1996 Supreme(Bom) 34

IN THE HIGH COURT OF BOMBAY
S.M. Jhunjhunuwala, J.
Municipal Corporation of Greater Bombay another.... Petitioners.
Versus
M/s. Atlanta Construction Company (India) Ltd. another .... Respondents.
Arbitration Petition No. 184 of 1992 in Award No. 128 of 1992, A.P. No. 185 of 1992 in M.A.No. 129 of 1992 A.P. No. 186 of 1992 in A. No. 130 of 1992, decided on 18-1-1996.
Advocates appeared :
M.R. Sathe with R.D. Dhanuka Ms. Neeta Rajani, for the petitioners.
N.G. Thakkar with Mrs. S. Doshi i/b Rustomji Ginwala for respondents.

Headnote:Sections 17 and 30-See Contract Act, 1872-Section 73.

       20. Sections 17 and 30-Evidence Act, 1872-Sectiuns 3 and 59_Arbitr-dlion Act-Award of-When cash be challenged?

       Held, as per clause 96, if any doubt, dispute or difference arises or happens between the Engineer or any other officer of the Municipal Corporation on the one hand and the contractor on the other hand, touching or concerning the concerned work or relative to the quantities, qualities, description or manner of work done and executed by the contractor or the quantity or quality of the materials to be employed therein or in respect of any additions, deductions, alterations or deviation made into or from the concerned work of touching or concerning the meaning or intention of the contract or of any plans, drawing, instructions or directions referred to therein or which may be furnished or given during the progress of the work or touching or concerning any certificate, order of reward which has, been made or in anyway whatsoever relating to the interests of the Municipal Corporation or of the contractor, every such doubt, dispute and difference is to be referred to the Municipal Commissioner who shall given his decision within a period of 90 days and if the contractor is not satisfied with the decision of the Municipal Commissioner or the Municipal Commissioner fails to give the decision within a period of 90 days, such dispute may be referred to arbitration ai per clause 97. The language of clause 97 which incorporates arbitration agreement between the parties is of widest amplitude. As per clause 97, all disputes or differences whatsoever arising at any time between the parties to the contract, touching or concerning the work or the execution or maintenance thereof or the contract or the construction, execution or maintenance thereof or of the rights or liabilities of the parties or arising out of or in relation there to whether during or after completion of the contract or whether before or after termination, foreclosure or breach of the contract (other than those in respect of which, decision of any person is by the contract, expressed to be final and binding) after after written notice by either party to the contract to the other of them to be referred to arbitration. Clause 97 also provides the manner and mode in which the arbitrator is to be appointed.

       Except in expected matters and that too subject to limitation mentioned in clause 96, reference to arbitration under clause 97 in respect of all claims, disputes or differences arising out of or in relation to the contract between the parties as provided therein can be made. Such reference to arbitration is not dependent upon clause 96. The claims in respect whereof the references to the arbitrator for arbitration were made were not of the nature in respect where of decision of any person by the contract expressed to be final and binding as such, the references in respect of the respondents claims against the Municipal Corporation were not made beyond the terms of the contracts. The arbitrator had the jurisdiction to arbitration in respect of the 1st respondents claims against the Municipal Corporation.

       In the facts of the instant case, the claims for idling machines and loss of profit were founded on different heads and independent of each other. Both the Claims Nos. 3 and 4 before the arbitrator were not claims for loss of profit but were raised under different heads independent to each other. As justifiably held by the arbitrator, heads of losses due to delay are (i) overheads, (ii) profit, and (iii) extra expenses due to price rise during the extended period (over and above the sum allowable under agreed escalation) in respect of (a) materials, (b) labour, (c) machinery, equipment, spares, P.O.L., etc. The arbitrator has further held that the analysis of heads of losses due to delay when applied to the compensation claimed by the 1st respondents in claim Nos. 3 and 4 revealed that the 1st respondents were claiming loss of profitability during the extended period after having claimed the loss of profit on the full value during the stipulated period which was logical. However, the arbitrator has awarded overheads which were actual out of pocket expenses incurred extra to the full extent and expected profit lost within the stipulated period but not the profitability during the extended period. Since the 1st respondents proved with documentary evidence for major items the rise in prices of materials and labour to the extent of 79%. The arbitrator, while considering claim No.4 of the 1st respondents justifiably held that credit had to be given on account of (i) material supplied by the Municipal Corporation to the 1st respondents at the fixed agreed rates, (ii) escalation due and payable under the agreed formula, and (iii) compensation awarded under claim No.3 of the 1st respondents and after giving this credit. Claim No.4 was partly awarded. The Court found no merit in the submission made on behalf of the Municipal Corporation that the arbitrator has awarded claims to the 1st respondents made inconsistent with each other.

       No claim contrary to contractual stipulations has been awarded by the arbitrator to the 1st respondents. The arbitrator has interpreted the relevant terms of the contracts for deciding the disputes between the parties and on interpretation of the terms of the contracts, the view taken by the arbitrator being a possible view, the same cannot be substituted by the view of the Court even if the Court takes a different view on interpretation thereof. Mr. Sathe has submitted that road divider work was deleted from the scope of the contracts and the Engineer of the Municipal Corporation had express power to do so and as such, no claim could have been awarded by the arbitrator in respect thereof. The material clauses for consideration by the arbitrator in this respect were clauses 14 and 94 of the General Conditions of the Contract for Civil Works. Clause 14 empowers the Engineer to alter or vary the levels or position of any of the works contemplated by the specifications, or to order any of the works contemplated thereby to be committed with or without substitution of any other works in lieu thereof. However, as provided in clause 14 itself, in the event of any deviation being ordered by the Engineer which in the opinion of the contractor changes the original nature of contract, the contractor shall nevertheless carry it out and disagreement as to the nature of the work and the rate to be paid therefor, shall be resolved in accordance with clause 97. Clause 94 empowers the Municipal Commissioner to foreclose the contract in full or in part. However, this power is not to be exercised arbitrarily. On the facts before him, the arbitrator found that the Municipal Corporation not only modified the design but got the work done through other agency and that the substantial reduction in the scope of work resulted in loss of overheads and profits, reduced productivity from machinery and equipment besides direct expenses incurred so far as the 1st respondents were concerned. By allowing partly this claim the arbitrator has not acted in contravention of any of the terms of the contracts. On the facts and evidence on record and while appreciating the same, it has been partly allowed and it is not permissible for the Court to reappreciate the evidence on record. On interpretation of clauses 14 and 94, the arbitrator has come to the conclusion that the claim was permissible in arbitration. There is no error of law on the face of the said awards and the reasons given by the arbitrator in partly allowing the claim do not disclose an erroneous proposition of law as the basis thereof. Since the arbitrator has not travelled outside the bounds of the contracts he has not acted without jurisdiction. He has remained inside the parameters of the contracts and has construed the provisions thereof.

       Section 30-Arbitrator final arbiter of dispute before him-On appreciation of evidence ground it cannot be challenged in any Court.

       The ambit and scope of challenge to an award under Section 30 of the Arbitration Act, 1940 (for short, the Act) has now been circumscribed by the catena of decisions of the Supreme Court, our Court and other High Courts. An award is not vulnerable to any challenge thereto. Needless to slate that when an arbitrator is made the final arbiter of the disputes between the parties, the award is not open to challenge on the ground that the arbitrator reached a wrong conclusion or failed to appreciate the facts. The reasonableness of the reasons given by the arbitrator cannot be challenged and the appreciation of evidence by the arbitrator is never a matter where the Court cases upon and considers. The arbitrator is the sole Judge of the quality as well as the quantity of the evidence and it will not be for the Court to take upon itself the task of being a Judge on the evidence before the arbitrator. Once there is no dispute as to the contract. What is interpretation of that contract is a matter for the arbitrator on which the Court cannot substitute its own decision. If on the view taken of a contract the decision of arbitrator on certain amounts awarded is a possible view though perhaps not the only correct view the award cannot be examined by the Court. However, an award can be set aside if the arbitrator misconduct; himself or the proceedings before him or proceed., beyond his jurisdiction. There is a distinction between the dispute as to the jurisdiction of the arbitrator and the dispute as to in what way that jurisdiction should be exercised. A distinction has to be drawn between an error within the jurisdiction and an error in excess of jurisdiction. An award may be remitted or set aside on the ground that the arbitrator in making it had exceeded his jurisdiction. An award can also be set aside where there is error apparent on the face thereof. All award is not invalid merely because by a process of inference and arguments it may be demonstrated that the arbitrator has committed some mistake in arriving at his conclusion. The Court in dealing with an application to set an award is not to consider whether the view of the arbitrator on the evidence is justified. The arbitrators adjudication is generally considered binding between the parties for he is a Tribunal selected by the parties and the power of the Court to set aside the award is restricted to the cases set out in Section 30 of the Act. Needless to say that the Court has no appellate jurisdiction in deciding the petition to set aside an award under Section 30 of the Act.