An arbitrator is duty bound to arbitrate in the terms of the contract and cannot award any claim in addition to what is permissible under the contract.

Dr. B.P. Saraf, J. - This appeal is directed against the judgment and order dated 12th December, 1994 of the learned single Judge dismissing the Arbitration Petition No.127 of 1991 filed by the appellants.

2. The material facts of the case, briefly stated, are as follow: In the year 1978, tenders were invited by the appellants, the Municipal Corporation of Greater Bombay ("Corporation"), for installing the crematorium furnaces in Bombay. In pursuances of the above tender invitation, tender has submitted by the respondent No.1, Thermal Engineering Corporation, on 1st February 1979. The Corporation accepted the said tender and issued the work order on 2nd November 1979. As per the work order, respondent No.1 was required to complete the construction of two crematorium furnaces within 11 months. The respondent No.1, however, could not start the work because of the strike resorted to by the sand suppliers, which continued till October 1980. During this interregnum, the prices of the materials covered by the work order escalated. Under those circumstances, the respondent No.1 wanted to terminate the above contract and accordingly, by its letter dated 13th October, 1981, requested the Corporation to terminate the same. In reply, on 7th April, 1982, the Corporation requested respondent No.1 to set up only one furnace instead of two as contemplated by the original contract. The above offer of the Corporation was accepted by the respondent No.1 on 16th October, 1982. The respondent No.1 there upon installed the furnace in terms of the modified contract. The Corporation also, on its part, made payments to the respondent No.1 from time to time under the above contract. The respondent No.1, however, made certain additional claims which were not acceptable to the appellant Corporation. One of the claims was a claim for an amount of Rs. 5,96,815.50 on account of 69% increase in the rates over and above the escalation permissible under the escalation clause contained in the contract. The appellant Corporation rejected the above claims of the respondent No.1. Thereupon, the respondent No.1 asked the Commissioner of the Corporation to refer the dispute regarding the amounts payable to the respondent No.1 to arbitration under Clause 96 of the general conditions of the Contract. The Corporation, accordingly referred the dispute to arbitration on 31st October, 1988. The award was made and published by the arbitrator on 4th April, 1991.

3. The Corporation challenged the award by filing an arbitration petition under Section 30 of the Arbitration Act, 1940 ("the Act") before the learned single Judge of this court and challenged the award of 690% increase in the rates which amounted to Rs. 5,96,815.50, in addition to a sum of Rs. 4,95,550/- under Clause 75 of the general conditions of the contract which provided for escalation of the cost, on the ground that respondent No.1 was entitled only to escalation under Clause 75 of the contract and no other amount on account of rise in the cost of material or labour etc. The case of the Corporation before the learned single Judge was that the claim of 69% escalation in addition to escalation under Clause 75 of the general conditions of the contract was illegal inasmuch as Clause 75 specifically barred any such claim. The learned single Judge field that, in the facts and circumstance of the case, the respondent No.1 was entitled to claim 69% escalation over and above the escalation permissible under Clause 75 of the general conditions of the contract as, in his opinion, Clause 75 did not operate as bar to such claim. The learned single Judge also observed that the arbitrator having consumed Clause 75 in that manner and that being one of the possible views, it was not open to him to go into the reason given by the arbitrator.

4. We have carefully considered the judgment of the learned single Judge. The contention of the appellant Corporation is that Clause 75 of the general conditions of contract cont