The court's decision emphasized the limited scope of Section 34 of the Arbitration and Conciliation Act, 1996, and the grounds for setting aside an arbitral award.

JUDGMENT :

I. Mahanty, J.

1. Instant misc. appeal has been filed by the appellants-Department against the judgment dated 04.05.2011 passed by the learned Additional District Judge No. 1, Bharatpur in Civil Misc. Case No. 01/2008, whereby the objections filed by the appellants under Section 34 of the Arbitration and Conciliation Act, 1996 (for short, 'the Act') were dismissed.

2. The facts, in brief, are that the Superintending Engineer, Irrigation Circle, Bharatpur issued NIT in 2003 for rehabilitation work of three numbers main canal and Mandapura Minor of Bund Baretha under the Rajasthan Water Sector Restructuring Project. Pursuant to said NIT, the respondent No. 1, claimant, submitted its tender, which was accepted by the appellant and an agreement No. 1/2003-04 was executed between the appellant No. 2 and the respondent No. 1-contractor for the said work. The total cost of the work was Rs.2,38,88,604/-. As per the terms of the agreement, the work was to be completed within 24 months from the date of placement of order. The date of commencement of work was fixed as 10.04.2003 and completion of work as 09.04.2005. However, the stipulated period was extended till 09.07.2005. The respondent executed a part of the work and did not complete the whole work. The respondent was paid Rs.1,49,78,507/- against the work executed by it.

3. Since some dispute and differences arose between the parties regarding the construction works, Shri M.B. Mathur, retired Superintending Engineer, Irrigation Department was appointed as Adjudicator on 30.10.2004, as per clauses 24 and 25 of the said agreement. The claimant-respondent No. 1 filed claim before the Adjudicator for a sum of Rs.62,45,652/- under various heads. The appellant No.2 filed application on 23.02.2006 raising preliminary objection regarding expiry of term of appointment of Adjudicator. Vide order dated 07.03.2006, the Adjudicator decided the matter and directed that respondent No.1 was entitled to receive Rs.74,59,635/- with further direction for release of the bank guarantee of Rs.28,70,430/- from the appellants with interest @ 12% per annum.

4. Aggrieved with the order of the Adjudicator, the Department sought for appointment of sole Arbitrator in terms of clause 25.2 of the agreement as the decision of the Adjudicator was beyond the terms of the agreement. The sole Arbitrator was appointed on 13.10.2006.

5. The learned sole Arbitrator passed an award on 13.09.2007, which was amended on 09.10.2007, correcting some clerical errors. The sole Arbitrator awarded to the respondent No. 1 a sum of Rs. 65,74,655/-, interest @ 12% per annum amounting Rs. 9,53,164/- be paid for pre-reference period and interest @ 12% per annum shall be paid for pendente-lite and for future till realization of payment. The bank guarantee was directed to be released.

6. Aggrieved by the award of the sole Arbitrator, the appellants submitted objections under Section 34 of the Act before the learned Additional District Judge No. 1, Bharatpur.

7. A reply to the objections was filed by respondent No. 1 contending inter alia that the award of the sole Arbitrator is just, proper & reasonable and is in conformity with the provisions of the Act. The sole Arbitrator has considered all aspects of the matter and passed the award upon evaluation of all the materials available on record, including the measurements indicated in the measurement book, in right perspective. The award does not suffer from the vice of arbitrariness. Hence, it was prayed that the objections may be rejected.

8. After hearing the parties, the learned Additional District Judge No. 1, vide impugned judgment dismissed the objections filed by the appellants. Hence, this appeal.

9. The learned counsel for the appellants has submitted that the award passed by the sole Arbitrator is contrary to the terms and conditions of the agreement. The Adjudicator while passing the award exceeded jurisdiction conferred under clause 24.1 of the agreement. Similarly, the sole