9911796707
TMI Blog2003 (3) TMI 532X X X X Extracts X X X X X X X X Extracts X X X X ..... aged in the construction business. The respondent is the Municipal Corporation of Greater Bombay. By its Tender Notice dated 4th April, 1988, the respondent invited sealed item rates tenders for the work of construction of tunnel between Sewree and Futka tank which was estimated to cost Rs. 15,03,29,970 (excluding the water charges, sewerage charges and municipal supervision charges). The appellant which was prequalified for the construction work submitted its bid to the respondent on 15th June, 1988 which was opened on the same day. The parties held discussions on certain matters between 24th and 28th June, 1988 but award of the contract was delayed for one reason or another for a long time. Eventually the respondent issued the Letter of Intent to the appellant on 10th August, 1989. One of the conditions of the contract is use of a Tunnel Boring Machine ("TBM") for excavation of the tunnel. The TBMs are not manufactured in India. Since TBMs are not manufactured in India, the appellant had necessarily to import the TBMs for construction of tunnel. The appellant entered into an agreement for hire of the TBM of WIRTH make with M/s. Murger A.G. The costs of hire of the WIRTH TBM was S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tition. The determination of this issue turns purely on the construction of the various terms of the contract. This is so mentioned in paragraph 18.1 of the Award, therein a reference is made to clause 18(3) of the Instructions to Tenderers. The learned Arbitrator has thereafter reproduced various clauses which are as follows : "Clause 75 : ( General Conditions of Contract ) 75. Subsequent Legislation. If, after the date thirty days prior to the latest date for submission of tenders for the works, there occur changes to any National or State Statute. Ordinance, decree on other law or any Regulation or Bye-law of any local or other duly constituted authority or the introduction of any such State, Statute, Ordinance, Decree, Law, Regulation or Bye-law which causes additional or reduced cost to the contractor, other than under the provisions of condition No. 74 in the execution of the works, such additional or reduced cost shall be certified by the Engineer and shall be paid by or credited to the Corporation and the contract price adjusted accordingly. 18(1) The unit rates and prices shall be quoted by the tenderer entirely in Indian Rupees. A tenderer expecting to incur expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dollars. The learned Arbitrator observed that: "It is quite difficult to appreciate how an Indian bidder can express the need to be paid either in US Dollars or in any other currency. In fact, the words "tenderer s home country" in IT 18(1) can only mean the home country of a foreign tender. The home country of an Indian tenderer can only be India. Thereafter interpreting clause 18(2) it is held that in the case of an Indian bidder the question of exchange risk does not arise as contemplated by IT 18(2). The learned Arbitrator concluded that it is clear from the very wording of the clause that it can only apply to foreign bidders. The reason is that the contract can provide for making payment to the contractor in foreign currencies only when the bidder is a foreign bidder. A domestic bidder is not entitled to be paid in foreign currency. The conclusion of the learned Arbitrator is summed as follows: 18.8. To sum up, the provisions contained in IT 18(2) and clause 75 of the special Conditions of contract do not support the claim made by the claimant under this head. Accordingly, my finding on issue ( c ) is in the negative. The learned Arbitrator made his award on 30-9-1994 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge rate provided by an authoritative source such as the Central Bank - on a date specified in the bidding documents. The contract is written in the currency of the bid and payment is made in the same currency. ( iii )Extract of the "Guidelines-Procurement under IBRD Loans and I DA Credits" issued by the World Bank, inter alia clause 2.26- "When the bid price is stated in one currency but the bidder has also requested in other currencies and has expressed the requirements in other currencies as a percentage of the bid price, the exchange rates to be used for purpose of payment shall be those used by the bidder in this bid, so as to ensure that the value of the foreign currency portions of his bid price is maintained without any loss or gain". ( iv )The letter dated 23rd November, 1991 indicating that the BMC had made inquiries in respect of other World Bank assisted projects such as the Narmada Dam project and had found that the Contractors were being reimbursed in respect of the escalation due to the foreign exchange rate. 6. The learned Arbitrator replied to the above letters stating that it would be possible for him to hold meeting if the respondent, the Municipal Cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hholding of the documents by the respondent the same is liable to be set aside on the ground that it has been improperly procured or is otherwise invalid. Strong reliance is placed, on the observations of the Supreme Court in S.P. Chengalvaraya Naidu v. Jagannath AIR 1994 SC 858. 8. In reply, Mr. Setalwad, learned counsel for the respondent submitted that the case pleaded by the appellant, even if accepted in toto would not make out any of the grounds for remitting the award under section 16 is of the Act. He further submitted that for setting aside the award under section 30 of the Act, it would be necessary for this court to hold that the conclusions arrived at by the learned Arbitrator are totally contrary to the provisions of the clauses of the contract. It is submitted that the jurisdiction of this court to interfere with the award of the learned Arbitrator is very limited and the said parameters have been well settled by the Supreme Court in a catena of decisions. In any event learned counsel urged that the documents relied upon by the appellant will not affect the award which has been given by the learned Arbitrator. According to Mr. Satalwad documents referred are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part, without affecting the decision on the matter, which was referred to arbitration or the award is, so indefinite as to be incapable of execution or that the award is erroneous on the face of it. In Ramchandran Reddy Co. v. State of A.P. (supra) Supreme Court held that an error of law on the face of the award would mean that one can find in the award or a document actually incorporated thereto stating the reasons for a judgment some legal propositions which are the basis of the award and which can be said to be erroneous. Documents not incorporated directly or indirectly into the award cannot be looked into for the purpose of finding out any alleged error. The courts are not to investigate beyond the award of the arbitrators and the documents actually incorporated therein and therefore, when there would be no patent error on the face of the award it would not be open for the court to go into the proceedings of the award. The court held that the discretion having been conferred on the court to remit an award, the said discretion has to be judicially exercised and an appellate court would not be justified in interfering with the exercise of discretion unless the discretio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P 16 were absolutely ignored by the arbitrator resulting in miscarriage of justice. However, an argument was advanced on behalf of the Government that these documents were not even marked before the arbitrator and thus there was no foundation for the grievance. This contention was repelled by the Supreme Court observing that "in the background of the controversy in this case even if the department did not produce the documents before the arbitrator it was incumbent upon him to get hold of all the relevant documents including Exhs P 11 and P 16 for the purpose of a just decision. The court further observed that "under section 30( a ) of the Arbitration Act an award can be set aside when an Arbitrator has misconducted himself or the proceedings. Misconduct under section 30( a ) has not a connotation of moral lapse. It comprises legal misconduct which is complete if the Arbitrator on the face of the award arrives at any inconsistent conclusion even on his own finding or arrives at a decision by ignoring very material documents which throw abundant light on the controversy to held a just and fair decision. It is in this sense that the arbitrator has misconducted the proceedings in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same. This is apart from the requirement that the party is required to establish that such documents could not be procured by exercise of any reasonable and diligent efforts before the award. In the instant case even assuming the argument of Mr. Chagla with regard to the relevance of the documents is to be accepted, even then it cannot be said that the interpretation placed on the clause by the learned Arbitrator is beyond jurisdiction or that it goes to the root of the award. The documents which are now sought to be relied upon are not part of the contract but are merely opinions expressed by various parties on the construction of the clauses of the contract. The letter dated 17-6-1992 of the World Bank clearly shows that the World Bank was merely giving its opinion/observations on the view point held by the respondent. As far as the document styled as Questions and Answers is concerned, this again contains opinion expressed by the World Bank with regard to payment on a different construction of the contract. The letter dated 23rd November, 1991 by the Engineer of the BMC merely records that in respect of Narmada Dam Project the contractors were reimbursed in respect of the esc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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