Calcutta High Court
M/S. Biptrade vs Union Of India on 24 September, 2025
Author: Ravi Krishan Kapur
Bench: Ravi Krishan Kapur
IN THE HIGH COURT AT CALCUTTA
ORIGINAL SIDE
2022:CHC-OS:6774
(Ordinary Original Civil Jurisdiction)
BEFORE:
The Hon'ble Justice Ravi Krishan Kapur
EOS/6/2006
M/S. BIPTRADE, REP. BY BIPLAB BOSE
Vs.
UNION OF INDIA
For the petitioner : Mr. Sakya Sen, Sr .Adv.
Mr. Shuvojeet Gupta, Adv.
Mr. Suvadeep Sen, Adv.
For the UOI : Mr. Pramod Kumar Drolia, Adv.
Mr. Santosh Kumar Pandey, Adv.
Heard on : 24.09.2025
Judgment on : 24.09.2025
Ravi Krishan Kapur, J.:
1. GA 2 of 2025 is an application for recalling of an order dated 19 May
2025 by which the main petition EOS 6 of 2006 was dismissed for
default. Having considered the grounds as well as the prayer for
condonation of delay of 14 days in the filing of this petition, I am
satisfied as to why the petitioner was unable to appear on 19 May 2025
when the main petition was dismissed for default. The delay in filing of
the application is condoned. The order dated 19 May 2025 is recalled.
The main petition being EOS 6 of 2006 is restored to its original file and
number. In view of the above, GA 2 of 2025 stands allowed.
2. By consent of the parties EOS 6 of 2006 and all connected applications
are taken up for hearing.
3. This is an application under sections 14(2) and 17 of the Arbitration Act,
1940 seeking necessary orders to make the award a Rule of Court and
for consequential reliefs. Pursuant to the filing of the above application,
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the respondent had also filed an application under sections 30, 31 and
33 of the Act of 1940 inter-alia challenging the award dated 20 December
1997 being Mis. Case No. 22 of 1998.
4. Briefly, the respondent had issued a tender for construction of a
Technical and Administrative Accommodation at Purnea Airbase. The
petitioner was the successful bidder and its bid was accepted on 13
November 1986.Thereafter, the contract was awarded in its favour. The
aggregate value of the contract was Rs.19,98,422.12/-. Subsequently, a
work order was issued on 27 November 1986 with a direction to
complete the same within 15 months from the date of handing over the
concerned site. A formal agreement was also executed between the
parties on 2 December 1986 and the work site was handed over to the
petitioner on 11 December 1986.
5. It is alleged that the petitioner failed to carry out the entire work in
terms of the contract although the respondent had diligently released
payments against running account receipts as per the contract. Upon
failure of the petitioner to complete the work, within the time limit
specified therein, the respondent by a letter dated 11 March 1988
cancelled the entire contract.
6. In view of such cancellation, the petitioner invoked the arbitration clause
as contained in the conditions of contract requesting the Chief Engineer
to refer the disputes arising out of the contract to a Sole Arbitrator. On
19 December 1996, a Sole Arbitrator was appointed who published his
award on 20 December 1997.
7. The primary ground for challenge is that the award is unreasoned. It2022:CHC-OS:6774
is
contended that the award is a non-speaking award and is contrary to the
agreement between the parties. In view of clause 70 of the GCC, the Sole
Arbitrator was obliged to furnish findings for each of the claims allowed.
It is further alleged that the award dated 20 December 1997 is a nullity
in view of the fact that the petitioner had invoked the arbitration clause
after expiry of more than 3 years from the date of the cause of action
which arose on 22 April 1995 (three years after the date of termination
i.e. 11 March, 1988).
8. On consideration of the impugned award, it is evident that the Sole
Arbitrator has only provided figures under each head without assigning
any reasons which is in violation of the agreement between the parties.
In Rajasthan State Mines & Minerals Ltd. v. Eastern Engg. Enterprises,
(1999) 9 SCC 283, it has been held as follows:
44. From the resume of the aforesaid decisions, it can be stated that:
(a) It is not open to the court to speculate, where no reasons are given by
the arbitrator, as to what impelled the arbitrator to arrive at his
conclusion.
(b) It is not open to the court to admit to probe the mental process by which
the arbitrator has reached his conclusion where it is not disclosed by the
terms of the award.
(c) If the arbitrator has committed a mere error of fact or law in reaching
his conclusion on the disputed question submitted for his adjudication
then the court cannot interfere.
(d) If no specific question of law is referred, the decision of the arbitrator
on that question is not final, however much it may be within his
jurisdiction and indeed essential for him to decide the question
incidentally. In a case where a specific question of law touching upon the
jurisdiction of the arbitrator was referred for the decision of the arbitrator
by the parties, then the finding of the arbitrator on the said question
between the parties may be binding.
(e) In a case of a non-speaking award, the jurisdiction of the court is
limited. The award can be set aside if the arbitrator acts beyond his
jurisdiction.
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(f) To find out whether the arbitrator has travelled beyond his jurisdiction,
it would be necessary to consider the agreement between the parties
containing the arbitration clause. The arbitrator acting beyond his
jurisdiction is a different ground from the error apparent on the face of the
award.
(g) In order to determine whether the arbitrator has acted in excess of his
jurisdiction what has to be seen is whether the claimant could raise a
particular claim before the arbitrator. If there is a specific term in the
contract or the law which does not permit or give the arbitrator the power
to decide the dispute raised by the claimant or there is a specific bar in the
contract to the raising of the particular claim then the award passed by
the arbitrator in respect thereof would be in excess of jurisdiction.
(h) The award made by the arbitrator disregarding the terms of the
reference or the arbitration agreement or the terms of the contract would
be a jurisdictional error which requires ultimately to be decided by the
court. He cannot award an amount which is ruled out or prohibited by the
terms of the agreement. Because of a specific bar stipulated by the parties
in the agreement, that claim could not be raised. Even if it is raised and
referred to arbitration because of a wider arbitration clause such claim
amount cannot be awarded as the agreement is binding between the
parties and the arbitrator has to adjudicate as per the agreement. This
aspect is absolutely made clear in Continental Construction Co.
Ltd. [(1988) 3 SCC 82 : (1988) 3 SCR 103] by relying upon the following
passage from Alopi Parshad v. Union of India [AIR 1960 SC 588 : (1960) 2
SCR 793] which is to the following effect: (SCC p. 88, para 5)
"There it was observed that a contract is not frustrated merely because
the circumstances in which the contract was made, altered. The Contract
Act does not enable a party to a contract to ignore the express covenants
thereof, and to claim payment of consideration for performance of the
contract at rates different from the stipulated rates, on some vague plea of
equity. The parties to an executory contract are often faced, in the course
of carrying it out, with a turn of events which they did not at all anticipate,
a wholly abnormal rise or fall in prices, a sudden depreciation of currency,
an unexpected obstacle to execution, or the like. There is no general liberty
reserved to the courts to absolve a party from liability to perform his part
of the contract merely because on account of an uncontemplated turn of
events, the performance of the contract may become onerous."
(i) The arbitrator could not act arbitrarily, irrationally, capriciously or
independently of the contract. A deliberate departure or conscious
disregard of the contract not only manifests the disregard of his authority
or misconduct on his part but it may tantamount to mala fide action.
(j) The arbitrator is not a conciliator and cannot ignore the law or misapply
it in order to do what he thinks just and reasonable; the arbitrator is a
tribunal selected by the parties to decide the disputes according to law.
9. In such circumstances, the award is a non-speaking award and contrary
to the terms of the contract and beyond the jurisdiction of the Arbitrator.
In this context, clause 70 of the General Conditions of Contracts (GCC)
2022:CHC-OS:6774
provides as follows:
70. Arbitration.- All disputes, between the parties to the Contract(other than those
for which the decision of the C.W.E. or any other person is by the Contract
expressed to be final and binding) shall, after written notice by either party to the
Contract to the other of them, be referred to the sole arbitration of an Engineer
officer to be appointed by the authority mentioned in the tender documents.
Unless both parties agree in writing such reference shall not take place
until after the completion or alleged completion of the Work or termination or
determination of the Contract under Condition Nos. 55, 56 and 57 hereof.
Provided that in the event of abandonment of the Works or cancellation of the
Contract under Condition Nos. 52, 53 or 54 hereof, such reference shall not take
place until alternative arrangements have been finalized by the Government to get
the Works completed by or through any other Contractor or Contractors or Agency
or Agencies.
Provided always that commencement or continuance of any arbitration
proceeding hereunder or otherwise shall not in any manner militate against
the Government's right of recovery from the contractor as provided in Condition
67 hereof.
If the Arbitrator so appointed resigns his appointment or vacates his
office or is unable or unwilling to act due to any reason whatsoever, the
authority appointing him may appoint a new Arbitrator to act in his place.
The Arbitrator shall be deemed to have entered on the reference on the date he
issues notice to both the parties, asking them to submit to him their statement of
the case and pleadings in defence.
The Arbitrator may proceed with the arbitration, exparte, if either party, inspite of
a notice from the Arbitrator fails to take part in the proceedings.
The Arbitrator may, from time to time with the consent of the parties, enlarge, the
time upto but not exceeding one year from the date of his entering on the
reference, for making and publishing the award. The Arbitrator shall give his
award within a period of six months from the date of his entering on the reference
or within the extended time as the case may be on all matters referred to him and
shall indicate his findings, along with sums awarded, separately on each
individual item of dispute. (emphasis added)
The venue of Arbitration shall be such place or places as may be fixed by the
Arbitrator in his sole discretion.
The award of the Arbitrator shall be final and binding on both parties to the
Contract.
10. In view of clause 70 of the GCC, it was obligatory for the Arbitrator to
provide findings for each of the claims allowed which demonstrates the
nexus for reaching his conclusions. In such circumstances, the award
passed is devoid of reasons and in disregard of the terms of the contract
which tantamounts to misconduct of the Arbitrator and vitiates the
entire award. There are no reasons nor findings in the award. There is
nothing in the impugned award to demonstrate how the mind has been
2022:CHC-OS:6774
applied to in the facts of circumstances of the case. [Rajendra
Construction Co. vs. Development Authority and Others (2005) 6 SCC 678
and Associated Engineering Co. vs. Government of Andhra Pradesh (1991)
4 SCC 93].
11. It is true that the Arbitration Act 1940 does not make it obligatory for an
Arbitrator to furnish reasons. Nevertheless, in view of the express terms
of the contract and in the absence of any findings, it is difficult to find
any basis on which the award has been passed.
12. It is also evident from the records that the petitioners invoked the
arbitration clause beyond the stipulated statutory period of time, i.e.,
three years from the date of the cause of action having arisen. The
contention of the petitioner that the communication from the respondent
dated 17 May, 1995 extended the period of limitation is misconceived
and untenable. The question of limitation has not been addressed in the
impugned award and this is also a serious infirmity. (Geo Miller and
Company Private Limited vs. Chairman Rajasthan Vidyut Utpadan Nigam
(2024)14 SCC 643).
13. Under such circumstances, the petitioner has been able to demonstrate
sufficient grounds for setting aside of the award. For the above reasons,
the impugned award is a nullity and is set aside. Accordingly, EOS 6 of
2006 stands disposed of. All connected applications stand disposed off.
(Ravi Krishan Kapur, J.)
