The main legal point established in the judgment is that supplementary work orders in continuation of the main contract are subject to arbitration proceedings, and the Court will uphold arbitration awards based on the evidence presented.

Prathiba M. Singh, J.

1. The present petition under Section 34 of the Arbitration and Conciliation Act, 1996 has been filed challenging the award dated 21st May, 2010 passed by the learned Sole Arbitrator. The Respondent – Contractor (hereinafter ‘Contractor’) was awarded a construction contract on 1st April, 2005 for building the IILM campus at Gurgaon. The total value of the contract comprising civil/structural work was Rs.4,82,37,613/-. The contract had an arbitration clause, which reads as under :

“14. ARBITRATION

In the event of any dispute arising out of or in relation to this agreement between the parties hereto the same shall first be sought to be settled by arbitration governed by the Arbitration & Conciliation Act, 1996 and the rules framed there under, whose decision shall be final and binding upon the parties Jurisdiction shall be at Delhi for all cases.”

2. Subsequent to the main contract awarding the work, a supplementary contract/work order was awarded on 1st December, 2005 and thereafter, a third work order was awarded on 7th December, 2005. The second work order dated 1st December, 2005 is not subject matter of the present petition.

3. The Contractor carried out a substantial portion of the work but thereafter, disputes arose between the parties. The Contractor filed a Section 11 petition before this Court. Vide order dated 2nd February, 2007, this Court appointed a Sole Arbitrator to adjudicate upon the disputes between the parties. The learned Arbitrator passed award dated 21st May, 2010 awarding various claims of the Contractor.

4. The Petitioner raised the following three objections in respect of the impugned award.

(i) That the claims in respect of work order dated 7th December, 2005 could not be adjudicated by the learned Arbitrator as there was no arbitration clause in the said work order.

(ii) That the Engineer-in-Charge had, made a noting on the final bill, that a sum of Rs.17 Lakhs (Rs.11 Lakhs as security deposit + Rs.6 Lakhs above sum) was to be retained, until the Contractor cleared the defects in the construction. Out of the said amount, the learned Arbitrator has wrongly awarded to the Contractor a sum of Rs.13 Lakhs (Rs.11 Lakhs + Rs.2 Lakhs).

(iii) That there is a calculation error of Rs.3 Lakhs in the final award.

Each of the above objections shall be dealt with hereinafter.

(i) That the claims in respect of work order dated 7th December, 2005 could not be adjudicated by the learned Arbitrator as there was no arbitration clause in the said work order.

5. It is submitted by learned counsel for the Petitioner that the work order dated 7th December, 2005 does not provide that the arbitration clause in the original contract namely dated 1st April, 2005 would apply qua this work order. He specifically relies upon clause 5 of the supplementary work order dated 7th December, 2005 to argue that the arbitration clause is conspicuous by its omission. It is, further, submitted that the learned Arbitrator has, despite relying upon the judgements of the Supreme Court in Alimenta S A v. National Agricultural Cooperative Market Federation of India Ltd. (NAFED) 1987(1) SCC 615 and Sukanya Holdings Pvt. Ltd. v. Jayesh H. Pandya (2003) 5 SCC 531 arrived at an incorrect legal conclusion that the disputes qua the supplementary work order were arbitrable.

6. On the other hand, learned counsel for the Respondents submits that the original work order was itself for a sum of Rs.4.82 Crores and the supplementary work order dated 7th December, 2005 was for a sum of Rs.64.93 Lakhs. Since the original work order itself was above the total amount of the final bill i.e. Rs.4.42 Crores, which was raised by the Contractor, there was no issue in respect of disputes being non-arbitrable.

7. A perusal of the supplementary order dated 7th December, 2005, clearly shows that the same is in continuation of the original work order