Arbitrators' jurisdiction to rewrite contract terms - Court not to go into intrinsic calculations of specified amounts granted - Interest granted at 12% p.a. from date of award till payment

1. These two Petitions are filed U/s.34 of the Arbitration and Conciliation Act, 1996 for setting aside the award dated 17th September, 2007 under two contracts entered by and between the parties for construction of the extension of Port Craft Berth at the B premises of the Petitioner.

2. Both contracts are contained in the letter of the Petitioner dated 25th February, 1999, 1st March, 1999 and the tender submitted by the Respondent dated 15th March, 1999 and 17th March, 1999 and further correspondence between the parties as set out in the letter of the Petitioner dated 1st September, 1999.

3. Under clause 17 of the contract between the parties they agreed to refer their dispute to two arbitrators, one to be nominated by each of them and the third to be nominated by the arbitrators. Under the arbitration clause the parties agreed that only the questions and disputes raised for the execution of the work until its completion would be referred to arbitration. The disputes arising thereafter would not be referred to arbitration except those relating to maintenance of the construction during the maintenance period. The disputes having arisen, an arbitration has been invoked and undertaken. The award is challenged essentially upon the ground that it travels beyond the contract between the parties.

4. In that regard, the Court would be bound and completely governed by the law laid down in the case of Rajasthan State Mines & Minerals Ltd. Vs. Eastern Engineering Enterprises & Anr., AIR 1999 Supreme Court 3627.

5. The parties have referred to various clauses of the contract in paragraph 1 contained in part II with regard to claims of the Respondent herein which have been granted and the grant of which has been challenged.

6. It need not be even mentioned that this Court, which is not an appellate Court, cannot go into the intrinsic calculations of the various specified amounts so granted. The main aspect to be seen is whether the arbitrators have exceeded the jurisdiction in going beyond the terms of the contract such as to rewrite the contract between the parties. Consequently it will be appropriate to take up the contentions of all the parties with regard to the grant of each of the claims and the challenge to each of the grants to determine the extent of the exercise of jurisdiction by the arbitrators.

7. Claim No.1 :

This relates to payment for boring in diaphragm wall from RL + 6.8 meters (m) to 5.125 m at which level the diaphragm wall begins as shown in the claim diagram relied upon by the Petitioner.

8. Under clause 4.1.20 of the tender specification the boring was to be in clay, mud, boulders, gravel, but not basalt which was separately considered.

9. The Petitioner has explained by diagram how the boring in the diaphragm wall was to be done by the Respondent. There are guide walls on the either side of a berth. The Respondent was to construct guide wall and diaphragm wall. The boring of the diaphragm is specified in clause 4.9 of the contract. It would be from the level + 5.125 m. It is contended by the Petitioner that the Respondent could not claim the expenses of boring wall from any higher level. Under clause 4.9A the measurement for boring was to be downward from the level where the boring was to encounter the soil. Under clause 4.9 B the concrete used for this purpose would be the actual consumption being under, as shown in the drawings and ordered by the Engineer-in-charge of the Petitioner. Under that clause it was agreed that the construction actually consumed up to the limit of theoretical volume shown in the drawings would be paid. Hence it is argued that it would be actual consumption until the limit of the height of digging is reached. This is admittedly paid.

10. Bill of Quantity (BOQ) in the contract under clause 4b shows the quantity of the boring required. This would be boring into weathered basalt rock or sand but not basalt. The quantity agreed between the parties for such boring was 2280. It is c