TaxTMI 
TaxTMI 
2005 (10) TMI 559
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....claims which were rejected by the Appellants. The Respondent, therefore, moved an application under Section 20 of the Arbitration Act, 1940 for referring the claims mentioned therein to arbitration. By an Order dated 11th November 1982, the District Judge held that only one claim was referable to arbitration and refused to refer the other three claims to arbitration. The Respondent filed an Appeal before the High Court. The High Court by its Order dated 7th June 1984 held that it was for the Arbitrator to decide whether the claims were to be awarded or not. The High Court held that reference could not be refused and, therefore, directed that all the four claims be referred to arbitration. Even before the High Court passed the Order dt. 7th June 1984, the Respondent had, on 31st March 1983, filed another application under Section 20 of the Arbitration Act, 1940. By this application the Respondent sought reference of 24 more claims. The District Judge by an Order dated 1st March 1985 allowed the application. The disputes were referred to two Arbitrators. One Shri M.K. Gambhir was appointed by the Appellants and Shri Leeladhar Aggarwal was appointed by the Respondent. The ....
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....st @ 18% p.a. on total amount of Claims except F.D.R. amounts beyond 29.5.95 upto the date of payment or decree of the Court whichever is earlier. I further award that the Respondents shall pay a part of the cost of arbitration and part of fees of arbitrator and Umpire to the extent of Rs. 20,000/- to the Claimants." The Appellants filed objections under Sections 30 and 33 of the Arbitration Act 1940, which were dismissed by the Trial Court on 16th July 1996. The Appellants filed an Appeal before the High Court and the Respondent filed a Cross-Appeal claiming compound interest. The High Court by the impugned Judgment dismissed both the Appeals. Civil Appeal No.2500 of 2001 is by the Appellants who are aggrieved by the dismissal of their objections. Civil Appeal No.2501 of 2001 is by the Respondents against dismissal of their claim for compound interest. Mr. Mohta has assailed the Award on five grounds: (1) that the Umpire was biased against the Appellants inasmuch as he was person, who regularly appeared for the Respondent in arbitration matters and assisted the Respondent in their arbitration cases; (2) that the Court had referred only 28 claims yet all the 39 claim....
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....pondents there would be documents showing his name/ appearance. None have been produced. So far as the second ground is concerned, we have seen the two applications made by the Respondent. It prima facie appears that the two applications were for referring, in all, 28 claims to arbitration. The Respondent then made 39 claims before the Arbitrators. The Umpire has awarded in respect of all the 39 claims. If claims not referred to Arbitration have been dealt with and awarded the Umpire would have exceeded his jurisdiction. However Mr. Moolchand Luhadia, partner of the Respondent who appeared in person, contended that all the claims were referred to the Arbitrators by the Order dt. 1st March 1985. He submitted that this is clear from the directions to the Arbitrators to decide all disputes arising between the parties. We are unable to accept this submission. The Order dt. 1st March 1985 allows "application dt. 9th April 1983 as part of application dt. 5th October 1981". It is in the context of claims raised in these two applications that the Arbitrators are instructed to decide all disputes between the parties. Mr. Lohadia then submitted that all claims were included in the two app....
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.... to be dealt with by an Umpire does not mean that the Umpire should give reasons for his Award. We further clarify that the Umpire now being appointed by us need not give reasons. Mr. Mohta had next contended that the Umpire has misconducted himself inasmuch as he had ignored the terms of the contract and awarded contrary to the terms of the contract. To this objection, the Respondent had submitted that such a point had neither been urged before the District Judge nor before the High Court. We, however, find that this point has in fact been urged both before the District Judge as well as before the High Court. This point, therefore, requires to be considered. In order to consider this point, some of the terms and conditions of the tender documents and the contract are required to be set out. The Respondent has given a declaration which inter-alia reads as follows: "1. I/We have visited the Site and fully acquainted myself/ourselves the local situation regarding materials, labour and other factors pertaining to the work before submitting this order. 2. I/We carefully studied the N.I.T. conditions of contract, specification, additional instructions, general rules and d....
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....d such last mentioned class of work is not entered in the schedule of rates of the district, then the contractor shall, within seven days of the date of this receipt of the order to carry out the work, inform the Engineer-in-Charge of the rate which it is his intention to charge for such class of work and if the Engineer-in-Charge does not agree to this rate he shall, by notice in writing, be at liberty to cancel his order to carry out such class of work and arrange to carry it out in such manner as he may consider advisable, provided always if the contractor shall commence work or incur any expenditure in regard thereto before the rates shall have been determined as lastly herein before mentioned, then and in such case he shall only be entitled to be paid in respect of the work carried out or expenditure incurred by him prior to the date of the determination of the rate as aforesaid according to such rate or rates as shall be fixed by the Engineer-in-Charge. In the event of a dispute, the decision of the Chief Engineer will be final. ...................................................................... Clause 23Except where otherwise specified in the contract the decision o....
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....m required to estimate to be required for making good the loss suffered by a worker by reasons of non-fulfillment of the conditions of the contract for the benefit of the worker or workers non-payment of wages or deductions made therefor which are not justified by the terms of contract or as a result of nonobservance of the aforesaid regulations. (e) Vis-'-vis the Government of Rajasthan the contractor shall be primarily liable for all payments to be made and for the observance of the regulations aforesaid without prejudice to his right to claim indemnity from his sub-contract. (f) The regulations aforesaid shall be deemed to be part of this contract and breach thereof shall be deemed to be breach of contract." Special Conditions of the contract inter-alia provide as follows: "31 LABOUR CONDITIONS:- (a) The contractor shall comply with the labour laws viz. Contractor Labour Regulation Act, Minimum Wages Act. Workman's Compensation Act, Industrial Disputes Act, etc. as may be current and shall furnish the returns and information as any required and be specified from time to time. The contractor will have to carry out registration with the office or Regional Labour Commis....
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.... the works are suitable for unskilled labour, any persons certified to him by the Engineers or by a duly authorized agent of the Engineers, in writing to be in need or relief and the contractor shall pay to such persons wages not below the minimum which the Government may have fixed in this behalf. Any disputes which may arise in the implementation of this provision shall be decided by the Engineer whose decision shall be final and binding on the contractor. (i) The contractor shall provide reasonable facilities to the satisfaction of the Engineer, for the labour employed by him, where no such natural facilities exists. The usual facilities are weather proof shelter for rest and supply or whole some drinking water, facilities for obtaining food reasonable washing and sanitary facilities special facilities for women workers, suitable residential accommodation, recreation and cultural activities, general sanction and health measures etc. (j) The implementation of any provision of this clause shall, in no way, entitle the contractor to claim compensation or rates higher than tendered in his contract. ......................................................................
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.... 1. Stone Ballast Local 1 km. 1 km. 2. Sand Piplia river 46 km. 46 km. 1) Any extra items if involved will be paid on the basis of the B.S.R. 1975 of Ajmer Irrigation on which 'G' Schedule is prepared plus the tendered premium of the Contractor. 2) If any construction material is not available at the sources indicated in the Lead Statement and has to be obtained from other sources intimated in writing by the Executive Engineer and if such other sources are nearer or further than the original source indicated recovery or extra payment will accordingly be made for the leaser or greater distance involved as per B.S.R. on which 'G' Schedule is based plus the premium tendered by the contractor." (emphasis supplied) Thus the Respondents had fully acquainted themselves with the local conditions and had agreed to execute the work as per specifications and at the rates specified in Schedule 'G'. It is only in respect of additional work that the Respondents were entitled to be paid at rates set out in B.S.R. 1975. Clause 12 provides that the Respondents had to make their own arrangements for petrol, diesel and lubricants. Clause 31 of the special conditions provi....
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.... minimum labour wages 5,27,638.60 26. Claim No. 26 Increased in minimum labour wages and increase in price in the rates 10,52,797.30 27. Claim No. 27 Loss of profit 3,07,038,00 28. Claim No. 28 Due to unlawful withdrawl of the running work 1,58,904.85 29. Claim No. 29 Over establishment and overheads beyond 16.5.81 (stipulated date of completion) 4,33,347.00 30. Claim No. 30 Difference of interest of F.D.R. 56,800.00 31. Claim No. 31 Wrong recovery from bills for sand department & extra carriage (6364.71 + 23206.90 29,571.61 32. Claim No. 32 Recovery of labour 2,730.30 33. Claim No. 33 Recovery of Storage charges 22,549.30 34. Claim No. 34 Material remain unused 5,856.00 35. Claim No. 35 Electric charges 10,205.20 36. Claim No. 36 Excess charges of hire charges of machine 37. Claim No. 37 Recoveries to be final 38. Claim No. 38 For screening of sand 4,165.00 39. Claim No. 39 Royalty charges on departmental material 6,243.30 Mr. Mohta relied upon the case of Bharat Coking Coal Ltd. vs. L. K. Ahuja & Co. reported in (2001) 4 SCC 86, wherein it has been held....
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....ll be allowed on the face. All side joints shall be vertical and beds horizontal and no joint shall be more than 12 mm. in thickness. Stones shall break joints in courses above and below by at least half the height of the courses. The joint in face work shall not be thicker than 12 mm. for single line chisel dressed stones. xxx xxx xxx" He submitted that this was the work which was required to be done under the Contract at the rate specified in Schedule G and yet the claim had been made at higher rates. He submitted that the Umpire had not rejected the claim. He submitted that even though the award was a lump sum award it was also in respect of claim No. 2. Mr. Mohta also referred to claim No. 26 which was for Rs. 10,52,797.30 for increase in minimum labour/wages and increase in prices. He pointed out that this claim was contrary to Clause 38 of the Contract and Clause 31 of the Special Conditions of the Contract which specifically provided that the contractor would not be entitled to claim compensation or higher rates because he had to implement labour laws or pay fair wages. In the same manner, Mr. Mohta took us through a large number of other claims to show that they we....
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....f India reported in (2002) 5 SCC 433 after the contract was entered into it was amended to provide that in cases where the claim is more than 1 lakh a reasoned award should be given. The arbitrator gave an unreasoned award. The challenge to it on the ground that the award was unreasoned was not accepted as this point was taken for the first time in the high court and also on the ground that a contract cannot be unilaterally altered. There can be no dispute to the well established principle set out in these cases. However these cases do not detract from the law laid down in Bharat Coking Coal Ltd's case or Continental Construction Co. Ltd's case (supra). An arbitrator cannot go beyond the terms of the contract between the parties. In the guise of doing justice he cannot award contrary to the terms of the contract. If he does so he will have misconducted himself. Of course if an interpretation of a term of the contract is involved than the interpretation of the arbitrator must be accepted unless it is one which could not be reasonably possible. However where the term of the contract is clear and unambiguous the arbitrator cannot ignore it. Mr. Luhadia submitted that the respondent....
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....ause 5.11(iii) of the Contract requires chiseling of stones on all sides. He however submitted that the rates given in Schedule G were only for chiseling of stones on one side. He submitted that this was clear from Note 1 under Schedule G which stated that Schedule G was based on B.S.R. 1975. He submitted that B.S.R. 1975 showed that such rates were only for chiseling stones on one side. He submitted that when the stone has to be chiseled on all sides the rates given in B.S.R. 1975 were to be applied. He submitted that claim No. 2 was based on those rates. We are unable to accept this submission of Mr. Luhadia. The Contract is very specific. The work specified in the Contract has to be done at the rates specified in Schedule 'G'. Even though Schedule G may be based on B.S.R. 1975 it is not exactly as B.S.R. 1975. Where in respect of a work specified in the contract the rate has been given in Schedule G that work could only be done at that rate. Works specified in the Contract does not become extra work. It is only in respect of extra work that rates specified in B.S.R. 1975 can be applied. To us it is clear that the claim No. 2 is contrary to the terms of the Contract. It is barred....