The scope of an arbitrator's authority includes adherence to contract terms, and errors in jurisdiction arise from deviations from those terms, leading to the reinstatement of the original arbitral award.

JUDGMENT :

Sunita Agarwal, C.J., D.N.Ray, J.

1. This is an old appeal filed under Section 37 of the Arbitration and Conciliation Act, 1996 (in short as ‘the Act, 1996’) of the year 2007, challenging the judgment and order dated 02.01.2007 passed by the Court of City Civil Judge, Ahmedabad in allowing the Civil Misc. Application No. 51 of 2004 under the Act, 1996, whereby the award dated 15^th October, 2003 passed by the learned sole Arbitrator has been set aside in part.

2. The facts, in brief, for effective adjudication of the present appeal are to be noted at the outset. Bharat Heavy Electrical Ltd. (BHEL), namely the respondent herein, had submitted an offer for supply, erection, commissioning and starting up operations and maintenance of 15 numbers of Wind Turbine Generators (WTGs) including the designing, supply and commissioning and associated electricals, auxiliary equipments, civil work and connected services at the proposed site. Accordingly, the order to install the wind power plants was placed by the appellant herein. The order placed on record contains the detail terms and conditions of the contract regarding payments, and in case of non- performance of contract, penalty etc. and also other substantial clauses.

3. It appears that a dispute arose between the parties pertaining to the terms of the agreement and the matter was referred to the learned Arbitrator, who had passed the award dated 15.10.2003 in favour of the appellant herein awarding a sum of Rs. 3,56,62,000.00/- including interest of amount Rs. 73,22,000.00. The total awarded amount came to Rs.4,01,33,000.00 alongwith interest @ 10% p.a.. till realisation.

4. The respondent (BHEL) herein filed application under Section 34 of the Act, 1996 challenging the award on the ground that once the learned Arbitrator had held that the time was not the essence of the contract and that the original contract did not survive and there was novatio contract, the award of penalty of Rs. 64,000.00, as per the original contract was illegal. It was also contended that the erection of wind masts by the applicant/respondent herein was not with any time schedule and the wind mast could be erected after the completion of erection of Wind Turbine Generators. It was submitted that the learned Arbitrator has himself held that there was delay on the part of the appellant to provide land and hence, the respondent could not be saddled with the responsibility of not erecting the wind mast. Moreover, as per the terms of the contract, the working of the machines (WTGs) was to be calculated on the basis of the wind data at Harshad site and the learned Arbitrator has wrongly relied on the data published for Navadra site, which was otherwise for the previous year and not for the period in question. It was, thus, contended that the basis of calculation being the previous year data to assess the working capacity of the machines (WTGs) itself makes the award bad, inasmuch as, the learned Arbitrator himself admitted that wind power change from month to month due to ecological change in the atmosphere. The whole comparison made by the learned Arbitrator for Navadra wind area was, thus, an absurd decision.

5. From a perusal of the order passed by the Court under Section 34 of the Act, 1996, it may be noted that the contention of the respondent therein was that it was further agreed between the partie