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TMI Blog2008 (3) TMI 727X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The said contract contained an arbitration agreement. The said contractual job was not allegedly completed by the respondent within the stipulated period wherefor a request was made for extension of time till 31.12.1986 to complete the work. Further extensions of time were sought for and granted from time to time. Disputes and differences having arisen between the parties, the arbitration agreement was invoked. The Chief Engineer of the appellant-Company was appointed as the sole arbitrator. He was to give a reasoned award. Before the arbitrator the respondent raised a claim of ₹ 55,01,640.66. The appellant herein also raised a counter claim for a sum of ₹ 28,47,860.57. By reason of an award dated 13.7.1994, the sole arbitrator awarded a sum of ₹ 18,97,729.37 with interest @ 18% per annum in favour of the respondent. The counter claim of the appellant, however, was rejected. The said award was filed before the learned Subordinate Judge, Dhanbad for being made a rule of court in terms of Section 14 of the Arbitration Act, 1940 (for short the Act ). The appellant herein in the said proceedings filed an objection under Sections 15, 16, 30 and 33 of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant herein have been thoroughly considered by the learned Subordinate Judge and the High Court and as such it is not a fit case wherein this Court should interfere. The learned counsel would urge that it is not the case of the appellant that the learned sole arbitrator did not pass a reasoned award and, thus, this court in exercise of its jurisdiction under Section 30 of the Act would not interfere when two views are possible. The learned counsel would submit that while exercising its jurisdiction under Section 30 of the Act, the court does not reappraise evidences brought on record. Strong reliance, in this connection, has been placed on Ispat Engineering Foundry Works, B.S. City, Bokaro vs. Steel Authority of India Ltd., B.S. City, Bokaro [(2001) 6 SCC 347]. FINDINGS: Only because the respondent has accepted the final bill, the same would not mean that it was not entitled to raise any claim. It is not the case of the appellant that while accepting the final bill, the respondent had unequivocally stated that he would not raise any further claim. In absence of such a declaration, the respondent cannot be held to be estopped or precluded from raising any clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the 15th day of the following month accompanied by the additional work; and (c) The contractor/contractors shall not be entitled to any payment in respect of such additional work if he/they fail to submit his/their claim within the aforesaid period. The question is as to whether the claim of the contractor is de hors the rules or not was a matter which fell for consideration before the arbitrator. He was bound to consider the same. The jurisdiction of the arbitrator in such a matter must be held to be confined to the four-corners of the contract. He could not have ignored an important clause in the agreement; although it may be open to the arbitrator to arrive at a finding on the materials on records that the claimant s claim for additional work was otherwise justified. Claim Item No.4 was rejected. The award in respect of Claim Item No.5 is not in question. Claim Item No.6 was in relation to penalty amount of ₹ 10,000/- which was deducted by way of penalty and was not found to be justifiable, and as such the appellant was directed to refund the said amount. We are furthermore concerned with Claim Item Nos.7 and 11 which are under the headings of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and evidence of matters not appearing on the face of it, will be admitted in order to establish whether the jurisdiction had been exceeded or not, because the nature of the dispute is something which has been determined outside the award, whatever might be said about it in the award by the Arbitrator. This Court further observed that an arbitrator acting beyond his jurisdiction is a different ground from the error apparent on the face of the award. There lies a clear distinction between an error within the jurisdiction and error in excess of jurisdiction. Thus, the role of the arbitrator is to arbitrate within the terms of the contract. He has no power apart from what the parties have given him under the contract. If he has travelled beyond the contract, he would be acting without jurisdiction, whereas if he has remained inside the parameter of the contract, his award cannot be questioned on the ground that it contains an error apparent on the face of the records. In paragraph 577 of Halsbury s laws of England 4th Edition Vol 2, the law has been stated in the following terms: As an arbitrator (and subsequently any umpire) obtains his jurisdiction solely from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imself the wrong question, or not really asking a question at all. In Alopi Parshad Sons Ltd. v. Union of India [(1960) 2 SCR 793], this Court clearly held that if damages are awarded ignoring the expressed terms of the contract, the arbitrator would commit misconduct of the proceedings. Reference in this connection may also be made to Naihati Jute Mills Ltd. Vs. Khyaliram Jagannath [(1968) 1 SCR 821]. In Heyman v. Darwin [1942 (1) All ER 327], it was held that arbitrator as a rule cannot clothe himself with the jurisdiction when it has none. In paragraph 622 at pages 330-331 Halsbury s Laws of England (4th Edn) Vol2 it has been stated but misconduct occurs, for example; (1) If the arbitrator or umpire fails to decide all the matters which were referred to him. (2) If by his award the arbitrator or umpire purports to decide matters which have not in fact been included in the agreement of reference, for example, where the arbitrator construed the lease (wrongly), instead of determining the rental and the value of buildings to be maintained on the land; or where the award contains unauthorised directions to the parties, or where the arbitra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n allowing them, he has misdirected and misconducted himself by manifestly disregarding the limits of his jurisdiction and the bounds of the contract from which he derived his authority thereby acting ultra fines compromissi. In State of Orissa v. Dandasi Sahu [1988 (4) SCC 12 ], this Court observed: In our opinion, the evidence of such state of affairs should make this Court scrutinise the award carefully in each particular case but that does not make the court declare that all high amounts of award would be bad per se. In K.P. Poulose v. State of Kerala [(1975) 2 SCC 236], this Court observed that the case of legal misconduct would be complete if the arbitrator on the face of the award arrives at an inconsistent conclusion even on his own finding or arrives at a decision by ignoring the very material documents which throw abundant light on the controversy to help a just and fair decision. In K.V. George v. The Secretary to Government, Water and Power Dept, Tri-vendrum [1989 (4) SCC 595], this Court held :- In the instant case, the contract was terminated by the respondents on April 26, 1980, and as such all the issues arose out of the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laims as damages. The umpire, it is held by the High Court, awarded mechanically, different amounts on each claim. He also totally failed to consider the counter-claim on the specious plea that it is belated counterstatement. These facts would show, not only the state of mind of the umpire but also non-application of the mind, as is demonstrable from the above facts. It would also show that he did not act in a judicious manner objectively and dispassionately which would go to the root of the competence of the arbitrator to decide the disputes. In Sikkim Subba Associates Vs. State of Sikkim [(2001) 5 SCC 629], this Court held: It would be difficult for the courts to either exhaustively define the word misconduct or likewise enumerate the line of cases in which alone interference either could or could not be made. Courts of law have a duty and obligation in order to maintain purity of standards and preserve full faith and credit as well as to inspire confidence in alternate dispute redressal method of arbitration, when on the face of the award it is shown to be based upon a proposition of law which is unsound or findings recorded which are absurd or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was not in a position to ascertain as to whether escalation charges had been made against the materials supplied by the principal or also other materials. It is no doubt true that the jurisdiction of this Court while considering the validity of an award is limited as has been stated by this Court in Ispat Engineering Foundry Works (supra): 4. Needless to record that there exists a long catena of cases through which the law seems to be rather well settled that the reappraisal of evidence by the court is not permissible. This Court in one of its latest decisions (Arosan Enterprises Ltd. v. Union of India ((1999) 9 SCC 449)) upon consideration of decisions in Champsey Bhara Co. v. Jivraj Balloo Spg. Wvg. Co. Ltd. (AIR 1923 PC 66 : 1923 AC 480), Union of India v. Bungo Steel Furniture (P) Ltd. (AIR 1967 SC 1032 : (1967) 1 SCR 324), N. Chellappan v. Secy., Kerala SEB ((1975) 1 SCC 289), Sudarsan Trading Co. v. Govt. of Kerala ((1989) 2 SCC 38), State of Rajasthan v. Puri Construction Co. Ltd. ((1994) 6 SCC 485) as also in Olympus Superstructures (P) Ltd. v. Meena Vijay Khetan ((1999) 5 SCC 651) has stated that reappraisal of evidence by the court is not permissib ..... X X X X Extracts X X X X X X X X Extracts X X X X
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