1. For construction of an engineering college at Jammu, applications were invited from the architects for providing drawing and design of the said college. It was an open architectural competition whereby the consultants were required to submit their rates, terms and conditions for rendering consultancy services for the construction of the said building. The rates, terms and conditions were submitted on 23rd of April’96 and 13th of May’96. The claimant was appointed as consultant for the above project on the terms and conditions mentioned in the letter of appointment. After the acceptance of the terms and conditions, the claimant submitted the revised master plan for the work on 21st of June’96, which was approved by the Principal of the College and final drawings were submitted by the claimant on 27th of June’96. Consequently, a formal agreement was executed on 6th of Sept’96, and the letter of appointment was made and integral part of the contract. 2. The work for such consultancy was allotted to the claimant by providing 2.5% of the total value of the contract for preparation of master plan, architectural, structural services including water supply, plumbing etc. The mode of payment was required to be made in eight stages, which are as under:- "1. Stage-I (Preliminary stage) (a) Retainer to be paid on the acceptance of terms & conditions which will be recovered from the bills on pro-rata basis. Rs.25000/- (b) On submitting conceptual designs & preliminary estimates of costs along with Master plan (subject to final approval by the Empowered Committee). -10% of the total fees Payable. 2. Stage-II On submission of final architectural @10% of the Drawings. Total fees payable 3. Stage-III (working Drawing Stage) On submission of basic working @20% of the total Drawings. Fees payable. 4. Stage-IV On submission of all structural @10% of the total Drawings including structural fees payable. Design along with its calculations. 5. Stage-V On submission of all Services Drawings including plumbing, Sanitary fittings & electrifications Etc. @10% of the total fees payable. 6. Stage VI On submission of BOQ and Tender documents. @10% of the total Fees payable. 7. Stage VII (Constructions stage) During the course of construction of work at site. @20% of the total Fees payable. 8. Stage VIII On completion of the work (to be Paid within one year of Completion of the work. @10% of total fees payable." 3. Stage VI On submission of BOQ and Tender documents. @10% of the total Fees payable. 7. Stage VII (Constructions stage) During the course of construction of work at site. @20% of the total Fees payable. 8. Stage VIII On completion of the work (to be Paid within one year of Completion of the work. @10% of total fees payable." 3. The above terms and conditions became part of the agreement which was executed on 6th of Sept’96. 4. For purposes of addressing the controversy as raised in the present petition, clauses 2 and 5 of the agreement are relevant. These be noticed as under:- "2. Scope of work:- The parties to this agreement agree that the scope of the work/service to be provided by the Consultants shall be: "Providing complete architectural Design and Drawings, Structural, Electrical, Sanitary, plumbing, Sewerage, Fire-fighting, Landscaping, Site Development and Infrasctuctural Working Drawings & Design Calculations Bill of Quantities, Construction Programme and all other allied drawings/data/advice etc. required for the successful completion of the work namely construction of college of Engineering and Technology Jammu and as defined in the letter of intent issued by the Corporation." "5. Mode and Schedule of payment: The schedule of payment shall be as per the terms and conditions contained in the letter of intent issued by the Corporation. And the parties to this agreement agree that 90% payment shall be paid to the consultant by the Corporation on a pro-rata basis depending on and relating to the stage wise releases of the working drawings by the consultants. It is also agreed that ten percent of the total fee shall be retained by the Corporation even after all the working details have been submitted by the Consultant. The said 10% of the total fee shall be released only after the completion of Construction work or one year after all drawings/details have been provided by the Consultant to the Corporation/whichever is earlier." 5. A co-joint reading of these clauses would indicate that the claimant was required to provide various drawings and designs at different stages. The first stage related to submitting of conceptual designs and preliminary estimates of costs alongwith the master plan. The second stage relates to submission of final architectural drawings. At third stage, basic working drawings were to be submitted. A co-joint reading of these clauses would indicate that the claimant was required to provide various drawings and designs at different stages. The first stage related to submitting of conceptual designs and preliminary estimates of costs alongwith the master plan. The second stage relates to submission of final architectural drawings. At third stage, basic working drawings were to be submitted. It is clearly mentioned in the agreement that the 90% of the payment shall be made to the consultant by the respondent-Corporation on pro-rata basis depending upon the quantum of work done. 6. It appears from the record that JKPCC was the construction agency employed by the Government. The work for the College could not be undertaken, the resultant effect was that the contract could not be concluded. The claimant’s job was to provide consultancy in the matter of providing architectural drawings and designs, structural drawings, service drawings i.e. water supply, sanitary, plumbing, sewerage, electrical etc. The mode of payment as indicated above, which was required to be made, was provided in the agreement. 7. It is admitted that the claimant had submitted final architectural drawings and designs which are stated to have been approved. The objectors, however, refused to make the payment to the claimant to which he was entitled to upto stage I. This was on the ground that the contract was frustrated due to the reason that the State Government did not go-ahead with the construction of the engineering college. On the refusal of the objectors to make the payment, the claimant invoked the arbitration clause for making reference to the arbitrator. Having failed to persuade the objectors to appoint an arbitrator, intervention of the court was sought. This court vide order dt. 28th of Aug’2000, appointed an independent arbitrator and the matter was referred to it, who entered into reference on 9th of Oct’2000, and called upon the parties to submit their respective claims and counter claims. The claimant is stated to have filed six claims which are as under:- "1. Claim of Rs. 8,50,000/- towards balance consultancy fees. 2. Claim of Rs. 21,25,000/- due to loss of profitability for unexecuted amount of contract. 3. Claim for Rs. 5,49,900/- towards salary of the staff from June’96 to June’98. 4. Claim for Rs. 21,150/- per month towards staff salary from July’98 onwards. 5. Claim for presuit, pendentelite and future interest @18%." 8. Claim of Rs. 8,50,000/- towards balance consultancy fees. 2. Claim of Rs. 21,25,000/- due to loss of profitability for unexecuted amount of contract. 3. Claim for Rs. 5,49,900/- towards salary of the staff from June’96 to June’98. 4. Claim for Rs. 21,150/- per month towards staff salary from July’98 onwards. 5. Claim for presuit, pendentelite and future interest @18%." 8. The objectors submitted their objections to the claims submitted by the claimant. The arbitrator after examining the claims and the objections filed to the same, passed the award in the following manner:- For claim No.1, an amount of Rs. 6,65,000/- was allowed as fee payable for Stage -- I taking into consideration that whole work upto this stage was completed. After adjusting an amount of Rs. 3,25,000 already paid to the claimant in this regard, the balance amount of Rs. 3,40,000/- under claim No.1 was held payable to the claimant. An amount of Rs. 8,97,750/- was awarded in favour of the claimant towards claim No.2. An amount of Rs. 3,38,400/- was awarded as against claim of Rs. 5,49,900/- under claim No.3 towards salary of the staff engaged by the claimant. For claim No.4, an amount of Rs.1,16,325/- was held payable to the claimant. Under Claim No.5, an interest of 12% p.a. was allowed. For claim No.6, the claimant was awarded an amount of Rs. 80,000/- towards costs along with interest @12% p.a. from the date of award onwards." 9. The award passed by the arbitrator was filed in this court which was received on 23rd of July’01. Notice was issued to both the parties for 17th of Sept’01. On receipt of the notice regarding the award having been filed by the arbitrator, an application under Section 34 of the J&K Arbitration and Conciliation Act, 1997, was filed by the objector on 9th of Oct’01. Objections to this application were filed by the claimant on 18th of Feb’03. On the pleadings of the parties, following issues came to be framed for adjudication by this court vide order dt. 19th of Nov’03:- "1. Whether the Arbitrator has misconducted himself or the proceedings, if so what is its effect on the award. OPR-objector. 2. Whether the Objector was incapacitated for executing the contract, if so what is its effect? OPR Objector. 3. Whether the contract stood frustrated and if so what is its effect on the award? OPR Objector. 4. 19th of Nov’03:- "1. Whether the Arbitrator has misconducted himself or the proceedings, if so what is its effect on the award. OPR-objector. 2. Whether the Objector was incapacitated for executing the contract, if so what is its effect? OPR Objector. 3. Whether the contract stood frustrated and if so what is its effect on the award? OPR Objector. 4. Is the award otherwise invalid? OPR." The parties vide aforementioned order were also directed to lead evidence by way of affidavits, which have been filed. Two grounds have been taken by the Objector in support of its pleadings regarding setting aside of the award, which are as under:- 1. That the contract was frustrated as the State Government did not go-ahead with the construction of the college; 2. That the award has been passed by the arbitrator which is beyond the terms of the contract. 10. It is contended by the objector that the Arbitrator while passing the award has exceeded its jurisdiction and gone beyond the term of reference. 11. Heard learned counsel for the parties. 12. Before analyzing the contours of the controversy involved in the present case, it is profitable to enumerate the provisions which deal with the setting aside of an award under the Act of 1997. Section 34 of the said Act, provides for setting aside of an award. This Section in so-far-as relevant, reads as under:- "34(1). 12. Before analyzing the contours of the controversy involved in the present case, it is profitable to enumerate the provisions which deal with the setting aside of an award under the Act of 1997. Section 34 of the said Act, provides for setting aside of an award. This Section in so-far-as relevant, reads as under:- "34(1). (2) An arbitral award may be set aside by the Court only if- (a) the party making the application furnishes proof that- (i) a party was under some incapacity; or (ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or (iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or (iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration or it contains decisions on matters beyond the scope of the submission to arbitration: Provided that, if the decision on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted arbitration may be set aside; or (v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or (b) the Court finds that- (i) the subject matter of the dispute is not capable of settlement by arbitration under the law for the time being in force; or (ii) the arbitral award is in conflict with the public policy of the State." 13. In terms of the Act of 1997, a departure has been made so far as the jurisdiction of the court to set aside an arbitral award is concerned vis-a-vis the earlier Act of 2002(1945 A.D). Whereas under Sections 30 and 33 of the Act of 2002, the power of the court was wide. Section 34 of the Act of 1997, brings certain changes envisaged thereunder. Whereas under Sections 30 and 33 of the Act of 2002, the power of the court was wide. Section 34 of the Act of 1997, brings certain changes envisaged thereunder. The Act of 1997 makes provision for supervisory power of the courts for review of the award in order to ensure fairness. The intervention of the court is envisaged in few circumstances only, like, in case of fraud or bias by the arbitrators, violation of natural justice etc. The court can only quash the award leaving the parties free to agitate before the arbitrator again, if so desired. The scheme of the provisions of the Act are for the purposes of supervisory role of the courts at minimum level. The grounds which can be the basis for setting aside of an arbitral award are as under:- If it is contrary to the: a/ fundamental policy of the law; b/ justice or morality; or c/ it is patently illegal or arbitrary. Such patent illegality, however, must go to the root of the matter. d/ it should also not be in violation of the public policy; and e/ where the arbitrator has gone contrary to or beyond the terms of the contract or has granted the relief in the matter which is not in dispute. 14. Now, while examining the role of the court in the present case and looking to the stand taken by the respondent objectors, following things are required to be noted: i/ that the contract of consultancy was to be executed in various stages and accordingly, payments were to be made on completion of each stage; ii/ that the contract could not go beyond the first stage as the objectors who were working as contractors for the Government, failed to perform their part of the contract; iii/ that non payment on the part of the objectors as also termination of contract due to failure of the State Government to go ahead with the project, resulted in dispute which was referred to the arbitrator; iv/ the only ground which is specifically contested by the objectors is that the contract was frustrated. 15. 15. Regarding the issue of contract having been frustrated, a co-ordinate Bench of this court in A.A. No. 72/98, which was filed by the claimant herein for appointment of an independent arbitrator, decided on 28th of Aug’2000, held that the rights and liabilities of the parties are governed by the terms of the agreement. It also transpires that the performance of the agreement did not depend upon the happening of some contingency in future as is pleaded by the respondent-objector. 16. In view of the above finding recorded by the co-ordinate Bench of this court, the arbitrator dismissed the plea taken by the objector and rightly so. 17. So far as the first claim is concerned, it is nowhere disputed that the amount as awarded under the said claim was not payable to the claimant at stage I of the contract which had been completed. No error, in this regard, has been committed by the arbitrator in awarding the said claim. Regarding claim No.2, which related to loss of profitability, it be seen that the claimant was prevented from execution of work despite agreement. He had engaged competent staff to undertake the contract. Invoking the provisions of Section 73 of the Contract Act, the arbitrator has rightly awarded this claim in favour of the claimant as due to the breach of the contract, a direct loss has occurred to the claimant. The claimant has suffered on account of such a breach and is entitled to compensation for the loss or damage which naturally arose in the usual course of things from such a breach. As a result of breach of agreement, the mode of assessment has been done strictly in accordance with the rules and fair play. 18. In respect of the third claim, it has been stated that the said claim has been awarded even though the same was not contemplated by the terms of the contract. According to the objector, the claimant was entitled to lump sum payment at various stages after completion of the work. It is further contended that no amount could be paid separately for engaging staff by the claimant and the lump sum payment to be made to the claimant would include the expenditure incurred by him in this behalf. 19. According to the objector, the claimant was entitled to lump sum payment at various stages after completion of the work. It is further contended that no amount could be paid separately for engaging staff by the claimant and the lump sum payment to be made to the claimant would include the expenditure incurred by him in this behalf. 19. There is no dispute with this position that a lump sum payment is required to be made to consultant which would include the expenditure in running the office by engaging the competent staff, however, it be seen that the claimant was required to submit various drawings and designs at different stages for which he had to engage the staff. It is also not in dispute that from May’96 to June’98, he was never informed that the contract could not be executed. As a matter of fact, the objector had been accepting the drawings from the claimant which were subject to revision from time to time. At no point of time, was he ever informed that the contract cannot be executed in view of the fact that the Government has refused to undertake the project. On the completion of the work beyond Stage I, the complainant was entitled to receive the payment as provided under the agreement. It is not disputed that no such payment has been given to the consultant after Stage I. The fact of the matter is that he was engaged in preparation of drawings for various stages as provided under the contract. The expenditure incurred by the claimant in these circumstances is required to be paid to him and it cannot be said that it is beyond the terms of the contract. Under these circumstances, no interference is called for on the findings recorded by the arbitrator in this behalf while computing this claim in view of the limited supervisory role of the court in this regard. 20. However, the same cannot be said about claim No.4. Under this head, a claim of Rs.21,150/- per month towards staff salary from July’98, onwards was claimed by the claimant. The arbitrator has awarded an amount of Rs. 1,16,325/- in favour of the claimant for the said claim. 20. However, the same cannot be said about claim No.4. Under this head, a claim of Rs.21,150/- per month towards staff salary from July’98, onwards was claimed by the claimant. The arbitrator has awarded an amount of Rs. 1,16,325/- in favour of the claimant for the said claim. It is admitted case of the parties that dispute had arisen in the year 1998 and any staff engaged by the claimant after the said period cannot be sustained for the reason that by the said time, the claimant had acknowledged the fact that the contract could not be executed in view of the stand taken by the objector in not making the payment to the claimant. Moreover, after Stage I, the claimant was entitled to receive the payment for Stage II only after its completion and could not have undertaken the work for Stage III unless the payment to which he was entitled to for the work upto Stage II was made to him. The engagement of the staff by the claimant after 1998 when the matter was referred to the arbitrator could not have been done, and thus, the said claim was not justifiable. This, in my view, was an issue beyond the terms of the contract. 21. The arbitrator’s jurisdiction is confined to four corners of the contract. He cannot ignore the provisions of the contract. I am supported in this view by a judgment of the Apex Court reported as Bharat Coking Coal Ltd v. Annapurna Construction, (2003) 8 SCC 154 . What has been observed by the Apex Court in this regard in para 14 of the judgment in the above case, may be noticed as under:- "The question as to whether the claim of the contractor is dehors the rules or not was a matter which fell for consideration before the arbitrator. He was bound to consider the same. The jurisdiction of the arbitrator in such a matter must be held to be confined to the four corners of the contract. He could not have ignored an important clause in the agreement; although it may be open to the arbitrator to arrive at a finding on the materials on record that the claimant’s claim for additional work was otherwise justified." 22. He could not have ignored an important clause in the agreement; although it may be open to the arbitrator to arrive at a finding on the materials on record that the claimant’s claim for additional work was otherwise justified." 22. In view of the above, the arbitrator having allowed claim No.4 travelling beyond the terms of contract, the same cannot be granted in favour of the claimant. 23. So far as claim Nos. 5 and 6 as awarded by the arbitrator are concerned, I do not find any reason to interfere with the same. However, the interest @9% shall be payable to the claimant from the date of the award till its realization. 24. With the above modification, the award is directed to be made rule of the court. The decree sheet be prepared accordingly. Disposed of as such. This judgment is announced by me in terms of Rule 138(3) of the J&K High Court Rules, 1999.