IMPORTANT POINT
Court does not sit in appeal over Arbitrator’s decision on merits and it cannot substitute its views for the arbitrator. However part of the award which suffers from perversity on ground of non-application of mind can be modified.

Judgment :

Adarsh Kumar Goel, J.

1. The question raised in this appeal is whether any interference is called for with the award dated 29th June, 2003 on the basis of objections of the appellant-State of Orissa.

2. The Respondent-Company (“the Contractor”) was awarded the work of “Construction of Mahanadi Barrage on the Right Side from the Right Divide Wall including Right Head Regulator” vide Agreement dated 11th February, 1986 at approximate cost of Rs.5 crore. The project was to be completed by 11th November, 1987. However, within the said period only 24.99% work was executed. Further extension of time was granted upto 21st March, 1988. Till then, only 36.81% of the work was executed. In these circumstances, vide letter dated 21st April, 1988, the contract was terminated under Clause 46 of the General Conditions of Contract. The work executed till then was only 47.67%.

3. The Contractor made a claim for Rs.6.99 crore towards its dues. The dispute was referred to the Arbitration. Retired Justice B.K. Behera (‘the Arbitrator’) vide award dated 29th June, 2003 upheld the claim of the Contractor to the extent of Rs.4.45 crore. The Arbitrator also allowed counter claim of the Department to the extent of Rs.1.37 crores.

4. The Contractor had raised 26 items of claim, out of which 21 were rejected and five were accepted. The major item of claim was Item No.18 against which award of Rs.3 crore was made. The said claim was towards hire charges of the machinery and equipment as follows :-

“The various machineries which were purchased by the claimants against sanction of advance from the respondents along with the own machineries of the claimants and those brought on hire from the private parties have been seized by the respondents. The respondents are to pay hire charges on each machinery as calculated in Annexure-P for the period those machineries are detained by the respondents. The hire charges of the machineries calculated till 31-10-1989 amount to Rs.68,44,332.00.”

5. The Annexure referred to above, is as follows :-

N.B. This amount has been calculated till the preparation of this claim statement, i.e. up to 31-10-89 and the actual amount shall be arrived at after taking into consideration the period from 1-11-1989 till the date of handing over all the aforesaid plants and machinery by the respondents to the claimants.

6. It is not necessary to refer to the other items of dispute as learned counsel for the parties have raised contentions mainly in respect of Item No.18.

7. The Arbitrator held that the seizure of the machinery and other equipments was illegal as termination of contract itself was illegal. The Contractor was therefore, entitled to hire charges as per Government rates which amounted to Rs.5 crores but since no men were employed to maintain the machines and no oil was used, the fair amount of claim to be upheld was Rs.3 crores.

8. The appellant filed objections under Section 34 of the Arbitration and Conciliation Act, 1996 (“the Act”) to the award including the award of Rs.3 crores against the above Item No.18 in favour of the Contractor.

9. The District Judge held that the Arbitr