Bombay High Court
M/S. Angerlehner Structurals & ... vs Municipal Corporation Of Greater on 1 October, 2012
Bench: Anoop V.Mohta
ssm 1 arbp162.09
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO. 162 OF 2009
M/s. Angerlehner Structurals & Civil
Engineering Co., 2078 "B" Wing,
2nd Floor, Oberoi Gardens,
Chandivali Studio Compound,
Saki Vihar Road, Sakinaka, Andheri (East),
Mumbai 400 072 .....Petitioners.
Vs.
Municipal Corporation of Greater
Mumbai, constituted under the
provisions of the Mumbai Municipal
Corporation Act, 1888 having its
office at 3rd Floor, Annexe Building,
Municipal Head Office,
Mahapalika Marg, Fort, Mumbai-400 001. ....Respondents
Mr. Z.T. Andhyarujina with Ms. Dohita Lewis, Mr. Javed Gaya
i/by Chamber of Javed Gaya for the Petitioners.
Mr. Kevic Setalwad, Senior Counsel with Ms. Daisy Dubash and
Mr. H.C. Pimple for the Respondents.
CORAM : ANOOP V. MOHTA, J.
JUDGMENT RESERVED ON : 27 AUGUST 2012.
JUDGMENT PRONOUNCED ON : 1 OCTOBER, 2012
JUDGMENT :-
This is a petition under Section 34 of the Arbitration and
ssm 2 arbp162.09
Conciliation Act, 1996 (for short, "the Arbitration Act"). The
majority award is under challenge.
Events:-
2 In the month of August, 1999 bids invited by the Mumbai
Municipal Corporation (for short "MMC"). On 12 September,
1999, the Petitioners submitted its bid. On 21 September 2000,
awarded them the Contract for Rehabilitation of sewer lines by
Lining/Coating method (Contract : SO/CA/02) for the price of
US$ 44,06,347.00 plus Indian Rupees 10,29,01,768.00. On 2
March 2001, an Agreement SO-CA-02 ("Contract") was
executed between the parties. The contract was initially for a
period of 24 months, but was extended on justifiable grounds to
nearly 29 months with the date of commencement as 11
January 2001 and the extended date of completion as 31 May
2003.
3 On 14 March 2001, letter from the Engineer (MMC) to the
Petitioners, informing them that M/s. TTI Consultants have
ssm 3 arbp162.09
been appointed as the "Consultants" under the Contract. On 11
April 2001, work order issued by the Engineer to the Petitioners,
pursuant to which they commenced their work under the
Contract. The work successfully completed within the time
stipulated in the Contract.
4 This works contract was partly financed by the World
Bank and in all such contracts there is a provisions for price
adjustment if the contract extends beyond 18 months.
Accordingly clause 70.3 of the COPA contained a price
adjustment formula that was to be applied to the payments
made under the contract. The Petitioners used to prepare and
raise its Bills (including price adjustment for local currency)
from time to time based on the agreed contractual formula.
However, the consultant rejected the Bills citing a discrepancy in
the contractual formula and unilaterally altered the same and
calculated the amounts that were due and payable to the
Petitioners and released the amounts to the Petitioners. On 14
February 2002, the Petitioners requested that this issue be
resolved. On 12 October 2002, Consultant's letter addressed to
ssm 4 arbp162.09
the Petitioners informing them that no extra claim was
permissible due to the Petitioners' misinterpretation of the
contractual formula. On 20 August 2003, the Petitioners' letter
submitted copies of the Statement of completion to the Engineer
and sought payment under the contract on the basis of the
Interim Payment Certificates (IPC's).
On 1 December 2003, Dy. Chief Engineer, MMC's letter to
the Petitioners that its claim for non-payment of certain dues on
account of formula of price adjustment had not been accepted
by them. The Petitioners were informed that the price
adjustment claim had been admitted as per the "corrected
formula recommended by the Consultant".
6 On 5 June 2004, the Petitioners' letter to the Engineer
informing him that they were going to approach the MMC for its
final opinion and scrutiny pursuant to clause 67 of the GC/COC.
7 On 24 June 2004, the Petitioners' letter to the DRE
informing him that his claim was wrongly rejected by both the
ssm 5 arbp162.09
Engineer and the MMC. On 23 September 2004, the DRE
recommended that the Petitioners have been paid correctly in
accordance with the changed formula.
8 On 21 October 2004, a Notice of Arbitration given by
Petitioners to the MMC, nominated Dr. Harald Wagner as its
Arbitrator. On 29 October 2004, a letter by the Respondents to
Mr. Sharad Upasni, Former Chief Secretary of the Government
of Maharashtra appointing him as their Arbitrator. On 15
December 2004, the reference was made to the President of
Institute of Engineers (India) to appoint a third and presiding
Arbitrator. On 11 July 2007, dissenting Award of Dr. Harald
Wagner in favour of the Petitioners. Majority Arbitral Award of
Mr. S. P. Upasani and Mr. S. L. Garg rejecting the Petitioners'
claim entirely.
9 On 10 October 2007, the Petitioners filed the present
Arbitration Petition. On 5 January 2012, the Respondents filed
reply. On 11 June 2012, the Petitioners filed rejoinder to the
reply filed by the Respondents. Annexed as Annexure I to this
ssm 6 arbp162.09
rejoinder is Award dated 18th April, 2012, passed in other
similarly placed matter (AJECT V. MCGM). This Award was, as
alleged, made on the legal principles in relation to the same
formula, as in the instant case, drafted by the same Consultant
(M/s. TTI Consultants) and a copy of this Award was issued by
the Arbitral Tribunal presided over by Mr. Ajit Pawar, a former
head of the PWD Dept. and two retired High Court Judges,
namely Mr. S. K. Shah and Mr. B. P. Saraf.
Submissions:-
10 The relevant portion of the submissions of the Petitioners
is as under:-
"5 Sub-Clause 70.1 and 70.3 of COPA provide for Price
Adjustment. According to these Sub-Clauses amounts payable
to the Claimant, in various currencies, are to be adjusted for rise
or fall in the cost of labour, equipment, plant, materials and
other inputs to the works, by applying to such amounts the
formula prescribed therein. It is further states that price
ssm 7 arbp162.09
adjustment shall be calculated for the local and foreign
components of the payment for work done as per formula given
in the contract data.
6 As per Sub-Clause 60.1, the Contractor is mandated to
submit monthly statements to the Engineer showing the
amounts the contractor considers himself to be entitled. The
statement is also to include amounts reflecting changes in cost
pursuant to Clause 70. As per Sub-Clause 60.2 the said
statement is to be approved or amended by the Engineer in such
a way that in its [Engineer's] opinion, it reflects the amounts in
various currencies due to the contractor in accordance with the
contract. The Engineer is mandated to determine amount due
to the Contractor and to issue an 'Interim Payment Certificate' to
the Employer certifying the amounts due to the Contractor.
7 The relevant forumla referred to in Sub-Clause 70.3 of the
contract are as under:-
A. R=RI+RF
B. Where 'R' is the total value of the work done
during the month, 'RI' is the portion of 'R' as
payable in foreign currency at fixed exchange
rate.
ssm 8 arbp162.09
C. The other formula governing value of price
adjustment of various components of
works are:-
i. VI = Price Adjustment for labour component
= 0.85 x P 1/100 x R x [L1-Lo]/Lo
ii. Vc = Price Adjustment for cement component
= 0.85 x P o/100 x R x [C1-Co]/Co
iii. Vs = Price Adjustment for steel component
= 0.85 x P s/100 x R x [S1-So]/So
iv. Vb = Price Adjustment for increase or
decrease in cost of bitumen
= 0.85 x P b/100 x R x [B1-Bo]/Bo
v. Vr = Price Adjustment for increase or
decrease in cost of POL
= 0.85 x P f/100 x R x [F1-Fo]/Fo
vi. Vm = Price Adjustment for increase or
decrease in cost of local materials.
= 0.85 x P m/100 x R x [M1-Mo]/Mo
vii. Vp = Price Adjustment for increase or
decrease in cost of plant and machinery
= 0.85 x P p/100 x R x [P1-Po]/Po
viii. VFc = Foreign Currency component
= 0.85 x RF x [Fe1-Feo]/ Feo
ssm 9 arbp162.09
8 It may be noted that all formula at Paragraph 7(c)(i) to
paragraph 7(c)(vii) above contain the term 'R' in them to be
used for calculating the value of price adjustment component
for various parts of the work."
9 .....
10 The Petitioner had made its Bid on the basis of whiat it
read it was entitled to including the price adjustment formula
and that is demonstrated by Sub-Clause 70.2 of the Contract
"To the extent that full compensation for any rise or fall in costs
to the Contractor is not covered by the provisions of this or
other Clauses in the Contract, the unit rates and prices included
in the Contract shall be deemed to include amounts to cover the
contingency of such other rise or fall of costs" cautions the
prospective bidder that it needs to take into account the
provisions made in the price variation clauses while preparing
and quoting its price bid."
11 The learned Senior Counsel for the Respondents
submitted to maintain the award, by referring to the clauses and
the supporting majority Arbitrators' reasons, apart from the
ssm 10 arbp162.09
Judgments so relied.
12 The power of the Court to interfere with the interpretation
given by the Arbitral Tribunal is quite limited. The view if
possible and plausible then also scope is limited. (Jigar
Vikamsay Vs. Bombay Stock Exchange Limited) 1
The Petitioners have also in support of the challenge,
relied on Central Bank of India Ltd., Amritsar Vs. the
Hartford Fire Insurance Co. Ltd. 2 , State bank of India Vs.
Mula Sahakari Sakhar Karkhana Ltd. 3 Bishwanath Prasad
Singh Vs. Rajendra Prasad 4 and Haji Abdul Rahaman Vs. The
Bombay and Persia Steam Navigation Co. 5.
14 The learned counsel appearing for the Petitioners has also
relied on TN State Electricity Board Vs. Bridge Tunnel
Custom 6 The relevant portion of the same is as under:-
.
1 2010(1) Bom. C.R. 908
2 AIR 1965 SCC, 1288
3 2006 6 SCC 293
4 2006(4) SCC 432
5 (1892) 16 Bom. 561
6 AIR 1997 SC 1376
ssm 11 arbp162.09
"If he makes an award disregarding the Contract it
would be a jurisdictional error beyond the scope of
the reference, he cannot clothes himeself to decide
conclusively the dispute as it is an error of
jurisdiction which ultimately requires to be decided
by the Court."
15 There is nothing provided to deal with correction or
interpretation of agreed formula. The Respondents counsel has
relied upon the following judgments to support the award in
every aspects.
a) National highways Authority of India Vs. Unitech-
NCC Joint Venture, MANU/DE/0650/2010.
b) National highways Authority of India Vs. Unitech-
NCC Joint Venture, (2011) 178 DLT 496 (DB)
c) William Charles Binns Vs. W. & T. Avery Ltd., AIR
1934 Calcutta 778.
d) Dagdu Valad Jairam & Ors. Vs. Bhana Valad
Jairam & Ors., 28 B. 420(=6 Bom. L.R. 126)
e) Mumbai Metropolitan Region Development
ssm 12 arbp162.09
Authority Vs. Unity Infraproject Ltd. 2008(5)
Bom. C.R. 196.
16 It is relevant to note here the following clauses of the
contract and all the terms and conditions.
"Priority of Contract Documents-
5.2
The several documents forming the Contract
are to be taken as mutually explanatory of one
another, but in case of ambiguities or
discrepancies the same shall be explained and
adjusted by the Engineer who shall thereupon
issue to the Contractor instructions thereon and
in such event, unless otherwise provided in the
Contract, the priority of the documents forming
the Contract shall be as follows;-
1) The Contract Agreement (if
completed);
2) The Letter of Acceptance;
3) The Tender;
4) Part II of these Conditions;
5) Part I of these conditions; and
6) Any other document forming part of
the Contract."
ssm 13 arbp162.09
"Sub-Clause 70.1 Price Adjustment
70.1 The amounts payable to the Contractor, in
various currencies pursuant to Sub-Clause 60.1
shall be adjusted in respect of the rise or fall in
the cost of labour, contractor's Equipment,
Plant, materials, and other inputs to the
Works, by applying to such amounts the
formulae prescribed in this clause."
"Sub-Clause 70.3 Adjustment Formulae
70.3 Contract price shall be adjusted for increase or
decrease in rates and price of labour, materials,
fuels and lubricants in accordance with the
following principles and procedures as per
formula given in the contract data, the amount
certified in each payment certificate is adjusted
by applying the respective prices adjustment
factor to the payment amounts due in each
currency:
(a) Price adjustment shall apply only for
work carried out within the stipulated
time or extensions granted by the
Employer and shall not apply to work
carried out beyond the stipulated time
for reasons attributable to the
Contractor, shall be paid in
accordance with sub-clause 70.6;
(b) Price adjustment shall be calculated
for the local and foreign components
of the payment for work done as per
formulae given in contract data; and
(c) Following expressions and meanings
are assigned to the value of the work
ssm 14 arbp162.09
done during each quarter:
R= Total value of work done during
the month. It would include the
value of materials on which
secured advance has been granted,
if any, during the month, less the
value of materials in respect of
which the secured advance has
been recovered, if any, during the
month. This will exclude cost of
work on items for which rates
were fixed under variations clause
ig (51 and 52) for which the
escalation will be regulated as
mutually agreed at the time of
fixation of rate.
RI= Portion of 'R' as payable in Indian
Rupees.
RF= Portion of 'R' as payable in foreign
currency (at fixed exchange rates)
R= RI + RF
To the extend that full compensation for any
rise or fall costs to the contractor is not
covered by the provisions of this or other
clauses in the contract, the unit rates and
prices included in the contract shall be
deemed to include amounts to cover the
contingency of such other rise or fall in
costs."
17 The parties having once agreed and acted upon the
ssm 15 arbp162.09
clauses and accepted the formula, the heavy burden lies upon
the employer-Respondents to demonstrate that there was
mistake and it was never intended to act upon. The
Respondents, therefore, need to prove that the price escalation
was to be calculated currency-wise and not on the basis of R,
but R-1. The Respondents must prove that there is apparent
ambiguity in the document and in the formula, otherwise, it is
difficult to accept the submission that such unilateral
clarification and/or amendment to the agreed formula, is
permissible and so also its effect on the claim raised by the
Petitioners.
18 The Arbitral Tribunal and/or even the Court needs to
consider the nature of work/project and its technical aspects,
while considering the agreed clauses and conditions and the
formula. Admittedly, the contract was signed on 11 May 1999
which was in relation to micro-tunneling works at various
locations in Mumbai, which was partly the World Bank aided
works. There is no question of change of agreed formula
unilaterally. The parties, in fact, acted upon the same. The
ssm 16 arbp162.09
issues arose at later stage, in view of the doubt raised by the
experts. The terms and conditions and/or formula is clear and
there is no vagueness, the view if takes by the Arbitral Tribunal,
based upon the same, the interference of the Court, as recorded,
is limited. But, the things are otherwise. By
changing/amending the formula unilaterally the decision is
given. There is no question of such restriction on the power of
the Arbitral Tribunal and/or on the Court to interpret the
clauses read with the original formula.
No bar to look into the minority view:-
19 Two views based upon the same terms and conditions
including the questionable formula are on record. The learned
majority Arbitrators rejected the claim/ case of the Petitioners.
The learned dissenting Arbitrator, however, passed the order in
favour of the Petitioners. Under the Arbitration Act, majority
views prevailed for all the purposes. There is nothing under the
Arbitration Act not to read and refer the view expressed by the
dissenting Arbitrator. The Court under Section 34 of the
ssm 17 arbp162.09
Arbitration Act, even otherwise, considering the material placed
on record, may pass the order supporting and/or against the
majority views or independently take a particular view, which
may, in a given case, by accepting the view/opinion of the
dissenting Arbitrator. There is no bar that the Court cannot just
take into consideration both the views and pass appropriate
order based upon the material available on record.
Unilateral change in agreed formula not permissible:-
20 Admittedly, there is a dispute with regard to the agreed
formula and its applicability. Everyone concerned, bound by
the terms and conditions of the contract read with the agreed
formula. In such type of construction contract, the contractor
and/or such other person always take note of terms and
conditions and the basic formulas before executing or accepting
the contract/work. The Respondents and/or the employer also
bound to read, refer and rely the same for every purpose. In the
present case, we are concerned with the important element of
the formula "price adjustment". In the clauses and the formulas,
ssm 18 arbp162.09
there are various components like labour component, cement
component, steel component, increase and decrease in cost of
bitumen, POL, local materials, plant and machinery and foreign
currency component. There is no dispute that, as advertised
and as agreed, the contract was accordingly signed and the
parties proceeded, and in fact as recorded above, the Petitioners
completed the project also. The Petitioners, admittedly,
received part interim payment based upon the agreed formula.
21 It is settled law that out of two or three formulas available
under the construction contract and in case of vagueness and
ambiguity, the Arbitrator based upon the facts and
circumstances, as submitted by the concerned party, if preferred
one formula out of it, and passes the award, the Court may not
entertain the objections to such mode. (McDermott
International Inc. V. Burn Standard Co. Ltd.) 7 . If there is
some confusion and/or clarification is required to the formula,
as submitted by the learned Senior Counsel appearing for the
Respondents based upon the clauses of the contract, the
7 (2006) 11 SCC 181
ssm 19 arbp162.09
concerned officials and/or the Executive Engineer bound to
explain and/or clarify the ambiguity and/or discrepancy based
upon the documents on record. The power of clarification or
the discrepancy, even if any, so referred and mentioned in clause
5.2, in my view, cannot be read and permitted to be read that
the employer can amend and/or change the formula itself. It is
a commercial contract. The parties knowing fully the effect of
the clauses read with the formula so agreed, considering the
nature of construction executed the contract. Both the parties
acted upon accordingly, therefore, such agreed terms and
conditions and/or formula, in my view, just cannot be altered
and/or amended unilaterally and basically without consent of
the other party, in such fashion.
22 The submission raised by the learned Senior Counsel
appearing for the Respondents based upon the various
judgments cited and referred that the interpretation given by
the Arbitrator and/or experts and/or Engineers, just cannot be
interfered with, by the Court. The possible interpretation
and/or view expressed by the experts and/or Arbitrator and as
ssm 20 arbp162.09
settled, the Court normally reluctant to interfere with it. But, in
the present case, the Respondents/employer, unilaterally
changed the agreed formula without consent of the Petitioners
and refused the claim made by the Petitioners. The power of
clarification and/or removal of doubts or discrepancies of the
existing formula, cannot be equated with the power of
unilateral change and/or correction in the formula itself. It is
impermissible. It is clear breach of the contract.
23 First of all, there should be a clear case of removal of
ambiguity and/or vagueness in the formula. This contemplates
pre-existence of the agreed formula. In the present case, we
are not dealing with such situation. Admittedly, as recorded
above, the Respondents, on a foundation of "mutual mistake"
unilaterally, changed the clauses of the formula itself and
refused to grant the claim so made by the Petitioners. Sub-
clause 70.3 (i) to 70.3 (vii), the term "R" has been used by the
Respondents through out. The commercial understanding of
the word and its meaning as elaborated, remained unchallenged
till this date. There is nothing on record to show that the
ssm 21 arbp162.09
Respondents, at any point of time, sought clarification and/or
amendment to the formula, at earliest. Both the parties,
therefore, are bound to treat "R" as "R" throughout. Once each
and every items of formula and/or the clauses are defined since
the beginning, it cannot be changed. The payment/calculation
needs to be based upon unchanged formula. I am not inclined
to accept the submission of the learned counsel appearing for
the Respondents-Corporation that it can be changed and/or
interpreted at any point of time. The terms and conditions and
the clauses, so announced and agreed, unless altered by consent
of the parties, bind all, for all the purposes.
The binding effect on the monetary claim and the agreed
formula:-
24 The another angle of the matter is, as submitted, that the
use of "R" and its meaning, if accepted as contemplated by the
Petitioners and/or the claimants, it would be contrary to the
spirit of the contract. Admittedly, this agreed formula and its
terms referring to price variation, play important role so far as
the monetary claim is concerned. The formula so announced
ssm 22 arbp162.09
and agreed was known and so also the nature of project and/or
the work. Therefore, the submission revolving around the
concept of "mutual mistake" is also unacceptable, as there is no
material whatsoever, brought on record by the Respondents-
employer to justify the same. There was opportunity available
with the Respondents either to amend the same at the earliest,
pending the execution of the work, and/or during the course of
Arbitration proceedings to lead evidence to support their case of
"mutual mistake". The submission and/or the averments of
mutual mistake, just cannot be accepted unless there is a clear
and apparent material and/or documents and/or evidence of
the parties to overwrite and to take away the written agreed
formula and its financial effect on the claim. All these things
are missing in the present case. There is no question of
unilateral rectification.
25 The parties, including the Arbitral Tribunal, in view of the
settled position of law, bound by the terms and conditions of the
contract, so also the agreed formula. This Court in Haji Abdul
Rahman Allarakhia and Anr. Vs. The Bombay and Persia
ssm 23 arbp162.09
Steam Navigation Company 8 , has observed as under:-
"A plaintiff seeking rectification must show that there
was an actual concluded contract antecedent to the
instrument sought to be rectified, and that such
contract is inaccurately represented in the
instrument."
26 The Apex Court in D.C.M. Ltd. Vs. Municipal
Corporation of Delhi & Anr. 9 has observed as under-
13. The arbitrator was required to examine the
narrow question whether the formula had been
properly applied. It was not open to him to
examine the correctness or otherwise of the
formula. He had to examine how the formula
had been worked. The formula had clearly set
out the various factors to be taken into
account.
"The arbitrator, therefore, was not right in
distorting this formula by removing the factor
of transmission and distribution losses from
calculation of the units sold. The arbitrator's
jurisdiction was confined to examining whether
the calculations were in accordance with the
formula. Therefore, in effect, the arbitrator
has acted beyond the scope of his reference in
eliminating an important factor in calculation
of the formula."
8 (1892) 16 Bom 561
9 (1997) 7 SCC 123
ssm 24 arbp162.09
The Similar contract and same formula, but different view by
another Tribunal and its effect:-
27 It is relevant to note that, in the present case, an
application was moved by the Petitioners to bring on record
another award passed by the Arbitral Tribunal arising out of
similarly placed contract and the work, where the Respondents
were party. The same was rejected as it was placed on record
on 19 September 2006 at quite late stage of the Arbitration
proceeding. The submission of the learned counsel appearing
for the Respondents was accepted and the learned Tribunal not
permitted the Petitioners to place on record the said award and
the additional material on record, basically by observing that no
new evidence can be taken on record at the time of rejoinder.
The Petitioners have raised issue out of the same even in this
Section 34 Petition. The copy of the award was also placed on
record. Normally, there is no question of accepting the new
documents on record for the first time in Section 34 Petition.
The Presiding Arbitrator, as well as, one of the Arbitrator who
was the Arbitrator in the present matter, were fully aware of the
reasoned award so passed based upon the similar terms and
ssm 25 arbp162.09
conditions and the formulas, apart from similar nature of the
work.
The important documents placed at late stage:-
28 The Arbitrator, normally needs to follow the basic
principle of Civil Procedure Code (for short, CPC) and/or the
Evidence Act. But, at the same stroke, it is not binding for all
the purposes. The documents and/or material, though placed
at rejoinder stage, but goes to the root of the matter and in the
given case important for the final adjudication, pending before
them, in my view, just cannot be overlooked even by the Arbitral
Tribunal. The provisions of CPC and/or the Evidence Act are
not applicable, this itself also means in a given case, those
necessary restrictions also. If the case is made out, considering
the principle of natural justice, fair-play and equity, the Arbitral
tribunal can take note of all these evidence and/or documents,
as it goes to the root of the matter. There is no serious dispute
with regard to the award so passed in respect of M/s. Arabian
Jacking Enterprises for Contracting and Trading Company
ssm 26 arbp162.09
(AJECT) Vs. The Municipal Corporation of Greater Mumbai
(MCGM) dated 18 April 2012. The submission was made that
the facts and circumstances were different. But, after
considering the same formula and the submission, the same
Respondents have been directed to pay the amount with
interest. The similar submissions revolving around the right of
Respondents to change the formula unilaterally and/or by
mutual mistake and/or it was only with the interpretation of the
terms and conditions, were rejected.
The formula, cannot be changed unless consented at earliest:-
29 I am inclined to observe here that in such commercial
agreements and basically when both the parties agreed and
acted upon, just cannot be change any clause and/or clauses of
formula unilaterally, unless there is consent and/or the further
agreement and/or amendment recorded accordingly. The
concept of opportunity at relevant time is very relevant while
amending any clause of the agreement. In a given case, the
either party may provide justification and/or clarification
ssm 27 arbp162.09
and/or oppose the same at the relevant time itself, before
proceeding with the project. In the present case, immediately
after three bills, the dispute arose. The Petitioners referred and
objected to such amendment and/or modification of formula.
The experts of the Respondents gave their opinion. The
contractor, however, never accepted the same. The fact remains
that the formula so agreed initially sought to be amended
and/or changed by the Respondents pending the project and
thereby rejected the claim. The Petitioners, if not willing to give
consent and/or never agreed to change the agreed formula, it
was a matter of dispute at the relevant time itself. In my view,
this is not the case of discrepancy and not a case of clarification.
It is a clear case where, the Respondents want to unilaterally
amend the formula itself, which in my view, just not permissible
without giving full opportunity to the parties. The conclusion,
therefore, given by the majority Arbitrator in this matter, by
overlooking the similarly placed award. The party, one who
makes a positive statement referring to interpretation of the
clauses, if failed to prove the same and/or failed to support the
same, this destroy their own case. This supports the claimant's
ssm 28 arbp162.09
case that the agreed formula was intended for all the purposes.
The majority Arbitrator, therefore, in my view, committed an
error in rejecting the claim of the Petitioners.
30 Considering overall view of the matter and the award so
placed on record, "M/s. AJECT", the minority view required to
be maintained. But under the Arbitration Act the Court, under
Section 34, nowhere permitted to accept the minority view, in
such manner. The challenge under Section 34 Petition is always
to the majority award, therefore, to set aside the majority award
itself, in no way means acceptance of the minority award in the
present case. In such situation, the appropriate order will be to
remand the matter for re-consideration on all points.
31 I have already, based upon the Supreme Court Judgments,
observed in GWL Properties Ltd. Vs. James Mackintosh & Co.,
Arbitration Petition No. 272 of 2010 dated 16 March 2012,
referring to Jigar Vikamsey Vs. Bombay Stock Exchange
Limited, that-
10 2010(1) Bom. C.R. 908
ssm 29 arbp162.09
(d) The jurisdiction of the Court to interfere with
an Award made by an Arbitrator is limited, unless
there is an error apparent on the face of the Award
and/or jurisdictional error and/or legal mis-
conduct. [Numaligarh Refinery Ltd. Vs. Daehim
Industrial Co. Ltd. (2007(10) SCALE 577=
(2007) 8 SCC 466] .
(e) The wrong point of law and apparent,
improper and incorrect findings of facts which are
demonstratable on the face of the material on
record, may be treated as grave error and/or legal
misconduct.
32 I have already observed in Axios Navigation Co. Ltd. Vs.
Indian Oil Corporation Limited
"19 The Court even otherwise, is entitled and
empowered to express opinion on merits of the
matter if case is made out even by setting aside the
majority view/opinion. It cannot be stated here that
the Court ought not to have looked into the reasons
given by dissenting Arbitrator's opinion. Any
opinion given by any of the Arbitrator whether by
majority and/or by minority, if based upon the valid
foundation of law and the record, just cannot be
overlooked by the Court under Section 34 of the
Arbitration Act, 1996. The Court's independent
reasonings irrespective of the reasons given by the
majority and/or minority Arbitrator should prevail.
33 In view of above, the judgments so cited by the learned
senior counsel appearing for the Respondents, need no further
11 2012 Vol. 114 (1) Bom. L.R. 0392
ssm 30 arbp162.09
discussion. The facts are totally distinct and distinguishable. I
have already recorded that this is not the case of the
interpretation of the formula and the clauses. It is case of
unilateral amendment of the formula. The judgments,
therefore, so sited, in my view, nowhere sufficient to reject the
case and/or the submissions so made by the learned counsel
appearing for the Petitioners. The formula in question and the
unilateral change of the structure of the formula was not the
issue in the judgments so cited. This is not a case of mere
interpretation of the formula without changing its structure and
the items. The submission revolving around Section 28(3) of
the Arbitration Act is also of no assistance. It is not even a case
of rectification of term or formula or interpretation of agreed
formula. It is relevant to note and conclude by referring to
following paragraph of Dhulipudi Namayya Vs. The Union of
India
" Thus, the mere fact that a new and a collateral
terms is annexed to an absolute acceptance would not
affect the formation of the contract on the basis of
the original offer which is unconditionally accepted.
As observed in the case of Jainarain V. Surajmull, AIR
1949 FC 211 at p. 216 (B).
12 AIR 1958 AP 533
ssm 31 arbp162.09
If after a contract is concluded and its terms
settled further negotiations are started with regard to
new matters, that would not prevent full effect being
given to the contract already existing, unless it is
established as a fact that the contract was rescinded
or varied with the consent of both the parties or that
both parties treated it as incomplete and
inconclusive. Once completed, the contract can be got
rid of only with the concurrence of both parties."
The remand is permissible mode to avoid further delay:-
Section 34 (4) of the Arbitration Act, permits the Court to
remand the matter for particular point and/or points and so
also the Civil Procedure Code (for short, "CPC"). I have already
observed in Angel Capital Angel Capital & Debt Market
Limited Vs. Mr. Sharad Munot, Arbitration Petition No. 972
of 2009, dated 31 August 2012, that if all issues and/or all
points are inter-linked and/or inter-connected, the limited
points and/or issues just cannot be remanded back for a fresh
adjudication. In the present case, the whole case revolving
around the formula in question, therefore, there is no question
of remanding back the matter on a particular point. I am
inclined to keep all points open and thereby granted
ssm 32 arbp162.09
opportunity to both the parties to make their submission afresh
before the Arbitral Tribunal. If the Arbitral Tribunal and/or its
members are not available, the parties are at liberty to take
appropriate steps to reconstitute the Tribunal. In the facts and
circumstances, just by quashing the award, I am not inclined to
delay the proceedings further, so far as the settlement of dispute
between the parties. The parties, by consent, subject to
permission of the Tribunal, may proceed based upon the same
material and/or evidence available on record, or even in a given
case may lead additional evidence by consent and/or by
obtaining appropriate permission from the Tribunal. The
requirement is an early disposal of the Arbitration proceeding.
No case to interfere with the cost so awarded.
35 In the result following order:-
ORDER
a) The impugned majority award dated 11 July
2007 is quashed and set aside, except the
award of cost.
b) The matter is remanded back for re-
ssm 33 arbp162.09
consideration, by giving opportunity to the
parties.
c) All points are kept open.
d) The hearing is expedited.
e) The parties to take steps accordingly.
f) The Petition is accordingly allowed partly.
g) There shall be no order as to costs.
(ANOOP V. MOHTA, J.)
