specifically referred to the arbitrators and therefore, the award of the arbitrator was final. The award in that case was under the "1940 Act" and was a non-reasoned award. Reference was made to Associated Engineering Company and it was held that the ratio of that case was not applicable and it could not be sad that the arbitrator, in R.J. Shah Co.. traveled outside the bounds of the contract.The correspondence exchanged between the parties, prior to the making of the reference, indicated that the arbitrator was entitled to claim revision of rates and if so. what should be the revised rates. The construction placed on contract by the Contractor, it was observed by the Apex Court, could not be sad to be implausible. It was further observed that it cannot be sad that the award was in excess of the jurisdiction. It was clearly indicated that the arbitrators were required to interpret the terms of the contract and. therefore the decision thereon was final and binding on the parties. 31. It was further observed that it cannot be sad that the award was in excess of the jurisdiction. It was clearly indicated that the arbitrators were required to interpret the terms of the contract and. therefore the decision thereon was final and binding on the parties. 31. In the present case, as pointed out earlier, the contractor claimed and arbitrator awarded the market rates as claimed by the contractor, even within the permissible deviation limit of 50% and individual limit of 10% in disregard to the provisions of clause 12 of the agreement and. therefore, traveled outside the provisions of the contract agreement. The ratio in R.J. Shah and Company is not applicable in the facts and circumstances of this case. 32. In Bombay Housing Board (now the Maharashtra Housing Board/ v. Ms. Karbhase Naik and Co. Sholapur. AIR 1975 SC 763. certain alterations on the specifications were made by the contractor at the instance of the Government in building contract. The contractor informed the Engineer-in-charge about the rates which he would charge by notice. The contract agreement contained a clause that if additional or altered work for which no rate is specified in schedule of rates is ordered to be carried out before the rates are agreed upon, then the contractor shall inform the Engineer-in-charge of the rate which is his intention to charge and if Engineer-in-charge does not agree, he shall issue a notice in writing to cancel or to carry out such class of work and that if the contractor incurs any expenditure in regard thereto before the rates had been determined, then in such case, he shall only be entitled to be paid in respect of the work carried out or expenditure incurred by him previous to the date of determination of the rate as aforesaid according to such rate or rates as shall be fixed by the Engineer-in-charge. A question arose whether the contractor could claim for additional or altered work on the basis of the rate quoted by him in the notice. The Apex Court held that until the rates were settled by an agreement, the contractor was under no obligation to cam out the additional or altered work. Their Lordships observed: "We are not satisfied that since the Engineer-in- charge did not exercise his liberty to cancel the order, there was a concluded contract between the parties. The Apex Court held that until the rates were settled by an agreement, the contractor was under no obligation to cam out the additional or altered work. Their Lordships observed: "We are not satisfied that since the Engineer-in- charge did not exercise his liberty to cancel the order, there was a concluded contract between the parties. The failure to cancel the order for additional or altered work on receipt of the notice specifying the rate would not result in an agreement as to the rate to be charged. The clause only gave the Engineer-in- charge the liberty to cancel the order and get the work done by another contractor. The fact that an express power was given to the Engineer-in-charge by the clause to cancel "the order if he did not agree to the rate would not mean that failure to cancel the order would result in an agreement as to the rate or rates. The proviso in clause 14 was intended to cover cases where the notice specifying the rate was not given by the contractor, or where, even though the notice was not given, the Engineer-in- charge did not cancel the order in the event of his not agreeing to the rate specified in the notice. We are of the view that in the presence of some positive act on the part of the Engineer-in- charge, agreeing to the rate, there was no agreement as to the rate and that the respondent was not bound to carry out the work". (emphasis supplied) 33. In the present case, merely because respondent wrote to the Engineer-in-charge that he will charge the market rates for the additional, alternative and substituted works, would not entitle him to the charges claimed by him in the absence of response from the Engineer-in-charge. particular., when the deviations were within the permissible limits as stipulated in the agreement. 34. Against claim No.3. the arbitrator has awarded rupees 1.92.657/- for the wood work undertaken by him. This claim again is beyond the scope of the terms of agreement. It is the admitted position that there was no change of specifications so far the wood work is concerned. The contract agreement provided for the execution of this work. According to the reasoning of the arbitrator, though originally the windows and doors chokets were to be made in wood but at a later date, in a meeting. It is the admitted position that there was no change of specifications so far the wood work is concerned. The contract agreement provided for the execution of this work. According to the reasoning of the arbitrator, though originally the windows and doors chokets were to be made in wood but at a later date, in a meeting. Chief Engineer proposed to substitute the chokets with steel chokets and steel section of the windows. Claimant submitted his rates on 18.10.1984. However, it was finally decided that the specifications would not be changed and work will be executed as per agreement and drawings and details as supplied to the complainant. It so happens that the claimant by a letter of 2.7.1985 informed the Objector that as the details of the wood work were supplied to him late, therefore, he could not procure the timber and in the meanwhile, the rates of the timber had gone up considerably and. therefore, he would charge 100% extra rates for the items of the wood work quoted by him in his original letter. The Objector Board did not respond to this communication. According to the arbitrator, in the absence of the response, the rates quoted by the claimant would be deemed to have been accepted by the Board. 35. It is admitted by the Objector that the detailed drawings of the wood work were supplied late to the contractor and. therefore, claimant becomes entitled for extra payment on account of the rise in the prices of timber. However, such rise has to be considered in terms of clause 10 (c) of the agreement which clearly provides that if during the progress of the work, the prices of any material incorporated in the work increase exceeding 10% of the price prevailing at the time of acceptance of the tender of the work, the contractor would be entitled to such increased price for the execution of the work relating to that item. For that purpose, the Contractor has to keep such books of account and other documents as are necessary to show the amount of any increase claimed and shall produce for inspection of the duly authorized representative of the Board. The Contractor, it is convenanted. shall give notice to the Engineer- in-charge claiming increase pursuant to clause 10(c) together, with all information relating to such increase. Procedure contemplated under clause 10(c) was not followed by the contractor. The Contractor, it is convenanted. shall give notice to the Engineer- in-charge claiming increase pursuant to clause 10(c) together, with all information relating to such increase. Procedure contemplated under clause 10(c) was not followed by the contractor. It is apparent that the arbitrator acted illegally and beyond his jurisdiction in allowing 100% increase as claimed by the claimant dehors and in disregard to the provision of the contract agreement. 36. During the course of hearing, it was brought to the notice of the Court that the Arbitrator was the Superintending Engineer and overall Incharge of the works subject of arbitration and he. as Superintending Engineer, was responsible to see that the letters written by the contractor for the increase in the rates were health with and responded. If this is true, then it would have been better for the Arbitrator to have not accepted the arbitration. I say no more. 37. To conclude, the impugned award, for the reasons recorded above, being beyond the scope of agreement is without jurisdiction and! is therefore liable to be set-aside. 38. In result, the objections are allowed. The impugned award is set- aside. The case is remitted back for decision afresh. The Chairman of the Board may consider to appoint another Arbitrator in this case for the just and proper decision in the light of the observations made herein above. -