M/S. Arvind Construction Company vs M/S. Engineering Projects
1995 Latest Caselaw 37 Del

JUDGMENT

Vijender Jain, J.

1. Objections to the award dated 31.8.1990 made by the Arbitrator. Shri Prakash Narain, for Chief Justice, in relation to a contract dated 5.5.1980 had been filed by respondent. The respondent has challenged the award on many grounds. Shri Y. R. Reddy, learned Additional Solicitor General who appeared for respondent, at the outset argued that the award was a non-speaking award and respondent is a Public Sector Undertaking and, therefore, learned Arbitrator was under a bounded legal obligation to mark a speaking award. Mr. Reddy has further contended that the Arbitrator has committed legal misconduct by giving a lump sum award and not giving claim-wise award.

2. Mr. Reddy vehemently contended that the award in favor of the petitioner is disproportionately high baying regard to the totality of the circumstances. He has submitted that petitioner had claimed large amount towards Factual expenses alleged to have been incurred by the petitioner in foreign currency and there was no evidence before the Arbitrator as to how petitioner received such foreign exchange. Moreover, in the absence of any law permitting the petitioner to incur such expenditure without obtaining permission from the Reserve Bank of India. Petitioner has based its claims on such expenses and in spite of being pointed out to the learned Arbitrator the award of such amount makes the award bad on account of legal misconduct as well, as error of jurisdiction. Mr. Reddy has argued that disproportionate nature of award is evident as the value of work admittedly done by the petitioner was approximately Iraqi Dinar (in short "I.D.") 6,93,971.862 and the amount payable, as per the contract on executed work was I.D. 6,53,799.563 but the total amount paid to the petitioner had been I.D. 12,33,136,690 Interest on borrowed sum has also been paid by the respondent and award has further trade the respondent to pay a sum of I.D. 2,96,403.260. The total claim of the petitioner before the Arbitrator was I.D. 15,57,169.980. Mr. Reddy has argued that claim No. 6 was the claim payable by the respondent on account of revision of rates for the work done beyond the contractual date of completion i.e. 14.5.1981 for I.D. 5,15,338 and claim No. 8 of the petitioner being claim for damages on account of estimated loss of profits at the rate of I.D. 6,500 per month beyond the contractual date i.e. 14.5.1981 for a period of 5 years for I.D. I.D. 3,90,000 in fact amounts to duplication and can also be in alternative. Mr. Reddy has argued that the claim No. 6 on account of revision of rates was beyond the contract agreement and as such learned Arbitrator had no jurisdiction to adjudicate upon the said claim. More so, in view of the fact that the contract with the petitioner was a labour contract and as such the question of revision of rates would not apply. In support of his arguments he has cited the case of M/s. Alopi Parshad & Sons v. UOI and Dhandasi Sahu v. State of Orissa in which the Supreme Court held that :

"The Arbitrator, in the case of a reference to him in persuance of an arbitration agreement between the parties, being a person chosen by parties, is constituted as the sole & final judge of all the question and the parties bind themselves as a rule to accept the award as final and conclusive. The Arbitrator need not give any reason and even if he commits a mistake either in law or in fact in determining the matter referred to him, where such mistake does not appear on the face of the award, the same could not be assailed. The award could be interfered with only in limited circumstances as provided under Sections 16 and 30 of the Arbitration Act. In this situation the court has to test the award with circumspection. Even with all these limitations on powers of court and probably because of these limitations it must be held that if the amount awarded was disproportionately high having regard to the original claim made and the totality of the circumstances, it would certainly be a case where the arbitrator could be said to have not applied his mind amounting to legal misconduct. In this case the total value of the work not paid, according to the appellant, was Rs. 12,15,653/-. As against this claim the arbitrator has awarded a lump sum of Rs. 25,00,156/-. The appellant had asked for payment of interest and including interest his claim was Rs. 31,44,437/-. However, where a reference to arbitration was made prior to the commencement of the interest Act, 1978 (which Act came into force on August 19, 1981) the arbitrator is not empowered to grant interest for the period up to the date of submission of the claim or the period during which the dispute was pending before the arbitrator and where the award granted a lump sum amount it shall deem to have included the interest also if interest had been claimed before the arbitrator and the inclusion of such interest rendered that part of award invalid. If, therefore, the interest portion is excluded then award of Rs. 25,00,156/- suffers from the vice of giving disproportionately high amount.

3. Mr. Reddy has further contended that the claim for the loss of profit could also not have been given to the petitioner as admittedly the petitioner had completed 92% of the work by June, 1982, therefore, if there was any loss at best that could be for one year and in any eventuality on this account the claim for I.D. 78,000 could have been the amount though the same was not admitted. Mr. Reddy has taken great pains to argue that award of any claim based on claim No. 6 suffers from serious error of jurisdiction as it is beyond the contract agreement and in support of his arguments he has cited 1990 (2) Delhi Lawyer 238, Hyderabad Municipal Corporation v. M. Mrishnaswami Mudallar & Mudallar and another, M/s. Chahal Engineerin & Construction Co. v. Irrigation Department, Punjab Sirsa and the case of P. M. Paul v. UOI (1989 Supple. (1) SSC 368) Mr. Reddy bus invited the attention of this court to the minutes of the meeting attended by the parties dated 2.5.1984 and has argued that in view of these minutes, the petitioner had, agreed to the remaining work at the rates as agreed to in the contract and, therefore, no amount could have been awarded on the basis of claim No. 6. In support of his arguments, he has cited the case of Associated Engineering Co. v. Government of Andhra Pradesh and others , in which the Supreme Court held that.

"The Arbitrator cannot act arbitrarily, irrationally, capriciously or independently of the contract. His sole function is to arbitrate in terms of the contract. His authority is derived from the contract and is governed by the Arbitration Act which embodies principles derived fro a specialised branch of the law of agency. If he has remained inside the parameters of the contract and has construed the provisions of the contract, his award cannot be interfered with unless he has given reasons for the award disclosing an error apparent on the face of it.

An Arbitrator who acts in manifest, disregard of the contract acts without jurisdiction. His authority is derived from the contract and is governed by the Arbitration Act which embodies principles derived from a specialised branch of the law of agency (see Mustill and Boyd's Commercial Arbitration, 2nd edn., p. 641), He commits misconduct if by his award he decides matters excluded by the agreement (see Halsbury's Laws of England, Volume II, 4th edn., para 622). A deliberate departure from contract amounts to not only manifest disregard of his authority or a misconduct on his part, but it may tantamount to mala fide action. A conscious disregard of the law or the provisions of the contract from which he has derived his authority vitiates the award."

4. Mr. Reddy has also contended that no weightage seems to have been given to the affidavit filed by Mr. Moorjani although the said witness was a high ranking officer of Finance Department, who was dealing with the record in the said Department, and his evidence could not have been ignored as he was person of knowledge on the controversy. The learned counsel for the respondent has argued that the arbitrator has not applied his mind and award is vitiated on that account also.

5. Another point raised by learned Additional Solicitor General appearing for the respondent is that the Arbitrator has committed a grave error in converting the award in US dollars giving the award on the basis of the rate of dollar on the date of award though fixed the amount in terms of rupees and this conversion is erroneous and illegal. Mr. Reddy has contended that the Arbitrator ought to have taken the conversion with reference to the date on which the claim arose and that too in Iraqi currency to be directly converted to the Indian Currency. He has contended that the Arbitrator had to give the award in the Indian rupees after determining the value of I.D. on the date of award. In support of his submission, Mr. Reddy has cited UOI v. M/s. Jain Associates and another (1994 (2) Scale 604), to his substantiate his arguments.

"Arbitrator has applied his mind in the judicious manner. Yet the question is whether the Arbitrator had applied his mind in a judicious manner so as to bind the parties by his award made on various claims. In law of Arbitration, by Justice Bachawat, a former judge of this court at Page 316, it is stated that "an arbitrator is not a conciliator. His duty is to decide the question submitted to him according to the legal rights of the parties and not according to what he may consider fair and reasonable."

6. Mr. Reddy has also argued that the award suffers from other infirmities as certain wrong consideration had been taken into account while awarding the award in favor of the petitioner and has argued that the outbreak of war did not adversely affect the construction activities the work was not required to be suspended and the petitioner was not required to demobilise and in fact the petitioner demobilised an its own. The main thrust of the arguments of Mr. Reddy is that admittedly the Iraqi President visited the site in October, 1982, and the petitioner had already executed 92% of the work by June, 1982 and therefore, the award is disproportionate and be set aside. Mr. Reddy has also argued that there are errors which are apparent on the face of the award inasmuch as the Arbitrator has held that there was partial demobilisation and as a matter of fact there was no mobilisation done by the petitioner after the demobilisation in 1982-83. Mr. Reddy has also argued that the award is vitiated and liable to be set aside on account of being unintelligible, uncertain and vague. Mr. Reddy has specifically mentioned that in view of Clause 45 of the contract, the award is bad. Clause-45 of the agreement is as follows.

"OUTBREAK OF WAR

If during the currency of the Sub-Contract there shall be an outbreak of war (declared or not) the Associate shall unless notified in writing by the Contractor to the effect of termination of the Sub-Contract use his best endeavors to complete the execution of the works."

7. Another clause which is important as submitted by learned counsel for respondent is Clause 14.5.

"If at any time during the continuance of the contract the performance in whole or in part by either party of any obligation under the Sub-Contract shall be prevented or delayed by reason of expected risks given above then provided notice of the happening of any such event given by the either party to the other within 7 (seven) days from the date of concurrence thereof, neither party shall by reason of such event, be entitled to terminate the Sub-Contract nor shall either party have any claim for damages against the other in respect of such non-performance or delay in performance. Performance under the Sub-Contract shall be resumed as soon as practicable after such even has come to an end or ceased to exist. However, if the performance in whole or in part of any obligation under the Sub-Contract is prevented or delayed by reason of any such even for a period exceeding 60 (sixty) days, the Contractor may have option to terminate the Sub-Contract with mutual consent. In case of such a termination of Sub-Contract the Contractor shall be at liability to take over from the Associate at a mutually agreed price of unused, undamaged and acceptable materials, bought of components and stores in course of manufacture in the possession of the Associate or such portion thereof as the Contractor may deem fit."

8. In view of the aforesaid clauses, Mr. Reddy has argued that no such notice, as required under Clause-14.5 of the Agreement, has been issued by the petitioner and, therefore, the petitioner is not entitled to any sum on this account. He has also vehemently argued that admittedly the work was to be completed by 14.5.1981 pursuant to the Agreement dated 5.3.1980 and, therefore, in terms of the contract the petitioner was neither entitled for any sum nor damages in view of Clause-14.5 of the Agreement and there is no provision for escalation in the said contract. Respondent has also argued that in any event the claim of the petitioner on account of estimated loss of profits cannot be attributed to the respondent. The argument of the learned counsel for the respondent is that in case the respondent had imposed liquidated damages on the petitioner then at best the petitioner could have taken the shelter of war but in the circumstances of the case, no damages could be awarded in favor of the petitioner. In any event he has argued that in view of Ex. D-1138 and Ex. D-1139 the petitioner could not maintain its claim, as in terms of the request of the petitioner, the petitioner was to achieve total demobilisation by January, 1983. Therefore, there was no question of granting any damages for a period of five years till 1986. Mr. Reddy has pointed out that letter written by the petitioner dated 17.3.1993 itself acknowledges that a few staff workers were retained by the petitioner for final measurement/material handing over and not many workers of staff were engaged by the petitioner so as to entitle them for damages as has been mentioned by them. Whatever staff was at site was for rectification of the work for which the petitioner in any case is not entitled to be paid. Mr. Reddy has further stated that vide letter dated 4.11.1986 the respondent had informed the petitioner that it site in Iraq there was only workers without supervisor, engineer and there was no use of these works as they lacked experience in the kind of work requiring rectification. On the basis of these arguments, Mr. Reddy has argued that what the Arbitrator has awarded under this head is absolutely whimsical, arbitrary and without any basis as nothing was to be paid for rectification of the work which they undertook from till 1986.

9. Learned counsel has invited the attention of this court to Ex. D-41, which is a letter written by the respondent dated October 30, 1980 inter alia, stating that the workers, who had opted to return to India, who were working with the petitioner, had been repatriated by the petitioner on his own risk and cost and it was entirely petitioner's organisational matter. In the said letter, the respondent had requested the petitioner to use its best endeavor to complete the execution of the work and further requested the petitioner to carry out the critical items of work. He has also invited the attention of this court to the minutes dated 2.5.1984 which was attended by the representatives of the parties. Both the parties have relied upon the minutes, therefore, it is proper to reproduce its content below;

       MINUTES OF THE. MEETING HELD BETWEEN EIP AND ACCPL     ON 2ND MAY, 1984 AT EPI, NEW DELHI OFFICE REGARDING             CMBP MAIN AND MODIFICATION WORKS 
 Present 
     E.P.I.                               ACC(P)L 
     Shri A. S. Bhandari               Shri B. P. Jain 
     Shri J. L. Zutshi 
     Shri A. N. Jha 
     Shri G. D. Moorjani 
 
 

Following were discussed and agreed to : 
 

At the outset EP 1 informed ACC(P)L about the status on CMBP modification works. 
 

According to the item rates generally discussed with the two civil associates, the value of corresponding modification works for ACC(P)L felt that the value of the I.d. 86,000 APPROX. ACC(P)L felt that the value of the modification works is too small for them to carry out economically. 
 

ACC(P)L confirmed that they will have no objection if the modification works of CMBP in their portion of works is given in some other agency by EPI. 
 

M/s. ACC(P)L confirmed that they will complete the balance works and rectification works of their portion of work covered in the existing contract dated 5th March for main works as per the terms and conditions of the agreement. 
  (A. S. Bhandari)                             (B. P. Jain) 
 M/s. Engineering Projects                  M/s. Arvind Const. (I) Ltd. 
 Co. (P) Limited.  
 
 

10. In view of these documents learned counsel for the respondent has argued that the learned Arbitrator lost sight of these two important piece of documents. Learned counsel for the respondent has also argued that the Arbitrator has gone wrong in giving the finding that encashment of bank guarantee by the respondent was illegal. Respondent has also argued that the Arbitrator lost sight of Ex. D-107, a letter dated January 25, 1992 wherein it was inter alia mentioned that ad hoc advances were paid to the petitioner over and above their running bills and for which the respondent was paying interest from 18% to 22% and Ex. D-140, a letter dated 1.7.1980. Mr. Reddy has also placed reliance on the minutes of 15.12.1986 in support of his contention that the bank guarantee was encashed after the working group, wherein the petitioner was also a party, agreed for the same. When the working group had agreed that it had no objection to the respondent invoking the unconditional guarantee. He has stated that in view of the undertaking that the respondent will not invoke the guarantee without obtaining the approval of the working group the respondent had invoked the guarantee after the working group agreed in principle as stated above and, therefore, the finding of the Arbitrator on this party is contrary to the documents filed on record and thereby the Arbitrator has committed a legal misconduct. In support of his arguments he had cited the cases of UOIV. M/s. Mehta Teja Singh & Co. , M/s. Bombay Ammonia Pvt. Ltd. v. UOI (AIR 1987 Delhi 148) and K, P. Poulose v. State of Kerala and another wherein the Supreme Court held that :

"Misconduct under Section 30(a) has not a connotation of moral lapse. It comprises legal misconduct which is complete if the Arbitrator on the face of the award arrives at an inconsistent conclusion even on his own finding or arrives at a decision by ignoring very material documents which throw abundant light on the controversy to help a just and fair decision."

11. On the other hand, Mr. Arun Jaitely, learned counsel for the petitioner has argued that the original contract was for the period of 14 months starting from May, 1980 but because of break out of war between Iraq and Iran and because of change in the design, concept and modification of the ministerial building after the visit of Iraqi President at the side in October, 1982, the petitioner had to continue on the site till 1986. Relying on the minutes of the said meeting dated 2.5.1984 Mr. Jaitely has pointed out that what had been contemplated in the said minutes was that the petitioner will have no objection if the modification work of the Counsel of Ministers building project in the portion of work of the petitioner is given to some other agency by the respondent and petitioner undertook to complete the balance work and the rectification work of its portion as per the terms and conditions of the Agreement. Mr. Jaitely has at the outset argued that what the petitioner is claiming is not on account of the work while the petitioner has carried out till June, 1982 but rectification resulting because of modification for which expenses equivalent to I.D. 50,000 had been incurred by way of manpower expenses by claimant after April, 1984 for the project. He has stated that when the respondent did not pay for the claim nor settled the matter, the petitioner initiated proceedings before this court under Section 20 of the Arbitration Act being Suit No. 2696-A/1986 pursuant to which respondent appointed Shri Prakash Narain, a former Chief Justice of this court, as Arbitrator. Mr. Jaitely has also contended that in relation to claims No. 3, 8, 9, 10 and 11, counsel for respondent had frankly conceded that he was not pressing the same for the time before the Arbitrator and this was so recorded in the minutes of the meetings held on 12.7.1990 and 13.7.1990 by the Arbitrator, wherein it was further noted that the parties have nothing further to say and the Arbitrator reserved his award. Mr. Jaitely has argued that keeping in view the nature of the claims, the Arbitrator has awarded a lump sum award taking into consideration ad hoc advances and other payments made by the respondent to the petitioner and after adjustment thereof, the Arbitrator has considered the claims of the parties, voluminous documentary records in hundreds of pages, oral evidence led by the parties and arguments of counsel for the parties. Mr. Jaitely has further argued that no direction was given by this court while making the order of the reference that the Arbitrator was to give award separately on each claim. Counsel for the petitioner has argued that it is fallacious to suggest that award is disproportionately high. He argued that these allegations are raised for the first time in these proceedings and were not raised before the Arbitrator. In any event, Mr. Jaitely has argued that these claims are based on extra items of work, execution of temporary work and the items arising out of payment against petty bills besides expenses incurred in connection with the work. In this regard has has also stated that in facts it is admitted by the respondent that the petitioner had given a correct amount of I.D. 59609.533 while working out the ad hoc advances provided by the respondent to petitioner in the available foreign currency for the purpose of the work. Therefore, most of claims are related to items of work executed under the contract and for which, there were no rates originally agreed and as such, Work being undisputably completed on instructions and within the knowledge of the respondent, the petitioner claimed the rates for such items. Mr. Jaitely has argued that the petitioner had other running contracts in Iraq like the project known as Samawa Railway Project and construction of 270 houses for the cement factory and the petitioner earned moneys in Iraqi Dinars from the said project and same were also spent for the work under the contract in question. Mr. Jaitely has contended that no permission was required from the Reserve Bank of India in this relation and the petitioner had the authority to spend by virtue of letter entered into between the parties dated 12.2.1980 as it was the duty of the respondent to provide funds in the available foreign currency to the petitioner for the work under the contract. On the basis of these arguments, he has stressed that there is no error of jurisdiction and award is proportionate to the cliams raised by the petitioner.

12. Repelling the arguments of learned Additional Solicitor General, Mr. Jaitely has contended that revision of rates has to apply to the contract in question. He has argued that as per the contract work ought to have been completed in May, 1981 and it is admitted that the petitioner worked for the respondent up to May, 1986. The contention of Mr. Jaitely is that higher rates were give to one Mr. K. P. R. Reddy at the relevant time and at least same rates must be made applicable to the petitioner. The main thrust of the arguments of learned counsel for the petitioner is that although in terms of the contract the work was to be finished within 14 months but on account of delays attributable to the respondent, the work was continued for a period of 82 months and there is no duplication in the claims of the petitioner as suggested by the respondent. Mr. Jaitely has denied that claims No. 6 and 8 are in duplication. He has further contended that claim No. 6 is neither arbitrary not beyond the contract agreament. Jaitely has contended that claim of the petitioner was more than I.D. 15 lacs whereas the Arbitrator has awarded less than I.D. 3 lacs. Learned counsel for the petitioner argued that the bank guarantee in question had been furnished under and/or pursuance of the contract and, therefore, the dispute and difference arising between the parties that had been referred for arbitration would also include the disputes concerning the legality and validity of the encashment of the bank guarantee and consequential relief to the petitioner to be entitled to return/refund of amount recovered under the bank guarantee including interest and, therefore, the award in this regard made by the Arbitrator is perfectly legal and valid. Counsel for petitioner has contended that Chairman-cum-Managing Director of the respondent appointed Shri Prakash Narain, sole Arbitrator, and all disputes were referred to the arbitration of the Arbitrator and there was no clause which could put restrictions on the right of parties to bring forward the dispute of money realised by encashing bank guarantee by the respondent. In any event there was no erroneous proposition of taw when the Arbitrator held that the encashment of the bank guarantee was unjustified. Mr. Jaitely has further repelled the contention of the respondent and argued that vide letter dated 10.5.1982 written by the respondent in reply to the petitioner's letter dated 16.4.1982 for enhancement of rate in which they had mentioned payment should be on the basis of cost plus 10% profit basis for the works beyond original stipulation for completion respondent requested the petitioner as the project is prestigious one, it should be completed at the earliest leaving matters for discussions at a later date. On the basis of this reply Mr. Jaitely has contended that at this stage the respondent cannot turn round and assailed the finding of the Arbitrator as voluminous record was filed before the Arbitrator and on the oasis of records, the Arbitrator has made the award. Mr. Jaitely has also argued that exclusion or inclusion clauses cease to exist and are of no relevance if fundamental changes are made in the contract. In support his contention he has cited the case of M/s. Salwan Construction Co. v. UOI (ILR (1977) 748), that firstly it is not open for the court to probe the mental process on which the Arbitrator has reached his conclusion where it is not disclosed by the terms of his award and secondly for the proposition that the escalator is an index. It can be a convenient measure of damages. When contract does not provide for escalation in case of breach of contract the escalator can be adopted by the court as true measure of damages if it is available at hand. He has cited the case of Charterhouse Credit Company Ltd. v. Tolly (1963 All England LR 432), in which it was held.

"if a party to a contract had broken a fundamental term, an election by the other party to affirm the contract and sue for damages, does not of itself re-entitle the party in breach to rely on an exemption clause which he has disentitled himself from relying on by his breach of the fundamental term of the contract."

13. Repelling the contention of the respondent regarding claim of demobilisation being wrong on the face of it Mr. Jaitley contended that the repatriated its own employees to India because of hostility between Iraq and Iran. In any case Mr. Jaitely argued that this objection was by the respondent and he cannot be permitted to argue if the same had not been taken or pleaded. In support of his submissions, he has cited Madan Lal v. Sunder Lal and another Mr. Jaitely argued with emphasis that nothing turned on the minutes dated 2.5.1984 as it only reflected that the petitioner in right earnest agreed to complete the balance work and rectification work covered under existing contract dated 15.3.1980 as per the terms and conditions of the Agreement. But that does not follow that by signing that minutes the petitioner had given up his rights regarding recovery of prices which petitioner has paid on account of work being carried out for a period beyond what was contemplated vide Agreement dated 5.3.1980. As a matter of fact, till 14.5.1981 only 34% of the work was done when the contract period was over and work had not been completed and admittedly on the assurance of the respondent, the petitioner carried on the work and completed approximately 92% work by June, 1982 and thereafter kept office for rectification of the modified works till 1986 and spent on establishment and on such modification. Mr. Jaitely has also argued that in July, 1981 for a similar work one Mr. K. P. R. Reddy was given contract and what the petitioner had demanded from the respondent that at least same rate be given to the petitioner as has been given to said Mr. K. P. R. Reddy. In this regard he has relied upon the affidavit filed by the petitioner before the Arbitrator particularly paragraph 17 of the said affidavit that the petitioner carried out the work after 14.5.1981 on specific assurance given to the petitioner by the then Chairman-cum-Managing Director, Shri O. P. Narula, and it was contended that the work has not progressed as it ought to have been and it was not possible for the petitioner or for the respondent to anticipate any completion date. The petitioner only demanded actual cost plus 10% vide their letter dated 16th April, 1982 addressed to Chairman-cum-Managing Director of the respondent and they had specifically mentioned that it was not possible for claimant to continue at the project if payment of cost plus 10% profit basis for the work beyond 14.5.1981 was not approved and it is too late in the day for the respondent to plead that the Arbitrator has wrongly awarded the award in favor of the petitioner in view of the reply of the respondent dated 10.5.1982. Mr. Jaitely has also contended from the letter dated November 29, 1980 Ex. C-114 makes it clear that work was suspended and respondent had allowed the suspension of the work from 31st October, 1980 and as a matter of fact has absorbed the available willing workers, who stayed on at Bagdad, Mr. Jaitely has invited the attention of this court to Ex. C-93 letter written by the petitioner to the respondent dated 8th October, 1980 in which it has been specifically mentioned that since the outbreak of war between Iraq and Iran, work was completely paralysed and was at stands till. The letter further stated that due to the insecure and unsafe conditions prevailing at the site on account of frequent air-raids, petitioner's workers represented to the respondent as well as to the Indian Embassy for repatriation with one month additional wages and their request was acceded to on September 30, 1980. Mr. Jaitely has further contended that the repatriation of Indian workers from Bagdad was made by the Indian Embassy and respondent's office at Bagdad and in this relation has shown Ex. C-104 a letter written by the petitioner dated 31.10.1980 to the respondent mentioning inter alia that in accordance with the decision taken by the Indian Embassy and respondent's office in Bagdad, workers were paid one month's additional wages and repatriated back to India. He has further invited the attention of this court to Ex. C-100, a letter written by the petitioner to the respondent dated 31.1.1980 incorporating the Telex message received by the petitioner from its Bagdad office :

"WORK AT CMB PROJECT SUSPENDED BY EPI FROM 1ST NOVEMBER, 1980 STOP THEY HAVE ASKED US TO SEND ALL LABOUR TO SAAD-3 PROJECT BUT ABOUT SIXTY LABOURS ARE UNWILLING TO GO TO THAT PROJECT BEING defense AREA STOP WE ARE REPATRIATING THEM TO INDIA IN THE NEXT FEW DAYS STOP FURTHER DEVELOPMENT WILL BE COMMUNICATED STOP.

14. Mr. Jaitely has further stressed that the respondent has never attributed the delay of the project to the claimant and had quoted the relevant information given by the respondent in its Annual Report to shareholders which was placed on the table of the Parliament :

"11TH ANNUAL REPORT FOR THE YEAR 1980-81 DATED 30TH SEPTEMBER, 1981.

(a) "SET BACK IN THE PROGRESS OF WORK ON IRAQI PROJECTS."

Due to continued efforts on the part of management to accelerate the progress of work on Iraqi projects an output of Rs. 6.9 crores was achieved in August, 1980, as against an amount of Rs. 1.65 crores at the beginning of that year. However, due to hostilities between Iraq and Iran, thereafter, there was a set back for about 6 months in the progress of work on Iraqi projects. During this period, keeping in view the safety of the personnel and workers posted at some of the sites, workers and the families of EPI employees were brought back to India and on the restoration of near normal conditions, workers have been repositioned at the sites. Scarcity of power and difficulties in the procurement and transportation of materials are still being experienced at sites. Your Directors hope to overcome these obstacles and obtain adequate progress of work at the sites in the remaining period of the current year."

15. Then later on a further report of the respondent dated 29.9.1993 which acknowledges that the work was stopped on account of certain modifications to be desired by the Iraqi after the visit of their President at the site. Mr. Jaitely has further taken me to Ex. C-337 a letter dated 4.12.1983 to show the basis of the claims of the petitioner, the respondent had preferred war claims on the employer and they assured the petitioner that they are pursuing the claims. On the basis of these voluminous evidence, Mr. Jaitely argued that the theory of the respondent that the Arbitrator has given disproportionate award in favor of the petitioner is wholly unjustified and without any basis. He has argued that the Arbitrator has based his award on the basis of the voluminous records, made available before the Arbitrator, filed by the parties. Petitioner further contended that once the Arbitrator held that encashment of bank guarantee was wrong, refund of bank guarantee amount equivalent of Rs. 38 lacs cannot be termed misconduct nor arbitrary. He further argued that contention of respondent that the contract was in Iraqi Dinar and taking into consideration the prevalent rate of dollar and then converting into Indian rupees was an exercise which ought not to have been done by the Arbitrator, has contended that at the relevant time there was no Iraqi Dinar and Rupees parity and, therefore, in international trade it was the convertibility of Iraqi Dinar to a dollar which has to be taken into account for awarding the sum in Indian Rupee as there was no determined value of Iraqi Dinar vis-a-vis Indian Rupees. In this connection, Mr. Jaitely has referred to the claim of respondent in which the respondent itself had shown US dollar vis-a-vis Iraqi Dinar giving the price of one Iraqi Dinar equal to US dollar 3.37 in the statement of claim filed by the respondent. Counsel has contended that even otherwise the court has merely to see whether the date on which the rate of exchange is awarded by the Arbitrator, is reasonable. If the award is made in foreign currency then the court can direct its payment in Indian currency as on the date of the passing of the decree. In this support he has cited Forasol v. Oil and Natural Gas Commission .

16. Repelling the contention of the respondent that Mr. G. D. Moorjani's evidence was totally ignored, Mr. Jaitely has argued that the Arbitrator has only held that said Mr. G. D. Moorjani did not have any personal knowledge of the project as the records were maintained in the Bagdad office and Mr. Moorjani was in Delhi. The Arbitrator has taken into consideration the affidavit of Mr. G. D. Moorjani also. Mr. Jaitely has contended that once the Arbitrator has stated that he has considered the evidence of all the witnesses and documents then there is no presumption that any witness or evidence has been ignored. In support of his submissions, he has cited the case of Secretary to Government of Orissa, Irrigation Department and others v. Raghunath Mohapatra . I would like to mention what Lord Denning said about evaluating of evidence by the Arbitrator :

"The weight of evidence and the inferences from it are essentially matters for the arbitrator. I do not think that the award of arbitrators should be challenged or upset on the ground that there was not sufficient evidence or that it was too tenuous or the like. One of the very seasons for going to arbitration is to get rid of technical rules of evidence and so forth ... Questions of evidence are essentially matters for the arbitrator and not matters for the court."

(G.K.N. Centrax Gears Ltd. v. Matbro Ltd. (1976) 2 Lloyod's Rep. 555 (575)).

17. Adverting on the next submission of learned counsel for the respondent, counsel for the petitioner argued that the theory that the Arbitrator has given disproportionately large amount is wrong as the total work awarded was for a value of about I.D. 8.92 lacs and admittedly the petitioner has received I.D. 11.9 lacs and the certified work was for I.D. 6.93 lacs, therefore, from June, 1981 till 1986 the claim of the petitioner has been for payment of more than I.D. 16 lacs and what the petitioner has stated in the claims filed before the Arbitrator that from 1981 onwards the rates given to Mr. K. P. R. Reddy be taken as the prevailing rates and on the same basis detailed claims were presented before the Arbitrator. Broadly stating Mr. Jaitely argued that on account of revision of rates I.D. 5 lacs were claimed on account of escalation in cost of material and rectification work I.D. 1.84 lacs were claimed on account of extra item of work, expenses incurred in the execution of extra item of works not included in the Contract with EPI amounted to I.D. 1,18,85.375, expenses incurred on execution of temporary works, enabling works etc. not included in the contract I.D. 2,00,668.433, amount payable by EPI towards deviation in petty bills I.D. S6,965.183, reimbursement of expenses incurred due to demobilisation and remobilisation etc. due to was I.D. 1,84,154.000 expenses incurred on renewal of bank guarantee and other charges from time to time Rs. 2,45,950/-, claim paybly by EPI on account of revision of rates for the work done beyond contractual date of completion i.e., 14.5.1981 I.D. 5,15,338, amount of claim for suspension of work by EPI I.D. 30,000, claim for damages on account of estimated loss of profit @ I.D. 6,500 per month beyond the contractual date of 15.5.1981 for a period of 5 years I.D. 3,90,000, refund of amount received by encashment of bank guarantees plus interest @ 18% p.a. Rs. 38,25,000/- with interest @ 18% p.a. on unpaid amounts stated hereinabove. Thus, it will be seen for claim of over I.D. 15 lacs, the Arbitrator has only awarded I.D. 2,10,000 equivalent in Indian currency in favor of the petitioner and by no stretch of imagination it can be said that the award is dis-proportionate. To supplement his submissions, Mr. Jaitely has argued that large amount has not been awarded by the Arbitrator. In support of his contention, he has cited State of Orissa v. Dhandasi Sahu in which Supreme Court held :

"It is well settled that when the parties choose their own arbitrator to be the judge in dispute between them, they cannot, when the award is good on the face of it, object to the decision either upon law or on facts. Therefore, when arbitrator commits a mistake either in law or in fact in determining the matters referred to him, where such mistake does not appear on the face of the award and the document and the documents appended to or incorporated so as to form part of it, the award will neither by remitted nor set aside .......

The fact that merely the award amount is quite high as commented by the High Court or that a large amount has been awarded, does not vitiate the award as such ......"

18. Learned counsel repelling the arguments of Mr. Reddy that the Arbitrator could not have awarded the amount under the award as there was no clause in the Agreement, has argued that if the award is a non-speaking award, as the one in challenge before this court, and does not make any reference to the clause of the Agreement, the court is not entitled to go to the clauses of the Agreement in order to determine the error. In support of his arguments, he has cited the case of M/s. Des Raj & Sons v. UOI (AIR 1984 Delhi 365) in which this court held :

"In a non-speaking award where the arbitrator neither has made any particular reference to any clause of the contract nor has incorporated the contract in the award in the sense that he has invited those reading the award to read the contract. Court is not entitled to look at the contract and search it in order to see whether there is an error of law, the court has no means to enter his mind and to explore his though processes."

19. And further cited the case of Calcutta Metro Politan Authority v. Haripada Mitra , incorporating the law laid down on the point by the Supreme Court in the case of State of Orissa v. M/s. Lall Brothers , in which the Supreme Court held that :

"It is not open to the court to speculate, where no reasons are given by the arbitrator, as to what impelled him to arrive at his conclusions. See in this connection the observations of the Judicial Committee in Champsey Bhara and Co. v. Jivraj Balloo Spinning & Weaving Co. Ltd. (50 Ind App 324 = AIR 1923 PC 66), and of this court in Jiverajbhai Ujamshi Seth v. Chintamanrao Balaji .

20. Mr. Jaitely has contended that is not necessary for the Arbitrator ty give reasons. The non-speaking award is a valid award and the same is not liable to be set aside merely on the ground that no grounds have been given by the Arbitrator while making the award. In his support he has cited the case of Raipur Development Authority and other v. M/s. Chokhamal Contractors and others . Moreover, when admittedly it is a non-speaking award, the court cannot probe into the mental process of the Arbitrator and determine as to what impelled the Arbitrator to arrive at his conclusion. In his support he has cited . He has contended that it is only when both the parties by a bilateral consent request the Arbitrator to give reasons that he is obliged to give reasons. In his support he has relied on the case of Food Corporation of India v. Jagdish Chandra Saha (1992 (3) Scale 258). On the basis of the above submissions learned counsel for the petitioner has stated that there is no error apparent on the face of the award and award be made a rule Zf the court and a decree in terms of the award be passed.

21. After hearing learned counsel for the parties, arguments spanning for a number of days, I must advert to the award now filed by the Arbitrator. The Arbitrator has mentioned that parties filed large number of documents and both the parties agreed that the same may be read as evidence without formal proof. Parties filed affidavit of the witnesses and witnesses were cross-examined. Lengthy arguments were advanced on behalf of both the parties. It has been specifically mentioned that respondent-EPI did not press its claims No. 3, 8, 9, 10 and 11 reserving its right to do so at some future date & stage. Thereafter the Arbitrator has recorded that after having considered that pleadings claims of the parties, voluminous documentary records, oral evidence led by the parties and arguments of counsel for the parties the Arbitrator awarded the lump sum award directing the respondent to pay back to the petitioner an amount of Rs. 38,25,000/- and interest thereon @ 15% p.a. from 6.12.1986, the date of encashment of bank guarantee, up to 23.6.1988, the date of reference amounting to Rs. 8,84,500/- holding that the encashment of bank guarantee by the respondent is unjustified. Thereafter the Arbitrator has further taking into consideration the ad hoc advances and other payments made by the respondent to the petitioner and giving adjustment of the same, directed the respondent to pay to the petitioner a further sum of I.D. 2,10,000 equal to Indian currency (taking the conversion rate of one Iraqi Dinar at US $ 3.3777778, this amount of I.D. 2,10,000 held payably by EPI comes to US $ 7,09,333.38, which in turn converted to Indian currency works out to Rs. 1,23,56,587/-) as per exchange rate @ 17.42 paise per one dollar prevailing on the date of the award. Accordingly the Arbitrator held the respondent to pay a sum of Rs. 1,23,56,587/- to the petitioner-ACCL. Respondent was further to pay interest @ 15% p.a. on the aforesaid amounts from the date of the award till the date of payment. The award is in a nature of lump sum award. The Arbitrator has not given the award claim-wise. If it is a lump sum award, is there any need for me to go and adjudicate upon various contentions raised by the learned counsel for both the parties. If the award is lump sum as in the present case and there was nothing in the order of reference which made it mandatory for the Arbitrator to give a speaking award or an award claim wise as has been sought to be argued by the learned counsel for the respondent, I need not go into the various objections raised by the respondent. The award before me is a lump sum award. Now I have to decide whether it is proper and appropriate for the court to probe into the mental process of the Arbitrator in the absence of any stipulation in the reference that reasons be given by the Arbitrator or that the award must be a speaking award. In my opinion court cannot found fault in the award and Arbitrator cannot be said to have committed error apparent on the face of the award if the award is a lump sum award. Following the reasoning of the case of Firm Madanlal Roshanlal Mahajan v. Hukumchand Mills Ltd. Indore .

"The arbitrator could give a lump sum award. He was not bound to give a separate award for each claim. His award on both fact and law is final. There is no appeal from his verdict. The Court cannot review his award and correct any mistake in his adjudication, unless an objection to the legality of the award is apparent on the face of it.

22. Quoting from Champsey Bhara & Co. v. Jivraj Balloo Spinning & Weaving Co. Ltd. (Supra) the Privy Council stated :

"An error in law on the face of the award means, in their Lordships' view, that you can find in the award or a document actually incorporated thereto, as for instance a note appended by the arbitrator, stating the reasons for his judgment, some legal proposition which is the basis of the award and which you can then say is erroneous.

In the present case, the Arbitrator gave no reason for the award. We do not find any legal proposition which is the basis of the award far less a legal proposition which is erroneous. It is not possible to say from the award that the arbitrator was under a misconception of law. The contention that there are errors of law on the face of the award is rejected."

23. Similar is the situation before me, I have broadly reproduced the award in proceeding paragraphs, no reason cogent or otherwise has been given by the Arbitrator. After reading the award, nobody could say that it is based on any legal proposition. The Arbitrator is the sole arbiter of dispute inter se the parties taking into consideration all the relevant material, documents, evidence and after hearing the arguments of learned counsel for the parties came to certain conclusion and granted lump sum award by no stretch of imagination it can be said that the Arbitrator was under mis-conception of law or has based the award on the basis of legal proposition which is erroneous, therefore, on this ground also the award cannot be rejected. Order of reference was made by the court directing the Managing Director of the respondent to appoint the Arbitrator the respondent those not to have an explicit order of reference that the Arbitrator must give a speaking award or reasons for the award though it was within the power of the parties to insist that the reasons must be given and only then the Arbitrator was under an obligation to give reasons. Now the respondent cannot turn back and argue because Arbitrator has awarded a lump sum award and no reason has been given, the award should be set aside.

24. In the facts and circumstances of the case, in the absence of any specific order of reference regarding award to be a speaking award, the Arbitrator was the sole judge of the facts and law involved in the case before him and his decision is not bound for review by the court unless the objection to the legality of the award is apparent on the face of it. In the present case no legal proposition much less erroneous legal proposition has been made the basis of the award and the award does not reveal that the Arbitrator was under any mis-conception of law. Therefore, the objection of the respondent that there are error of law apparent on the face of the award must be rejected. The objection that the award is liable to be set aside on the ground of non-consideration of the evidence and submissions of the parties must be rejected as the Arbitrator has specifically recorded in the award that he had considered the claims and counter-claims, evidence adduced by the parties, submissions and documents filed by the parties and the arguments advanced by the parties nor can the award be set aside merely on the ground that the Arbitrator has not specifically referred to any evidence of Mr. G. D. Moorgani or someone else. The Supreme Court in the case of Bijendra Nath Srivastava v. Mayank Srivastava and others , has held so. Even otherwise once the parties have selected their own forum then the deciding forum must be given the power of appraisement of the evidence. Once the Arbitrator has chosen to give a lump sum award, the award cannot be challenge on the ground which has been sought to be convassed before me by the respondent. The Arbitrator is the sole judge of the quality as well as quantity of the evidence and court will not substitute its own judgment even if it arrived at a different conclusion. I am also supported by the decision of the Supreme Court in the case of Municipal Corporation of Delhi v. M/s. Jagan Nath Ashok Kumar and another , held :

"In this case, there was no violation of any principles of natural justice. It is not a case where the arbitrator has refused cogent and material factors to be taken into consideration. The award cannot be said to be vitiated by non-reception of material or non-consideration of the relevant aspects of the matter. Appraisement of evidence by the arbitrator is ordinarily never a matter which the court questions and considers. The parties have selected their own forum and the deciding forum must be conceded the power of appraisement of the evidence. In the instant case, there was no evidence of violation of any principle of natural justice. The Arbitrator in our opinion is the sole judge of the quality as well as quality of evidence and it will not be for court to take upon itself the task of being a judge of the evidence before the arbitrator. It may be possible that on the same evidence the court might have arrived at a different conclusion than the one arrived at by the arbitrator but that by itself is no ground in our view for setting aside the award of an arbitrator."

25. In view of the above discussions, I dismiss the objections application.

Suit No. 2994-A/94

26. In view of the objections application, which has been dismissed vide my above order, the award is made rule of the court. A decree in terms of the award is passed. The petitioner will be entitled to interest @ 12% p.a. from the date of decree till its realisation.

27. Suits disposed of accordingly.