An arbitrator is bound by the terms of a contract and cannot exceed its boundaries; a final bill or 'no claims due certificate' can only be overridden if it was proven to be a result of vitiating factors under law.

JUDGMENT :

K. M. JOSEPH, J.

1. A contract was entered into between the parties for the repair of bathrooms and other allied works on 02.07.2001. It would appear that time was extended up to 19.01.2002. The respondent-Contractor submitted final bill on 13.02.2002. It contained a No Claims Certificate. The said amount claimed by the respondent apparently was not paid immediately. The respondent it would appear made several reminders regarding the non-payment of the final bill for a period of one year. Following many reminders by the respondent regarding the non payment of the final bill, according to the respondent, it sent a list of additional claims on 25.02.2003 and in the said letter, claimed that the letter and the Final bill should be considered as under protest. The respondent signed affidavit dated 24.05.2003 which according to the respondent was prepared by the appellant and which provided for the withdrawal of the letter dated 25.02.2003. An undertaking was also got signed from the respondent on 12.09.2003. Thereafter, respondent on 14.11.2003 revoked the affidavit and undertaking on account of non payment of the bill and purported to give the final notice invoking the arbitration clause contained in the contract for the non payment of claims due. It is, thereafter, on 25.11.2003, that the appellant made payment of Rs.100358/-. This was followed by letter dated 08.09.2004 by which the respondent sought to invoke the arbitration clause and appointment of arbitrator. Later, on 12.11.2007, a petition was moved under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘Act’ for brevity) for appointment of an arbitrator. The same was allowed. A fresh agreement for arbitration was entered into on 22.11.2007 providing for appointment of a new Arbitrator. Suffice it to notice that a former District and Sessions Judge came to be appointed as sole arbitrator. The appellant filed an application under Section 16 for dismissal of the claims. The appellant invoked clauses 65 and 65A of the contract. This application, no doubt, was rejected on 04.03.2009 by the Arbitrator. Thereafter, the Arbitrator entered upon the merits of the matter and passed Award dated 16.07.2009. There were a total of 10 claims. The Arbitrator disallowed seven out of the ten claims while it allowed three claims. The claims were allowed with rate of interest which we need not notice at this stage. The petition filed by the appellant under Section 34 of the Act came to be allowed by the District Judge. It is this order passed by the District Judge under Section 34 which stands overturned by the impugned order in an appeal under Section 37 of the Act.

2. We have heard Col. R. Balasubramanium, learned senior counsel for the appellants, and Ms. Praveena Gautam, learned counsel for the respondent.

3. The only controversy which we are called upon to resolve is whether the impugned order is sustainable having regard to clauses 65 and 65A of the Contract.

4. The contention of the learned senior counsel for the appellants is that the impugned order is in the teeth of law laid down by this Court in Bharat Coking Coal Ltd. vs. Annapurna Construction (2003) 8 SCC 154. He also points out that the said view has been followed in PSA SI CAL Terminate (P) Ltd. v. Board of Trustees of V.O. Chidambranar Port Trust Tuticorin 2021 SCC Online SC 508. In a nutshell, the argument is as follows:

5. He contends that the Arbitrator cannot travel outside the boundaries of the contact. In fact, he is fully bound by the terms of the contract. In the terms of the contract which are apposite in the context of the dispute before us, there is a prohibition against the Contractor supplementing the claims in the final bill by including claims which are not found in the final bill. In the facts of this case, he would submit that this is precisely what has happened by pointing out the final bill which was submitted on 13.02.2002 and the claims allowed are later raised