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1994 JLJ 412
(SUPREME COURT)
B.P. Jeevan Reddy and B.L. Hansaria, JJ.
Tarapore and Co. v. State of M.P.
Civil Appeal No. 1246 of 1992; arising out of order of M.P. High Court
passed in M.A. No. 152 of 1988; Decided on 16.2.1994.
(2) Arbitration Act, 1940 -- S. 33 (a) -- arbitration agreement -- escalation clause absent in agreement -- mere absence not sufficient to refuse escalation because escalation is normal incident. 1989 Supp. (1) SCC 368 and (1988) 3 SCC 82 relied on. [Para 17
(3) Jurisdiction -- patent and latent lack of jurisdiction -- distinction between.
If an authority would lack jurisdiction in the sense that the subject matter is nut amenable at all to its decision i.e. the case be of patent lack of jurisdiction acquiescence of the parties would not be material inasmuch as it is settled law that by agreement jurisdiction cannot be conferred.
The present was definitely a dispute arising out of or connected with the contract. The subject-matter of the dispute is thus squarely covered by till; arbitration clause and therefore we do not read patent lack of jurisdiction on the part of arbitrators in having gone into the question of reimbursement. The best that could be said is that the terms of the agreement being what they are, the arbitrators had no jurisdiction to entertain the claim, and so, the present was a case of latent lack of jurisdiction. In such a case acquiescence of the parties may be relevant. [Para 19
(4) Agreement -- arbitration agreement -- subsequent escalation in price and labour chargers -- absence of escalation clause in agreement -- claim cannot he turned down on that basis -- agreement should be read as whole. (1984) 2 SCC 680 followed. [Para 22
(5) Words and Phrases -- words "fair wages" -- do not mean "minimum wages‘ ‘. AIR 1963 SC 1332, AIR 1967 SC 948 and (1969) 1 SCC 266 relied on. [Para 26
(6) Arbitration Act, 1940 -- S.30 -- error in interpreting the agreement by arbitrators -- not amenable by Court. (1989) 2 SCC 38, (1992) 4 SCC 217, (1991) 4 SCC 93 and (1990) 4 SCC 740 relied on. [Para 28
(7) Arbitration Act, 1940 -- S.30 -- possible view taken by arbitrators -interference by Court not permissible. AIR 1963 SC 1677, (1975) 1 SCC 289, (1990) 1 SCC 433, (1990) 3 SCC 338 and (1993) 1 SCC 548. [Para 29
(8) Practice (Civil) --litigant cannot be asked to do what is not possible on his part -- he cannot be made to suffer for no fault on his part. [Para 34
¼1½ ek/;LFke~ vf/kfu;e] 1940 & /kkjk 30 ¼d½ & ikfjr vf/kfu.kZ; vf/kdkfjrk ds ckgj & vopkj fd;k x;k & ,slk vfofu.kZ; vikLr fd, tkus ;ksX; gSA ¼1991½ 4 ,l lh lh 93 rFkk ¼1990½ 4 ,l lh lh 740 voyafcrA ¿iSjk 19
¼2½ ek/;LFke~ vf/kfu;e] 1940 & /kkjk 33 ¼d½ & ek/;LFke~ djkj & o`f) laca/kh [kaM djkj esa fo|eku ugha & ek= vfo|ekurk o`f) ukeatwj djus ds fy, Ik;kZIr ugha D;ksafd o`f) lkekU; ?kVuk gSA ¼1989½ lIyh- ¼1½ ,l lh lh 368 rFkk ¼1988½ 3 ,l lh lh 82 voyafcrA ¿iSjk 17
¼3½ vf/kdkfjrk & vf/kdkfjrk dh çdV ,oa vçdV deh & foHksnA
;fn çkf/kdkjh esa vf/kdkfjrk dh bl vFkZ eas deh gS fd fo"k;oLrq mlds fofu‘p; ds v/;/khu ugha gSa] vFkkZr ekeyk vf/kdkfjrk dh çdV deh dk gks] rc Ik{kdkjksa dh miefr rkfRod ugha gksxh D;ksafd ;g lqLFkkfir fof/k gS fd djkj ls vf/kdkfjrk çnku ugha dh tk ldrhA
orZeku fookn fu‘p; gh djkj ls mn~Hkwr vFkok lacaf/kr gSA vr% fookn dh fo"k;oLrq mfpr :Ik ls ek/;LFke~ [kaM ds varxZr vkrh gS] rFkk blfy, ge e/;LFkksa }kjk çfriwfrZ dk ç‘u mBk, tkus esa vf/kdkfjrk dh çdV deh ugha ikrsA vf/kd&ls&vf/kd ;g dgk tk ldrk gS fd djkj ds fuca/ku bl çdkj ds gksrs gq,] e/;LFkksa dks nkok xzg.k djus dh vf/kdkfjrk ugha Fkh] vr% orZeku ekeyk vf/kdkfjrk dh vçdV deh dk gSA ,sls ekeys esa Ik{kdkjksa dh miefr lqlaxr gks ldrh gSA
¼4½ djkj & ek/;LFke djkj & Ik‘pkrorhZ dher ,oa etnwjh esa o`f) & djkj esa o`f) laca/kh [kaM dh vfo|ekurk & nkok bl vk/kkj ij vLohdkj ugha fd;k tk ldrk & djkj v[kafMr :Ik esa Ik<+k tkuk pkfg,A ¼1994½ 2 ,l lh lh 680 vuqlfjrA ¿iSjk 22
¼5½ ‘‘kCn vkSj okD; & ‘‘kCn ^^mfpr etnwjh** & vFkZ ^^U;wure etnwjh** ughaA , vkb vkj 1963 ,l lh 1332] , vkb vkj 1967 ,l lh 948 rFkk ¼1969½ 1 ,l lh lh 266 voyafcrA ¿iSjk 26
¼6½ ek/;LFke vf/kfu;e] 1940 & /kkjk 30 & e/;LFkksa }kjk djkj ds fuoZpu esa =qfV & U;k;ky;ksa ds v/;/khu ughaA ¼1989½ 2 ,l lh lh 38] ¼1992½ 4 ,l lh lh 217] ¼1991½ 4 ,l lh lh 93 rFkk ¼1990½ 4 ,l lh lh 740 voyafcrA ¿iSjk 28
¼7½ ek/;LFke vf/kfu;e] 1940 & /kkjk 30 & e/;LFkksa }kjk laHkkfor n`f"Vdks.k viuk;k x;k & U;k;ky; }kjk gLr{ksi vuqKs; ughaA , vkb vkj 1963 ,l lh 1677] ¼1975½ 1 ,l lh lh 289] ¼1990½ 1 ,l lh lh 433] ¼1990½ 3 ,l lh lh 338 rFkk ¼1993½ 1 ,l lh lh 548A ¿iSjk 29
¼8½ çFkk ¼flfoy½ & oknh ls og djus dks ugha dgk tk ldrk tks mlds }kjk fd;k tkuk laHko ugha gSa & mldh dksbZ Hkwyu gksus ij mls ihfM+r ugha fd;k tk ldrkA ¿iSjk 34
¼9½ çFkk ¼flfoy½ & oknh ls og djus dks ugha dgk tk ldrk tks mlds }kjk fd;k tkuk laHko ugha gSa & mldh dksbZ Hkwyu gksus ij mls ihfM+r ugha fd;k tk ldrkA ¿iSjk 34
B.L. Hansaria, J.--1. The appellant impugns the judgment of the High Court of Madhya Pradesh by which it has upheld the order of the District Judge, Jabalpur, setting aside the award of the arbitrators in exercise of power conferred by section 30 (a) or the Arbitration Act, 1940, hereinafter the Act.
2. The award to be set aside was one which had come to be passed following the order of the District Judge dated May 6,1987 in Civil Suit No. 1-A/87 by which an an earlier award had come to be remitted to the arbitrator for reconsideration keeping in view the legal arguments advanced. The first award owes its origin to the following question referred for determination by the two arbitrators named in the order of the District Judge passed on April 12, 1985:
:'Whether the State is not liable to reimburse to the applicant Rs. 3,42,69,847.00 for the period August 7, 1979 to August 31, 1984 on account or difference in wages."
3. The reference was made on an application made by the appellant under section 20 (1) of the: Act. That application was based on the terms of the agreement entered into by the appellant with the State of Madhya Pradesh relating to constructed of Bargi Masonry Dam. One of the terms of the agreement as incorporates in clause 4.3.29 (2) provided for settlement of dispute arising out of contract by arbitration. The appellant's avertment was that after the contract was entered into, minimum wages were raised by the State and the appellant was required to pay wages accordingly. The rates quoted by the appellant, however, related to wages as were prevalent at the time when the tender was invited. The revision of the wages upset all the calculations as extra amount had to be paid on this count. The Superintending engineer rejected the claim of reimbursement on the ground of no escalation clause in the contract, whereupon the appellant called upon the Superintending Engineer to appoint an arbitrator on behalf of the State. This not having been done and the appellant having appointed one Brigadier D.R. Kathuria as arbitrator, it approached the Court to direct the State to file the arbitration agreement and to make an order of reference. The non-applicant did not oppose; indeed it filed no reply. Not only this, it even named one Shri Y.M. Chitale as arbitrator while filing the arbitration agreement.
4. In these circumstances the aforesaid question was referred for determination by the two named arbitrators. After the reference was entered into by the arbitrators the appellant claimed a sum of Rs. 3,42,69,847 on the aforesaid count. The Stale admitted that the contract was liable to pay the increased wages under the Minimum Wages Ad, but took a stand in paragraph 12 of its counter that the claimant was not entitled to the increased amount on account of revision of wage & and denied its liability to reimburse. The arbitrators, however, by order dated November 20, 1986 awarded a sum of Rs. 236 lakhs with simple interest @ 12 per cent to the claimant-appellant. It may be stated that by the time the award was passed one Shri K.C. Goel had stepped into the shoes of Brigadier D.R. Kathuria.
5. The State approached the District Judge to set aside the award; inter alia, on the ground that the arbitrators had not decided the question of the liability of the State to reimburse the claim due to escalation of wages which was one of the matters referred to the arbitrators. This is what appears from the State's petition filed on January 23, 1987 under section 30 of the Act. When the matter came to be taken up by the District Judge the main contention advanced was, however, relating to quantum or award, as it would appear from paragraph 5 of the order of the District Judge passed on May 6, 1987. The attack on this score was on the ground that the arbitration could not have calculated the amount on the task-basis of the sub-contractor and piece workers. The District Judge took the view that the difference in wages was required to be calcu
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