IMPORTANT POINTS
Court should not interfere with subject matter of arbitration unless injustice is caused to either of the parties.
When the agreed contract prohibits reimbursement of any escalation due to any reason whatsoever, the respondent cannot claim reimbursement of excess of minimum wages on account of hike due to Government Notification.
A clause in a contract cannot be interpreted in terms of another clause which stands on different footing.

JUDGMENT :

R.K. Agrawal, J.

1. Leave granted.

2. These two appeals are preferred against the impugned common judgment and order dated 28.05.2012 passed by the High Court of Delhi at New Delhi in FAO (OS) Nos. 238 and 239 of 2012 whereby the Division Bench of the High Court dismissed the appeals filed by the appellant herein while upholding the decision of learned single Judge of the High Court. Since the moot question is same in these two appeals, both would be disposed off by this common judgment.

3. Brief facts:-

(a) The appellant herein is the Union of India and the respondent herein is the Contractor. On 30.10.2006, the appellant floated two tenders for the construction of the residential accommodations at Hissar. Pursuant to that, the appellant received tenders of various companies.

(b) Being the lowest quotation of the respondent-Contractor, its tender was accepted by the appellant. The lump sum amount of these two contracts were Rs. 39,09,80,362.61 and Rs. 35,21,99,854.30 respectively. Consequently, the appellant and the respondent-Contractor entered into formal contract and laid down terms and conditions of the contract by which it was decided that both would be bound and also added the clause of arbitration in case of dispute.

(c) As per the terms of the contract, respondent started the work of construction as per the schedule on 20.03.2007 and finally completed the work within the stipulated extended time period of completion. At this juncture, respondent submitted the final bill along with some additional claims. The claim of additional amount was rejected by the appellant. As a result, the respondent invoked the arbitration clause and the dispute was referred to learned Arbitrator Shri Sunil Chopra, Chief Engineer (Contract) as provided under the Contract.

(d) Learned Arbitrator made the Award dated 24.08.2011. It is pertinent to note here that the respondent referred total 12 claims in the arbitration proceeding. Out of these claims, two were rejected by learned Arbitrator and one claim is partly withdrawn by the respondent and the remaining claims were decided in favour of the respondent.

(e) Feeling aggrieved, the appellant filed OMP Nos. 890 and 891 of 2011 before the High Court of Delhi. Learned single Judge of the High Court, vide common order dated 16.03.2012, dismissed both the petitions and upheld the Award passed by learned Arbitrator.

(f) Being aggrieved with the said order, the appellant preferred two separate first appeals being FAP (OS) Nos. 238 and 239 of 2012 respectively. However, the same two appeals also got dismissed by the Division Bench of the High Court in limini vide judgment and order dated 28.05.2012.

(g) As a result, the appellant has filed these two appeals by way of special leave before this Court.

4. We have given our thoughtful consideration to the submissions of learned senior counsel for the parties and perused the material on record placed before us.

Point(s) for consideration:-

5. The present case is confined only to the extent as to whether the Award of the arbitrator and the findings of the High Court are contrary to the express provision of Clause 19, according to which no escalation is permissible to the contractor for, inter alia, increase in wages of labour due to statutory hike, which the contractor may have to incur during the execution of the work on any account?

Rival contentions:-

6. At the outset, learned senior counsel for the appellant-Union of India contended that the relationship of the appellant and respondent is governed by the terms and conditions of the contract and as per Clause 19 of the special conditions, it is clearly mentioned that “No escalation, reimbursement whatsoever shall be made to the contractor for increase in, inter-alia, wages of the labor during the execution of the contract”. Hence, the Notification issued by the State of Haryana which increased the minimum wages of the labour during the subsistence of the contract does not vest any right to the contractor t