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1988 Supreme(Del) 336

High Court Of Delhi
C.LYALL AND COMPANY - Appellant
Versus
UNION OF INDIA - Respondent
Interim Application 1045 of 1981
Decided On : 11/08/1988

Advocates Appeared:
VIPIN SANGHI

Disputes covered by a specific clause of an agreement that provides a complete machinery for their resolution are excluded from arbitration, and an arbitrator's jurisdiction is limited to disputes not covered by such a clause.

Headnote:

ARBITRATION - JURISDICTION - AWARD - INTERPRETATION OF CLAUSES 12 AND 25 OF THE AGREEMENT - DISPUTES COVERED BY CLAUSE 12 EXCLUDED FROM ARBITRATION - ARBITRATOR'S JURISDICTION LIMITED TO DISPUTES NOT COVERED BY CLAUSE 12 - AWARD IN RESPECT OF CLAIM NO. 15 SET ASIDE FOR WANT OF JURISDICTION.

Fact of the Case:

The petitioner, a contractor, executed the work of strengthening an existing runway and constructing a taxi track and apron at Bakshi-ka-Talab (Lucknow) pursuant to an agreement. Disputes arose out of the contract, and Mr. N. K. Aggarwal was appointed as an arbitrator. The arbitrator made an award in favor of the contractor, and the respondent filed objections challenging the award in respect of certain claims.

Finding of the Court:

The court held that the disputes in respect of claims No. 2 (i) to (v), 11 (a), and 11 (b) were not covered by clause 12 of the agreement, which provided a complete machinery for the decision of disputes relating to rates for altered, additional, or substituted works. Therefore, the arbitrator had jurisdiction to decide these claims. However, the court held that the dispute in respect of claim No. 15 was covered by clause 12 and was therefore not subject to arbitration. The court set aside the award in respect of claim No. 15 for want of jurisdiction.

Issues: 1. Whether the objections are within time? If not, is the objector entitled to condonation of delay? 2. Whether there are no disputes or differences between the parties? 3. Had the arbitrator no jurisdiction in the matter? 4. Is the award liable to be set aside for reasons given in the objection petition. If so, with what effect? 5. Is the petitioner debarred from claiming the amounts in dispute?

Ratio Decidendi: The court interpreted clauses 12 and 25 of the agreement and held that disputes covered by clause 12 were excluded from arbitration. The court also held that the arbitrator's jurisdiction was limited to disputes not covered by clause 12. Therefore, the award in respect of claim No. 15 was set aside for want of jurisdiction.

Final Decision: The court set aside the award in respect of claim No. 15 amounting to Rs. 1,89,913 for want of jurisdiction. The award in respect of all other claims was made a rule of the Court, and a decree was passed in terms thereof.

Y. K. SABHARWAL, J.

( 1 ) THE petitioner (for short contractor ) executed the work of strengthening of existing runway and construction of Taxi track and Apron at Bakshi-ka-Talab (Lucknow) pursuant to agreement No. 2/ee of 1962-63. As some disputes arose out of the said contract Mr. N. K. Aggarwal, respondent No. 2 was appointed as an arbitrator. The arbitrator made and published his award on 2nd February, 1971 awarding a sum of Rs. 7,12,459. 97 to the contractor. The award and proceedings were filed in this Court and respondent No. I has filed objections challenging the award in respect of claims No. 2 (i) to (v), ll (a) and (b) and 15 to the extent of Rs. 5,78,624. 96 particulars whereof are as under:-

( 2 ) ON pleadings of the parties, following issues were framed.

1. Whether the objections are within time ? If not, is the objector entitled to condonation of delay ?

2. Whether there are no disputes or differences between the parties ?

3. Had the arbitrator no jurisdiction in the matter ?

4. Is the award liable to be set aside for reasons given in the objection petition. If so, with what effect?

5. Is the petitioner debarred from claiming the amounts in dispute ?

6. Relief.

( 3 ) I have heard learned counsel for the respondent/objector in support of the objections. None appeared for the contractor. My findings on issues are as under :-

( 4 ) ISSUE NO. 1: Issue No. I stands answered in favour of the objector by judgment of Division Bench in FAO (OS)-14 of 1973 dated 13th November, 1980 holding that the objectors are entitled to delay being condoned. Issue No. I is decided accordingly.

( 5 ) ISSUES NO. 2 to 5: Issues No. 2 to 5 can be conveniently taken up together. The substance of the objection to the award is that disputes in regard to claims No. 2 (i) to (v ). 11 (a), 11 (b) and 15 cannot be arbitrated upon under clause 25 of the agreement containing arbitration clause as these disputes are covered by clause 12 which itself provides the machinery for decision of disputes falling under the said clause whereunder decision of the Superintending Engineer is final. Learned counsel for the objector submits that award in respect of these claims is liable to be set aside as the arbitrator has exercised jurisdiction in respect of the matters outside the reference and that disputes and differences, if any, pertaining to the said claims -fall in the category of excepted matters and could not be referred to arbitration as the decision of the Superintending Engineer there upon is final. It is submitted that arbitrator exceeded his jurisdiction in proceeding to give his award in respect of the said claims. As the bone of contention depends upon the interpretation of arbitration clause No. 25, it would be appropriate to produce the said clause which reads as under:

"except where otherwise provided in the contract all questions and disputes relating to the meaning of the specifications, designs drawings and instruction hereinbefore mentioned and as to the quality of workmanship or materials used on the work or as to any other question, claim, right, matter or thing whatsoever, in any way arising out of or relating to the contract, designs, drawings, specifications, estimates, instruction, or the execution or failure to execute the same whether arising during the progress of the work or after the completion or abandonment thereof shall be referred to the sole arbitration of the person appointed by the Additional Chief Engineer, Central Public Works Department, Incharge of the work at the time of dispute or if there be no Additional Chief Engineer, the administrative head of the said Central Public Works Department at the time of such appointment. It will be no objection to any such appointment that the arbitrators so appointed is a Government servant, that he had to deal with the matters to which the contract relates and that in the course of his duties as Government servant he had expressed views on all or any of the matters in dispute or diff





















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