2019 Supreme(SC) 365

SUPREME COURT OF INDIA
RANJAN GOGOI, CJI., SANJAY KISHAN KAUL, K.M. JOSEPH
SRI K. MARAPPAN (DEAD) THROUGH SOLE LR. BALASUBRAMANIAN – APPELLANT(S)
VERSUS
THE SUPERINTENDING ENGINEER T.B.P.H.L.C. CIRCLE ANANTAPUR – RESPONDENT(S)
CIVIL APPEAL NOS. 159-170 OF 2010
Decided on : 27-03-2019

Important Points
(1) Arbitrator is creature of contract and he is bound by contract.
(2) As long as agreement between the parties does not prohibit grant of interest and matter is referred to Arbitrator, Arbitrator would have power to grant interest pendente lite.
(3) Parties are bound by terms and condition of contract.
(4) Arbitrator cannot award compensation de hors terms of contract.

Headnote:(A) Arbitration Act, 1940 – Sections 30 and 33 – Appeal against arbitral award – Contract for irrigation work – It will not be open to contractor to claim compensation which arises on account of fact that work is delayed or hindrance caused to work from any cause whatsoever – Clause 59 of contract interdicts raising claim for compensation by contractor if employer poses hindrance to work – If work gets delayed on account of contractor himself, it is axiomatic that he cannot claim compensation as it would amount to a person taking advantage of his own wrong – Delay from any cause cannot found a claim for compensation – It may also happen that work may get delayed not due to fault of employer – There may be natural causes such as natural calamities which may cause delay in carrying out work – Even in such cases, Clause 59 would cast embargo against claim by contractor – Equally, if there is hindrance to work from any cause whatever, claim for compensation would not lie. (Para 26)

       (B) Arbitration Act, 1940 – Sections 30 and 33 – Appeal against arbitral award – Request for extension of time must arise from causes beyond control of contractor – Whenever authorised alterations or additions which are made during progress of work are of such a nature which justify extension of time, extension can be granted in writing by Executive Engineer or other competent authority when ordering such alterations or additions – Claim for compensation on account of delay or hindrance on account of any cause will not lie – Arbitrator is creature of contract and he is bound by contract. (Paras 27 and 29)

       (C) Arbitration Act, 1940 – Sections 15 and 16 – Appeal against arbitral award – Power of court to modify extend to a case where award is imperfect in form – Where award contains an obvious error which can be amended without affecting such decision. Court has power to modify – Amount must be awarded on the basis of cost of conveyance being calculated at the rate of Rs.13.75 and the amount must be calculated and paid. (Paras 33 and 41)

       (D) Arbitration Act, 1940 – Section 29 – Award of interest – As long as agreement between the parties does not prohibit grant of interest and matter is referred to Arbitrator, Arbitrator would have power to grant interest pendente lite – Entering upon reference is to be taken as date of commencement of arbitration proceedings for calculation of interest – There is no power to grant interest from the date of commencement of arbitration. (Paras 88 and 89)

       Facts of Case:

       By impugned judgment, High Court set aside orders passed by Sub-Court granting decree in terms of Arbitration Award though in a modified way in respect of certain claims raised by appellant. Court also rejected petitions filed by appellant challenging decision of sub-Court refusing to make Award decree of Court in regard to certain claim. By mpugned judgment High court found that arbitration awards were totally unsustainable in view of Clause 59 of Agreement.

       Findings of Court:

       Only point which remains is whether there was any basis for Arbitrator to have found that appellant had indeed brought quantity of cement from other sources and used it for works in question. arbitrator has proceeded on the basis of admitted correspondence between officers to find that there is shortage of cement. Sub-court on other hand finds that none of correspondence by officers indicate that appellant was given permission to buy cement from outside. There is no indication in any of letters written by appellant which other sources were from which he was procuring cement. Most important obstacle for appellant is clause in contract for procuring cement by contractor, he must maintain ledger and which may be open to scrutiny by officer as and when demanded. In this case, appellant has not produced any ledger showing purchase of cement from other sources. There is no written permission produced to purchase cement from other sources. No voucher has been produced by appellant to establish purchase of cement from outside.

       Result : Appeals Partly allowed.