The main legal point established in the judgment is that the Arbitrator's award should not be interfered with unless suffering from manifest error, and the Court should not substitute the Arbitrator's view with its own merely because a different view is possible.

1. The appellants in the present appeal filed under Section 39 of the Arbitration Act 1940 (for short the said Act) have challenged the judgment dated 23-4-1998 in Special Civil Suit No.67/1992 whereby the award made by the Arbitrator was made rule of the Court.

2. The relevant facts are that the appellants had invited tenders for constructing of office, dwelling units, boundary wall etc. Pursuant to said notice, the respondent had submitted its offer and on 24-4-1986, an agreement was entered into between the appellants and the respondent for undertaking said work. Prior thereto, work order came to be issued to the respondent on 31-3-1986. The work in question was to be completed within a period of 12 months from 10-4-1986 to 9-4-1987. The work was to be carried out as per the terms agreed between the parties. Certain conditions had been stipulated in the notices inviting the tenders. On that basis, the respondent undertook the work of construction. Said work could not be completed within the stipulated period and hence, time to complete the same was extended on two occasions vide communication dated 14-5-1987 and 14-12-1987. The work came to be completed on 31-1-1988.

3. Disputes having arisen between the parties, the respondent in terms of the agreement sought appointment of an Arbitrator. By order dated 20-12-1995, the Civil Court directed the present appellants to file the arbitration agreement in Court and appointed a sole Arbitrator to adjudicate the claim of the present respondent. Pursuant thereto, arbitration proceedings took place and on 30-6-1997, the sole Arbitrator made his award and held that the respondent was entitled to a total amount of Rs.16,05,982.95/-. The award was thereafter placed before the Civil Court and the appellants filed their objection vide Exhibit.41. The objections pertained to grant of amount towards escalation and award of interest at 18% per annum. The Civil Court thereafter considered the award and the objections thereto and by judgment dated 23-4-1998 upheld said award and made it rule of the Court. This judgment is under challenge in the present appeal.

4. Shri C. S. Samudra, learned Counsel appearing for the appellants submitted that the amounts as awarded by the Arbitrator in respect of escalation charges and interest @18% per annum were not permissible under the agreement between the parties and hence, by awarding said amounts, the Arbitrator had misconducted himself. He submitted that as per Clause 9 of the tender conditions, time had been made an essence of contract and, therefore, it was necessary for the respondent to have completed the work in question within stipulated time. He submitted that as per Clause 21 thereof, no escalation was permissible on account of fluctuation in market prices of labour and material during the currency of the contract. Similarly, as per Clause 16, it was agreed that the respondent would not be entitled to any compensation for any loss on account of delay in commencing or executing the work. He, therefore, submitted that in the absence of any agreement to provide for escalation, it was beyond the jurisdiction of the Arbitrator to award any amount of claim for said reason. In support of the said submission, the learned Counsel placed reliance on decision of the Division bench in PawanHans Helicopter Ltd. vs. Messers Associated Construction 2007 (6) Mh.L.J. 255, Municipal Corporation of Greater Bombay vs. Thermal Engineering Corporation and others 1997(1) Mh.L.J. 700, Ramnath International Construction Pvt. Ltd. v. Union of India and Anr. AIR 2007 SC 509, State of Orissa v. Sudhakar Das AIR 2000 SC 1294, New India Civil Erectors (P) Ltd. v. Oil and Natural Gas Corporation AIR 1997 SC 980, Ramchandra Reddy & Co. v. State of Andhra Pradesh and others AIR 2001 SC 1523, Continental Constuction Co. Ltd. v. State of Madhya Pradesh AIR 1988 SC 1166, Associated Engineering Co. v. Government of Andhra Pradesh and another AIR 1992 SC 232, Ch. Ramalin