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1991 Supreme(Del) 512

High Court Of Delhi
BHARAT FURNISHING COMPANY - Appellant
Versus
DELHI DEVELOPMENT AUTHORITY - Respondent
Suit 9250 of 1988
Decided On : 09/19/1991

Advocates Appeared:
ANSUYA SALVAN, G.N.AGGARWAL

An arbitrator is required to give reasons for his award, and the court can set aside an award if the arbitrator fails to do so.

Headnote:

ARBITRATION - AWARD - REASONS - SUFFICIENCY - JURISDICTION - CONTRACTOR'S CLAIM FOR ADDITIONAL PAYMENT - ARBITRATOR'S FAILURE TO GIVE REASONS FOR AWARD - AWARD SET ASIDE - ARBITRATOR EXCEEDING JURISDICTION - AWARD SET ASIDE.

Fact of the Case:

The petitioner, a contractor, was awarded a tender for providing and fixing door shutters on 201 DU s AGD-IV. Disputes and differences having arisen between the petitioner and the DDA, the same were referred to the sole arbitration of respondent No. 2 who made his award on August 12, 1986. The arbitrator failed to give reasons for his conclusions, which was a violation of clause 25 of the agreement between the parties. The Delhi Development Authority (DDA) objected to the award under Sections 30 and 33 of the Arbitration Act, arguing that the award was liable to be set aside on the grounds mentioned in I. A. 9250/88.

Finding of the Court:

The court held that the arbitrator's failure to give reasons for his conclusions rendered the award liable to be set aside. The court also held that the arbitrator had exceeded his jurisdiction in making awards under certain claims, as the contract between the parties specifically excluded such claims.

Issues: 1. Whether the award was liable to be set aside on the grounds mentioned in I. A. 9250/88? 2. Whether the arbitrator had exceeded his jurisdiction in making awards under certain claims?

Ratio Decidendi: 1. An arbitrator is required to give reasons for his award, and the court can set aside an award if the arbitrator fails to do so. 2. An arbitrator cannot exceed the jurisdiction conferred upon him by the contract between the parties.

Final Decision: The court set aside the award and remitted the case back to the arbitrator for a fresh reasoned decision on certain claims.

Jaspal Singh

( 1 ) THIS is the second battle of the award. The first was before Sunanda Bhandare J. , who by her order dated April 24, 1989, set aside the finding of the arbitrator on claim No. 7 and remitted the case back for fresh decision on claims No. 1, 2 and 5. This the arbitrator has done but the battle lines are still drawn.

( 2 ) HERE is the background. As per agreement No. 5/pe/agd-IV/ 81-82 the petitioner was awarded tender for providing and fixing door shutters on 201 DU s AGD-IV. Disputes and differences having arisen between the petitioner and the DDA, the same were referred to the sole arbitration of respondent No. 2 who made his award on August 12, 1986. It was this award which led to the order of Sunanda Bhandare, J. , as referred to above. Claim No. 7 which was set aside related to the award of pendente lite interest. As regards claims 1, 2 and 5 the award met its doom as the arbitrator had not given reasons for his conclusions which, under clause 25 of the agreement, he was under an obligation to do. Consequent upon that order the arbitrator has given a fresh award. What, however, is of significance is that it too has failed to win the approval of the Delhi Development Authority. That is why its objections under Sections 30 and 33 of the Arbitration Act leading to the following issues :

(1) Whether the award is liable to be set aside on the grounds mentioned in I. A. 9250/88 ? (2) Relief.

( 3 ) DURING arguments the award in general was assailed on the ground that no reasons had again been given for the conclusions arrived at, and that, in any case, reasons, even if taken to have been given, were so "insufficient" and "devoid of reasoning" that they could hardly be accepted as "reasons". Coming to the specifics, and besides the objection in general already referred to in the preceding paragraph, the award on claim No. 1 was assailed on the following grounds :

(A) It has gone beyond clause (1) of the agreement in as much as no payment was to be made on account of any deviations at the site. (B) No extra payment for the double-doors could be allowed as there was no such stipulation in the agreement. (C) As the shutters were to be supplied according to the actual measurements at site, the arbitrator could not have allowed 5% on account of wastage. (D) The tender being known to be for the ASIAD job, the award of 5% as additional expense on account of rush job, could not be allowed. (E) The agreement being only for wax polishing and no rates having been fixed for spirit polishing the award under claim l (e) at the rate of Rs. 19. 69 per sq. meter was not in consonance with the Delhi Schedule of Rates and the enhancement as given in the agreement. It was contended that the award should have been at the rate of Rs. 14. 39 per sq. meter.

( 4 ) WITH regard to claim No. 2, it was contended on behalf of the objector that as the delay of about six months in the completion of the job was attributable to the contractor and as the Senior Project Engineer, in terms of the agreement, had found the contractor to be at fault and had levied 1% compensation amounting to Rs. 7,106. 20 and as the said sum had been deducted from the final bill, and further as the increase in minimum wages was after the period fixed for completion of the work, the contractor could not be allowed any amount under clause 10-C on account of increase in the minimum labour wages, and that, in any case, the arbitrator had travelled beyond his jurisdiction by allowing the claim. The finding on claim No. 5 too came under fire. By it the arbitrator has allowed the refund of Rs. 7,106. 20 to the contractor. This amount was deducted on account of the levy of compensation by the Senior Project Engineer on account of six months delay in the completion of the work. It was argued that in view of the judgment of the Supreme Court in Vishwanath Sood v. Union of India1, the Arbitrator had no jurisdiction to allow the refund.

( 5 ) BEFORE, I come into grip with the object


























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