Rajasthan High Court - Jaipur
Union Of India (Uoi) vs Ajmer Construction Company on 22 August, 1996
Equivalent citations: AIR1997RAJ65
JUDGMENT P.C. Jain, J.
1. The appellants-defendant has filed this appeal under Section 39 of the Arbitration Act, 1940 (for short the Act) against the judgment and decree passed by the learned Addl. Distt. Judge No. 2, Jodhpur dated 15-1 -96 in Civil Misc. Case No. 227/ 95.
2. The dispute raised in this appeal is very short. The relevant facts are that a contract agreement No. CE/B/J/JODH/45/84 was executed between the parties of store accommodation at Banar, Jodhpur. The above agreement contained a provision for reference of the disputes arising between the parties in connection with the above work to an arbitrator. A dispute regarding water chances arose between the parties. The dispite (sic) referred to Shri S. G. Mahajan, the Sale Arbitrator. After hearing the parties, the Sale Arbitrator gave his award on 16-2-93. The notice of making the award was given by the arbitrator to the plaintiff-respondent. Under the above award, the arbitrator awarded a sum of Rs. 3,77,959/- to the respondent No. 1. He also awarded interest. However, no dispute has been raised regarding the interest. The appellant-defendant raised certain objections before the learned District Judge when the proceedings under Section 14 of the Act were initiated. The petitioner challenged the award on the ground that the arbitrator did not at all consider the respective contentions of the parties regarding the dispute of water. He totally ignored the provision contained regarding water in Clause (31) of the above agreement and without assigning any reason awarded a sum of Rs. 3,30,000/- as cost of the water incurred by the respondent in the execution of the above work. It may be stated that the appellant only charged a sum of Rs. 23,629/- as cost of water. As compared to this reasonable cost, the award contains a very exhorbitant claim being cleared by the arbitrator without any reason and in total ignorance of the relevant Clause which governs the conditions under which water is to be supplied and utilised. Thus, the award is silent about that and suffers fatally on that account. By allowing such unfounded claim in favour of the respondent, the arbitrator has misconducted himself and the award is liable to be set aside on that ground. Learned Counsel has placed reliance on the observations made in Associated Engineering Co. v. Govt. of Andhra Pradesh, AIR 1992 SC 232.
3. Learned Counsel for the appellant further submitted that the learned District Judge also did not consider this aspect of the matter and he also did not deal with the real and material dispute between the parties regarding supply of water.
4. Learned Counsel for the respondent, on the other hand, submitted that the learned Counsel for the appellant forgot that when the MES backed out from the contract to supply water to the respondent, the latter had to manage water from a very long distance as there is fairly acute scarcity of water. Learned Counsel has admitted that the dispute between the parties will be governed by Clause (31) of the contract. The appellant in flagrant violation of the provisions contained in Clause (31) did not take any steps to facilitate supply of water. Only a pipe-line was laid down, but, no water was supplied in it nor different points were made and indicated from which the respondent could draw the water. In fact, the appellant did not supply water at all. It is rather surprising that even without supplying any water, the appellant chose to charge for water in the bill. Learned Counsel has very emphatically argued that the dispute regarding charges Of water Was before the arbitrator and he heard both the parties arid then rendered his award, It is settled law that the validity of an award cannot be judged on the ground that it is not speaking award because the arbitrator is not professionally sound and does not understand the requirement of law to render a well-reasoned and well-documented award. He must follow the principles of equity and natural justice. In this connection, learned Counsel has placed reliance oh Goa, Daman & Diu Housing Board v. Ramakant, AIR 1991 SC 2089 and State of Orissa v. Dandasi Sahoo, AIR 1988 SC 1791. Learned Counsel also submitted that the dispute regarding water charges was within the jurisdiction of reference. Hence, it cannot be said that the arbitrator travelled outside the scope of reference.
5. I have considered the matter. Before I proceed further, I may quote Clause (31) of the agreement which is as follows :--
"The contractor shall allow, in his tender and provide at his cost all water required for the use of works or his employees on the works, together with all pipes and fittings, or other means that may be necessary or required to ensure a proper and ample supply of water for all purposes for the works.
In the event of a provision existing in the tender documents for M.E.S. supply of water on payment and the contractor desiring to buy it from M.E.S., he will be permitted to draw it from M.E.S. Water Supply System or other M.E.S. Sources at such point or points as may be decided by the Garrison Engineer on his sole discretion and the contractor shall make necessary arrangements at his own cost of lifting, pumping, carrying or conveying water to the site of works as required.
Normally in all cases of water supplied from M.E.S. piped system, the supply shall be metered and paid for by contractor at the All India Flat Rate per 1,000 gallons which includes hire charges for meter to be provided by M.E.S. In exceptional cases where metering is not feasible, i.e., water from M.E.S. wells or static tanks, or in the case of Term Contracts where the Contractor draws water not from any one source, the Contractor shall pay Rs. 3.75 per every Rs. 1,000 worth of work done priced at contract rates. In the event of breakdown of M.E.S. supply of water or in the event of the said supply of M.E.S. water becoming intermittent, the Contractor shall have no claim whatsoever on this account.
The water used for any or all requirements shall be subject to the prior written approval of the Engineer-in-chief."
6. It is not dispute that water was to be supplied by the appellant. The grievance of the respondent was that despite such a stipulation, the appellant did not take any steps to lay down the pipe-line and fix the points from which the respondent could draw water. These are all requirements of Clause (31) of the agreement. This dispute was, therefore, referred to the arbitrator and he gave his finding thereof. Hence, it cannot be assailed on the ground that if the arbitrator gave any finding on the dispute regarding water charges, he acted beyond his jurisdiction. The reference was in respect of water charges and this dispute therefore, clearly fell within his province.
7. Learned Counsel for the appellant cited the case of Associated Engineering Co. (AIR 1992 SC 232), but the facts of that case are entirely different. There the award of the arbitrator was challenged on the ground that arbitrator granted claim not covered by agreement and the conclusion reached not by entering contract but by merely looking at it. It was held that by doing so, the arbitrator misdirected and misconducted himself.
8. In the instant case, as I have already stated, it was the province of the arbitrator to have given his award on the dispute regarding charges of water. Merely because there was disparity between the amount charged or claimed by the appellant and awarded by the arbitrator, it cannot be said that by doing so, the arbitrator has misconducted himself. In this connection, learned Counsel for the respondent submitted that in the area where the work was executed, there is accute water scarcity and the respondent had to transport water in tanks from long distances. If the water would have been supplied by the appellant through the regular water supply, naturally, the cost would have been nominal but when the water was brought from long distances there would be a phenomenal rise in transportation cost.
9. Normally, courts encourage settlement of dispute by arbitration. The Court, therefore, approach an award with a view to support it, if it is reasonably possible rather than to destroy it by calling it illegal. This is also apparent from the scheme of Section 13 of the Act. Section 13 contains the grounds on which the award Can be set aside. The legislature has limited the scope of the Court in assailing the award. The award is thus final and conclusive except where the arbitrator has misconducted himself or the proceedings or has committed an error of law apparent on the face of the award. The Court cannot approach on merits and sit in appeal over it. Normally, the arbitrator is given finality regarding his decision on facts.
10. However, often the award is challenged vehemently on the ground that the award is non-speaking and the arbitrator has omitted to give detailed reasons for his decision on a particular point or issue. The validity of non-speaking awards has always been a matter of considerable debate in India. The controversy is now said to be resolved by the decision in Rajpur Development Authority v. Chokhmal Contractors, AIR 1990 SC 1426. Their Lordships of the Supreme Court observed (Para 19):
"It is now well-settled that an award can neither be remitted nor set aside merely on the ground that it does not contain reasons in support of the conclusion or decisions reached in it except where the arbitration agreement or the deed of submission required him to give reasons. The arbitrator or umpire shall have to give reasons also where the court has directed in any order such as the one made under Section 20 or Section 21 or Section 34 of the Act that reasons should be given or where the statute which governs an arbitration requires him to do so."
11. Hence, in my opinion, the learned District Judge has not committed any error in accepting the award.
12. There is no force in the appeal and it is hereby dismissed.