IMPORTANT POINT
Setting aside arbitral award – Courts, while adjudging whether an arbitration award calls for interference has to be conscious that Arbitrator is sole Judge of facts – Unless an error of law is shown, interference with award should be avoided.

JUDGMENT :

S. Ravindra Bhat, J.

1. These appeals challenge a common judgment of the Aurangabad Bench of the Bombay High Court,¹[Dated 13.08.2009, in AO 108/2005; the appeal to the Division Bench was rejected on the ground of maintainability.]. The appellant was aggrieved by the judgment of the trial court,²[Joint Civil Judge, Senior Division, Ahmednagar, in R.C.S. No.595/1997.]. The trial court had set aside an award made in the appellant’s favour, ³[Dated 14.12.1997.] awarding substantial amounts towards its claim, in the backdrop of a road construction contract.

2. The first respondent, the Government of Maharashtra Irrigation Department, through Executive Engineer (hereafter EE), issued a tender notice for the work “Construction of Earth Work, structure and lining in Km. No.91 to 110 Kukadi Left Bank Canal”. This tender was accepted, and a work order was issued on 23.07.1983; the estimated cost of the work was Rs. 4,01,77,153/-. The contract between the parties visualized the period for completion of work to be 18 (Eighteen) English calendar months. The due date for completion of work, thus, was 22.01.1985. It was, however, not completed; several extensions were given, on the understanding that they were not due to the contractor’s fault.

3. Disputes arose; the appellant approached the civil court for appointment of an arbitrator, in terms of the contract. Eventually, the Civil Judge, Ahmednagar,⁴[By order dated 25.02.1997 in Arb. MA 1/1995.], appointed an arbitrator for “settling the dispute in respect of payment of additional and extra work carried by the petitioner outside of Contract LCB 9/83-84.”

4. The arbitrator, by his award,⁵[Dated 14.12.1997], held the claimant/contractor entitled to the sum of Rs. 1,50,07,000/- towards various heads and interest at 12% p.a. for the period 10.12.88 to the date of commencement of arbitration (working out to Rs. 133.22 lakhs). The arbitrator rejected the state’s counter claim.

5. The respondent state, aggrieved by the award of the arbitrator, challenged it under Sections 30/33 of the Indian Arbitration Act (hereafter “the Act”), claiming that it was the result of legal misconduct. The trial court set aside the award; this impelled the contractor to approach the High Court, which rejected his appeal.

Findings of the Court below

6. Both the trial court and the High Court held that the award was vitiated by the legal misconduct of the arbitrator under the old Arbitration Act,⁶[Indian Arbitration Act, 1940.]. The courts concluded that the claim was time-barred since the disputes in relation to the contract originally awarded in 1983 with the stipulation of the work being completed within eighteen months were no doubt extended with parties’ consent. It was only in 1991 that the claim for nomination of the arbitrator was made, which finally led the contractor to approach the Court under Section 8 of the Act in 1995. It was next held that the order referring the disputes to arbitration [by the Civil Judge (Senior Division)] on 25.02.1997 (in Arb. M.A. 1/1995) were in relation to the works carried on by the contractor under the contract. The courts held that the award of amounts exceeded the terms of reference in respect of at least three items. Consequently, it could not be sustained.

7. It was held that the claims could not be pursued because the original contractor died and all legal representatives had not joined in the proceedings: there appeared to be inter se disputes amongst them. This fact was not disclosed during arbitration proceedings, vitiating the award. It was also found that in terms of the contract, the claim had to be lodged within a particular time within 30 days of the expiration of the defect liability period. In this regard, it was held that the claim was made much beyond that period of time and, therefore, contractually precluded.

Contentions of the parties

8. Mr. Vinay Navare, learned senior counsel appearing for the contractor/appellant urged that the findings of the courts be