Punjab-Haryana High Court
Karam Singh Lall vs Union Of India on 29 September, 1999
Equivalent citations: (2000)125PLR507
Author: R.L. Anand
Bench: R.L. Anand
JUDGMENT R.L. Anand, J.
1. This is a civil revision filed by Karam Singh Lall (contractor) and has been directed against the judgment dated 3-3-1998 passed by Additional District Judge, Amritsar, whose aside the order dated 11-10-1996 passed by the Civil Judge (Sr. Division), Amritsar, who dismissed the objections of the Government of India under Sections 30/33 of the Arbitration Act and made the award dated 3-2-1994 as rule of the Court.
2. The brief facts of the case are that Karam Singh Lall is that sole proprietor of M/s. New Amritsar Construction Company. Respondent No. 3 Mr. M. S. Sahota reconsidered the matter in dispute and gave the award dated 3-2-1994. When the award in question was received in the Court, notice of the making of the award was given to the parties. The Govt. of India filed the objections on 3-3-1994 stating that the award published on 13-6-1985 given by Lt. Col. P. K. Garg was remitted back for reconsideration vide order dated 9-4-1991 and Mr. M. S. Sahota, respondent No. 3, was appointed as sole Arbitrator in placed of Mr. P. K. Garg. He gave the award on 3-2-1994, which was filed in the Court on 9-2-1994. According to the objections of the Govt. of India, the Arbitrator misconducted himself when he awarded a sum of Rs. 32,906/- against claim No. 2 to the contractor in gross violation of express condition No. 11. The contract period was prolonged upto 15-11-1982 by the department on the specific request of the contractor vide his application dated 23-1-1982. The deviation order dated 29-9-1982 shows revised dates of completion, which was accepted by the contractor without any protest. The deviation order dated 31-3-1983 was also accepted by the petitioner without any protest. In short, the stand of the Union of India is that if there was any delay in the execution of the contract, on that score the Arbitrator could not award any damages to the contractor. The said objections were denied by the contractor, who supported the award given by Mr. Sahota. The pleadings of the parties gave rise to the following issues :
(1) Whether the objection petition is within limitation ? OPO (2) Whether the award is liable to be set aside on the grounds, as alleged in the objection petition ? OPO (3) Relief.
3. The trial Court for the reasons given in para No. 10 of the impugned judgment dismissed the objections of the Union of India and resultantly issue No. 1 was decided against the Government and finally the award dated 3-2-1994 given by Mr. Sahota was made rule of the Court. The reasons given by the trial Court as contained in Para No. 10 of the judgment dated 11-10-1996 can be quoted as follows :
"10. The only point raised by the learned counsel for the objector that the Arbitrator has misconducted the proceedings as he has not re-appraised the evidence led on the record by the parties but has followed the Award of the previous Arbitrator. It is specifically mentioned in his affidavit filed by the applicant Karam Singh Lall that the objector did not raise any objections during the hearing before the Arbitrator. In his affidavit Major Y. S. Yadav has submitted that the Arbitrator has ignored the contract provisions. But nothing has pointed out that as to how the contract provisions have been violated by the Arbitrator. Both, the parties were allowed opportunities to lead evidence and after considering the evidence on the file, the Arbitrator has submitted the award. Moreover, it has been observed in Hindustan Construction Co. Ltd. v. Governor of Orissa and other (1995(3) SLJ 1951 (SC) = 1995(2) Arb. LR 1 (SC).), by Hon'ble Supreme Court of India as under :
"It is well known that the Court while considering the question whether the Award should be set aside, does not examine that question as an appellate court. While exercising the said power, the court cannot re-appreciate all the materials on the record for the purpose of recording a finding whether in the facts and circumstances, of a particular case, the award in question could have been made."
As already mentioned above, the Arbitrator has already appreciated all the materials on the record and this Court cannot reappreciate for the purpose of recording a finding. The only grouse of the objector is that M. S. Sahota has not acted in dependently. If after, reconsidering the evidence on record, the Arbitrator has come to the conclusion that to which the previous Arbitrator has come it cannot be termed as misconduct on the part of the Arbitrator. In this view of the matter, I find that the objection raised by the objector is without any merits. I therefore decide this issue in favour of the applicant and against the objectors."
4. Aggrieved by the judgment of the trial Court, the Union of India filed the appeal before the Court of Additional District Judge, Amritsar, who allowed the appeal and set aside the judgment and decree of the trial Court by holding that the Arbitrator could not award Rs. 32,907/- as approved by the learned trial Court in view of Clause 11 of the contract agreement. Resultantly, the appeal of Union of India was partly allowed. The first Appellate Court only modified the award by allowing objections in part and declared that the contractor is only entitled to Rs. 916.26 against item No. 4 as awarded by the Arbitrator in his favour. Obviously, Karam Singh Lail is not satisfied with the decision dated 3-3-1998 given by the Additional District judge, Amritsar. This is the history of the present civil revision. It will also be useful for me to incorporate the reasons advanced by the first Appellate Court as contained in paras Nos. 7 to 9 of the judgment date 3-3-1998 in order to appreciate the contentions raised by the parties and the same are as under :
"7. Disputed amount of Rs. 32,907/- has been awarded to the Contractor on account of damages due to prolongation of contract due to default of respondent department against the Contractor's claim of Rs. 81,365/-. Relevant Clause 11 of the contract agreement is as under -
"11. Time, Delay and Extension.
(A) Time is of the essence of the Contract and is specified in the contract document or in each individual works order.
As soon as possible after the Contract is let or any substantial works order is placed and before work under it is begun, the G.E. and the contractor shall agree upon a time and progress Chart. The Chart shall be prepared in direct relation to the time stated in the contract documents or the Work Order for completion of the individual items thereof and/or the contract or Work Order as a whole.
It shall indicate the forecast of the dates for commencement and completion of the various trade processes or sections of the work and shall be amended as may be required by agreement between the G.E. and the Contractor within the limitation of time imposed in the contract documents of time imposed in the contract documents or Works Order.
If the works be delayed -
(i) by force majeure, or
(ii) by reason of abnormally bad whether, or
(iii) by reason of serious loss or damage by fire, or
(iv) by reason of Civil commotion, local combination of workmen, strike or lockout affecting any of the trades, employed on the work, or
(v) by reason or delay an the part of nominated sub-contractors, or nominated suppliers which the Contractor has, in the opinion of G.E. taken all practical steps to avoid, or reduce, or
(vi) by reasons of delay on the part of Contractors or tradesmen engaged by Government in executing works not forming part of the contract, or
(vii) by reason of any other cause, which in the absolute discretion of the Accepting Officer is beyond the contractor's control, then, in any such case, the officer hereinafter mentioned may make fair and reasonable extension in the completion dates of individual items of groups of items of work for which separate periods of completion we mentioned in the contract documents or works order, as applicable.
Upon the happening of any such event causing delay, the Contractor shall immediately, but not later than 30 days of the happening of the event, given notice thereof in writing to the G.E. but shall nevertheless use constantly his best endeavour to prevent or make good the delay and shall do all that may reasonably be required to the satisfaction of the G.E. to proceed with the work. Extension of time shall be granted as under -
(a) by G.E. for all Term Contracts;
(b) by Accepting Officer of the Contractor all other contracts.
In case the Contractor fails to notify the G.E. of happening of an event(s) causing delay within the period of 30 days stipulated in sub-para 3 above, he shall forfeit his right to claim extension of time for the delay cause due to such event(s).
Extension of time, as granted above, shall be communicated to the Contractor by G.E. in writing and shall be final and binding.
Provided that in the case of contracts (other than term Contracts) accepted by the G.E. in the event of the contractor not agreeing to the extension granted by the G.E. the matter shall be referred to the C.W.E. whose decision shall be final and binding.
(B) If the works be delayed :
(a) by reason of non-availability of Government Stores mentioned in Schedule (B), or
(b) by reason of non-availability or breakdown of Govt. Tools and plant mentioned in Schedule (C), then, in any such event, notwithstanding the provisions hereinbefore contained, the G.E. may in his discretion grant such extension of time as may appear reasonable to him and the Contractor shall be bound to complete the works within such extended time. In the event of the Contractor not agreeing to the extension granted by the Garrison Engineer, the matter shall be referred to the Accepting Officer (or C.W.E. in case of Contract accepted by Garrison Engineer) whose decision shall be final and binding.
(C) No claim in respect of compensation or otherwise, howsoever, arising, as a result of extensions granted under conditions (A) and (B) above shall be admitted."
8. The arbitration agreement containing the same question as in Clause 11(C) above, came up for consideration in Civil Revision No. 1694 of 1996 titled Union of India v. M/s. Om Construction Co., decided by Hon'ble Mr. Justice Swatanter Kumar of the Punjab & Haryana High Court on 3-9-1996. His Hordship observed that this term of the contract specifically barred any claim of compensation as a result of extension granted in conditions (a) and (b) of the contract and the Arbitrator had no jurisdiction to alter the agreement between the parties or to frustrate an agreed terms by his award. His Lordship further observed that the function of the Arbitrator is primarily to arbitrate within the terms of the agreement and he has no power to act beyond the terms of the contract and that transgression of such term would be an error apparent on the face of record suffering from lack of jurisdiction and to that extent would render the award liable to the interfered. In my opinion, the judgment is applicable to the facts of the present case on all fours. In Punjab State v. Amar Nath Aggarwal (1998(1) R.C.R. (Civil) 527.). Hon'ble Mr. Justice Amarjit Chaudhary of Punjab and Haryana High Court held that the Court can interfere in the award of an Arbitrator if he acts independent of the terms of the contract and travel outside the bonds (bounds ?) of contract, i.e., without jurisdiction. In Babu Lal Barwa v. Delhi Developnwnt Authority and others (1996(2) R.R.R. 558.), levy of penalty and its amount were decided by the authority. Under the contract his decision was final. Arbitrator travelled beyond his jurisdiction in awarding the amount deducted from the Contractor on account of penalty. That part of the award was a set aside holding that the same could not be made rule of the court.
9. Learned counsel for the Contractor cited State of Maharashtra v. Nav Bharat Builders (AIR 1991 SC 11 = 1990(2) Arb. LR 195 (SC).), B. V. Radha Krishan v. Sponge Iron India Ltd. (1997 (Suppl.) CCC 422 (SC) = 1997(1) Arb. LR 412 (SC).), and M/s. Hindustan Tea Co. v. M/s. K. Sashikant & Co. and others (AIR 1987 SC 81 = 1987(1) Arb. LR 29 (SC)). In AIR 1981 SC 11, a clause in the agreement provided for compensation only for temporary stoppages for work. However, the work in that case was stopped completely for about 11 months. It was held that such continuous stoppage of work for the entire seasons was not contemplated by the relevant clause in the contract. In 1997 C.C.C. 422 SC, it was held that while dealing with the arbitration award, the court is not empowered to substitute its own view in place of the Arbitrators' view as it is dealing with an appeal. In AIR 1987 SC 81 supra, it was held that award is not open to challenge on the ground that the Arbitrator has reached wrong conclusion or has failed to appreciate facts. Such circumstances do not exist in the present case. None of these rulings cited by Shri Arora, therefore, helps the contractor."
5. I have heard Mr. B. R. Mahajan, Advocate, on behalf of the petitioner, Mr. S. K. Sharma, Advocate, on behalf of the respondent and with their assistance I have gone through the record of this case.
6. The learned counsel for the petitioner relied upon K. R. Raveendranathan v. State of Kerala (1999(1) Latest Judicial Reports 279.), a judgment of the Hon'ble Supreme Court and submits that when construction of the contract itself has been left to the jurisdiction of the Arbitrator, the court could not take upon itself the burden of saying that this was contrary to the contract and as such beyond jurisdiction. Mr. Mahajan wanted to convey that it was for the Arbitrator to decide it whether the sum of Rs. 32,907/- could be awarded to the contractor in view of Clause 11 of the contract agreement and if the Arbitrator has construed that clause in favour of the contractor, the Civil Court cannot sit as a judgment of appeal nor the Civil Court has any jurisdiction to take the responsibility upon its own shoulder to again interpret the contract and to say that the awarded amount in favour of the contractor was without jurisdiction. The counsel for the petitioner also read in verbatim para No. 8 of the grounds of revision and submitted that the Hon'ble Judges constituting the Bench in case K. R. Raveendranathan v. State of Kerala, while making the reference to the larger Bench, were of the view that the case of Sudarsan Trading Co. v. Govt. of Kerala (JT 1989(1) 339 = 1989(2) Arb. LR 6 (SC).), was not brought to the notice of the Supreme Court in State of Kerala v. M/s. Associated Engineering Co. (AIR 1992 SC 232.), Mr. Mahajan wanted to say that the Hon'ble Bench of three Hon'ble Judges approved the view of Sudarsan Trading Co. (supra) and reiterated the view in K. R. Raveendranathan's case (supra). The counsel also relied upon Himachal Pradesh State Electricity Board v. R. J. Shah & Co. (JT 1999(3) SC 151 = 1999(2) Arb. LR 316 (SC).), and submitted that when an Arbitrator was required to construe a contract then merely because another view may be possible the court would not be justified in construing the contract in a different manner and then to set aside the award by observing that the Arbitrator has exceeded the jurisdiction in making the award. The counsel submitted that the dispute before the Arbitrator related to the interpretation of the contract. The Arbitrator was the master of the question of law and fact and even if the decision of the Arbitrator was erroneous, it cannot be said that it was without jurisdiction and in these circumstances the award given by the Arbitrator cannot be set aside.
7. I have considered the submissions raised by the learned counsel for the petitioner and in my opinion these are devoid of any merit. The point in his case is very simple whether the Arbitrator has misconducted himself or the proceedings when he awarded a sum of Rs. 32,907/- in favour of the contractor. These is no dispute about the proposition of law that the Civil Court cannot and should not sit as a Court of appeal. Arbitrator is a master of facts. He is not supposed to give a judgment like the judgment of a Civil Court. He has the power even to decide a thing wrongly provided his decisions are within the jurisdiction. Section 30 of the Arbitration Act, 1940 lays down that an award shall not be set aside except on one or more of the following grounds, namely :
(a) that an Arbitrator or Umpire has misconducted himself or the proceedings;
(b) .........................................................
(c) that an award has been improperly procured or is otherwise invalid.
If the award gives such types of directions are totally unpermitted by the contract itself, in that eventuality such an award is liable to be set aside either as a whole or in piecemeal, if the subject-matter is severable. The simple point for determination in this case is whether the Arbitrator under Clause 11 of the contract could sanction the claim of the contractor with respect to compensation by virtue of sub-clause (C) of Clause 11. In this regard a reference to Clause 11 is necessary which has already been quoted above when I reproduced para No. 7 of the judgment of the first Appellate Court. This clause pertaining to the time, delay and extension of the execution of work. As per sub-dause (C) no claim in respect of compensation or otherwise, howsoever, arising as a result of extension granted under conditions (A) and (B) above shall be admitted. The Arbitrator was nicer called upon to interpret sub-clause (c). He was only called upon to adjudicate whether any compensation is required to be paid to the contractor or to the department. The contractor filed his claim and claimed compensation on the plea that delay had occurred in the execution of the work on account of the fault of the department, whereas the stand of the department before the Arbitrator was that the contractor himself was at fault as he had not been able to arrange skilled labour on account of harvesting of crops etc. Be that as it may, if sub-clause (C) does not permit for the grant of any compensation on the delayed execution of a project and still Arbitrator awards compensation to one party or the other, it can be certainly stated that the said Arbitrator had exceeded his jurisdiction and had misconducted himself or with the proceedings. The word "misconduct" has not been defined under the Arbitration Act, but it can be reasonably said that all those acts performed by Arbitrator which are beyond the scope of the reference and which are beyond the scope of the contract will come within the mischief of misconduct. It has been held in Steel Authority of India Limited v. J. C. Budharaja, Government and Mining Contractor (JT 1999(6) SC 429 = 1999(3) Arb. LR 335 (SC).), that when the conditions of contract stipulate for no claim for delay in obtaining permission from forest department for excavation and still the damages have been awarded, such an award is against the terms of the contract and in such a situation the Arbitrator was held to have gone beyond his jurisdiction and such an act on the part of the Arbitrator amounts to misconduct and mala fide action. The ratio of this judgment is very near to the facts in hand. In Union of India v. M/s. Om Construction Company (1971(1) RCR (Civil) 143.), this High Court held that where there is admitted contract between the parties, in such a situation the Arbitrator must confine himself only to the scope of contract. He cannot travel beyond the terms and conditions of the contract unless the terms are challenged. In the cited case, admittedly, the contract between the parties stipulates that no compensation on account of extension of time would be granted. In such a situation Arbitrator or the Court cannot allow compensation on account of extension of time. Further the High Court held that if compensation is awarded under the award, such compensation is liable to be quashed being beyond jurisdiction.
In this view of the matter, this Court is of the opinion that the trial Court was in error when it affirmed the award dated 3-2-1994 on item No. 5 and awarded a sum of Rs. 32,907/- to the contractor. In fact, the learned trial Court did not go through sub-clause (C) of Clause 11. The citations relied upon by the learned counsel for the petitioner are not helpful to him. The Arbitrator was not called upon to interprets the contract itself, but was called upon to decide the claim of the parties as to whether any compensation is permissible or not. Resultantly, I do not see any merit in this revision and dismiss the same with no order as to costs.
8. Revision dismissed.