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1987 Supreme(SC) 744

SUPREME COURT OF INDIA
O. CHINNAPPA REDDY, M.H. KANIA AND K. JAGANNATHA SHETTY, JJ.
Executive Engineer, Irrigation, Galimala and others, Appellants
Versus
Abnaduta Jena, Respondent.
Civil Appeals Nos. 6245-46 of 1983 (with Special Leave Petn. (Civil) No. 8640 / 81 and Civil Appeals Nos. 6019-22 / 83, 2611, 3223 / 82 1641 / 81, 4895 / 83, 2635 / 82, 1950 / 80, 3746, 3997 / 82, 2175 / 80, 119, 120-21 / 81, 611 /79 and 2257 / 84), D/- 22-9-1987.

Advocates:
ARUN MADAN, B.P.MAHESHVARI, D.N.MUKHERJI, D.P.MOHANTY, G.L.SANGHI, INDERJIT ROY, J.R.DAS, JITENDRA SHARMA, LILY ISABLE THOMAS, M.A.Firoz, M.M.KSHATRIYA, P.K.BANERJI, P.K.MUKHERJI, P.N.MISHRA, PARIJAT SINHA, PROBIR PATIL, R.K.MEHTA, R.N.Poddar, S.K.Bagga, SHANKAR GOPAL PAGIRE, VINU BHAGAT, Y.S.Chitale

Headnote:

Constitution of India – Article 136 – Appeals raises the question of award of interest by an arbitrator to whom a reference is made without the intervention of the Court – Special leave to appeal was granted limited to the question of award of interest during the period prior to the reference and during the pendency of the arbitration proceedings. Special leave was not granted in regard to the award of interest subsequent to the date of the arbitrators award – Question, therefore, does not concern us in these appeals – Various references to arbitration in these cases were in regard to work done by different contractors in excess of what was stipulated under the several contracts – Contracts generally contained a clause to the following effect – Held, They are not entitled to claim pendente lite interest as the arbitrator is not a Court nor were the references to arbitration made in suits – One of the submissions made on behalf of the respondents was that in every case, all disputes were referred to arbitration and the jurisdiction of the arbitrator to award interest under certain circumstances was undeniable – Award not being a speaking award, it was not permissible to speculate on the reasons for the award of interest and the Court was not entitled to go behind the award and disallow the interest – It is difficult to agree with this submission – Arbitrator is bound to make his award in accordance with law – If the arbitrator could not possibly have awarded interest on any permissible ground because such ground did not exist, it would be open to the Court to set aside the award relating to the award of interest on the ground of an error apparent on the record – On the other hand, if there was the slightest possibility of the entitlement of the claimant to interest on one or other of the legally permissible grounds, it may not be open to the Court to go behind the award and decide whether the award of interest was justifiable – Order accordingly.

Judgment

CHINNAPPA REDDY, J. :- This group of appeals raises the question of award of interest by an arbitrator to whom a reference is made without the intervention of the Court. Special leave to appeal was granted under Art. 136 of the Constitution limited to the question of award of interest during the period prior to the reference and during the pendency of the arbitration proceedings. Special leave was not granted in regard to the award of interest subsequent to the date of the arbitrators award. This question, therefore, does not concern us in these appeals.

2. The various references to arbitration in these cases were in regard to work done by different contractors in excess of what was stipulated under the several contracts. The contracts generally contained a clause to the following effect :

"Clause 11 - The Engineer-in-charge shall have power to make any alterations in or additions to the original specifications, drawings, designs, and instructions that may appear to him to be necessary or advisable during the progress of the work, and the contractor shall be bound to carry out the work in accordance with any instructions which may be given to him in writing signed by the Engineer-in-charge, and such alteration shall not invalidate the contract; and any additional work which the contractor may be directed to do in the manner above specified as part of the work shall be carried out by the contractor on the same conditions in all respects on which he agreed to do the main work, and at the same rates as are specified in the tender for the main work. The time for the completion of the work shall be extended in the proportion that the additional work bears to the original work bears to the original contract work and the certificate of the Engineer-in-charge shall be conclusive as to such proportion. And if the additional work includes any class of work, for which no rate is specified in this contract, then such class of work shall be carried out at the rates entered in the sanctioned schedule of rates of the locality during the period when the work is being carried on and if such last mentioned class of work is not entered in the schedule of rates of the district then the contractor shall within seven days of the date of his receipt of the order to carry out the work inform the Engineer-in-charge of the rate which it is his intention to charge for such class of work, and if the Engineer-in-charge does not agree to this rate he shall by notice in writing be at liberty to cancel his order to carry out such class of work and arrange to carry it out in such manner as he may consider advisable, provided always that if the contractor shall commence work order of any expenditure in regard thereof before the rates shall have been determined as lastly hereinbefore mentioned, then and in such case he shall only be entitled to be paid in respect of the work carried out or expenditure incurred by him prior to the date of the determination of the rate as aforesaid according to such rate or rates as shall be fixed by the Engineer-in-charge. In the event of a dispute, the decision of the Superintending Engineer of the circle will be final :

Provided always that the contractor shall not be entitled to any payment for any additional work done unless he has received an order in writing from the Engineer-in-charge. for the additional work, that the contractor shall be bound to submit his claim for any additional work done during any month on or before the 15th day of the following month accompanied by a copy of the order in writing of the Engineer-in-charge for the additional work, and that the contractor shall not be entitled to any payment in respect of such additional work if he fails to submit his claim within the aforesaid period."

3. All the contracts also contained a provision for a reference to arbitration in case of disputes. The clause of the contract enabling the reference was as follows :-

"Clause 23 - Except where otherwise provided in

























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