IMPORTANT POINT
Where it is a speaking award and the arbitrator fails to take note of the relevant documents or ignores the same, it vitiates the award.

Headnote:Arbitration and Conciliation Act, 1996-Arbitration award-Objections-Water project undertaken by State Government for bringing water to city of Madras covering a distance of 155 miles through pipelines to be laid for the purpose-Tenders submitted by appellant for carrying on job subject to clearance of foreign collaboration arrangement and release of necessary foreign exchange for import of equipments from foreign manufacturers-Agreement executed between State of Tamil Nadu and appellant contractor specifying terms and conditions of the contract-Work was required to be completed within 36 months from the date of entrustment of site-Time for completion was liable to be extended on request of contractor for justifiable reasons-Delay of one year four months in commencing production of pipes-Disputes between parties-Arbitration proceedings at the instance of appellant contractor raising certain claims against respondent-Non production of documents by respondent Board-Note prepared by Chief Engineer of the project in official discharge of his duties containing relevant facts and information regarding questions involved in the case not produced-Single Judge of the High Court was right in inferring that such an infirmity would vitiate the award-Order of Division Bench reversing decision of Single Judge held not sustainable.
Held : There is no question of secrecy or confidentiality so far the "handing over note" of the Chief Engineer is concerned. It is a note prepared by the Chief Engineer of the project in official discharge of his duties. It contains relevant facts and information regarding questions involved in the case. The appreciation of the contents of the `note and its effect would of course be a matter to be decided by the appropriate authority/arbitrator/umpire but its perusal or consideration could not be shut out on the meek ground that the department was not bound by it or on the ground of confidentiality in the times when more stress is rather on transparency. In our view, the learned Single Judge was right in inferring that such an infirmity would vitiate the award. That being the position, in our view the order of the Division Bench, reversing the decision of the Single Judge is not sustainable and the matter may be required to be remitted to be considered in the light of the "handing over note" of the Chief Engineer in respect whereof an application was moved by the appellant before the arbitrator as well as before the Umpire which remained unattended to by the forum and later did not accede to the request. Considering the fact that it is an old matter and it being a speaking award the matter having also been considered by the learned single Judge, it would better serve ends of justice to ensure expeditious disposal of the matter, therefore, the Division Bench of the High Court may consider the matter afresh, taking into account the "handing over note" of the Chief Engineer of the Project and other relevant documents in respect of which request may have been made but refused. (Paras 16 and 17)

JUDGMENT

Brijesh Kumar, J.-Leave granted.

2. These appeals are the outcome of an arbitration proceedings initiated at the instance of the appellant M/s. Sathyanarayana Brothers (P) Ltd. raising certain claims against the respondent Tamil Nadu Water Supply & Drainage Board (for short the Board ). The claim was ultimately partly allowed by the Umpire. The objections against the Award preferred by the appellant were allowed by the learned single Judge but the Division Bench set aside the order of the learned single Judge. Hence, this appeal by M/s. Sathyanarayana Brothers (P) Ltd.

3. In view of the acute scarcity of water in the State of Tamil Nadu a project known as Veeranam project was undertaken by the State Government after its clearance by the Planning Commission for bringing the water from the left bank of the Coleroon at Lower Anicut to the city of Madras covering a distance of 155 miles through the pipelines to be laid for the purpose. The work required to be done was for manufacturing, supplying, delivering 1676 mm. (66") Diameter Prestressed Concrete Pipes and fittings including transporting to site, laying, jointing and testing for raw water and clear water conveying mains from Veeranam Tank to Madras city.

4. The tenders submitted by the appellant M/s. Sathyanarayana Brothers (P) Ltd. for carrying on the job detailed above was accepted for a lump sum amount of Rs. 16,55,87,300/- subject to clearance of the foreign collaboration arrangement and release of necessary foreign exchange and also subject to other conditions and issued G.O.Ms.No. 1607 Public (TWAD) Department dated 13.7.1970. While submitting the tender the petitioner had also written a letter dated 22.1.1970 to the Chief Engineer (Buildings) and City Water Supply, Veeranam Project, Public Works Department, Chepauk, Madras with a request for foreign exchange requirement for import of equipments from foreign manufacturers. The contractor had requested the government to give all assistance in procurement of foreign exchange and other necessary central government clearances. Articles of agreement was executed between the State of Tamil Nadu and M/s. Sathyanaraya Brothers specifying the terms and conditions of the contract. The work was required to be completed within 36 months from the date of the entrustment of the site which was to be done within 30 days after the date of acceptance of the tender. It also provided that if there was any delay in handing over the site there should be extension of time for completion of the contract. The time for completion was liable to be extended on the request of the contractor for justifiable reasons.

5. The contractor required Rs. 1.2 crores of foreign exchange for importing necessary equipments for manufacture of Prestressed Concrete Pipes from Switzerland since the exporters insisted on payment in Doutecha Marks. The contractor was advised to approach the Integral Credit and Investment Corporation of India (ICICI) who insisted that the contractor should be in the form of an incorporated company so as to be able to avail facilities of foreign exchange instead of a partnership firm. The contractor, therefore, converted into a private limited company as per the advise on 24.2.1971. The imported equipment landed in Madras in February 1972 whereafter a factory at Thirukalikundram and another factory at Panruti were commissioned by June 1972 and January 1973 respectively. There was thus already a delay of one year four months in commencing production of prestressed concrete pipes. The contractor therefore, requested for extension of time up to 31.12.1975. It was, however, extended up to 30.6.1975 by the Chief Engineer. The contractor wrote a letter dated 11.11.1974 refusing to accept the offer and further indicated that he would be prepared to work on the condition that contractor would be paid at the rate to be worked out taking into account the increase in the cost and which may further increase during the course of the work. It

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2003 Supreme(SC) 1158

IMPORTANT POINTWhere it is a speaking award and the arbitrator fails to take note of the relevant documents or ignores the same, it vitiates the award.

Cases Referred (3)

IMPORTANT POINT
Where it is a speaking award and the arbitrator fails to take note of the relevant documents or ignores the same, it vitiates the award.