The court's decision emphasized the restricted scope for court intervention in arbitral awards under the Arbitration Act of 1940, as well as the importance of interpreting specific contract clauses in adjudicating claims.

K. Kannan, J.

1. I have today disposed of two other civil revision petitions between the same parties relating to a contract for construction of 'married accomodation' at Nahan. The contract in the present case was awarded about 10 years later for construction of a 'married accommodation' at Dharamsala. The matter refers to claim arising out of cancellation of a contract and the tenability of the award by the arbitrator appointed under the Arbitration Act of 1940. The revision is brought at the instance of the contractor against rejection of certain portions of the claims by the Courts that were allowed by the Arbitrator. The Union itself has not challenged the award already passed in favour of the contractor and the rejection of the appeal by the lower Appellate Court. The minimal facts that are necessary are as follows:

I. Facts of the case:

2. On 30.3.1978 parties enter into contract for a provision of married accommodation at Dharamshala to be completed by 11.10. 1980. The petitioner contractor failed to execute the work as per terms and conditions of the contract citing increase in prices and other holdups. As a result, Union of India cancelled contract on 04.10.1980 and took over all stocks and material lying on site. The unfinished work had been got done by somebody else and completed on 15.11.1983. The petition complained of cancellation as unjustified and made claims for value of works done and also claimed damages through a reference to an Arbitrator. Many Arbitrators had been appointed and left office and finally on 18.03.1997, S.S. Goyal had been appointed as Arbitrator. An award had been passed by Sh. S.S. Goyal on 19.02.2001 vide which claims of the petitioners contractor were partly allowed and award of recoveries of Rs. 9,18,247.09 along with cost of Rs. 20,000/- with interest. The award had been submitted to Court, which issued notice of filing award to both parties. The award which was made the rule of court accepted majority of claims and declined claim Nos. 2(K) and 2(L), which had been allowed by the Arbitrator and Claim No.2(M) was modified.

II. Lower Court Judgment:

3. Raising the issue of whether Award dated 19.02.2001 was liable to be set aside, the court of first instance had held Award of claim No.2(K) relating to damages for alleged unlawful cancellation of the contract and claim No.2(L) relating to additional costs incurred for increase of prices of materials were not permissible and set aside. Claim No.2(M) was modified as under:

Instead of Rs. 4,55,860/-, it was reduced to sum of Rs. 2,18,657.12 and accordingly, made rule of Court. All other claims were upheld.

Both parties appealed against lower Court judgment.

III. Lower Appellate Court:

4. Dismissing the appeals, the Appellate Court reasoned that;

i) In light of clause 70 of contract, Cause of action was taken to arise on 15.11.1983 when work was completed.

ii) Entertainment of claim by the arbitrator on disputes which were not permissible under the conditions and adjudication amounted to exceeding jurisdiction and could be interfered while considering the question of making the award rule of the Court.

iii) As regards unreasoned award, limited jurisdiction of the Court in this case permitted it to lift the veil and to see whether arbitrator acted against contract in deciding the claims in question.

iv) As regards Claim No. 2(K), the damages on account of wrongful cancellation of contract quantified by contractor at Rs. 2,94,000/- but allowed by arbitrator Rs. 50,000/- only and denied completely by Lower Court. The lower Appellate Court held that petitioner contractor was not entitled to any damages on this account and claim was rightly rejected having been allowed by Arbitrator against terms and conditions of agreement.

v) Claim No. 2(L): Regarding increase in price of material, the court reasoned hat it was rightly rejected being not permissible under contract as the contractor did not fulfill the requirements of the claim.

vi) Claim 2(M): Regard