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TMI Blog2024 (4) TMI 425X X X X Extracts X X X X X X X X Extracts X X X X ..... for interference, courts have to necessarily chose the path of least interference, except when absolutely necessary]. By training, inclination and experience, judges tend to adopt a corrective lens; usually, commended for appellate review. However, that lens is unavailable when exercising jurisdiction Under Section 34 of the Act. Courts cannot, through process of primary contract interpretation, thus, create pathways to the kind of review which is forbidden Under Section 34 - As long as the view adopted by the majority was plausible- and this Court finds no reason to hold otherwise (because concededly the work was completed and the finished embankment was made of composite, compacted matter, comprising both soil and fly ash), such a substitution was impermissible. It is evident that a dissenting opinion cannot be treated as an award if the majority award is set aside. It might provide useful clues in case there is a procedural issue which becomes critical during the challenge hearings. This Court is of the opinion that there is another dimension to the matter. When a majority award is challenged by the aggrieved party, the focus of the court and the aggrieved party is to point out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court, in CA 4658/2023 [ Arising out of SLP No. 38162/2012, which was directed against the judgment of the Division Bench of the Delhi High Court dated 08.11.2012 in FAO (OS) No. 48/ 2012 ] (hereafter referred to as the main judgment ) the facts and decisions, in that appeal would be alluded to. 2. NHAI awarded, to the contractor the work of construction of the Allahabad by-pass project in U.P. by agreement dated 02.06.2004. The project was completed. However, certain disputes arose inter se the parties with reference to different areas of the contract; these were referred to arbitration. NHAI has an inbuilt resolution mechanism, i.e., a Dispute Resolution Board ( DRB ) consisting of technical experts in the field, to which matters are first referred to. Since the contractor was not satisfied with the opinion of the DRB, in terms of the agreement, it could and, did invoke the arbitration. The disputes in the present case culminated in a reference to the arbitration of three technical persons, who after considering the rival viewpoints and the materials before them, made the award [Award dated 30.03.2010]. The award was unanimous on most questions while, on others, there was a di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the two materials. We fail to appreciate how the arbitral tribunal could have come to a conclusion that the mode of measurement of the two items separately was not in accordance with the contract. The majority view, after having noticed the principles of consensus ad idem, seems to have failed to appreciate this vital issue.[..] Contentions of parties 5. On behalf of the Appellant/contractors, Dr. Abhishek Manu Singhvi, Mr. V. Giri, and Mr. Anil Airi, learned Senior Counsels, Mr. Sameer Parekh and Mr. George Thomas learned Counsel made submissions. It was argued that the impugned judgment goes far beyond the scope of the jurisdiction Under Section 34 /Section 37 of the Act. The Division Bench while interfering with the award on the grounds that it did, transgressed the extremely narrow scope of interference Under Section 37 of the Act. It was argued that this Court in a plethora of cases has held that the intent of the Act is to restrict the grounds of challenge to an arbitral award to the barest minimum. It is submitted that this Court has time and again held that the general approach of the courts should be to uphold the award and the arbitral award and not to sit with a meticu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... control, a measurement for payment etc) to be followed by the contractor for embankment with pond ash. It was submitted that Clause 305.2.2.3.2 further provides, the work shall conform to Clause 4.7.l of IRC SP:58 - 2001 . It was highlighted that the contract contemplated payment for 'construction of earth embankment with soil' in BOQ [Bill of Quantities] item 2.02(a) and 'construction of Pond ash embankment with pond ash' in BOQ item No. 2.02. It was also contended that BOQ pertains to the execution and completion of the entire item of work in compliance with the contract requirements and does not relate only to any individual material/consumables used in the execution of the work. 10. It was argued that the contract conditions and stipulations are to be read as a whole; thus, technical specifications, drawings and other documents form part of the contract which cannot be considered in isolation. The counsel also emphasized that the preamble to the BOQ and the technical specifications read together also mandate that the rates given in BOQ item 2.02 (a) and (b) are for the construction of embankment i.e., soil embankment and pond ash embankment and not for the usag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) and (b) reveal that there is only BOQ Item, i.e., embankment. The separate treatment in the stipulation only meant that the embankment could be constructed one way, where the soil was used and second, where both soil and pond ash was used. Learned Counsel submitted that in terms of Clause 305.8 of the technical specifications, cross-sections had to be quantified proportionately. The ASG further highlighted that for two years, separate measurements were taken and consequently it was incorrect to contend that separate measurements for both the materials were not possible. It was further argued that embankment work with pond ash and soil is completed by layering wherever concerned materials are necessary and easily capable of measurement. Further, she argued that separate quantities were expressly notified and mentioned in the concerned conditions which the parties at the relevant time intended to give meaning to. This aspect was highlighted by the dissenting award of one member of the tribunal, who upheld the EE's decision to reject the claim based on such interpretation. Therefore, wherever soil was used it had to be paid as per Clause 2.02(a) and wherever pond ash was used, p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pectively. The said clauses are extracted below. The MoRTH specification reads as follows: 305.8 Measurements of Payment Earth embankment/subgrade construction shall be measured separately by taking cross sections at intervals in the original position before the work starts and after its completion and computing the volumes of earthworks in cubic metres by the method of average end areas....... Clause 305.2.2.3.3- relatable to Item No. 2.02(b) reads as under: Measurement for payment: Same as Clause 305.8 of MoRTH specifications. The relevant stipulation for contract rate units for different items in rate contracts is Clause 114.1; it reads as follows: 114.1. - For item rate contracts, the contract unit rates for different items of work shall be payment in full for completing the work to the requirements of the specifications including full compensation for all the operations detailed in the relevant Sections of these specifications under Rates . In the absence of any directions to the contrary, the rates are to be considered as full inclusive rate for finished work covering all labour, materials, wastage Arising out of General Conditions of Contract. 17. The majority award, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of BOQ. 13.3.9 Thus I draw firm conclusion that the provision made in the BOQ item 2.02 (a) and 2.02 (b) are for different material i.e. 2.02(a) is for soil and 2.02 (b)is for pond ash and is for type of material to be used in the respective items. 18. A reasoning similar to the majority award, which was in issue in the main judgment, was adopted in awards, rendered by tribunals of other contractors, such as CEC -HCC(JV) [The appellant in CA 4659/2023;]; Sunway Construction [Appellant in CA 4660/2023]; Patel KNR JV [Appellant in CA 4661/2023]; and Oriental Structural Engineers (P) Ltd. (hereafter, Oriental Structures ) [Appellant in CA 4662/2023]. In some cases, the stipulation was for the construction of an embankment with approved materials from borrow areas in terms of TS Clause 305, and also the construction of an embankment with fly ash obtained from coal or lignite burning thermal power station (CA 4659/2023); likewise, fly ash or lignite burning thermal station as waste material (CA 4660/2020); all types of soil and with fly ash obtained from coal or lignite burning thermal power station (CA 4661/2023) and pond ash (CA 4662/2023). 19. In some cases, the DRP (or DRB) set up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be paid at the rates approved after the Arbitration in vogue as on the days after allowing the rebate provided by Contractor in his offer. 20. It is quite evident that in most cases, the view of DRPs and tribunals, and in two cases, majority awards of tribunals, favoured the arguments of contractors, that composite embankment construction took place, as a result of which measurement was to be done in a composite, or unified manner. Dissenting or minority views, wherever expressed, were premised on separate measurements. This opinion was of technical experts constituted as arbitrators, who were versed in contractual interpretation of the type of work involved; they also had first hand experience as engineers who supervised such contracts. When the predominant view of these experts pointed to one direction, i.e., a composite measurement, the question is what really is the role of the court Under Section 34 the Act. 21. This Court, in M/s. Voestalpine Schienen GmbH v. DMRC 2017 (1) SCR 798 commenting on the value of having expert personnel as arbitrators, emphasized that technical aspects of the dispute are suitably resolved by utilising their expertise when they act as arbitrators. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Agreement having regard to the fact-situation obtaining therein. It is submitted that an award made by an arbitrator may be wrong either on law or on fact and error of law on the face of it could not nullify an award. The award is a speaking one. The arbitrator has assigned sufficient and cogent reasons in support thereof. Interpretation of a contract, it is trite, is a matter for arbitrator to determine (see M/s. Sudarsan Trading Co. v. The Government of Kerala AIR (1989) SC 890). Section 30 of the Arbitration Act, 1940 providing for setting aside an award is restrictive in its operation. Unless one or the other condition contained in Section 30 is satisfied, an award cannot be set aside. The arbitrator is a Judge chosen by the parties and his decision is final. The Court is precluded from reappraising the evidence. Even in a case where the award contains reasons, the interference therewith would still be not available within the jurisdiction of the Court unless, of course, the reasons are totally perverse or the judgment is based on a wrong proposition of law 24. This enunciation has been endorsed in several cases (Ref McDermott International Inc. v. Burn Standard Co. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal's related obligation to make a reasoned award. Although there are legal systems where dissenting or separate opinions are either not permitted, or not customary, these domestic Rules have little application in the context of party-nominated co-arbitrators, and diverse Tribunals. Indeed, the right of an arbitrator to deliver a dissenting opinion is properly considered as an element of his/her adjudicative mandate, particularly in circumstances where a reasoned award is required. Only clear an explicit prohibition should preclude the making and publication to the parties of a dissenting opinion, which serves an important role in the deliberative process, and can provide a valuable check on arbitrary or indefensible decision making. [.] [...] There is nothing objectionable at all about an arbitrator systematically drawing up a dissenting opinion, and insisting that it be communicated to the parties . If an arbitrator believes that the Tribunal is making a seriously wrong decision, which cannot fairly be reconciled with the law and the evidentiary record, then he/she may express that view. There is nothing wrong - and on the contrary, much that is right - with such a course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es that This is an essential aspect of the process by which the parties have an opportunity to both, present their case, and hear the reasons for the Tribunal's decision; not hearing the dissent deprives the parties of an important aspect of this process. 27. It is, therefore, evident that a dissenting opinion cannot be treated as an award if the majority award is set aside. It might provide useful clues in case there is a procedural issue which becomes critical during the challenge hearings. This Court is of the opinion that there is another dimension to the matter. When a majority award is challenged by the aggrieved party, the focus of the court and the aggrieved party is to point out the errors or illegalities in the majority award. The minority award (or dissenting opinion, as the learned authors point out) only embodies the views of the arbitrator disagreeing with the majority. There is no occasion for anyone- such as the party aggrieved by the majority award, or, more crucially, the party who succeeds in the majority award, to challenge the soundness, plausibility, illegality or perversity in the approach or conclusions in the dissenting opinion. That dissenting opinion ..... X X X X Extracts X X X X X X X X Extracts X X X X
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