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TMI Blog2008 (8) TMI 970X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld ASG appearing for DDA, there is no specific clause in the terms of agreement for extra cartage for bringing stones from elsewhere. In this regard, the appellant heavily relied on clause 3.16 of the Agreement. The perusal of the Award of the Arbitrator as well as the judgment of the Division Bench clearly shows that they did not advert to the above clause 3.16. It is relevant to point out that the extra cartage has been awarded by the Arbitrator without adverting to clause 3.16 of the Agreement, hence, the learned single Judge was wholly justified in partially setting aside the Award in respect of the claims with respect to the extra cartage. We also perused the pleadings and evidence placed on record pertaining to Claim Nos. 1-3 and additional Claim Nos. 1-3. As rightly observed by the learned single Judge, there was no material on record to substantiate the case of the claimant, viz., DDA had insisted upon the claimant for using the stone aggregates brought from Nooh in Haryana. In those circumstances and of the fact that the terms and conditions of the Agreement are binding on both the parties, in the absence of specific clause with regard to payment of extra cart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Delhi Development Authority - the appellant herein and directed that the Award passed by the Arbitrator be made a rule of the Court along with interest @ 12% p.a. from the date of the decree till the date of payment on the entire amount as awarded by the Arbitrator. 2) The facts, in a nutshell, are as under: On 18.4.1990, an Agreement was entered into between the appellant-Delhi Development Authority (hereinafter referred to as DDA ) and the respondent - M/s R.S. Sharma Co. (hereinafter referred to as the Company ) for carrying out the work for development of the land at Pappankalan (Dwarka) Project in South-West Delhi, Phase I according to the terms and conditions mentioned in the contract. On disputes having arisen during execution of the work, mainly with respect to the extra cartage, the same were referred to the Sole Arbitrator, Shri A.P. Paracer, Additional Director General (Retd.), C.P.W.D., for adjudication. During the pendency of the arbitration proceedings, the work was still being executed by the Company. 13 Claims (including additional claims) for a sum of ₹ 55.19 lacs approximately were raised by the Company before the Arbitrator. Claim Nos. 1 to 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the date of decree till the date of payment on the entire amount as awarded by the Arbitrator. Aggrieved by the said judgment, the present appeal is filed by DDA before this Court. 3) Heard Mr. Amarendra Sharan, learned Additional Solicitor General, appearing for the appellant and Mr. U.A. Rana, learned counsel, appearing for the respondent. 4) Mr. Amarendra Sharan, learned Additional Solicitor General, appearing for the appellant-Delhi Development Authority, vehemently contended that the Division Bench of the High Court was not justified in setting aside the order passed by the learned single Judge with respect to Claim Nos. 1-3 and additional claim Nos. 1-3 inasmuch as the Arbitrator had clearly failed to advert to clause 3.16 of the Agreement which does not provide for extra cartage. According to him, clause 3.16 of the Agreement stipulates that the contractor is responsible for all the extra leads over and above the rate of payment specified in the Agreement. He further contended that since the Arbitrator failed to take note of the relevant condition, namely, clause 3.16, which prohibits extra cartage over and above the rate of payment specified in the Agreement, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upplies of Delhi quartz stone, the claimant was entitled to extra rates at the rate of ₹ 30/- per cubic meter for procurement of stone aggregate from the quarries at Nooh in Haryana. According to DDA, the Arbitrator has misconstrued and misunderstood the Agreement between the parties, particularly, clause 3.16. Though the learned single Judge set aside the Award in respect of claim Nos. 1-3 and additional Claim Nos. 1-3 on the ground that there were no material before the Arbitrator to accept those claims, the Division Bench, reversed the same and confirmed the Award as granted by the Arbitrator. 7) In order to consider the rival contentions, it is useful to refer the relevant provisions of the Act. Chapter VII of the Act deals with `Recourse against Arbitral Award'. Section 34 enumerates various grounds/circumstances on which the Award can be set aside by the Court which reads as under: 34. Application for setting aside arbitral award. - (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and subsection (3). (2) An arbitral award may be set aside by the Court onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder sub-section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award. 8) The grounds/ circumstances mentioned in sub-section(2) of Section 34 have been considered by this Court in various decisions. In Grid Corporation of Orissa Ltd. Anr. vs. Balasore Technical School, (2000) 9 SCC 552, this Court in paragraph 3 held as under: 3. In this case, the High Court is of the view that a civil court does not sit in appeal against the award and the power of the court when an award is challenged is rather limited. The award of the arbitrator is ordinarily final and conclusive as long as the arbitrator has acted within his authority and according to the principle of fair play. An arbitrator's adjudication is generally considered binding between the parties for he is a tribunal selected by the parties and the power of the court to set aside the award is restricted to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceptionable. However, from a reading of the decisions of this Court referred to earlier it is clear that when an award is made plainly contrary to the terms of the contract not by misinterpretation but which is plainly contrary to the terms of the contract it would certainly lead to an inference that there is an error apparent on the face of the award which results in jurisdictional error in the award. In such a case the courts can certainly interfere with the award made by the arbitrator. 9) In General Manager, Northern Railway anr. vs. Sarvesh Chopra, (2002) 4 SCC 45, it is worthwhile to refer the following conclusion as observed in paragraph 10 as under: 10. It was next submitted by the learned counsel for the respondent that if this Court was not inclined to agree with the submission of the learned counsel for the respondent and the interpretation sought to be placed by him on the meaning of excepted matter then whether or not the claim raised by the contractor is an excepted matter should be left to be determined by the arbitrator. It was submitted by him that while dealing with a petition under Section 20 of the Arbitration Act, 1940 the court should order the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdiction in the matter and that the reference of the dispute to the arbitrator was invalid and the entire proceedings before the arbitrator including the awards made by him were null and void. 10) In State of Rajasthan vs. Nav Bharat Construction Co., (2006) 1 SCC 86, this Court in paragraph 27 held as under: 27. 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. case or Continental Construction Co. Ltd. case. 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 then 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. 11) In Hindustan Zinc Ltd. vs. Friends Coal Carbonisation, (2006) 4 SCC 445, the following principles laid down in paragraphs 13 and 14 are relevant for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 34 in context is required to be given a wider meaning. It can be stated that the concept of public policy connotes some matter which concerns public good and the public interest. What is for public good or in public interest or what would be injurious or harmful to the public good or public interest has varied from time to time. However, the award which is, on the face of it, patently in violation of statutory provisions cannot be said to be in public interest. Such award/judgment/decision is likely to adversely affect the administration of justice. Hence, in our view in addition to narrower meaning given to the term public policy in Renusagar case, it is required to be held that the award could be set aside if it is patently illegal. The result would be award could be set aside if it is contrary to: (a) fundamental policy of Indian law; or (b) the interest of India; or (c) justice or morality; or (d) in addition, if it is patently illegal. Illegality must go to the root of the matter and if the illegality is of trivial nature it cannot be held that award is against the public policy. Award could also be set aside if it is so unfair and unreasonable that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 990 of the claimant - M/s R.S. Sharma Co. to the Chief Engineer (WZ), DDA, Vikas Minar, New Delhi. In paragraph 6 of the said letter, it was stated as under: 6. We will use Delhi Quartz stone as per CPWD specifications and specifications mentioned in the tender documents. This condition has been accepted by the Department in the case of Ist lowest tenderer for this work. 15) It is stated by the learned counsel appearing for the claimant that since the DDA has not approved Delhi Quartz stone which was not as per CPWD specifications and specifications mentioned in the tender document, stones were brought from Nooh, Haryana which satisfied those specifications. As rightly pointed out by the learned ASG appearing for DDA, there is no specific clause in the terms of agreement for extra cartage for bringing stones from elsewhere. In this regard, the appellant heavily relied on clause 3.16 of the Agreement which reads as under: 3.16 - The collection and stacking of material shall include all leads. The rates quoted by the contractor shall hold good irrespective of the source from which the material are brought so long as they conform to the specifications. The closure of par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the record as well as contrary to the terms of the Agreement. 17) For the sake of brevity, we point out that in terms of clause 3.16 of the Contract, it is the responsibility of the Contractor to collect and stock the material and the rates quoted by him including all leads irrespective of the source from where the material was brought. However, if DDA had refused to accept the stone aggregate brought to site by the contractor from a quarry in Delhi and insisted upon bringing the material from Nooh quarry, Haryana, the Contractor will be entitled to the extra lead for bringing the said material from Nooh. As rightly pointed out by learned counsel for the appellant, in the present case, there is nothing on record to show that the Department had insisted upon bringing the stone aggregate only from Nooh. Hence, the contractor will not be entitled to the increased rates for extra lead. Without a specific request or additional clause, the Arbitrator in respect of Claim Nos. 1-3 and additional Claim Nos. 1-3 proceeded on the wrong assumption that the Department had insisted upon the use of stone aggregate to be brought from Nooh, hence, the learned single Judge is perfectly right ..... X X X X Extracts X X X X X X X X Extracts X X X X
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