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2004 DIGILAW 221 (JK)

Northern Sanitation v. Hotel Corp. Of India

2004-07-27

Y.P.NARGOTRA

body2004
The Arbitrator, Shri M.L. Bhat, has filed his award on 12.8.1996 for making it rule of the court. On filing of the award notice was issued to the parties. The petitioner-contractor has not objected to the award but the respondent-corporation filed an application u/s 30/33 of the Arbitration Act for setting aside of the award. The petitioner-contractor objected to the objections i.e. application u/s 30/33 AA inter alia on the ground that it was time barred and as such could not be taken into consideration. A Learned Single Judge by his order dated 22.7.1998 accepted the plea of the contractor-petitioner and held the same to be time barred, consequently dismissed the application. Aggrieved by the dismissal of application u/s 30/33 the respondent-corporation went in appeal before the Honble Division Bench and the learned Division Bench by its order dated 5.8.2002 allowed the appeal and held the application u/ s 30/33 to be within time and remitted the case back for disposal of application u/s 30/33 AA on merits in accordance with law. This is how the matter has come up before this court. 2. From the pleadings of the parties following issues have been framed for determination:- "1. Whether the arbitrator has misconducted himself in arbitral proceedings, if so whether the award is liable to be set aside? OP Objector. 2. Relief. The parties have filed affidavits by way of evidence. BACKGROUND. 3. The respondent-corporation floated tenders for plumbing and sanitary installations in the rooms of Centaur Lakeview Hotel at Srinagar in 1980. The petitioner being a plumbing and sanitary contractor submitted its tender. Same was accepted and the work was allotted to the petitioner on 3.11.1980. An agreement between the parties was executed in respect of the said work. As per the agreement work in respect of 50 rooms was to be completed by the contractor by 15.6.1981 and the remaining work was to be completed by 15.4.1982. However, the nature of the work to be executed by the petitioner was such that it depended upon execution of civil works by the other agencies to whom contract for said work stood allotted. Finished sanitary materials were also to be supplied by the corporation to the contractor. However, the nature of the work to be executed by the petitioner was such that it depended upon execution of civil works by the other agencies to whom contract for said work stood allotted. Finished sanitary materials were also to be supplied by the corporation to the contractor. Site for execution of the work was not made immediately available to the contractor but it continued to be handed over in piecemeal and therefore the contractor could complete the work only in the year 1988. After completion of work the contractor handed over the site to the respondent on 5.8.1988. During the execution of work up to 25.1.1985 disputes arose between the parties and therefore the petitioner invoked arbitration clause by filing a petition u/s 20 AA in Srinagar Bench of this court. Prayer for reference of the disputes to the arbitrator was allowed and consequently in terms of the agreement two arbitrators each nominated by the contractor and the respondent were appointed. Both the arbitrators entered upon the reference and made and published a non-speaking award on 12.11.1986. The award passed by the arbitrators came to be challenged by the respondent-corporation. The same was set aside by a learned Single Judge of this court by order dated 9.11.1989. Aggrieved by the setting aside of the award by the learned Single Judge the contractor petitioner went in appeal before the Honble Division Bench and the Division Bench remitted the matter back to the third arbitrator (Umpire) Mr. Swami Dayal, retired Chief Engineer CPWD with direction to act as sole arbitrator. The arbitrator so appointed in terms of the judgment of the Division Bench entered upon the reference and made his non-speaking award on 26.1.1991. The respondent-corporation challenged the award by filing application u/s 30/33 AA which was dismissed by the learned Single Judge vide his order dated 27.8.1992 passed on AA 207/1991 and the award was made rule of the court. The corporation again filed an appeal, CIMA 1/1993 before the Division Bench, which was dismissed, vide its judgment dated 15.5.2001. Against the judgment of the Division Bench the corporation filed an S.L.P. before Honble Supreme Court but the same was also dismissed on 29.11.2001. Thus the disputes which had arisen between the parties up to 25.1.1985 came to be finally settled by the order dated 29.11.2001 passed by the Honble Supreme court. Against the judgment of the Division Bench the corporation filed an S.L.P. before Honble Supreme Court but the same was also dismissed on 29.11.2001. Thus the disputes which had arisen between the parties up to 25.1.1985 came to be finally settled by the order dated 29.11.2001 passed by the Honble Supreme court. The petitioner however continued to execute the work up to 5.8.1988, the date on which ultimately after execution of the work the site was handed over back to the corporation by the petitioner. PRESENT CONTROVERSY. 4. For the intervening period between 25.1.1985 to 5.8.1988 the petitioner raised fresh disputes and for invoking arbitration clause filed an application u/s 20. Said application was allowed by this court by its order dated 1.6.1992 and appointed the arbitrator in terms of the arbitration agreement with direction to make award within four months from the date of order of reference. However said arbitrator failed to enter upon the reference, therefore an application came to be filed for changing the arbitrator. The application was allowed by order dated 8.12.1994 and Mr. Justice M.L.Bhat (retired) was appointed as the sole arbitrator. Learned Arbitrator entered upon the reference and made and published his award on 3.5.1996. As already said on filing the same notices were issued and Respondent Corporation has filed an application for setting aside the award and on the basis of pleadings above quoted issues have been framed. 5. I have heard the learned counsel for the parties and perused the record thoroughly. 6. Mr.Thakur learned counsel for the objector-corporation has submitted that the award of the arbitrator is bad in law and merits to be set aside as the arbitrator has misconducted the proceedings by ignoring the express conditions of the contract agreement. He has argued that the claims of the petitioner-contractor basically arise out of the alleged delay on the part of the corporation in handing over the site to the petitioner, for various reasons including the slow progress of work by the other contractors, idling of labour, escalation of prices during the extended period of contract, non-availability of owners supply material in time. He submits that the claims made by the petitioner on account of said factors were wholly untenable and could not be entertained in view of the specific provisions of the contract agreement executed between the parties.. He submits that the claims made by the petitioner on account of said factors were wholly untenable and could not be entertained in view of the specific provisions of the contract agreement executed between the parties.. He has submitted that this objection was raised before the arbitrator and his attention was invited to the relevant clauses of the agreements but the arbitrator ignored the same and thus traveled beyond the scope of the agreement and therefore the award made by the arbitrator is bad and the arbitrator is guilty of legal misconduct and his award deserves to be set aside. 7. The Petitioner raised the following claims against the respondent, which the learned Arbitrator has awarded as follows:- Claims Award Claim No. 1: Amount Rs. 12,72780-00 Rs. 12,72,780.00 with interest @ 18% P.A, w.e.f. = 7.11.87 till payment. Claim No. 2 Amount Rs. 7,85,720.77 Rs. 7, 85,720.77 Claim No. 3 Amount Rs. 10,83,557.00 Rs. 10,83,557.00 with 18% interest w.e.f. 7.11.87. Claim No. 4 Amount Rs. 1,90,916.00              Rs. 1,90,916.00 Claim No. 5 Amount Rs. 2,04,050.00 Rs. 2,04,050.00 with interest @ 18 % p.a. w.e.f. 7.11.87. Claim No. 6 Amount Rs. 1,27,268.33 Rs. 1,27,268.33. Claim No. 7 Amount Rs. 1,42,100.00 Rejected. Claim No. 8 Amount Rs. 43,368.00 Rs. 43,368.00 Claim No. 9 Amount Rs. 49,206.65 Rs. 40,206.65 with interest @ 18 p.a. w.e.f. 31.10.1987. Claim No. 10 Amount of interest @ 24% p.a. claimed. Rejected. Claims No. 11. Amount of Rs.50,000.00 as costs of the proceedings. Left to be decided by the Court. TOTAL 36,47,804.75.00 8. As regards the counter claims of the respondent Corporation the arbitrator has allowed one claim and held it entitled to Rs.9, 20,000.00 with interest @ 15% p.a. till date of payment from the contractor-petitioner to be set off. The Contractor has not challenged the award. 9. Mr. D.S.Thakur learned counsel for the respondent has challenged the award to the extent it allows the claims in favour of the contractor. According to Mr.Thakur the arbitrator has in contravention of the express terms of the contract, entertained the claims and awarded the same by misinterpreting the various clauses of the agreement by holding that there was fundamental breach of the agreement. According to Mr.Thakur there was no scope of fundamental breach when the claims of the petitioner stood covered by express conditions of the contract. According to Mr.Thakur there was no scope of fundamental breach when the claims of the petitioner stood covered by express conditions of the contract. He argues that the arbitrator has traveled beyond the agreement so can be said to have legally misconducted the proceedings and therefore the award is liable to be set aside. 10. Per contra the contention of Mr. Sharma learned counsel for the petitioner-contractor is that in the tender document there is stipulation of time schedule for completion of the work. The purpose of giving time schedule in the tender notice is to enable the contractor to quote the rates accordingly. Thus when the rates are accordingly quoted by the contractor then he is entitled to keep the time schedule so that losses on account of escalation of prices, idling labour, blockage of money etc. do not occur as after all one engages in the execution of the contract for earning profits lawfully and in a case where delay occurs due to the fault of the contractor then levy of compensation clause may be invoked against him or even his contract can be cancelled, but if the delay is on the part of the contractee would the contractor be remediless. The rule is well accepted that where there is a fundamental breach of the agreement say the site is not made immediately available to the contractor and delay is thus caused in completion of the work, the contractee would be liable to compensate the contractor for consequential losses. He further submits that in that case contractee cannot avoid the liability by taking shelter under various clauses of the agreement. Mr. Sharma further submits that if a dispute is referable for arbitration and is referred for determination to an arbitrator and the arbitrator makes the award after interpreting the various clauses of the agreement, his award is not open to challenge and cannot be set aside on the ground that he has interpreted the contract agreement wrongly, being the sole judge of facts and law. He argues that court cannot look into the various clauses of the agreement for judging the correctness of the view of the arbitrator in interpreting them. 11. Learned Arbitrator, for considering the claims and counter claims of the parties, formulated the following issues:- 1. He argues that court cannot look into the various clauses of the agreement for judging the correctness of the view of the arbitrator in interpreting them. 11. Learned Arbitrator, for considering the claims and counter claims of the parties, formulated the following issues:- 1. Are the claims preferred by the claimants in their claim petition not tenable under the terms and conditions of the agreement governing the contract in question having regard to the various preliminary objections raised by the respondent in their counter-claim petition? 2. How much amount is due to be paid to the claimant in respect of various claims preferred by him in his claim petition? 3. If issue No. 2 is decided in favour of the claimants are they entitled to receive any interest on the amount, which is found due to them, if so for what period and at what rate? 4. Are the respondents entitled to receive any amount from the claimants on account of their counter claim petition, if so how much? 5. If issue No.4 is decided in favour of the respondents are they entitled to receive any interest on the amount, which is found due to them. If so for what period and at what rate? 6. Relief. 12. The decision of the arbitrator on issue No. 1 primarily is the basis of the award being related to the maintainability of the claims of the contractor. Learned Arbitrator has decided this issue in favour of the contractor. The arbitrator held that time was not the essence of the contract because of the extension clauses. The arbitrator also held exemption clause of the agreement to the effect that escalation in price of the material cannot be claimed by the contractor and delay in execution of the work on the part of the respondent would not entitle the contractor to claim damages, cannot be enforced against the contractor by observing:- "While relying on the exemption clause the respondents have lost sight of an important clause of the schedule which enjoined upon them to hand over possession of the sites in a phased manner to the claimants latest by 30th July 1980. Unless possession of the site was handed over to the claimants it was not possible for the claimants to execute the work. Unless possession of the site was handed over to the claimants it was not possible for the claimants to execute the work. The importance of execution of the work by the claimants is reflected by the various letters, which the respondents had addressed to the other agencies with whom the claimants were supposed to coordinate. The coordination of the work with other agencies was not possible because the site had not been handed over to the claimants along with other agencies and some portion of the area where the work was to been executed was used by the other agencies of the additional agreement the respondents seem to have been persistently requesting the other agencies to complete their part of the work so as to enable the plumbing contractor to execute the work. The delay in handing over of the site to the claimants is the fundamental breach committed by the respondents and this breach would not allow them to claim any exemption or exclusion from the consequences, which would flow from the fundamental breach. The other fundamental breach caused by the respondents was of the non-supply of departmental material to be used by the claimant under the schedule to the agreement for execution of the work. The supply of material was delayed beyond time and therefore for any delay caused by the respondents the claimants cannot be held responsible. In case of fundamental breach of the contract by the respondents the claimant will not be debarred from claiming extra cost which had to be incurred by him because of non delivery of site and non supply of all essential materials by the respondents." The learned arbitrator has also observed:- "The contract is reciprocal agreement between the parties and any clause which is oppressive and are against the fundamental rules of law of contract cannot be allowed to operate. However in this case the contract itself says that it is obligatory for the respondents to deliver the site by 30th July 1980 to the claimants which site does not seen to have been delivered in its entirety to the claimants even up to the year ending 1985. However in this case the contract itself says that it is obligatory for the respondents to deliver the site by 30th July 1980 to the claimants which site does not seen to have been delivered in its entirety to the claimants even up to the year ending 1985. The delay is not of weeks or months but it is an unreasonable delay of many years, which in the words of the respondents has also hampered the execution of the work by the claimants because other agencies had not done part of their work. The work to be done by the claimants was dependent on the completion of the work by the other agencies. I am not here to consider the fault of other agencies, the fact remains that the claimants were prevented for no fault of theirs from executing the work and if for a period of 5 to 6 years they have not been able to execute the work they cannot be asked to forego the cost of escalation which must have taken place during the intervening period." It has also been observed by him:- "The exemption clause or the exclusion clause appears to have been intended to be operative for the period which was fixed in the contract for execution of the work. At any rate this clause would not operate beyond two months from the date of the execution of the additional agreement dated 25th April 1984. The contract was not rescinded nor was claimant prevented from executing the work after the expiry of the period prescribed in the additional agreement. On the other hand it appears that the respondents felt helpless because other agencies such as marble contractor and civil contractor had not completed their part of work and execution of the contract by the claimants was therefore hampered on this account alone." 13. Mr. Sharma learned counsel for the contractor further contends that disputes arising during the execution of the contract work were referred by the court to the arbitrator. One of the issues before the arbitrator was whether in view of the said exemption clauses of the agreement claims of the contractor could be awarded. The arbitrator construed and interpreted those clauses of the agreement and held that the respondent corporation was not entitled to take shelter under those clauses and avoid compensation. One of the issues before the arbitrator was whether in view of the said exemption clauses of the agreement claims of the contractor could be awarded. The arbitrator construed and interpreted those clauses of the agreement and held that the respondent corporation was not entitled to take shelter under those clauses and avoid compensation. This being the position the court cannot set aside the award by holding that it was contrary to bargain. FUNDAMENTAL POINT OF LAW INVOLVED IN THE CASE. 14. From the submissions made at the bar by the learned counsel for the parties the fundamental question involved in the case is whether it is permissible for the court to look into the terms and conditions of the agreement when the award is challenged on the ground that it has been passed in favour of the contractor by overlooking or ignoring the express terms of the agreement containing bar to the entertainment of the claim awarded ? 15. An award can be set aside under Section 30 of the Arbitration Act if there is an error apparent on the face of the award. 16. What would be an error apparent on the face of the award? An error apparent on the face of award would arise when the reasons given for decision by the Arbitrator either in the award or in any document incorporated with it, are based upon an erroneous legal proposition. This would however be subject to one exception that is when parties themselves refer a question of law specifically to an arbitrator for determination and the arbitrator decides the question, his decision however erroneous shall be binding upon the parties. If there is no such error apparent on the face of the award and the decision of arbitrator is based upon the appreciation of evidence and record. It is not open to the court to re-appreciate the evidence for reaching a conclusion other than that of the arbitrator. 17. In M/S Sudarshan Trading Co. v. Govt. If there is no such error apparent on the face of the award and the decision of arbitrator is based upon the appreciation of evidence and record. It is not open to the court to re-appreciate the evidence for reaching a conclusion other than that of the arbitrator. 17. In M/S Sudarshan Trading Co. v. Govt. of Kerala, AIR 1989 SC 890 their lordships held as under:- "An award of arbitration can be set aside on the ground of error of law apparent on the face of the award only when in the award or in a document incorporated with it, as for instance a note appended by the arbitrator stating the reasons for his decision, there is found some legal proposition which is the basis of the award and which is erroneous." Their Lordships further held: - "It is not open to the court to probe the mental process of the arbitrator and speculate where no reasons are given by the arbitrator, as to what impelled the arbitrator to arrive at his conclusion. See the observations of this court in Hindustan Steel works construction Ltd. v. C. Rajasekhar Rao (1897) 4 SCC 93. In the instant case the arbitrator has merely set out the claims and given the history of the claims and then awarded certain amount. He has not spoken his mind indicating why he has done what he has done; he has narrated only how he came to make the award. In absence of any reasons for making the award, it is not open to the court to interfere with the award. Furthermore in any event reasonableness of the reasons given by the arbitrator cannot be challenged. Appraisement of evidence by the arbitrator is never a matter, which the court questions and considers. It the parties have selected their own forum; the deciding forum must be conceded the power of appraisement of the evidence. The arbitrator is the sole judge of the quality as well as the quantity of evidence and it will not be for the court to take upon itself the task of being a judge on the evidence before the arbitrator. The same principle has been stated in Alopi Prasad and Cons Ltd. v. Union of India (AIR 1960 SC 588). The arbitrator is the sole judge of the quality as well as the quantity of evidence and it will not be for the court to take upon itself the task of being a judge on the evidence before the arbitrator. The same principle has been stated in Alopi Prasad and Cons Ltd. v. Union of India (AIR 1960 SC 588). 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 asset 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." Their lordships further observed:- "An award may be remitted or set aside on the ground that the arbitrator in making it had exceeded his jurisdiction and evidence of matters not appearing on the face of it will be admitted in order to establish whether the jurisdiction had been exceeded or not because the nature of the dispute is something which has to be determined out side the award-whatever might be said about it in the award or by the arbitrator." 18. And in M/S Tarapore and Co. v. Cochin Shipyard Ltd., Cochin, AIR 1984. S.C. 1072 the Supreme Court has held:- "If a question of law is specifically referred and it becomes evident that the parties desired to have a decision on the specific question from the arbitrator about that rather than one from court, then the court will not interfere with the award of the arbitrator on the ground that there is an error of law apparent on the face of the award even if the view of law taken by the arbitrator does not accord with the view of the court. The view that common law courts were very reluctant to part with its jurisdiction has hardly any relevance where a specific question of law including the one touching the jurisdiction of the arbitrator is referred to the arbitrator for his decision. The view that common law courts were very reluctant to part with its jurisdiction has hardly any relevance where a specific question of law including the one touching the jurisdiction of the arbitrator is referred to the arbitrator for his decision. Even if the decision of the arbitrator does not accord with the view of the court, the award cannot be set aside on the sole ground that there is an error of law apparent on the face of it.(1913)2 KB 32 AIR 1955 SC 468." 19. The Arbitrator is the sole Judge of the case of the parties having been chosen by them. His decision is final and binding on the parties and can be challenged only on the grounds specified in Section 30/33 of the Arbitration Act. For deciding the dispute between parties it is within the domain of jurisdiction of the Arbitrator to interpret various clauses of the agreement. 20. In case titled P.V.Suibba Naidu and others v. Government of A.P. and others, (1998) 9 SCC 407, it was held as follows:- "In the present case all the claims in question were expressly referred to arbitrator and were raised before the arbitrator. The High court was therefore not right in examining the terms of the contract or interpreting them for the purpose of deciding whether these claims were covered by the terms of the contract. 21. In the case of K.R.Reveendranathan V. State of Kerala, this court relying upon the decision in Hindustan construction Co.Ltd. V State of J&K has held that the court by purporting to construe the contract cannot take upon itself the burden of saying that it was contrary to the contract and as such beyond jurisdiction. This is precisely what has been done in the present case. In the case of Sudarshan Trading Co. v. Govt. of Kerala this court has made a distinction between error apparent on the face of the award and lack of jurisdiction. It has held that only in a speaking award can the court look into the reasoning of the arbitrator. It is not open to the court to probe the mental process of the arbitrator, or speculate on what impelled an arbitrator to arrive at his conclusion. An award can be set-aside on the ground that the arbitrator in making it, had exceeded his jurisdiction. It is not open to the court to probe the mental process of the arbitrator, or speculate on what impelled an arbitrator to arrive at his conclusion. An award can be set-aside on the ground that the arbitrator in making it, had exceeded his jurisdiction. But 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. The same view has been reiterated in Hindustan Construction Co. v. State of J&K." 22. And then in (1998) 9 SCC 410, K.R. Raveendranathan v. State of Kerala, it was held:- "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 v. State of J&K. In particular, it drew our attention to para 10 of the judgment and the portion extracted from the decision in Sudarshan 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." 23. If interpretation of the various clauses of the agreement is within the jurisdiction of the Arbitrator it can be argued and in fact has been argued that where in exercise of the power interprets the various clauses of the agreement including the exemption clauses then where is the scope for the court to look into the various clauses of the agreement to say that Arbitrator has committed the error apparent on the fact of the award and has traveled outside the contract. 24. There is a distinction between an error apparent within the jurisdiction and an error in excess the jurisdiction of the Arbitrator. If the error is within the jurisdiction the award cannot be set aside but where the Arbitrator has traveled beyond the jurisdiction the award would be without jurisdiction and shall not be upheld. How to determine whether the arbitrator has traveled outside his jurisdiction? 25. In case titled Himachal Pradesh SEB v. R.J.Shah and Co. If the error is within the jurisdiction the award cannot be set aside but where the Arbitrator has traveled beyond the jurisdiction the award would be without jurisdiction and shall not be upheld. How to determine whether the arbitrator has traveled outside his jurisdiction? 25. In case titled Himachal Pradesh SEB v. R.J.Shah and Co. (1999) 4 SCC 410, their lordships of the Supreme court held as follows:- "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 to 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 dispute made to the arbitrators limited for the purpose of seeing whether the arbitrator has the jurisdiction to decide the claim made in the arbitration proceedings." 26. And then in State of U.P. v. Allied Construction, (2003) 7 SCC 396 it was held as under:- "Any award made by an arbitrator can be set aside only if one or the other terms specified in section 30 and 33 of the Arbitration Act 1940 is attracted. It is not a case where it can be said that the arbitrator has misconducted the proceedings. It was within his jurisdiction to interpret clause 47 of the agreement having regard to the fact-situation obtaining therein. It is submitted that an award made by an arbitrator may be wrong either on law or on fact and error of law on the face of it could not nullify an award. The award is a speaking one. The arbitrator has assigned sufficient and cogent reasons in support thereof. It is submitted that an award made by an arbitrator may be wrong either on law or on fact and error of law on the face of it could not nullify an award. The award is a speaking one. The arbitrator has assigned sufficient and cogent reasons in support thereof. Interpretation of a contract, it is trite, is a matter for the arbitrator to determine (see Sudarshan Trading Co. v. Govt. of Kerala). Section 30 of the Arbitration Act,1940 providing for setting aside an award is restrictive in its operation. Unless one or the other condition contained in section 30 is satisfied an award cannot be set aside. The arbitrator is a judge chosen by the parties and his decision is final. The court is precluded from reappraising the evidence. Even in a case where the award contains reasons, the interference therewith would still be not available within the jurisdiction of the court unless of course the reasons are totally perverse or the judgment is based on a wrong proposition of law. An error apparent on the face of the records would not imply closer scrutiny of the merits of documents and materials on record. Once it is found that the view of the arbitrator is plausible one, the court will refrain itself from interfering." 27. The Supreme Court laid down the test for determining whether the arbitrator has traveled beyond his jurisdiction in case Rajasthan State Mines and Minerals Ltd. v. Eastern Engineering Enterprises A.I.R. 1999 S.C. 3627, which reads as under :- "44. 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 traveled beyond his jurisdiction, it would be necessary to consider the agreement between the parties containing the arbitration clause. Arbitrator acting beyond his jurisdiction- as a different ground from the error apparent on the face 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 raise a particular claim before the arbitrator. If there is a specific term 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 of 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 jurisdictional error 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. 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. (AIR 1988 SC 1166) (supra) by relying upon the following passage from M/s Alopi Prasad v. Union of India (1960) 2 SCR 793 : AIR 1960 SC 588) 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 nto 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 not at all anticipate, a wholly abnormal use or fall in process, a sudden depreciation of currency, an unexpected obstacle to execution or the like. There is no general liberty reserved to the courts to absolve a party from liability to perform his part of the contract merely because of 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 manifests the disregard of his authority or misconduct on his part but it may tantamount to mala fide action. (j) 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 dispute according to law." 28. Then in case titled Pure Helium India Pvt. Ltd v. Oil and Natural Gas Commission, (2003) 8 SCC 593 the Supreme Court after noticing the case law observed and held as follows:- "The principle of law laid down in the aforementioned decisions leave no manner of doubt that the jurisdiction of the court in interfering with a non-speaking award is limited. The upshot of the above decisions is that if the claim of the claimant is not arbitral having regard to the bar/prohibition created under the contract, the court can set aside the award but unless such a prohibition/bar is found out, the court cannot exercise its jurisdiction under section 30 of the Act. The High court therefore misdirected itself in law in posing a wrong question. It is true that where such prohibition exists, the court will not hesitate to set aside the award." Therefore, in view of the above legal position discussed above, there is no force in the submission of Mr. Sharma Learned Senior Counsel for the Contractor that it is not permissible for the court to look into the terms of the contract once the arbitrator has interpreted the various clauses of the contract and awarded the claims of the contractor. As already said the terms of contract can be looked into by the court to find out whether the arbitrator has traveled outside the contract by entertaining the claims of the contractor and for that purpose the agreement would be required to be seen to find out if the agreement specifically bars certain claims from being raised and yet those claims have been awarded then the award would not merit to be upheld. 29. In (1999) 9 S.C.C. 283,Rajasthan State Mines & Minerals Ltd. V. Eastern Engineer Enterprises and others, the Supreme Court held:- "23. 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 and 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." 30. Admittedly, there are certain clauses in the agreement which specifically bar raising of some of the claims by the contractor. Learned Arbitrator has held that the respondent corporation not entitled to take shelter under these exemption clauses. Before dealing with the award claim wise in the light of the exemption clauses of the agreement it would be proper to examine the correctness of the view of the Arbitrator expressed in the award. 31. Learned Arbitrator has held that the respondent corporation not entitled to take shelter under these exemption clauses. Before dealing with the award claim wise in the light of the exemption clauses of the agreement it would be proper to examine the correctness of the view of the Arbitrator expressed in the award. 31. Learned Arbitrator has held that time was not the essence of the contract and rightly so because contract itself envisaged for the extension of the period for completion of the work. Admittedly the work has been completed by the Contractor after being granted extensions by the Corporation. Clause ix of the agreement though stipulated that entire work would be completed by 15th April 1982 but also stipulates:- "The above dates are in accordance with the tender issued to you and discussion took place between you and us from time to time,. If there is any delay in gradual handing over of the areas for work from our side, suitable extension of time will be granted but no additional claims will be entertained for the same." Learned Arbitrator has come to the view that there was failure of the Corporation in handing over the site of the work to the Contractor therefore the Corporation could not be permitted to take shelter under various exemption clauses of the agreement. 32. Admittedly the execution of sanitary works allotted to the contractor depended upon the execution of other civil works allotted to other agencies. The contractor was aware of this fact and for the said reason clause 25 appears to have been incorporated in the agreement. It is because of the delay caused in execution of civil work by other agencies, delay in completion of the work by the Contractor/petitioner has been caused. Assuming there was some delay attributable to the Corporation also, it by itself would not cause any fundamental breach of the agreement for the reason that agreement of the parties itself provides as to how the situation would be dealt with. Under the terms of the agreement the Contractor/Petitioner would have become entitled to extension of time for completion of work and it is not his case that extensions were not granted resulting in breach of the agreement. Under the terms of the agreement the Contractor/Petitioner would have become entitled to extension of time for completion of work and it is not his case that extensions were not granted resulting in breach of the agreement. Under terms of the agreement the contractor/petitioner availed the extensions and after having availed the same he could not be permitted to say that exemption contained in clause(ix) of the agreement be not allowed to be claimed to the Corporation/respondent. Once the parties conclude the bargain into the terms of an agreement, they are bound by the same and their respective rights are to be decided in terms of the agreement. Learned Arbitrator has observed that it was obligatory for the respondents to deliver the site by 30.07.80 which does not seem to have been delivered even up to the year 1980, the delay of about 5 years hampered the completion of the work causing loss to the contractor. Learned Arbitrator appears to have missed to take notice of the fact that disputes put up for determination before him admittedly pertained to the period between 25.1.1985 to 5.8.1988 and therefore delay occurring during this period only was relevant. Be it so the fact remains that delay caused in handing over the site stood compensated by granting of suitable extension for completion of the work to the contractor. Clause (ix) barred the entertainment of any claim of the contractor in respect of the delay. Could the respondents be debarred from claiming the benefit of the exemption clause of the agreement by the Arbitrator? 33. In Bharat Coking Coal Ltd. V. Annapurna Construction, (2003) 8 SCC 154, the Supreme Court has held: - "21. In Associated Engg. Co. v. Govt. of A.P. this Court clearly held that the arbitrators cannot travel beyond the parameters of the contract. In Sudershan Trading Co. v. Govt. of Kerala this Court has observed that an award may be remitted or set aside on the ground that the arbitrator in making it had exceeded his jurisdiction and evidence of matters not appearing on the face of it, will be admitted in order to establish whether the jurisdiction had been exceeded or not, because the nature of the dispute is something which has been determined outside the award, whatever might be said about it in the award by the arbitrator. This Court further observed that an arbitrator acting beyond jurisdiction is a different ground from the error apparent on the face of the award. 22. There lies a clear distinction between an error within the jurisdiction and error in excess of jurisdiction. Thus, the role of the arbitrator is to arbitrate within the terms of the contract. He has no power apart from what the parties have given him under the contract. If he has traveled beyond the contract, he would be acting without jurisdiction, whereas if he has remained inside the parameters of the contract, his award cannot be questioned on the ground that if contains an error apparent on the fact of the record." 34. Learned Arbitrator in my considered view erred in law in holding that respondent/corporation had committed `fundamental breach of agreement as such was not entitled to take shelter under various exemption clauses to avoid its liability to compensate the contractor for the losses incurred due to the delay in handing over the site. The claims of the contractor were to be adjudged in accordance with the provisions of the agreement of the parties including exemption clauses of the agreement. 35. In Indu Engineering Textiles Ltd. v. D.D.A, (2001) 5 SCC 691, it has been laid down that some of the grounds on which interference with an award is permissible are:- (i) There is violation of principles of natural justice in passing the award. (ii) There is an error apparent on the face of the award. (iii) The arbitrator has ignored or deliberately violated a clause in the agreement prohibiting the dispute of the nature entertained. (iv) The award on the face of it is based on a preposition of law, which is erroneous. The contention of Mr. Sharma that the award of the arbitrator cannot be questioned as the reference of dispute to him included the question whether claims of the contractor were arbitrable in the face of the exemption clauses, is without any force because no question of law was specifically referred under the reference. The reference is in general terms, therefore, the opinion of the Arbitrator even on a question of law is open to judicial scrutiny. 36. Now I proceed to deal with each claim awarded and objected to by the respondent. 37. The reference is in general terms, therefore, the opinion of the Arbitrator even on a question of law is open to judicial scrutiny. 36. Now I proceed to deal with each claim awarded and objected to by the respondent. 37. CLAIM NO.1 The claimants preferred the final bill for Rs.79,28,803/- out of which Rs.66,56,023/- were found accounted for by the respondents. Learned arbitrator came to the conclusion that the balance amount of Rs.12, 72,718/- is payable to the claimants by the respondents and therefore the said balance amount has been awarded on account of incorrect recording of measurements with interest at the rate of 18%P.A. from the date of submission of the final bill i.e. from 7.11.1987 till the payment. The finding of the arbitrator being based upon appreciation of evidence is required to be accepted as re-appraisal of the evidence by the court is not permissible under law and as such is accepted and upheld. 38. CLAIM NO. 2 Learned Arbitrator has allowed the claim of the claimants for Rs.7, 85,720.77 on account of statutory increase in wages of skilled and unskilled labour. The claimants claimed the said amount on account of increase in the wages of skilled and unskilled labour because of the increase in minimum wages on various dates. As per the claimants the execution of the work had been delayed due to non-availability of site therefore they were entitled to the increased wages, which they had to pay to the labour. The respondents in their objections filed before the arbitrator objected claim No.2 by saying:- "Contents of claim No.2 are denied. It is denied that the claimants is entitled to claim any amount on account of increase in the wages of the skilled and unskilled labour as alleged. Without prejudice to this, however, it is submitted that as far as the payment of escalation in wages is concerned the same has been certified in the final bills certified by the Architects and included in the certified amount of payment. In view of this nothing extra is payable to the claimant by the respondent and therefore claim No.2 merits outright rejection." Mr.Thakur learned counsel for the respondents submits that in view of clause 27 of the contract under the sub-head "variation in material costs and wages rates" the claim of the claimants is not tenable. In view of this nothing extra is payable to the claimant by the respondent and therefore claim No.2 merits outright rejection." Mr.Thakur learned counsel for the respondents submits that in view of clause 27 of the contract under the sub-head "variation in material costs and wages rates" the claim of the claimants is not tenable. Clause 27 reads:- "The contract rates shall be deemed to fully cover for all fluctuations in prices of materials, duties, excise, taxes, labour wages etc. and any claim for extras on such account by the contractor shall not be entertained." Admittedly the work order issued to the claimants contains the following clause also:- (a) Any increase in the minimum wages of labour due to any statutory order of central or local government after 31.8.1980 shall be reimbursable to you on actual basis subject to your paying the increased minimum wages." From the conjoint reading of above quoted clauses it is manifest that though generally contractor is not entitled to claim any amount on account of escalation of rates of labour wages during the execution of the contract but he would be entitled to claim the escalation of the rates in case of statutory order of central or local government after 31.8.1980 being issued for increasing the minimum wages of the labour. The learned arbitrator has not in his award specifically referred to any central or local government order in this behalf and the finding being silent cannot be reopened in view of the law laid down in Sudarshan Trading case (supra). The award of claim No.2 thus being not barred by any clause of the agreement merits to be accepted and accordingly is upheld. 39. CLAIM NO. 3. The arbitrator has granted Rs.10, 83,557/- on account of increase in the price of accessories and auxiliary materials like G.I.pipes, CI pipes, SW pipes, RCC pipes etc. with 18% P.A. interest w.e.f. 7.11.1987.The stand of the respondents in their objections was:- "In reply to claim No.3 it is submitted that the material escalation amounts accounted for in the final bill have also been included in the certified amount by the Architect and therefore nothing further is payable to the claimants by the respondents. This claim too merits outright rejection. This claim too merits outright rejection. It is submitted that the respondents are under no liability to compensate the claimant for increase in the price of materials other than the specific materials mentioned in the contract. In any case the increase in prices if any which the claimant alleges to have incurred is entirely on account of the claimants themselves not having completed the work in question within the contractual period and thus any claim to this effect at this stage is wholly misconceived and ought to be rejected." The contention of Mr.Thakur learned counsel for the respondents is that under clause 27 (quoted above) the claimants could claim the escalation price on the specified goods/items in the work order. The claim of the claimants included some items out side the said list of items and moreover the permissible escalation stood included in the final bill, as the learned arbitrator ought not to have allowed this claim. Since there was a condition in the agreement for allowing the escalation in prices on some items therefore it was within the domain of powers of the arbitrator to decide which of the items required to be paid at escalated price. It was also for the arbitrator to decide which of the items had not been paid for. The arbitrator has not specified the items as well as the escalated price and therefore his award on claim No.3 is non-speaking. What impelled the arbitrator to award the claim of the claimants is the question, which is out side the purview of the court, therefore, the award of claim No.3 is upheld. 40. CLAIM NO. 4 The arbitrator has awarded an amount of Rs. 1,90,916/- on account of expenditure incurred on labour because of the prolongation of contractual period due to fundamental breaches committed b the respondents. Mr.Thakur learned counsel for the respondents contends that the learned arbitrator has held that time was not the essence of the contract. The extensions of the time for completion of the work were granted and accepted by the contractor. There was no responsibility of the respondents to make available the site immediately to the contractor, as other civil works were to be completed by other agencies and after completion thereof the petitioner/contractor was to execute his sanitary works. The extensions of the time for completion of the work were granted and accepted by the contractor. There was no responsibility of the respondents to make available the site immediately to the contractor, as other civil works were to be completed by other agencies and after completion thereof the petitioner/contractor was to execute his sanitary works. The petitioner was made aware of this fact at the time of execution of the contract and therefore provision in this behalf was made in clause 25 of the agreement and therefore there could not be any fundamental breach on the part of the respondents for not making the site available. According to Mr.Thakur the arbitrator in awarding the claim No.4 has traveled out side the agreement by ignoring the provision of clause 25 of the agreement. He submits that in view of provision contained in clause ix the contractor was not entitled to raise any additional claim on account of delay in completion of the work. Clause (ix) reads:- "(ix) TIME OF COMPLETION. (a) Present scope of work: 1. 50 rooms adjacent to the area under construction including public and service area connected therewith .. June 15,1981 2. Entire work .. April 15,1982. The above dates are in accordance with the tender issued to you and discussions took place between you and us from time to time. If there is any delay in gradual handing over of the areas for work from our side, suitable extension of time will be granted but no additional claims will be entertained for the same." Clause 25 reads:- "At the commencement of work and from time to time the contractor shall confer with other contractors, sub-contractors, persons engaged on separate contract in connection with the work with the Architect for the purposes of the coordination and execution of the various phases of work. The contractor shall ascertain from other contractors, sub-contractors and persons engaged on separate contractors in connection with the works the extent of all chasing, cutting and forming of all opening, holes, grooves etc. as may be required to accommodate the various services. The contractor shall ascertain the routes of all services and the positions of all floor and wall outlets, traps etc. as may be required to accommodate the various services. The contractor shall ascertain the routes of all services and the positions of all floor and wall outlets, traps etc. in connection with the installation of plant, services and arrange for the construction of work accordingly." From the reading of clause 25 it is clear that respondents were under no obligation to handover the site immediately after execution of the contract to the contractor and therefore there could not be any fundamental breach on the part of the respondents in this behalf. If there was delay the contractor was entitled for extension of time. Extensions were admittedly granted to the contractor for completion of the work. Clause (ix) expressly barred the entertainment of claims on account of delay in completion of the work. Still the learned arbitrator has granted the claim of the contractor. Mr. Sharma learned counsel for the contractor contends that there being no clause in the agreement for barring the entertainment of such claim by the arbitrator the arbitrator did not lack jurisdiction for interpreting various clauses of the agreement. Once the arbitrator has interpreted the various clauses of the agreement which include clause (25) and (ix) of the agreement, his interpretation even if wrong has to be accepted by the court. Therefore, according to Mr.Sharma, the award on item No.4 cannot be interfered with by holding that arbitrator has interpreted the agreement wrongly. I am not in agreement with Mr. Sharma. In view of the law laid down in Rajasthan State Mines case AIR 1999 SC 3627(supra) where there is an express bar in the agreement to the raising of the particular claim then the award of that particular claim by the arbitrator would be in excess of jurisdiction. In the present case clause (ix) barred the raising of the claim on account of delay in completion of the work, therefore, award of claim No.4 is in my considered opinion beyond the jurisdiction of the arbitrator and as such cannot be upheld. 41. CLAIM NO. 5. The claimants claimed a sum of Rs204050/-from the respondents on account of over-head charges which the claimant incurred from 26.1.1985 to 31.10.1987 on the ground that this expenditure was incurred because of delay in completion of work due to non fulfillment of the contractual obligations by the respondents. 41. CLAIM NO. 5. The claimants claimed a sum of Rs204050/-from the respondents on account of over-head charges which the claimant incurred from 26.1.1985 to 31.10.1987 on the ground that this expenditure was incurred because of delay in completion of work due to non fulfillment of the contractual obligations by the respondents. It was submitted before the arbitrator by the contractor that the respondent dragged the claimant at the site of the work till 31.10,1987 even for negligible works and during this period the claimant had incurred expenditure of said amount for no fault on his part. The arbitrator has awarded said amount of Rs.204050/-on account of over-head charges for the said period in favour of the contractor along with interest @ 18% PA from 7.11.1987 till the date of realization. Mr.Thakur learned counsel for the respondents has argued that the claim of the contractor could not be entertained by the arbitrator in terms of condition in clause (ix) & (25) of the agreement already referred while arguing in respect of claim No.4. For the same reasons on which finding of the arbitrator regarding claim No.4 has not been upheld the finding on the present claim No.5 is also not upheld. The delay in execution of the work was suitably compensated by granting extensions to the contractor for completion of work in terms of clause (ix) and therefore the claim for consequential expenditure incurred on account of delay was not entertainable by the learned arbitrator. The award of Rs.204050/- to the contractor in respect of claim No.5 therefore is not being upheld for the reason that it was beyond the jurisdiction of the arbitrator. 42. CLAIM NO. 6. The contractor claim Rs.1, 27,268.33 from the respondents on account of payment of traveling expenses, hotel expenses, and telephone expenses for the period from 26.1.1985 to 31.10.1987 as according to the contractor this expenditure was incurred because of prolongation of the contract. For the reasons already given while considering the claims of the contractor at S.Nos.4&5,granting of this claim by the arbitrator cannot be upheld, the same being also beyond jurisdiction of the arbitrator. 43. CLAIM NO. 7 This claim has been rejected by the arbitrator and the petitioner-contractor has not challenged the same, therefore, the decision of the arbitrator on this claim is upheld. 44. CLAIM NO. 8. 43. CLAIM NO. 7 This claim has been rejected by the arbitrator and the petitioner-contractor has not challenged the same, therefore, the decision of the arbitrator on this claim is upheld. 44. CLAIM NO. 8. This claim has been awarded by the arbitrator for an amount of Rs.43368/- with interest @ 18% PA from 21.2.1986 till the date of payment in respect of certificate No.20A dated 21.2.1986 of the Architect. The arbitrator has come to the conclusion that the said amount has remained unpaid to the claimant and therefore he is entitled to receive the same. The conclusion of the arbitrator being based on appreciation of evidence is not open to judicial review and as such same is upheld. 45. CLAIM NO. 9 The arbitrator has granted a sum of Rs.40206.65P with interest @ 18% PA from 1.10.1987 to 5.8.1988 on account of expenditure incurred on watch and ward and supervision from the date of completion of the contract i.e. 31.10.1987 to 5.8.1988 as in the view of the arbitrator taking over of the work was delayed by the respondents. The conclusion and award of the arbitrator of the said amount in favour of the contractor cannot be upset as no detailed reasons have been disclosed for awarding the said amount and the conclusion being based upon the finding of fact is not open to reconsideration. Award of claim No.9 as such is accepted and upheld. 46. CLAIM NO. 10 Claim No.10 pertained to granting of interest and as interest stood already awarded by the arbitrator in respect of limited claims; therefore, he has not awarded any claim under claim No.10.The conclusion of the arbitrator on claim No.10 is not being challenged. 47. CLAIM NO. 11. The claimants have claimed Rs.50000/- as costs of arbitration and the arbitrator has not awarded any amount in this behalf to the contractor and left it open to the court to consider its grant. Learned counsel for the contractor has while making his submissions not claimed any amount under this head, so claim No.11 is deemed to have not been pressed and is therefore rejected. 48. Learned Arbitrator through his award has rejected the counter-claims except one of the respondent without giving any reasons and the award is non-speaking in this behalf. Therefore, the conclusions of the arbitrator cannot be allowed to be reagitated. 49. 48. Learned Arbitrator through his award has rejected the counter-claims except one of the respondent without giving any reasons and the award is non-speaking in this behalf. Therefore, the conclusions of the arbitrator cannot be allowed to be reagitated. 49. On the aforesaid premises, the application of the respondents u/s 30/33 of Arbitration Act is partly allowed and the award of the arbitrator made in respect of claim Nos.4, 5 & 6 in favour of the petitioner contractor is set aside, whereas in respect of other claims it is made rule of the court. Let a decree be drawn in terms of the award in the light of this judgment. 50. Disposed of accordingly.