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TMI Blog2009 (9) TMI 1030X X X X Extracts X X X X X X X X Extracts X X X X ..... of the contract (Sections IV III respectively) were integral part of the conditions specified in the contract. Under the contract, the contractor was to complete the works within forty-two months. That the work could not be completed within the agreed period is not in dispute. It is also an admitted position that the time for completion of work was extended on two occasions; in all by 25 months. The case of the contractor is that the extension of time was not for any fault of theirs and as a matter of fact they had to continue the site office in Cochin; that they also incurred additional expenditure in relation to their work at Cochin and that further expenditure towards equipment ownership charges in respect of the machinery worth crores of rupees continued to be employed for the work. The contractor, therefore, raised claims under diverse heads before the Engineer on February 22, 1998. According to the contractor, the Engineer took decision concerning claim No. 1 but the said decision was not implemented and regarding other claims, no decision was taken necessitating the contractor to seek reference of the dispute to arbitration. 3. On January 11, 1999 an arbitral tribunal c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Order dated February 23, 2005. He held that there were sufficient reasons recorded by the arbitral tribunal for allowing each claim. 10. The State of Kerala then approached the High Court by filing an appeal against the judgment and order of the 2nd Additional District Judge dismissing their petition under Section 34 of the Act, 1996. 11. The Division Bench heard the appeal and vide its judgment dated June 3, 2005 allowed the appeal in part and set aside the award relating to claim Nos. 1 and 4B on the ground that the findings thereon do not have supporting reasons being violative of Sections 28(3) and 31(3) of the Act, 1996. The Division Bench also set aside the interest awarded on these two counts claimed under claims 7B and 7C. 12. Both the parties are aggrieved by the judgment of the Division Bench. Civil Appeal No. 3089 of 2006 has been preferred by the contractor aggrieved by the said judgment to the extent the award relating to claim Nos. 1 and 4B has been set aside whereas Civil Appeal No. 3090 of 2006 is at the instance of the State of Kerala dissatisfied with the award relating to claim Nos. 5 and 6. 13. It is appropriate that few clauses of Conditions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent to the Engineer, the Contractor shall send a final account within 28 days of the end of the effects resulting from the event. The Contractor shall, if required by the Engineer so to do, copy to the Employer all accounts sent to the Engineer pursuant to this Sub-Clause. 53.4 If the Contractor fails to comply with any of the provisions of this Clause in respect of any claim which he seeks to make, his entitlement to payment in respect thereof shall not exceed such amount as the Engineer or any arbitrator or arbitrators appointed pursuant to Sub-Clause 67.3 assessing the claim considers to be verified by contemporary records (whether or not such records were brought to the Engineer's notice as required under Sub-Clauses 53.2 and 53.3). 53.5 The Contractor shall be entitled to have included in any interim payment certified by the Engineer pursuant to Clause 60 such amount in respect of any claim as the Engineer, after due consultation with the Employer and the Contractor, may consider due to the Contractor provided that the Contractor has supplied sufficient particulars to enable the Engineer to determine the amount due. If such particulars are insufficient to substantiat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, as hereinafter provided , as to such dispute and, subject to Sub-Clause 67.4, no arbitration in respect thereof may be commenced unless such notice is given. If the Engineer has given notice of his decision as to a matter in dispute to the Employer and the Contractor and no notice of intention to commence arbitration as to such dispute has been given by either the Employer or the Contractor on or before the seventieth day after the day on which the parties received notice as to such decision from the Engineer, the said decision shall become final and binding upon the Employer and the Contractor. 67.2. ... 67.3. ... 67.4 Where neither the Employer nor the Contractor has given notice of intention to commence arbitration of a dispute within the period stated in Sub-Clause 67.1 and the related decision has become final and binding, either party may, if the other party fails to comply with such decision, and without prejudice to any other rights it may have, refer the failure to arbitration in accordance with Sub-Clause 67.3. The provisions of Sub-Clauses 67.1 and 67.2 shall not apply to any such reference. 18. Mr. V.A. Mohta, learned senior counsel for the contractor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ministry of Surface (Transport) to settle the contractor's claim. Concededly, the aforesaid two documents are referred to by the arbitral tribunal in the award and arbitral tribunal has also noticed the arguments advanced on behalf of the parties in support of their respective stand but reasons are not at all discernible in support of its finding that the period of completion was extended by the respondent for 18 = months due to reasons not attributable to the contractor. Having perused the award carefully, we have not been able to find reasons in support of claim No. 1. The position is no better in respect of award for claim No. 4B. As a matter of fact, no reason whatsoever has been assigned for awarding that claim. 21. Section 31(3) mandates that the arbitral award shall state the reasons upon which it is based, unless - (a) the parties have agreed that no reasons are to be given or (b) the award is an arbitral award under Section 30. That the present case is not covered by Clauses (a) and (b) is not in dispute. In the circumstances, it was obligatory for the arbitral tribunal to state reasons in support of its award in respect of claim Nos. 1 and 4B. By legislative m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e consideration of the controversy by the arbitral tribunal. It is true that arbitral tribunal is not expected to write judgment like a court nor it is expected to give elaborate and detailed reasons in support of its finding/s but mere noticing the submissions of the parties or reference to documents is no substitute for reasons which the arbitral tribunal is obliged to give. Howsoever brief these may be, reasons must be indicated in the award as that would reflect thought process leading to a particular conclusion. To satisfy the requirement of Section 31(3), the reasons must be stated by the arbitral tribunal upon which the award is based; want of reasons would make such award legally flawed. In what we have discussed above, it cannot be said that High Court was wrong in observing that no reasons have been assigned by the arbitral tribunal as to whether the period of completion extended by the employer for 18 = months was due to reasons not attributable to the claimant. However, in our view, the High Court ought to have given the arbitral tribunal an opportunity to give reasons. This course is available under Section 34(4) of the Act which reads thus: 1. ... 2. ... 3. . ..... X X X X Extracts X X X X X X X X Extracts X X X X
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