Delhi High Court
Airports Authority Of India vs Biren Manufacturing Co.(Cables) ... on 27 July, 2001
Author: A Sikri
Bench: A Sikri
ORDER
A.K. Sikri, J.
1. This is an application filed by the petitioner under Section 34 of the Arbitration and Conciliation Act, 1996 for setting aside the arbitral Award dated 23rd February, 1999 as well as clarification/decision dated 5th April, 1999 made and signed by Shri M.K. Mathur, Sole Arbitrator/Respondent No.2. In challenging the said Award, the learned counsel for the petitioners has raised two grounds which are as follows:
2. The Arbitrator while deciding the claim of L.D., levied to the extent of Rs.99,995/- has exceeded his jurisdiction inasmuch as this dispute could not have been referred for adjudication in terms of Clause-25 of the Agreement between the parties containing the arbitration clause. The submission of the learned counsel for the petitioner is that as per clause-2 of the conditions of contract, it was the sole prerogative of the Superintending Engineer to levy such compensation in the event of contractor's failing to comply with the conditions stipulated in the contract and such decision of the Superintending Engineer was final. Clause-25 of the terms and conditions which contains an arbitration clause stipulates that the Arbitrator wold adjudicate upon all question and disputes relating to meaning of specifications, designs etc. in the contract "except where otherwise provided". Since it is provided in Clause-2 that the decision of Superintending Engineer is final, this is "except matter" and, therefore, does not fail within the ambit of Section-25. Relying upon the provision of Section 34(2)(iv), it is submitted that the arbitrator deals with a disputes not contemplated by order falling within the terms of the settlement to arbitration, therefore, it was a decide beyond the scope of arbitration. I find force in the submission of learned counsel for the petitioner. The issue involved is no more res integra and has been settled by various judgments of Supreme Court as well as this Court. Interpreting similar clauses it has been held that the Arbitrator shall have no jurisdiction to decide such a dispute being "excepted matter" and, therefore, no reference of such a dispute could be made. (Delhi Development Authority Vs. M/s, Sudhir Brothers, 1995(2) Arbitration Law Reporter 306).
3. Since the Award on this claim can be separated from the remaining Award, this part of the Award is set-aside under Section 34(a)(iv). It will, therefore, be for the petitioner to seek to recover the said amount of Rs.99,995/- in whatever manner it is open to it and in case any such proceedings are taken, it will be open to the contractor to raise all defenses that may be open to him in law to contend that the levy is bad. In case be petitioner seeks to recover the said amount of compensation from the contractor it will be open to the contractor to file a suit and raise all such contentions as he may deem fit.
4. The other objection by the petitioner is that learned Arbitrator has not adjudicated upon the claim No.1 preferred by the petitioner and has only decided the claim partially.
5. It was submitted that claim No.1 of the petitioner was for cost of difference due to risk purchase amounting to Rs.1259892.24. However, while dealing with this claim the learned Arbitrator held that as per para-3 of letter dated 18.1.1994 of the petitioner the said contract was valid for one year i.e. w.e.f. 1.2.1994 to 31.1.1995. Although the same could be extended but no extension was, however, mutually agreed. Therefore, any orders placed beyond the orders ending 31.1.1995 were not valid. On this reckoning the Arbitrator found that risk purchase amount of Rs.1,50,688/- was beyond the period. It was submitted by learned counsel for the petitioner that even if this be so, the learned Arbitrator had to adjudicate upon the balance claim in respect of orders placed prior to 31.1.1995 as the total claim preferred by the petitioner was to the tune of Rs.1259892.24. As there was no discussion about the same in the impugned award the petitioner had filed an application dated 23.3.1999 under Section 33 of the Arbitration and Conciliation Act, 1996 requesting the Arbitrator to decide this aspect which was left undecided. The Arbitrator rejected this application by order dated 5.4.99 stating that the disputes referred to arbitration relate to recovery of Rs.2,12,582.36 only and the two claims could be examined only up to this amount within the scope of reference. The claim No.2 regarding LD levied was to the tune of Rs.99,995/- and once it is held that claim No.1 to the extent of Rs.150688/- was beyond the scope, the claim regarding remaining amount of Rs.11,09,224.24 could not be adjudicated upon as beyond the scope of reference. Learned counsel for the petitioner assailed this reasoning also submitting that the Arbitrator has wrongly interpreted the scope of reference and held that the disputes referred to arbitration relate to recovery of Rs.2,12,582.36 only.
6. I agree with the submission of learned counsel for the petitioner. In the terms of reference claims mentioned are as under:
1. Cost of difference due to risk purchase Rs.12,59,892.24p.
2. L.D. Levied Rs.99,995.00.
3. Amount available with AAI (NAD) due for payment to the firm i/c amounts available from other agreements of AAI(NAD) Rs.11,47,304.88.
4. Amount to be deposited by the firm to AAI (NAD) Rs.2,12582.36.
7. From the aforesaid it is clear that the petitioner had preferred first two claims which were for Rs.12,59,892.24 and Rs.99,995/- i.e. for a total amount of Rs.13,59,887.24. Thereafter, it is mentioned that 'since a sum of Rs.11,47,304.88 is available with the petitioner which is to be paid to the respondent in respect of other agreements, if this amount is adjusted the balance amount which would be payable by the respondent would be Rs.2,12,582.36. It does not mean that the Arbitrator was to adjudicate in respect of Rs.2,12,582.36 only. The Arbitrator was to adjudicate the first two claims as preferred by the petitioner and on adjudication upon the same he was to decide as to whether the petitioner was entitled to adjust the amount of Rs.11,47,304.88p payable to the respondent in respect of other agreements. The entire approach adopted by the Arbitrator is erroneous by proceeding on the assumption that the scope of reference is limited to the claim of Rs.2,12,582.36. The approach adopted by the Arbitrator is hyper-technical and is mis-reading of the scope of reference. He has failed to exercise his jurisdiction by not deciding the dispute which was specifically referred to him.
8. Accordingly, the matter is remanded back to the Arbitrator with direction to decide Claim No.1 preferred by the petitioner is totality. Even if claim in respect of Rs.1,50,688/- is not round due, he should decide about balance claim preferred by the petitioner on this account.
9. A copy of this order along with original record be sent to the Arbitrator who shall decide the aforesaid aspect and give his Award thereon.
10. The application stands disposed of. There shall be no orders as to costs.
