Judgment

Sanjeev Kumar, J.-This is a petition under Section 34 of the Jammu & Kashmir Arbitration and Conciliation Act, 1997 [“the Act of 1997”] filed by the petitioner for setting aside the award dated 18.09.2002 passed by K.Thiruvengadam, the sole arbitrator, appointed by the parties to arbitrate and adjudicate upon the disputes pertaining to the agreement No.GE/AKH-48/95-96 entered into between the petitioner and the respondents.

2. Before adverting to the grounds of challenge urged on behalf of the petitioner to assail the arbitral award, it would be appropriate to notice few facts:

Vide contract agreement aforementioned, the work of Special Repair to E/M Installations at Rakh Muthi, Jourian and Pallanwala was allotted by the respondents to the petitioner. During execution of the contract, certain disputes arose between the parties and as a result whereof, the respondent terminated the contract. The disputes having arisen between the parties, the competent authority i.e. Chief Engineer, Udhampur Zone vide his letter dated 2306.2001 appointed K.Thiruvengadam ACE(Planning) CE, Udhampur zone as sole arbitrator to adjudicate upon the disputes pertaining to the contract. The arbitrator was requested to enter upon the reference and publish findings and award in respect of disputes listed in appendix-A appended to the aforesaid letter of appointment. The appendix enumerates several claims put forth by the parties for adjudication of the Arbitrator. In compliance to the aforesaid letter of the Chief Engineer, Udhampur Zone, learned arbitrator entered upon the reference and made the impugned award on 18.09.2002.

3. As per the impugned award, the claim No.1 preferred by the respondent was allowed and on that account a sum of Rs.75,887.69 was awarded in favour of the respondents and against the petitioner. Claim No.2, which pertains to the cost of arbitration proceedings and other legal expenses amounting to Rs.20,000/- was also allowed and the amount was allowed to be paid to the respondents alongwith interest @18% per annum post pendente lite and future. However, the claims lodged by the petitioners were rejected. The petitioner is aggrieved and challenges the award inter alia on the following grounds:-

i) That the disputes referred to the arbitrator had arisen between the parties within the State of Jammu & Kashmir and, therefore, the award was required to be passed by the arbitrator as per the Act of 1997, which came into force w.e.f. 01 January, 1998. However, the arbitrator, as is apparent from the award, has made his award under the Arbitration and Conciliation Act, 1996, the Central Act, which had no application in the State of J&K.

ii) That the arbitrator while awarding a sum of Rs.75,887.69, as claim No.1, in favour of the respondents exceeded his jurisdiction, in that, the Union of India in claim No.1 had only claimed a sum of Rs.30,456.69. The impugned award insofar as claim No.1 is concerned is beyond the terms of reference and, therefore, is not sustainable in law.

4. The respondents have opposed the petition by filing objections. The respondents in their objections have sought to justify the award passed under the Act of 1996 on the ground that same is in pari materia to the Act of 1997, which came into force in the State of Jammu & Kashmir w.e.f. 01.01.1998.

5. With regard to the award of Rs.75,887.69 as against the claim of Rs.30456.69 in favour of Union of India, it is submitted that it is true that at the time of making reference of the disputes to the arbitrator the Union of India had raised a claim of Rs.30,456.69 but as is well known that both the parties to the disputes always have a right vested in them to amend, modify or delete their claim/claims and it is in the exercise of that right a modified claim was preferred before the arbitrator.

6. Having heard learned counsel for the parties and perused the record, it is necessary to first set out Section 34 of the Act of 1997 herein below:-

“34. Application for s