The arbitrator has the jurisdiction to interpret the terms and conditions of the contract and determine whether a dispute is one of substitution or reduction, but is bound by the finality of the decisions of the Chief Project Engineer regarding the quantum of reduction and justification thereof in respect of the rates for substandard work.

( 1 ) THIS will dispose of two petitions moved under Ss. 20 and 33 of the Arbitration Act by M/s. Bindra Builders. The respondent is the Delhi Development Authority. By the former the petitioner is seeking reference of disputes numbering 14 as mentioned in Annexure a attached with the petition to arbitration. The other is for determining the effect and validity of the arbitration agreement with regard to claim No. 5 of that Annexure. That claim is to the following effect:

"dispute over sanction of substituted item for Makrana white marble provided in the works; Rs. 3. 75 lacs. "

( 2 ) THE background is that the petitioner executed a contract for the construction of 201 houses on behalf of the respondent at Siri Fort, New Delhi for the "asiad". The total amount thereof was about 2. 2 crores. Specifications and rates of different items were also agreed upon. One of the terms of the contract was that the petitioner would use makrana superior marble . The rate according to the petitioner for this was around Rs. 781. 00 per sq. meter. However, during the course of the execution of the contract the petitioner found that the makrana marble was not available and it appeared that mines there were not in operation for some time. As such the petitioner used rajnagar marble which though not of as high quality as makrana , was next possible available. Its user according to the petitioner was to the knowledge of the Engineers of the respondent who used to supervise the work at the spot and no objection was taken thereto. Subsequently after the completion of the contract when the petitioner submitted the bills, the Executive Engineer In-charge treated the use of rajnagar Marble as substituted item and allowed the rate of about Rs. 343. 00 per sq. meter. The petitioner claimed that he should have been allowed the rate of Rs. 634. 00 per sq. meter. However, the Chief Engineer declined to treat the matter as one of the substituted item but held that it fell in the category of reduction item as the marble actually used was of inferior quality than stipulated for. On its basis substantial amount is sought to be deducted from the bills of the petitioner.

( 3 ) THERE is no dispute that the contract was governed by an arbitration clause under which the Engineer Member of the respondent was competent to appoint an arbitrator. This was earlier also invoked during the course of execution of contract when certain interim disputes had arisen. The petitioner has, therefore, sought in the petition under S. 20 of the Arbitration Act that the Engineer Member should be directed to appoint an arbitrator for deciding the dispute as referred to in Annexure a attached with this petition.

( 4 ) CLAUSE 25-B of the agreement provided as under :

"the decision of Chief Project Engineer regarding the quantum of reduction as well as justification thereof in respect of rates for sub-standard work which may be decided to be accepted will be final and would not he open, to arbitration. "

( 5 ) THE respondent is purporting to act under this clause and holding the case as one of reduction for substandard work. The decision of the Chief Project Engineer in this regard is made final and not open to arbitration. To this extent, therefore, the arbitrator is held bound by the finality of the decision given by the Chief Project Engineer. A reduction @ Rs. 956. 00 per sq. meter on this score is being sought from the bills of the petitioner.

( 6 ) THE petitioner on the other hand is asserting that the controversy does not fall under cl. 25-B and that this was a case of substituted item and Cl. 12 of the agreement was applicable under which the Engineer In-charge was empowered to substitute any item during the progress of the work. Although no specific request in writing for this was made to the Engineer In-charge by the petitioner during the progress of the work, it is contended that since the work was being executed under his supervision and instructions, h