IMPORTANT POINT
Division Bench of High Court fell into the error of entertaining plea of non-speaking award which was neither in arbitration clause nor in reference and in disposing of the appeal by upholding the same though the plea was not even available to the respondents to be raised at that stage.

Headnote:Arbitration Act and Contract Act, 1872-Section 2-Notice Inviting Tender-Tender submitted by appellant-Respondent accepted it-Contract entered into on 29.5.1995-Contract containing arbitration clause-Arbitration clause not requiring arbitrator to give reasons or making a speaking award-On 4.9.86 Govt. of India introduced on amendment in arbitration clause "if the value of claim is exceeding Rs. 1 lakh the arbitrator shall give reasons for award"-Dispute arising-Referred to arbitrator-Arbitrator allowing appellant s claim (which was exceeding Rs. 1 lakh) to the extent of Rs. 80,000/- only and rejected respondent s counter claim by a non-speaking award-Award made rule of the Court by Single Judge-Division Bench set aside the award on ground that it was not a reasoned award and sent back the matter, to arbitrator proceeding afresh and making a reasoned award-Appeal to Supreme Court-Whether the amendment dated 4.9.86 applies to the general conditions of contract as applicable to the parties, and therefore, the arbitration clause should have been real as amended casting an obligation to give a reasoned award? (No)-Whether case be remanded? (No)-Appeal allowed D.B. s order set aside and that of single Judge restored-(Arbitration Act, 1946-Sections 17 r/w 30).
       Held : There is nothing contained in the acceptance letter, either expressly or by necessary implication, to spell out the appellant having authorized the respondents to carry out modifications in the terms and conditions of the contract otherwise than by mutual agreement and to hold the appellant bound by such modifications though not consented to by him and though not even brought to his knowledge. (Para 8)
       The arbitration clause is contained in the contract entered into between the parties. Its terms could not have been varied except by mutual agreement. Moreover the amendment dated 4.9.1986 itself provides for its coming into effect from 3.10.1986, i.e. on 30th day after the date of the amendment. That amendment clearly cannot have any relevance for interpreting the arbitration clause contained in the contract entered into between the parties much before the date of amendment coming into effect. (Para 10)
       There are several other factors which preclude the respondents from urging such a plea. The reference to arbitrator does not suggest an obligation having been cast on the arbitrator to give reasons for the award. Such a plea, as has been urged in this Court, was not taken by the respondents before the arbitrator. Even in the objections filed in the court, the validity of the award has not been specifically questioned on the ground of its having been given in breach of any obligation of arbitrator to give reasons as spelled out by the arbitration clause. The judgment of the learned single Judge does not show such a plea having been urged before him. (Para 11)
       We do not also find any other plea deserving consideration having been taken up either in the objection petition before the learned single Judge or before the Division Bench which may call for a remand by this Court for further hearing. (Para 12)
       Held finally : For the foregoing reasons, the appeal is allowed. The judgment of the Division Bench is set aside and the decision dated 20th October, 1999 by the learned single Judge is restored. (Para 13)

JUDGMENT

R.C. Lahoti, J.-Leave granted.

2. In response to a Notice Inviting Tenders (NIT) issued by the respondent on 12.9.1984, the appellant submitted the tender based on the tender document issued by the respondents. The tender submitted by the appellant was accepted. On 22.2.1985, the appellant signed a letter to the following effect:-

"CA No. (GE) B-10 OF 85 86 SERIAL PAGE No. 23

(GENERAL CONDITIONS OF CONTRACT - IAFW-2249)

(1976 PRINT)

LUMP SUM CONTRACT FOR IAFW-2159

TERM CONTRACT FOR ARTIFICERS WORK (IAFW-1821)

MEASUREMENT CONTRACT-IAFW-1779 & 1779A

1. A copy of GENERAL CONDITIONS OF CONTRACTS (IAFW-2249 1976 PRINT) with Errata No. 1 to 27 and Amendment No. 1 to 27 has been supplied to me/us and as in my/our possession. I/We have read and understood the provisions contained in the aforesaid GENERAL CONDITIONS OF CONTRACTS before submission of this tender and I/We agree that I/We shall abide by the terms and conditions thereof, as modified, if any elsewhere in these tender documents.

2. It is hereby further agreed and declared by me/us, that the GENERAL CONDITIONS OF CONTRACTS-IAFW-2249 (1976 PRINT) including Conditions 70 there pertaining to settlement of disputes by arbitration containing 30 pages (Serial Page Number 1 to 30) with Errata Numbers 1 to 27 and amendment Numbers 1 to 27 form Part of these Tender documents.

Sd/- Sd/-

SIGNATURE OF ACCEPTING CONTRACTOR OFFICER

Dated :................

3. The respondents accepted the tender and a contract was entered into between the parties on 29.5.1985. It is not a dispute that the contract contains an arbitration clause requiring all disputes, between the parties to the contract (other than those for which the decision of the CWE or any other person is by the contract expressed to be final and binding) shall, after written notice by either party to the contract to the other of them, be referred to the sole arbitration of an Engineer Officer to be appointed by the authority mentioned in the tender documents. There are other recitals contained in the arbitration clause which are not relevant for our purpose. What is relevant to mention is that the clause does not provide for a reasoned award or a speaking award being given by the arbitrator. There is nothing in the arbitration clause spelling out an obligation on the part of the arbitrator to give reasons for the findings arrived at by him.

4. On 4.9.1986, the Government of India, Ministry of Defence, New Delhi sanctioned an amendment in the general conditions of the contract which reads as under :-"Amendment Page Particulars No. No.

48 24 Condition 70 Sub 1978 para 9 Add the fol- Print lowing at the end of the sub paras :

"If the value of the claims or counter claims in an arbitration reference exceeds Rs. 1 lakh the arbitration shall given reasons for the award.

2. Sanction of the Government is also accorded for incorporation of the above mentioned amendment at the appropriate place in the earlier prints of IAFW 2249.

3. This amendment shall come into effect from 3.10.1986."

5. Disputes arose between the parties leading to cancellation of contract by the respondents on 3.11.1987 and again on 4.4.1990. On 31.5.1991, the respondents appointed a Senior Engineer Officer as the sole arbitrator in accordance with the arbitration agreement. On 28.9.1995, the arbitrator published his award allowing the appellant s claim to the extent of Rs. 80,000/- only and rejecting the respondents counter claim. The award was made a rule of the court by the learned Single Judge of the High Court. In an appeal preferred by the respondents, the decree passed by the learned Single Judge has been set aside by the Division Bench of the High Court which has also directed the award to be set aside and remitted back to the arbitrator for proceeding a fresh and making a reasoned award. For doing so the Division Ben

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2002 Supreme(SC) 626

Cases Referred (1)