High Court Of Delhi
METRO ELECTRIC COMPANY - Appellant
Versus
DELHI DEVELOPMENT AUTHORITY - Respondent
First Appeal Order 27 of 1976
Decided On : 01/21/1980
ARBITRATION - ERROR APPARENT ON THE FACE OF THE AWARD - INTERPRETATION OF CLAUSE 10C OF THE CONTRACT - APPLICABILITY OF CLAUSE 5 OF THE AGREEMENT - EXTENSION OF TIME - DAMAGES.
Fact of the Case:
The appellant, a contractor, entered into an agreement with the respondent, D.D.A., for the electrification of the Interstate Bus Terminus, Kashmere Gate. The work was to be completed in eleven months, but due to the delay in handing over the site by the D.D.A., the contractor was unable to complete the work within the stipulated time. The contractor claimed additional 22% rate by way of general damages, which was referred to arbitration. The arbitrator awarded the contractor an enhancement of 18% over and above the accepted tendered enhancements on the quantum of work executed after December 1970. The single Judge held that the award was contrary to Clause 10c of the agreement and that the arbitrator had committed misconduct in granting the claim.
Finding of the Court:
The court held that the learned single Judge erred in his interpretation of Clause 10c of the contract and his further finding regarding the error apparent on the face of the award and the consequent misconduct committed by the arbitrator in allowing the claim. The court found that Clause 10c was not applicable to the facts of the case as it presumes that the contract is completed during the agreed period of the contract and is applicable only during the progress of the work within that period. The court also held that Clause 5 of the agreement, which deals with the extension of time, was not applicable as the present case was not a case of minor hindrance or impediment, but a case of total failure of the D.D.A. in completing the civil construction.
Issues: 1. Whether the arbitrator committed an error apparent on the face of the award in granting the contractor's claim for an enhancement of 18% over and above the accepted tendered enhancements? 2. Whether Clause 10c of the agreement was applicable to the facts of the case? 3. Whether Clause 5 of the agreement, which deals with the extension of time, was applicable to the present case?
Ratio Decidendi: 1. The court held that the arbitrator did not commit an error apparent on the face of the award as Clause 10c of the agreement was not applicable to the facts of the case. 2. The court held that Clause 10c of the agreement was not applicable as it presumes that the contract is completed during the agreed period of the contract and is applicable only during the progress of the work within that period. 3. The court held that Clause 5 of the agreement, which deals with the extension of time, was not applicable as the present case was not a case of minor hindrance or impediment, but a case of total failure of the D.D.A. in completing the civil construction.
Final Decision: The court allowed the appeal, set aside the order of the learned single Judge in regard to claim No. 1, and made the entire award including claim No. 1 for 18% rise, the rule of the court. The appellants were entitled to costs throughout.
( 1 ) THIS is an appeal against the order of the learned single Judge of this court (Gill, J.) dated 4th Dec. 1975 holding that there was a "manifest error apparent ex facie" so far as daim No. 1 of the appellant/contractor. The learned Judge further held that the award in respect of other claims of the contractor should be made a rule of the court. The appellant-contractor contests part of the order of the learned single Judge which rejects claim No. 1. Claim No. 1 was decided by the Arbitrator as follows:
"the claimants are entitled to an enhancement of 18% over and above their accepted tendered enhancements on the quantum of work executed after December 1970".
( 2 ) THE learned single Judge held that the award in regard to claim No. 1 was contrary to Cl. 10c of the agreement between the parties, that the error was apparent on the face of the award and that the Arbitrator committed misconduct in granting the said claim to the appellant which was beyond his jurisdiction.
( 3 ) THE first contention raised by the appellant is that the finding of the learned single Judge that there was error apparent on the face of the award and that the arbitrator had committed a misconduct was contrary to S. 80 of the Arbitration Act. He has relied upon the decisions of the Supreme Court in Finn Madan Lal Roshan Lal v. Hukam Chand Mills (AIR 1967 SC 1080) and Alien Berry and Co. v. Union of India, (AIR 1971 SC 696 ). His submission in short is that the award in question being a non-speaking award and since clause 10c of the contract was not incorporated in the award, the learned single Judge was not right in holding that there was an error apparent on the face of the award. Even if it is assumed that the Arbitrator granted the claim contrary to the provisions of Cl. 10c, the award cannot be assailed. In the Alien Berry case the Supreme Court has summarised the law on the point as follows:
THE question whether a contract or a clause of it is incorporated in the award is a question of construction of the award. The test is, does the arbitrator come to a finding on the wording of the contract. If he does, he can be said to have impliedly incorporated the contract or a clause in it whichever be the case. But a mere general reference to the contract in the award is not to be held as incorporating it. The principle of reading contracts or other documents into the award is not to be encouraged or extended (see Babu Ram v. Nanhemal, C. A. No. 107 of 1966, D/- 5-12-1968 (SC ). The rule thus is that as the parties choose their own arbitrator to be the judge in the dispute between them, they cannot, when the award is good on the face of it, object to Reported in 1969 SCD 262. the decision either upon the law or the facts. Therefore, even when an arbitrator commits a mistake either in law or in fact in determining the matters referred to him, but such mistake does not appear on the face of the award or in a document appended to or incorporated in it so as to form part of it, the award will neither be remitted nor set aside notwithstanding the mistake. "
( 4 ) IT is true that the award in question is a non-speaking award and the learned Arbitrator has not given any reason as to why he permits the claim in the face of Cl. 10c. However, two special facts of the case must be taken into account. The first is that to the several representations of the appellant the respondent had consistently replied that the claim was not permissible under Cl. 10c of the contract. Secondly, before the learned single Judge both sides had stated that the entire evidence recorded by the Arbitrator and also the documents produced before him be looked into for deciding the various points raised in the controversy. On the facts of this case there is no error committed by the learned single Judge in looking to Cl. IOC, as that was the principal controversy between the parties. However, we need not express any final opinion on this question as we have come to the conclusion that
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