Judgment

B.L.HANSARIA, J.

(1) THE appellant impugns the judgment of the High court of Madhya Pradesh by which it has upheld the order of the District Judge, Jabalpur, setting aside the award of the arbitrators in exercise of power conferred by Section 30(a) of the Arbitration Act, 1940, hereinafter the Act.

(2) THE award to be set aside was one which had come to be passed following the order of the District Judge dated 6/05/1987 in Civil Suit No. 1-A/87 by which an earlier award had come to be remitted to the arbitrator for reconsideration keeping in view the legal arguments advanced. The first award owes its origin to the following question referred for determination by the two arbitrators named in the order of the District Judge passed on 12/04/1985:

"WHETHER the State is not liable to reimburse to the applicant Rs. 3,42,69,847.00 for the period 7/08/1979 to august 31/08/1984 on account of difference in wages,"

(3) THE reference was made on an application made by the appellant under Section 20(1 of the Act. That application was based on the terms of the agreement entered into by the appellant with the State of Madhya Pradesh relating to construction of Bargi Masonry Dam. One of the terms of the agreement as incorporated in clause 4.3.29(2 provided for settlement of dispute arising out of contract by arbitration. The appellants averment was that after the contract was entered into, minimum wages were raised by the State and the appellant was required to pay wages accordingly. The rates quoted by the appellant, however, related to wages as were prevalent at the time when the tender was invited. The revision of the wages upset all the calculations as extra amount had to be paid on this count. The Superintending Engineer rejected the claim of reimbursement on the ground of no escalation clause in the contract, whereupon the appellant called upon the Superintending Engineer to appoint an arbitrator on behalf of the State. This not having been done and the appellant having appointed one Brigadier D.R.Kathuria as arbitrator, it approached the court to direct the State to file the arbitration agreement and to make an order of reference. The non-applicant did not oppose; indeed it filed no reply. Not only this, it even named one Shri V.M. Chitale as arbitrator while filing the arbitration agreement.

(4) IN these circumstances the aforesaid question was referred for determination by the two named arbitrators. After the reference was entered into by the arbitrators the appellant claimed a sum of Rs. 3,42,69,847.00 on the aforesaid count. The State admitted that the contractor was liable to pay the increased wages under the Minimum Wages Act, but took a stand in paragraph 12 of its counter that the claimant was not entitled to the increased amount on account of revision of wages and denied its liability to reimburse. The arbitrators, however, by order dated 20/11/1986 awarded a sum of Rs. 236 lakhs with simple interest per cent to the claimant-appellant. It may be stated that by the time the award was passed one Shri K.C. Goel had stepped into the shoes of Brigadier D.R. Kathuria.

(5) THE State approached the District Judge to set aside the award, inter alia, on the ground that the arbitrators had not decided the question of the liability of the State to reimburse the claim due to escalation of wages which was one of the matters referred to the arbitrators. This is what appears from the States petition filed on 23/01/1987 under Section 30 of the Act. When the matter came to be taken up by the District Judge the main contention advanced was, however, relating to quantum of award, as it would appear from paragraph 5 of the order of the District Judge passed on 6/05/1987. The attack on this score was on the ground that the arbitration could not have calculated the amount on the task-basis of the sub-contractor and piece workers. The District Judge took the view that the difference in wag