Bombay High Court
International Airports Authority Of ... vs Noor Mohammed And Sons on 5 August, 1992
Equivalent citations: 1993(1)BOMCR155
JUDGMENT S.M. Jhunjhunuwala, J.
1. This petition has been filed under section 30 of The Arbitration Act, 1940 to set aside the Award dated 6th June 1989 made and published by one Ramarao, sole arbitrator.
2. The petitioners are a statutory body constituted by and under the provisions of the International Airport Authority Act, 1971. The respondents are a partnership firm, inter alia, carrying on business of building and civil engineering contractors. On or about 1981, the work of constructing a new International Terminal Complex Phase II at Sahar Airport. Bombay, was being carried out by the petitioners in pursuance of their statutory functions, powers and duties. As part of the said constructions the petitioners invited tenders in 1981 for the construction of RCC Flyover at Bombay Airport. The notice inviting tenders was duly published and in response thereto, the respondent submitted their tender by which the respondents offered to carry out the work of constructing the RCC Flyover at Bombay Airport subject to the terms and conditions set out therein. The petitioners accepted the tenders submitted by the respondents and by a letter dated 15th January 1982, the petitioners communicated their acceptance of the tender of the respondents. The petitioners awarded the work of constructing the Flyover to the respondents. The value of the work under the contract was of Rs. 2,24,84,513/-. The said letter of acceptance also provided that the work has to commence on the 10th day after the issue of the letter and was required to be completed within a period of 12 months thereafter. The said period of 12 months was due to expire on 24th January 1983. The contract in respect of the said work which was entrusted to the respondents was executed on or about 16th January 1982. The period for completion of the said work was initially extended upto 30th June 1983 and subsequently upto 30th June 1984. According to the petitioners, the 100% site was handed over to the respondents as follows : 50.29% by 11th March 1983, 51.76% by 15th April 1983, 57.44% by 23rd May 1983, 78.86% by 1st July 1983, 88.15% by 17th November 1983 and 100% by 20th December, 1983. Although it was canvassed across the bar that 100% site was handed over to the respondents by 20th December, 1983, the petitioners in para 10 of the petition have stated that despite 95% of the site having been made available by the petitioners on 19th December, 1983, less than 25% of the contractual work had been carried out by the respondents. The respondents were required to carry out the work entrusted to them in accordance with the terms of the said contract. Since the said work was not completed within the stipulated time and according to the petitioners the respondents were unable or unwilling to carry out the said work despite having been given a number of opportunities to remedy the situation, the petitioners called upon the respondents by a notice dated 25th February 1984 to show cause under Clause 3 of the terms and conditions of the contract as to why the said contract should not be rescinded. The petitioners by their letter dated 5th May 1984 rescinded the said contract. According to the petitioners, the respondents had delayed and suspended the contractual work and that in the opinion of the Engineer in charge, the respondents had failed to complete the contract by the extended date of completion. In view of the said letter dated 5th May 1981 addressed by the petitioners to the respondents, the respondents raised 28 claims against the petitioners and by their letter dated 6th June 1984, called upon the petitioners to settle the same within the period mentioned therein. By their further letter dated 13th July 1984, the respondents called upon the petitioners to appoint arbitrator in accordance with the arbitration agreement entered by and between the petitioners and the respondents as contained in the said contract to settle the claims and disputes. The 28 claims made by the respondents against the petitioners are as under :
Claim Particulars of Amount
No. Claim Claimed
1. Claim for the works done against the agreement
items of work. 12,50,000/-
2. Balance of payments against the extra/substituted
items of work. 5,30,000/-
3. Cost of stone, metal and sand left at the site on the
termination of contract. 2,00,000/-
4. Payment under 8th R.A. Bill 4,79,404/-
5. Loss of expected profit from the remaining work. 23,50,838/-
6. Expenditure on overheads establishment during the
extended period of Contract (i.e. 15 1/3 months). 11,49,875.80
7. Loss of hire charges for the machinery, under-
utilised during the extended period of Contract
(i.e. 25-1-1983 to 5-5-84). 10,30,667/-
8. Loss of hire charges for the scaffolding and shuttering
materials, under-utilised during the extended period
(i.e. 25-1-83 to 5-5-84) 7,66,666/-
9. Reimbursement of expenditure on under-utilised
labour force for the prolonged period (i.e. 25-1-83 to
5-5-84) 4,60,000/-
10. Increase in cost of labour and material during the
extended period of contract. 14,89,155/-
11. Infructuous expenditure during the 7th months out
of the stipulated period of construction. 15,12,000/-
12. Compensation for extra expenditure incurred for
extending bank guarantees 3,16,000/-
13. Refund of security deposit which forfeited under
Clause 3(a) of agreement. 1,00,000/-
14. Depreciation and ousting caused to the machinery &
plant from 5-5-84 to December, 85 22,00,000/-
15. Increased labour wages over the original rate. 4,40,000/-
16. Reimbursement of money advanced to the labour-gangs
irrevocable due to rescinding of contract. 1,25,000/-
17. Claim towards the value of site offices, godowns, etc.
which were not utilised. 1,15,000/-
18. Claim for executing the RCC items at greater heights
than that specified in the agreement. 1,63,115/-
19. Claim for the value of copper plate supplied to the
petitioner. 37,800/-
20. Extra expenditure for providing M.S. Girders for
supporting the shuttering. 1,26,000/-
21. Extra expenditure for providing M.S. Box girders
for supporting the shuttering. 3,02,400/-
22. Claim for re-construction of labour huts. 40,000/-
23. Claim for expenditure incurred in straightening the
bent steel bars. 1,13,000/-
24. Claim towards the labour charges for filling earth. 50,880/-
25. Claim towards the balance payment due to them. 10,00,000/-
26. Claim towards the carriage of construction materials. 17,00,000/-
27. Future interest at the rate of 21% p.a. from the date
of appointment of arbitrator. 21% P.A.
28. Cost of arbitration. 5,00,000/-
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Total : 1,85,47,800/-
3. By a letter dated 27th July 1984, the Chief Engineer of the petitioners appointed one O.P. Mittal as the sole arbitrator to decide and make his Award regarding the claims and disputes raised by the respondents as mentioned in the list enclosed thereto and also to decide and make his Award with regard to any counterclaims as may be preferred by the petitioners subject always to their eligibility under the arbitration agreement. The said O.P. Mittal entered upon the reference. However, on or about 18th October 1985, a petition was filed by the respondents in this Court being Arbitration Petition No. 130 of 1985 for removal of the said O.P. Mittal as arbitrator and for the appointment of new arbitrator in his place. By an order dated 4th March 1986, passed in the said Arbitration Petition No. 130 of 1985, by consent of the petitioners and the respondents, one M.A. Rao, a retired Member of the Railway Board was appointed as the sole arbitrator in place of the said O.P. Mittal. Consent terms were filed in the said Arbitration Petition No. 130 of 1985 for appointing the said M.A. Rao as the sole arbitrator in place of the said O.P. Mittal. In the said consent terms, it is inter alia, provided as under :
"By consent Shri O.P. Mittal, the second respondent herein, is substituted by Shri M.A. Rao as Sole Arbitrator in the matter and all the disputes and differences between the petitioners and the First respondents contained in the pleadings filed before Shri O.P. Mittal, the Second respondent herein, are referred to the sole arbitration of Shri M.A. Rao, Retired Member, Railway Board, New Delhi".
4. On or about 15th April 1987 the said M.A. Rao resigned as arbitrator on ground of health. Thereupon on or about 15th May 1987, Arbitration Petition No. 124 of 1987 was filed in this Court by the respondents in which the respondents prayed for appointment of fresh arbitrator. By an order dated 6th November 1987, passed in the said Arbitration Petition No. 124 of 1987 by consent of the petitioners and the respondents, the said C. Ramarao, a Retired Director General of Works of the CPWD was appointed as the sole arbitrator in place of the said M.A. Rao. Consent terms were filed in the said Arbitration Petition No. 124 of 1987 for appointment of the said C. Ramarao as sole arbitrator. The said consent terms, inter alia, provided as follows :
"By consent all the disputes and differences between the petitioners and the respondents, which were previously referred to the Sole Arbitration of Shri M.A. Rao, Sole Arbitrator, who has since resigned from the case, are referred to the Sole Arbitration of Shri C. Rama Rao and Retd. Director Gen. of Works CPWD."
5. The arbitrator entered upon the Receiver and the first meeting before him was held on 29th March 1988. The time for making and publishing the Award was extended from time to time, the last of such extension being upto 14th June 1989. The respondents have filed their claim-statement containing the said 28 claims. The petitioners filed their counter-statement of facts for all the said 28 claims and also filed five counter-claims. Neither party led any oral evidence before the arbitrator but relied on the voluminous documentary evidence produced before him. In all 28 hearings were held before the arbitrator, the final hearing being held on 12th April 1989 when both the parties concluded their arguments subject to the petitioners' advocate submitting his written comments on the legal points within 10 days therefrom. The arbitrator received the legal comments from the advocate for the petitioners along with his letter dated 14th April 1989 which arbitrator considered while making the said Award. On 6th June, 1989 the arbitrator has made and published his Award. Out of the 28 claims raised by the respondents against the petitioners, 13 claims have been partly allowed, claim for refund of security deposit has been fully allowed and the rest of the claims have been rejected by the arbitrator. The five counterclaims raised by the petitioners against the respondents have been rejected by the arbitrator. In the net result, the petitioners have been directed to pay to the respondents the sum of Rs. 51,88,593/- in settlement of all the claims and counterclaims with simple interest at 15% per annum on the amount of Rs. 3,82,115/- due in the final bill with effect from 27th July 1984 till the date of payment or decree whichever is earlier. The petitioners have also been directed to pay interest on the sum of Rs. 48,06,478/- at the rate of 15% per annum with effect from 7th September, 1989 if the awarded amount of Rs. 51,88,593/- is not paid within 3 months of the date of the Award till the actual date of payment or decree whichever is earlier. The said Award has been filed in this Court and numbered as Award No. 120 of 1989. The notice of filing of the Award was served upon the petitioners on 8th August 1989 and the petitioners have filed the present petition for setting aside the said Award on 13th September, 1989.
6. Mr. Shah, the learned Counsel appearing for the petitioners has submitted that the arbitrator is guilty of legal misconduct in proceeding on the footing that the rescission of the said contract by the petitioners was bad. In the submission of Mr. Shah, under sub-clause (c) of Clause 3 of the terms and conditions of the said contract, the Engineer in charge of the petitioners was conferred the absolute and conclusive power to determine the said contract in the circumstances mentioned therein and as such, the arbitrator had no jurisdiction to decide upon the validity of rescission thereof. Since the arbitrator has proceeded to decide about the validity of rescission of the said contract, the arbitrator acted without jurisdiction and as such, the said Award is vitiated. Mr. Shah has further submitted that since the arbitrator has proceeded to decide upon validity of rescission of the said contract, the said Award is `otherwise invalid' and as such, liable to be set aside by this Court. Mr. Shah has also submitted that the said contract provides for extension and in terms of the said contract, when the period for performance thereof was extended, the rates remained the same. In the submission of Mr. Shah, any claim based on prolongation of the original period for performance of the said contract giving rise to damages, extra expenditure or overheads was not permitted. Since the arbitrator has entertained such claims put forward by the respondents, the arbitrator has proceeded in contravention of the terms and conditions of the said contract and as such, the said Award is bad and liable to be set aside. Mr. Shah has further submitted that the terms and conditions of the said contract and in particular Clause 10(c) thereof prohibited the grant of escalation costs and extra expenses incurred by the respondents and since the arbitrator has ignored the terms of the said contract while awarding such claims to the respondence, there is an error of law apparent on the fact of the said Award and as such, the same is liable to be set aside.
7. In support of his above submissions, Mr. Shah has relied upon the case of Associated Engineering Company v. Government of Andhra Pradesh and another, , where it has been held that if the arbitrator acts in manifest disregard to the terms of the contract, he would be acting without jurisdiction and award would be liable to be set aside. Reliance has also been placed upon the case of Union of India v. Shri Om Prakash, , where it has been held that the words "or is otherwise invalid" in Clause (c) of section 30 of The Arbitration Act, are wide enough to cover all forms of invalidity including invalidity of the reference. Reliance has also been placed upon the case of K.I. Pouloso v. State of Kerala and another, , where it has been held that if an arbitrator ignores the material documents, it amounts to misconduct of the proceedings before him. Mr. Shah has also placed reliance on the case of Jivarajbhai Ujamshi Sheth and others v. Chintamanrao Balaji and others, , in support of his submission that as the arbitrator exceeded his jurisdiction, the said Award is invalid. Reliance has also been placed on the case of Vishwanath Sood v. Union of India and another, , in support of his submission that what was required to be decided by the Engineer in Charge of the petitioners under the terms of the said contract could not be decided by the arbitrator and since the arbitrator ignored the terms of the said contract the said Award is vitiated.
8. Mr. Subramaniam, the learned Counsel appearing for the respondents, has submitted that due to various delays and hindrances caused by the petitioners from time to time in completion of works by the respondents, the said works could not be completed by the stipulated date of completion. Mr. Subramaniam has further submitted that there was specific condition of contract that the site for the entire work would be made available to the respondents. It was absolutely essential that the entire site and drawings were made available to the respondents immediately on award of the works so that the respondents could start work simultaneously in various portions of the site so as to ensure maximum progress and completion of entire work in all respects within the limited contract period of 12 months specified in the said contract. The petitioners had caused inordinate delay in handing over the site and drawings required for works and could hand over only a small portion of the site and drawings even after the expiry of the whole contract period by 24th January 1983. Mr. Subramaniam has further submitted that in the light of the specific conditions in the said contract that the site for the work was to be made available immediately, the delay in handing over the site by the petitioners meant a serious breach of the said contract on the part of the petitioners. It is also submitted on behalf of the respondents that the petitioners were not to rescind the said contract since the petitioners themselves committed serious breaches thereof by not handing over the full site and not issuing full drawings to the respondents. Mr. Subramaniam has further submitted that the correspondence ensued between the parties prior to making reference to arbitration clearly establish that the respondents had at all times gone ahead with the execution of the said works specifically on the basis and understand that the revised rates and the revised terms as demanded by the respondents would be granted to the respondents by the petitioners. In the submission of Mr. Subramaniam, the respondents had reserved their rights to claim such revised rates and revised terms and also reserved their rights to claim compensation from the petitioners for loss and damages suffered by the respondents on account of delays and hindrances caused by the petitioners from time to time and breach of the said contract committed by the petitioners and as such, entitled there to from the petitioners and the arbitrator had jurisdiction to adjudicate thereupon and has justly and properly awarded to the respondents. Mr. Subramaniam has also submitted that the arbitration agreement between the petitioners and the respondents is wide enough to cover within its scope and ambit all disputes arising out of or anywise relating to the said contract and as such, the arbitrator had the jurisdiction to arbitrate and adjudicate upon the said 28 claims of the respondents against the petitioners. He has further submitted that the decision of the Engineer in charge was made final subject to the fact that the obligation of the petitioners could be complied with in terms of the said contract. The initial breaches committed by the petitioners in not handing over the entire site to the respondents continued and in the circumstances, the respondents could not be deprived of their right to have the reference of the claims arising in consequence of the breach of the said contract committed by the petitioners to arbitration. In the submission of Mr. Subramaniam, the arbitrator has neither ignored express terms of the said contract nor acted contrary thereto but has interpreted and construed the same and on interpretation and construction thereof, has awarded claim to the respondents while acting within the jurisdiction vested in him. Mr. Subramaniam has also submitted that since the petition has been amended on 18th December 1989, incorporating additional grounds to challenge the said Award and such amendments being beyond the period of 30 days from the date of service of notice of the filing of the said Award upon the petitioners, the same are barred by limitation and as such, the petitioners are not entitled to challenge the said Award on the basis of the amendments contained in the petition. Mr. Subramaniam has finally submitted that there is neither an error of law on the face of the said Award nor the said Award is vitiated or otherwise invalid.
9. Clauses 3 and 10(c) of the terms and conditions of the said contract read as under :
"Clause 3. The Engineer-in-Charge may without prejudice to his right against the contractor in any respect of any delay or inferior workmanship or otherwise or to any claims for damage in respect of any breaches of the contract and without prejudice to any rights or remedies under any of the provisions of this contract or otherwise and whether the date for completion has or has not elapsed by notice in writing, absolutely determine the contract in any of the following cases.
(i) if the contractor having been given by the Engineer-in-Charge a notice in writing to rectify, reconstruct or replace any defective work or that the work is being performed in any inefficient or otherwise improper or unworkman like manner shall omit to comply with the requirements of such notice for a period of seven days thereafter or if the contractor shall delay or suspend the execution of the work so that either in the judgment of the Engineer in Charge (which shall be final and binding) he will be unable to secure completion of the work by the date for completion or he has already failed to complete the work by that date.
(ii) if the contractor being a Company shall pass a resolution or the Court shall make an order that the Company shall be wound up or if a receiver or a manager on behalf of a creditor shall be appointed if circumstances shall arise which entitle the Court or creditor to appoint a receiver or a manager or which entitle the Court to make winding up order.
(iii) if the contractor commits breach of any of the terms and conditions of this contract.
(iv) if the contractor commits any acts mentioned in Clause 21 hereof.
Clause 10(c). If during the progress of the works, the price of any materials, incorporated in the works (not being materials supplied from the Engineer-in-Charge's stores in accordance with Clause 10 hereof) and/or wages of labour increases as a direct result of the coming into force of any fresh law, or statutory rule or order (but not due to any changes in sales tax) and such increase exceeds ten per cent of the price and/or wages : Prevailing "at the time of receipt of the tender" for the work and the contractor thereupon necessarily and properly pays in respect of that material (incorporated in the works) such increased price and/or wages : Prevailing "at the time of receipt of the tender' (incorporated in the works) such increased price and/or in respect of labour engaged on the execution of the work such increased wages, then the amount of the contract shall accordingly be varied provided always that any increase so payable is not, in the opinion of the Chief Engineer/Project Director (whose decision shall be final and binding) attributable to delay in the execution of the contract within the control of the contractor. Provided, however, no reimbursement shall be made if the increase is not more than 10% of the said prices/wages, and if so, the reimbursement shall be made only on the excess over 10% and provided further that any such increase shall not be payable if such increase has become operative after the contract or extended date of completion of the work in question.
10. If during the progress of the works, the price of any material incorporated in the works (not being material supplied from the Engineer-in-Charge's stores in accordance with Clause 10 hereof) and/or wages of labour is decreased as a result of the coming into force of any fresh law or statutory rule or order (but not due to any changes in sales tax) and such decrease exceeds ten per cent of the prices and/or wages prevailing at the time of receipt of the tender for the work, International Airports Authority of India shall in respect of materials incorporated in the works (not being materials supplied from the Engineer-in-Charge's stores in accordance with Clause 10 hereof) and/or labour engaged on the execution of the work after the date of coming into force of such law, statutory rule or order be entitled to deduct from the dues of the contractor such amount as shall be equivalent to difference between the price of materials and/or wages as they prevailed at the time of receipt of the tender for the work minus ten per cent thereof and the prices of material and/or wages of labour on the coming into force of such law, statutory rule or order.
11. The contractor shall, for the purpose of this condition keep such books of account and other document as are necessary to show the amount of any increase claimed or reduction available and shall allow inspection of the same by a duly authorised representative of International Airports Authority of India and further shall, at the request of the Engineer-in-Charge furnish verified in such a manner as the Engineer-in-Charge may require, any documents so kept and such other information as the Engineer-in-Charge may require.
12. The Contractor shall within a reasonable time of his becoming aware of any alteration in the price of any such material and/or wages of labour give notice thereof to the Engineer-in-Charge stating that the same is given pursuant to this condition together with all information relating thereto which he may be in a position to supply."
Clause 25 of the terms and conditions of the said contract which incorporates the arbitration agreement between the petitioners and the respondents is wide. It reads as under
"Clause 25. Except where otherwise provided in the contract all questions and disputes relating to the meaning of the specification designs, drawings and instructions herein before mentioned and as to the quality of workmanship or materials used on the work or as to any other question claim, right matter or thing whatsoever, in any way arising out of or relating to the contract, designs, drawings, specifications, estimates, instructions, orders or these conditions or otherwise concerning the work, or the execution or failure to execute the same whether arising during the progress of the work or after the completion or abandonment thereof shall be referred to the sole arbitration of the person appointed by the Director of Engineer, International Airports Authority of India, in charge of the work at the time of dispute or if there be no Director of Engineering the administrative head of the Department of Engineering of said Authority at the time of such appointment. It will be no objection to any such appointment that the Arbitrator so appointed is a International Airports Authority of India's Employee that he had to deal with the matters to which the contract relates and that in the course of his duties as International Airports Authority of India's Employee he had expressed views on all or any of the matters in dispute or difference. The Arbitrator to whom the matter is originally referred being transferred or vacating his office or being unable to act for any reason, such Director of Engineering or administrative head of the Department of Engineering as aforesaid at the time of such transfer, vacation of office or inability to act, shall appoint another person to act as Arbitrator in accordance with the terms of the contract. Such person shall be entitled to proceed with the reference from the stage at which it was left by his predecessor. It is also a term of this contract that no person other than a person appointed by such Director of Engineering or administrative head of the Department of Engineering of the Authority as aforesaid should act as Arbitrator and if for any reason, that is not possible, the matter is not to be referred to arbitration at all. In all cases where the amount of the claim in dispute is Rs. 50,000/- (Rupees fifty thousand) and above, the Arbitrator shall give reasons for the award.
Subject as aforesaid the provisions of the Arbitration Act, 1940, or any statutory modification or re-enactment thereof and the rules made thereunder and for time being in force shall apply to the arbitration proceeding under this clause.
It is a term of the contract that the party invoking arbitration shall specify the dispute or dispute to be referred to arbitration under this clause together with the amount or amounts claimed in respect of each such dispute.
It is also a term of the contract that if the contractor(s) does/do not make any demand for arbitration in respect of any claim(s) in writing within 90 days of receiving the intimation from the authority that the Bill is ready for payment the claim of the contractor(s) will be deemed to have been waived and absolutely barred and the authority shall be discharged and released of all liabilities under the contract in respect of these claims.
The Arbitrator(s) may from time to time with consent of the parties enlarge the time for making and publishing the award".
13. The words `arising out of' or `in relation to' contained in the said arbitration agreement are sufficiently wide to comprehend the matters in respect whereof the decision of the Engineer in charge of the petitioners has been agreed to be final and binding on the parties. In the facts and circumstances of the case, it is abundantly clear that the reference to arbitration in pursuance to the said arbitration agreement between the petitioners and the respondents was in connection with or relating to all the claims of the respondents against the petitioners. The petitioners have accepted this position before the Arbitrator and did not challenge the jurisdiction of the Arbitrator. In the said letter dated 27th, July 1984 by which the Chief Engineer of the petitioners had appointed the said O.P. Mittal as the sole Arbitrator, it is recorded that the appointment was made to decide and make the Award regarding the claims and disputes raised by the respondents as mentioned in the list enclosed therewith and also to decide and make his Award with regard to any counterclaims that might be preferred by the petitioners against the respondents. Even on 4th, March 1986 when the consent terms were filed in the said Arbitration Petition No. 130 of 1985, it was agreed and accepted by and between the petitioners and the respondents that all the disputes and differences between the petitioners and the respondents contained in the pleadings filed before the said O.P. Mittal were referred to the sole arbitration of the said M.A. Rao. Same is the admitted position for reference of the disputes and differences to the said C. Rama Rao as per the consent terms filed on 6th November 1987 in Arbitration Petition No. 124 of 1987. These consent orders of references by themselves constituted arbitration agreements by and between the petitioners and the respondents for reference of said 28 claims of the respondents against the petitioners and counterclaims of the petitioners against the respondents to arbitration as provided therein. Moreover, both the petitioners and the respondents were conscious and aware that the matters to be decided by the Engineer-in-charge of the petitioners under the terms of the said contract and claims of the respondents arising therefrom were for consideration before the arbitrator and with such knowledge proceeded with the said reference which culminated into the said Award. Such Award can not be faulted with since submission to arbitration can easily be enlarged by inclusion of the question of liability to pay in the statements before the Arbitrator. In the decision reported in National Fire and General Insurance Co. Ltd. v. Union of India and another, , an arbitration clause in a fire insurance policy provided that if any difference arises as to the amount of any loss or damage, such difference shall independently of all other questions be referred to the decision of the arbitrators. The dispute was referred to the arbitration and in the statement of claim, the parties put forward a claim which was not actually covered by the reference. The party against whom the award had gone contended that the arbitrators had acted without jurisdiction in deciding that claim which was not initially referred. The Calcutta High Court over ruled the contention holding that it was open to the parties to enlarge the scope of a reference by inclusion of a fresh dispute and that they must be held to have done that when they filed their statements, putting forward claims not covered by the original agreement. It was further held that the statements before the arbitrators satisfied the requirements of section 2(a) of the Arbitration Act, and that it was competent to the arbitrators to decide the dispute. The decision of the Calcutta High Court was approved by the Supreme Court in the case of Waverly Jute Mills Co. Ltd. v. Raymon & Co. (India) P. Ltd., . Disputes pertaining or anywise relating to the said conditions of the said contract were in fact referred to arbitration with the consent of the parties and in the circumstances it was open to the arbitrator to consider the same and give such findings thereupon as he thought proper which are binding on the parties. In this connection Mr. Subramaniam has put reliance on the case of Union of India v. Mehta & Chavan, in Arbitration Petition No. 86 of 1978 in Award No. 17 of 1978 decided on September 5, 1979 by Pendse, J. In that case the dispute related to a railway contract and the contract provided that with regard to certain items, the Engineer had to issue a certificate, and once the certificate is issued, that would be final and conclusive. It was held that the questions pertaining to rescission of the contract and entitlement of railways to forfeit security were not concluded by such certificate and the award was uphold. Appeal preferred from the said judgment was summarily rejected by the Division Bench of this Court.
14. The petitioners had not contended before the arbitrator that any of the said claims of the respondents pertaining or anywise relating or arising out of the said contract were by reason of any terms in the said contract not referable to arbitration or that the arbitrator had no jurisdiction to arbitrate thereupon. The jurisdiction of the arbitrator was not challenged by the petitioners. On the contrary, the petitioners submitted to the jurisdiction of the arbitrator and participated in the proceedings before him for adjudication thereof without any protest whatsoever, Despite the said terms and conditions in the said contract, both the petitioners and the respondents did agree to have adjudication of the arbitrator upon claims and counterclaims filed in the proceedings before him on their merits. In the circumstances of the case, the petitioners are now estopped from challenging the jurisdiction of the arbitrator to arbitrate in the said claims and counterclaims referred to him. As held by the Supreme Court in the case of Prasan Roy v. The Calcutta Metropolitan Development Authority and another, , long participation and acquiescence in proceedings before the arbitrator preclude the other party from contending that the proceedings are without jurisdiction. In the facts and circumstances of the case, it is not possible to hold that the arbitrator ignored the terms of the said contract or acted contrary thereto.
15. As rightly submitted by Mr. Subramanian, in a petition under section 30 of the Arbitration Act, 1940, it is not open to the Court to go into the questions of law and fact referred to arbitrator. When the disputes were referred to the Arbitrator in respect of various items including these where the decision of the Engineer in charge of the petitioners was agreed to be final and binding on the parties and such reference to arbitration having been made by the petitioners themselves through their Chief Engineer, and the petitioners having taken no objection before the arbitrator as regards his jurisdiction to decide the same, it is now not open to the petitioners to contend that the arbitrator had no jurisdiction to decide or adjudicate upon the same. The question of interpretation of terms of the contract is a question of law and reference in respect thereof being made to the arbitrator, even if there is misconstruction or misinterpretation of a term or terms of the contract by the arbitrator, it cannot be considered as an error of law on the face of the Award and the Award can not be set aside on that ground. It was for the arbitrator to interpret the provisions of the said contract including the said Clauses 3 and 10(c) thereof since he had the jurisdiction to do so. On such interpretation, the arbitrator has awarded the compensation towards escalation cost and the extra expenses which the respondents had to incur because of delay on the part of the petitioners in handing over the site and requisite drawings. The arbitrator has reached to his conclusions by interpreting and construing the terms of the said contract and not by merely looking at the said contract and as such, neither there is an error of law on the face of the said Award nor the same is vitiated in any manner whatsoever. In this view of mine, I am supported by the decision of the Supreme Court in the case of Sudarsan Trading Co. v. Government of Kerala, where it has been held that interpretation of contract is a matter for the arbitrator and when the amounts have been awarded by the arbitrator by taking a particular view of the contract, the Court can not interfere with it and substitute its own decision. Even in the case of Union of India v. Abhoy Sarkar and another, , the Calcutta High Court has held :
"It is for the arbitrator to interpret the provisions of the contract. There is no doubt that before the Arbitrator the present railway referred to several clauses of the contract but the Arbitrator had the jurisdiction to interpret clauses of contract and if on such interpretation he awarded the compensation towards the esclation cost and the extra expenses which the contractor had to incur because of the delay of the railway in giving possession of the site and also for giving the possession of the site piecemeal then it cannot be said that he committed any misconduct."
In the facts of this case also, it can not be said that the arbitrator committed any misconduct.
16. The limits of jurisdiction of the Court to challenge the Award are now well settled. While considering the petition under section 30 of the Arbitration Act, the Court does not act as an Appellate Court. It can only interfere with the award if the arbitrator misconducts himself or the proceedings or the award has been made after the issue of an Order of the Court superseding the arbitration or if the arbitration proceedings have becomes invalid under section 35(c) of the Act or award has been improperly procured or is otherwise invalid. As held in Hindustan Tea Co. v. K. Sashikant & Co., , the arbitrator is made the final arbiter of the dispute between the parties referred to him. The award is not open to challenge on the ground that the Arbitrator has reached a wrong conclusion or has failed to appreciate the facts.
17. In support of his submission that the said Award is proper, valid and binding both upon the petitioners and the respondents, Mr. Subramanian has relied upon unreported judgment of this Court in the case of M/s. Noor Mohammed and Sons v. International Airports Authority of India, (same parties as in this petition) in Appeal No. 213 of 1988 in Arbitration Petition No. 125 of 1987 delivered on 21st February, 1991 by the Division Bench presided by Pendse, J., of which I was a party. In the facts and circumstances similar to the facts of this case, it has been held in that case that despite the terms of the contract, the arbitrator had the jurisdiction to adjudicate upon the claims referred to him. Once there is no dispute as to the contract, what is the interpretation of that contract is a matter for the arbitrator and on which the Court cannot substitute its own decision. A Special Leave petition preferred to the Supreme Court there against stands dismissed. Reliance has also been placed by Mr. Subramanian on unreported judgment of this Court in the case of The Chief Engineer (Sewerage Project) Municipal Corporation of Greater Bombay v. M/s. Asian Techs Ltd., delivered on 27th March 1992, by Variava, J., in Arbitration Petition No. 241 of 1987 wherein it has been held that if two views are possible, then even though the Court is inclined to take a different view from that of the arbitrator, the Court can not set aside the award. This is because the arbitrator is chosen by the parties and entrusted with the power to decide what is submitted to him. Whether particular term of the contract in the facts of the case applied or not is purely a question of interpretation of the contract. This is the very question referred to the arbitrator. If two interpretations are possible and the arbitrator has accepted one of the interpretations, even though the Court may not agree with that interpretation, the Court can not interfere. While relying upon the case of Associate Engineering Co. (supra), Mr. Subramanian has rightly submitted that if the arbitrator commits error in the construction of the contract that is an error within his jurisdiction and the Court in the proceedings under section 30 of the Arbitration Act cannot correct such an error. The Arbitrator has not travelled outside the permissible territory and has not exceeded his jurisdiction in making the said Award. There is no error apparent on the face of the Award.
18. Mr. Subramanian lastly submitted that the grounds of challenge to the said Award subsequently added in the petition by way of amendment thereof must be treated as a new application filed after expiration of period of 30 days of service of notice of filing of the Award upon the petitioners and as such, barred by limitation. The petitioners had originally filed the petition on 13th September, 1989 and thereafter various grounds were added and the petition was amended on 18th, December, 1989.
19. If a party wants an award to be set aside on any of the grounds mentioned in section 30 of the Arbitration Act, it must apply within 30 days of the date of service of notice of filing of the award as provided in Article 119(b) of the Limitation Act, 1963. If no such application is made, the award cannot be set aside on any of the grounds specified in section 30 of The Arbitration Act. Though Mr. Subramanian is right in his submission and grounds of challenge to the said Award which are not mentioned in the original objection of the petitioners taken in the petition are not to be entertained, in the view which I have taken as aforesaid, I have taken into consideration the additional grounds of the challenge to the said Award taken by the petitioners by way of amendment to the petition.
In the result, the petition is dismissed with costs.
Issuance of certified copy of minutes expedited.