Bharat Heavy Electricals Ltd. vs Globe Hi Fabs Ltd.
2004 Latest Caselaw 1374 Del

JUDGMENT

Vijender Jain, J.

C.M.No. 13370/2004

1. Learned counsel for the appellants wishes to withdraw the application for interim injunction.

2. In view of the submissions made, the application is dismissed as withdrawn.

F.A.O.(OS) No. 222/2004

1. This appeal has been filed aggrieved by the impugned order dated 9th August, 2004 of the learned Single Judge dismissing the objections of the appellant. We are dismissing this appeal in liming as we have heard Mr. J.C. Seth, learned counsel appearing for the appellant at length and the counsel for the caveator.

2. In view of certain disputes between the parties, the matter was referred to arbitration of sole arbitrator, Mr. S. Krishnan, who was a retired manager of the appellant's organization. Mr. Seth has vehemently contended that the award was without jurisdiction. It was contended before us that the learned single Judge failed to appreciate that there was a specific bar in the contract against the payment of interest to the contractor. In this regard, reliance was placed on clause 3.3 (ix) of the General Condition of Contract relating to security deposit which is as under:-

"No interest shall be payable by the employer on earnest money, security deposit or any money due to the contractor by the employer."

3. On the basis of the aforesaid clause, it was contended before us that the clause clearly bars the payment of interest to the respondent on any amount due and payable from the appellant and, therefore, on the basis of aforesaid stipulation in the contract it was contended that the award was against the specific term of the contract and, therefore, was illegal and the learned single Judge failed to appreciate that the award was without jurisdiction. It was further contended that in terms of Section 28(3) of the Arbitration Act, the award was in accordance with the terms of the contract and in view of the specific clause prohibiting the award of interest, the award deserved to be set aside on that score. It was contended that the reliance placed by the learned single Judge on the headings was misplaced and headings cannot control the clauses and headings were not decisive and in this regard reliance was placed on , Forage & Co. (of Lushala) v. Municipal Corporation of Greater Bombay and Ors. It was contended that headings or notes cannot be taken into consideration in interpretation or construction of the clauses of the contract.

4. It was next contended by the learned counsel for the appellant that parties had specifically agreed for non-payment of interest on any amount due. Therefore, the arbitrator had no power to award interest under Section 31(7)(a) of the Act. In support of his contention, learned counsel for the appellant relied on Rajasthan State Mines and Minerals Limited v. Eastern Engineering Enterprises and Anr; . It has been contended that while passing the award basic and fundamental terms of the agreement between the parties cannot be ignored and if fundamental terms are ignored then that will be a case of exceeding the jurisdiction by the arbitrator, and in such case the arbitrator by ignoring such terms would be traveling beyond his jurisdiction. Special emphasis was placed by learned counsel for the appellant on sub-paragraph 'G' of paragraph 44 of Rajasthan State Mines and Minerals (supra) which is as under :-

"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."

5. It is contended that in this case, the arbitrator having awarded the interest contrary to term of the contract, the award is on the face of it is illegal and in excess of jurisdiction. Reliance was also placed by the learned counsel for the appellant on Oil & Natural Gas Corporation Ltd. v. Saw Pipes Ltd. 2003(2) Arb. LR 5 (SC). Referring to the ONGC's case (supra) it was contended that in the said case the Court had held that no interest would be paid on disputed claims. It was contended that in the instant case also the construction of staircase was not provided in the contract. No amendment in this regard was issued and, therefore, award of any interest on construction of staircase was bad in law and against the specific term of the contract. Relying on Ahmedabad Municipal Corporation v. Virendra Kumar Jayantibhai Patel; , it was contended that in the realm of contract equity will have no place. Learned counsel for the appellant also relied on Union of India v. M/s. Ajit Mehta and Associates, .

6. Let us first consider the award dated 5th August, 1998 and the impugned order passed by the learned Single Judge. The appellant had awarded the contract on turnkey basis for setting up of two units of 210 MW by Tenughat Vidyut Nigam Limited, an undertaking of the State Government of Bihar for setting out of Tenughat Power Plant on cost plus basis. Out of the main contract, the BHEL awarded a contract for structural steel works for Unit-1 and Unit-II of the power plant to the respondent, Globe Hi-Fabs Ltd. (in short 'GHF') at a lump sum price of Rs. 8,64,13,027.25 on 12th January, 1989. GHF submitted final bill for the Unit-II work on 01.11.1994 for Rs. 26.28 lacs but the appellant wanted to make deduction of Rs. 5.71 lacs on account of staircase fabrication and steel used for the same. Therefore, the bill was forwarded to the Head Office of BHEL at New Delhi for payment. The Head Office deducted a further sum of Rs. 6.55 lacs towards the hire charges of power winch provided by the BHEL to GHF, which deductions were disputed by the GHF. As the contract between the parties was subject to the arbitration agreement, the appellant appointed an arbitrator, a former Manager of the appellant, Mr. S. Krishnan as the sole arbitrator in terms of the said Arbitration clause. After having allowed certain claims, as has been discussed in the impugned order, the appellant confined his grounds of attack to the award on the following three grounds :-

a) The arbitration proceedings initiated by the GHF were premature and against the terms of the contract because the GHF failed to refer their claim/dispute to the 'Engineer' and obtain his decision in terms of clause 43(i) of GCC.

b) Rejection of the claim of BHEL for Rs. 6,65,765.40 paise towards hire charges of power winch is totally arbitrary and whimsical and not based on the terms of the contract, trade and usage; and

c) The award of interest @ 18% per annum from 30.4.1995 to the date of realization of the amount on the amount of Rs. 26,28,430.72 paise is illegal and against the terms and conditions of GCC."

7. In the appeal, the learned counsel for the appellant had only disputed the award of interest as per the submissions recorded hereinabove. The learned Single Judge dealing with the contentions of the appellant on interest has discussed that the contract provided that the bills would be cleared within 180 days and after the expiry of 180 days the amount would be deemed to have become payable by the employer to the contractor. The reasoning which has been given by the learned Single Judge was that the contract does not debar the payment of the interest on the money which has been illegally withheld by the employer after it became due. In the instant case the bill was submitted on 1.11.1994 and after giving a margin of 180 days to the employer, it became due and payable on 30.4.1995 and in view of grace period agreed to by respondent till 1.1.1996, the learned Single Judge held that the arbitrator was justified in granting the interest and modified the award and granted interest from 1.1.1996 instead of 30.4.1996 awarded by the arbitrator. The question for consideration before us is that once there is an arbitration clause and if an arbitrator has interpreted a clause in an agreement in a particular manner and has taken a decision which is a possible view, is it permissible to Court to substitute its own evaluation or the conclusion when the parties voluntarily have chosen a forum to refer their disputes to be adjudicated not under common law but to the exclusion of a civil court by an arbitral forum. It is no more res-integra that the Court while sitting in appeal will not substitute its opinion until and unless it is found that that view is manifestly perverse or contrary to the terms of the contract.

8. We have perused the terms of the contract pertaining to the interest. Clause 3.3. of the General Condition of the Contract pertains to `security deposits' and under the said clause, 3.3 (ix) deals with interest. Even if the heading may not control the clause and it may not be said that the heading is decisive but in the absence of any other clause in the contract to the contrary forbidding levy of interest in case of default or in case of payment becoming due, to say that clause appearing under Security Deposit 3.3 will cover any money payable due to the contractor by the employer will include all such sum which are otherwise legally recoverable from the employer, neither would be proper nor this Court will substitute its opinion with the opinion and inference of the Arbitrator.

9. The agreement has to be understood in the commercial sense. It can not be held that even if the appellant was at fault and the money was withheld unreasonably by the appellant, it will not be liable to pay any interest. The contention of the appellant that the principle of equity are not applicable to the contractual matters is contrary to the law laid down by the courts. In Mannai Investment Co. Ltd. v. Eagle Star Life Assurance Co. Ltd. ; 1997 (2) WLR 945, it was observed that :-

"There has been a shift from strict construction of commercial instruments to what is sometimes called purposive construction of such documents. Lord Diplock deprecated the use of that phrase in regard to the construction of private contracts as opposed to the construction of statutes: Antaios Compania Naviera S.A. v. Salen Rederierna A.B. (1985) A.C. 191, 201D. That is understandable. There are obvious differences between the processes of interpretation in regard to private contracts and public statutes. For a perceptive exploration of the differences in the context of United States, see Robert S. Summers, "Statutes and Contracts as founts of formal Reasoning," in Essays for Patrick Atiyah, edited by Peter Cane and Jane Stapleton (1991), pp. 71 et seq. It is better to speak of a shift towards commercial interpretation. About the fact of the change in approach to construction there is no doubt. One illustration will be sufficient. In Antaios Compania Naviera S.A. v. Salen Rederierna A.B. (1985) A.C. 191, 201, Lord Diplock in a speech concurred in by his fellow Law Lords observed:

"if detailed semantic and syntactical analysis of a word in a commercial contract is going to lead to a conclusion that flouts business common sense, it must be made to yield to business common sense."

10. In the realm of contract, the principle of acting reasonably and fairly in contractual matters has been noticed and applied by the apex Court. In Kumari Srilekha Vidyarathi v. State of Uttar Pradesh , it was held that the power of judicial review would be available and the unreasonableness of a term could be considered especially in contracts where the bargaining power is unequal and the contracts are standard form contracts between the un-equals.. The Supreme Court in Kumari Shrilekha Vidyarthi v. State of U.P. (supra) held in paragraphs 20 & 21 as under :-

"20. Even apart from the premise that the 'office' or 'post' of DGCs has a public element which alone is sufficient to attract the power of judicial review for testing validity of the impugned circular on the anvil of Article 14, we are also clearly of the view that this power is available even without that element on the premise that after the initial appointment, the matter is purely contractual. Applicability of Article 14 to all executive actions of the State being settled and for the same reason its applicability at the threshold to the making of a contract in exercise of the executive power being beyond dispute, can it be said that the State can thereafter cast off its personality and exercise unbridled power unfettered by the requirements of Article 14 in the sphere of contractual matters and claim to be governed therein only by private law principles applicable to private individuals whose rights flow only from the terms of the contract without anything more? We have no hesitation in saying that the personality of the State, requiring regulation of its conduct in all spheres by requirements of Article 14, does not undergo such a radical change after the making of a contract merely because some contractual rights accrue to the other party in addition. It is not as if the requirements of Article 14 and contractual obligations are alien concepts, which cannot co-exist.

"21. We have no doubt that the Constitution does not envisage or permit unfairness or unreasonableness in the State actions in any sphere of its activity contrary to the professed ideals in the preamble. In our opinion, it would be alien to the Constitutional scheme to accept the argument of exclusion of article 14 in contractual matters. The scope and permissible grounds of judicial review in such matters and the relief which may be available are different matters but that does not justify the view of its total exclusion. This is more so when the modern trend is also to examine the unreasonableness of a term in such contracts where the bargaining power is unequal so that these are not negotiated contracts but standard form contracts between unequals."

It was also observed in paragraphs 28 & 48 as under:-

"28. Even assuming that it is necessary to import the concept of presence of some public element in a State action to attract article 14 and permit judicial review, we have no hesitation in saying that the ultimate impact of all actions of the state or a public body, being undoubtedly on public interest, the requisite public element for this purpose is present also in contractual matters. We, therefore, find it difficult and unrealistic to exclude the state actions in contractual matters, after the contract has been made, from the purview of judicial review to test its validity on the anvil of Article 14."

48. "In our view, bringing the State activity in contractual matters also within the purview of judicial review is inevitable and is a logical corollary to the stage already reached in the decisions of this Court so far. Having fortunately reached this point, we should not now turn back or take a turn in a different direction or merely stop there. In our opinion, two recent decisions in Dwarkadas Marfatia and Sons and Mahabir Auto Stores also lead in the same direction without saying so in clear terms. This appears to be also the trend of the recent English decisions. It is in consonance with our commitment to openness which implies scrutiny of every State action to provide an effective check against arbitrariness and abuse of power. We would much rather be wrong in saying so rather than be wrong in not saying so. Non-arbitrariness, being a necessary concomitant of the rule of law, it is imperative that all actions of every public functionary, in whatever sphere, must be guided by reason and not humour, whim, caprice or personal predilections of the persons entrusted with the task on behalf of the State and exercise of all power must be for public good instead of being an abuse of the power."

11. The Supreme Court also held in the case of Dwarkadas Marfatia v. Board of Trustee of the Port of Bombay, , dealing with the question whether the action of the Port Trust in evicting one of the tenants and granting permission to one M/S Dhanji Mavji was proper and right held that every action of the respondent which was `State' within article `12' of the Constitution, whether it be in the field of the contract, or in any other field, was subject to article 14 of the constitution and must be reasonable and taken only upon lawful and relevant grounds of public interest. A three judge bench of the Supreme Court, however, held that every activity of the Bombay Port trust was subject to Article 14 and must be reasonable and taken only upon lawful and relevant grounds of public interest. Where there is arbitrariness in State action, article 14 springs in and judicial review strikes such an action down. Every action of the executive authority must be subject to rule of law and must be informed by reason. So whatever be the activity of the public authority it should meet the test of article 14. In Style (Dress Land) v. Union Territory, Chandigarh, , the Supreme Court has observed :

"10. In the absence of the rules, the action of the respondents regarding imposition of the terms and conditions of the lease including the enhancement of rent is required to be fair and reasonable and not actuated by considerations which could be termed as arbitrary or discriminatory. The Government cannot act like a private individual in imposing the conditions solely with the object of extracting profits from its lessees. Governmental actions are required to be based on standards which are not arbitrary or unauthorised. This Court in Ramana Dayaram Shetty v. International Airport Authority of India while agreeing with the observations of Mathew, J. held: (SCC pp. 505-06, para 12).

"12. We agree with the observations of Mathew, J., in V. Punnen Thomas v. State of Kerala that:

'The Government is not and should not be as free as an individual in selecting the recipients for its largesse. Whatever its activity, the Government is still the Government and will be subject to restraints, inherent in its position in a democratic society. A democratic Government cannot lay down arbitrary and capricious standards for the choice of persons with whom alone it will deal.'

The same point was made by this Court in Erusian Equipment and Chemicals Ltd. v. State of W.B. where the question was whether blacklisting of a person without giving him an opportunity to be heard was bad? Ray, C.J., speaking on behalf of himself and his colleagues on the Bench pointed out that blacklisting of a person not only affects his reputation which is, in Poundian terms, an interest both of personality and substance, but also denies him equality in the matter of entering into contract with the Government and it cannot, therefore, be supported without fair hearing. It was argued for the Government that no person has a right to enter into contractual relationship with the Government and the Government, like any other private individual, has the absolute right to enter into contract with anyone it pleases. But the Court, speaking through the learned Chief Justice, responded that the Government is not like a private individual who can pick and choose the person with whom it will deal, but the Government is still a Government when it enters into contract or when it is administering largesse and it cannot, without adequate reason, exclude any person from dealing with it or take away largesse arbitrarily. The learned Chief Justice said that when the Government is trading with the public, 'the democratic form of government demands equality and absence of arbitrariness.... The activities of the Government have a public element and, therefore, there should be fairness and equality. The State need not enter into any contract with anyone, but if it does so, it must do so fairly without discrimination and without unfair procedure'. This proposition would hold good in all cases of dealing by the Government with the public, where the interest sought to be protected is a privilege. It must, therefore, be taken to be the law that where the Government is dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotas or licenses or granting other forms of largesse, the Government cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with standard or norms which is not arbitrary, irrational or irrelevant. The power or discretion of the Government in the matter of grant of largesse including award of jobs, contracts, quotas, licenses, etc., must be confined and structured by rational, relevant and non-discriminatory standard or norm and if the Government departs from such standard or norm in any particular case or cases, the action of the Government would be liable to be struck down, unless it can be shown by the Government that the departure was not arbitrary, but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory."

12. The contract provided that the bills would be cleared within 180 days and after the expiry of 180 days, the amount would be deemed to have become payable by the employer to the contractor. Contract does not debar payment of the interest on the money which has been illegally withheld by the employer after it became due. In the present case the bill was given on 1.11.1994 and giving a margin of 180 dyas to the respondent, it became due and payable on 30.4.1995 and the arbitrator, therefore, granted interest from 30.4.1995 which was modified by the learned Single Judge to 1.1.1996. Therefore, to say that the award suffers from lack of jurisdiction is not correct. The arbitrator was a person who was working as a Manager in the appellant's organization. He was well conversant with the type of contract in which he was to arbitrate and adjudicate the disputes.

13. In Konkan Railway Corpn. Ltd. and Ors. v. M/s. Mehul Construction Co; , the Supreme Court held that under the Arbitration and Conciliation Act, 1996, the grounds on which an award of an arbitrator could be challenged before the Court have been severely cut down and such challenge is now permitted on the basis of invalidity of the agreement, want of jurisdiction on the part of the arbitrator or want of proper notice to a party of the appointment of the arbitrator or of arbitral proceedings. It was laid down authoritatively by the Supreme Court in the said decision that the Statement of Objects and Reasons of Act clearly enunciates that the main objective of the legislation was to minimize the supervisory role of Courts in the arbitral process. In Olympus Superstructures Pvt. Ltd. v. Meena Vijay Khetan; , it was held by the Supreme Court that Section 34 of the Act is based on article 34 of the UNCITRAL Model Law and it will be noticed that under the 1996 Act the scope of the provisions for setting aside the award is far less (than) the same under Section 30 or Section 33 of the Arbitration Act of 1940.

14. From the decisions rendered under the Arbitration Act, 1940 as well as under Act of 1996 by the Supreme Court it is apparent that if an arbitrator has interpreted a clause in an agreement in a particular manner and has taken a decision which is a possible view, it is not permissible for the Court to substitute its own evaluation or the conclusion of law or fact. When the parties have chosen a forum to refer their disputes to be adjudicated not under a common law forum or under a statute by filing a suit, Court while exercising appellate power will not substitute its opinion with that of the arbitrator. If the clauses in the contract are open to two plausible interpretations, it is legitimate for the arbitrator to accept one or the other available interpretation and even if the Court may think that the other view is preferable, the Court will not or should not interfere with interpretation of the Arbitrator. Reliance can be placed on Food Corporation of India v. Joginderpal Mohinderpal and Anr.; , Puri Construction Pvt. Ltd v. Union of India; , Gujarat Water Supply & Sewerage Board v. Unique Erectors (Gujarat) P. Ltd and Anr.; and Hind Builders v. Union of India; in this regard that this court while exercising appellate power should not substitute its opinion with that of the arbitrator.

15. An award is not invalid merely because by a process of inference and arguments it may be demonstrated that the arbitrator has committed some mistake in arriving at his conclusions. By purporting to construe the contract the Court can not and should not take upon itself the burden of saying that the view taken was contrary to the contract and, as such, beyond jurisdiction. What is to be seen is whether construction placed by the Arbitrator is ex-facie contrary to facts, terms of contract and law and the arbitrator has proceeded illegally and is liable to be corrected by the Court? What is to be seen is whether the view taken by the Arbitrator is feasible and whether any findings given by the Arbitrator are per se perverse? If on a view taken of a contract, the decision of the arbitrator on some matters is a possible view though perhaps not the only correct view, the award cannot be examined by the court. In Sudershan Trading Company (Supra) it was observed by the Supreme Court:

31. "An award may be remitted or set aside on the ground that the arbitrator in making it had exceeded his jurisdiction and evidence of matters not appearing on the face of it will be admitted in order to establish whether the jurisdiction had been exceeded or not, because the nature of the dispute is something which has to be determined outside the award - whatever might be said about it in the award or by the arbitrator. See in this connection, the observations of Russell on The Law of Arbitration, 20th Edn., 427. Also see the observations of Christopher Brown Ld. v. Genossenschaft Oesterreichischer and Dalmia Dairy Industries Ltd. v. National Bank of Pakisthan (1978) 2 Loyd's Rep. 223. It has to be reiterated that an arbitrator acting beyond his jurisdiction is a different ground from the error apparent on the face of the award. In Halsbury's Laws of England II, (4th Edn., Vol. 2, para 622) one of the misconducts enumerated, is the decision by the arbitrator on a matter which is not included in the agreement or reference. But in such a case one has to determine the distinction between an error within the jurisdiction and an error in excess of the jurisdiction. See the observations in Anisminic Ltd. v. Foreign Compensation Commission (1969) 2 AC 147 and Regina v. Noseda, Field, Knight & Fitzpatrick (1958) 1 WLR 793. But, in the instant case the court had examined the different claims not to find out whether these claims were within the disputes referable to the arbitrator, but to find out whether in arriving at the decision, the arbitrator had acted correctly or incorrectly. This, in our opinion, the court had no jurisdiction to do, namely, substitution of its own evaluation of the conclusion of law or fact to come to the conclusion that the arbitrator had acted contrary to the bargain between the parties. Whether a particular amount was liable to be paid or damages liable to be sustained, was a decision within the competency of the arbitrator in this case. By purporting to construe the contract the court could not take upon itself the burden of saying that this was contrary to the contract and, as such, beyond jurisdiction. It has to be determined that there is a distinction between disputes as to the jurisdiction of the arbitrator and the disputes as to in what way that jurisdiction should be exercised. There may be a conflict as to the power of the arbitrator to grant a particular remedy. See Commercial Arbitration by Sir N.J. Mustill and Stewart C. Boyd, p 84."

35. "In the instant case, the High Court seems to have fallen into an error of deciding the question on interpretation of the contract. In the aforesaid view of the matter, we are of the opinion that the High Court was in error. It may be stated that if on a view taken of a contract, the decision of the arbitrator on certain amounts awarded, is a possible view though perhaps not the only correct view, the award cannot be examined by the court in the manner done by the High Court in the instant case."

36. "In light of the above, the High Court, in our opinion, had no jurisdiction to examine the different items awarded clause by clause by the arbitrator and to hold that under the contract these were not sustainable in the facts found by the arbitrator."

16. In Food Corporation of India v. Joginderpal Mohinderpal, it was held by the Supreme Court:-

"9. Dr L.M. Singhvi, learned counsel for the appellant, urged before us that the arbitrator was wrong in not awarding 50 per cent of the added penalty as claimed by the appellant, as mentioned hereinabove. The appellant had claimed the price of Rs 165 per qtl. The arbitrator was of the view that the expression 'Economic Rate' had not been defined. It is true that the expression 'Economic Rate' has not been used, but the expression 'Economic Cost' has been used. The arbitrator has noted that the market rate did not exceed that amount at that time. The amount of Rs. 100 per qtl. is mentioned of (sic) such a rate as the arbitrator had noted, could only be pre-estimated damages but this was not so according to the arbitrator. The arbitrator had construed the effect of clause g(i) of the contract as mentioned hereinbefore. It cannot be said that such a construction is a construction which is not conceivable or possible. If that is the position assuming even for the sake of argument that there was some mistake in the construction, such a mistake is not amenable to be corrected in respect of the award by the court. This was a fair order after considering all the records. The conclusion arrived at by the arbitrator is a plausible conclusion. The court has, in our opinion, no jurisdiction to interfere or modify the award in the manner sought for by the appellant and in the manner done by the learned Subordinate Judge in the first instance in this case. In that view of the matter, the learned Additional District Judge was justified in correcting the order of the learned Subordinate Judge and the High Court was also justified in not interfering with the order of the Additional District Judge. The award on the aspects canvassed before us by Dr L.M. Singhvi is a plausible construction of clause g(i) of the contract. It cannot, in our opinion, be interfered with either on the ground that there was error apparent on the face of the award or on the ground that the arbitrator has misconducted himself in not giving the effect to the penal rate as contemplated under clause g(i) of the contract referred to hereinbefore in the award. Dr Singhvi sought to urge that as per the terms of the contract the arbitrator was obliged to award penal rate in terms of clause g(i) of the contract. The arbitrator has apparently not done so. He has given reason why he has not done so. It was submitted that he was wrong in not doing so. We do not agree. The arbitrator has discussed the effect of clause g(i). He has noted that unless there was evidence about which incidentally there was none, this amount could not be treated as a pre-estimate of damage. If that be so then it was penalty. It was not recoverable. Reasons may not be apparent, latent was there. Dr Singhvi's objection therefore cannot be accepted."

17. Similarly in H.P. State Electricity Board v. R.J. Shah & Co, , it was held that if an award is in excess of jurisdiction then it is liable to be set aside but if the award is within jurisdiction, on the basis of construction of the contract which the arbitrator was required to do, then the Court cannot set it aside merely because another view was possible. In the facts of said case it was held that the award was not in excess of jurisdiction. The Supreme Court held:

"24. A two-Judge Bench of this Court in K.R. Raveendranathan v. State of Kerala observed that on the question that whether the arbitrator had exceeded its jurisdiction, there appeared to be a conflict between the decision of Sudarsan Trading Co. case and Associated Engg. Co. case. By this order the case was referred to a larger Bench. On reference a Division Bench of three Judges in K.R. Raveendranathan case held as follows: (SCC p. 410, para 2)

"2. The learned counsel for the appellant points out that the question in issue in the present appeals is squarely covered by the decision of this Court in Hindustan Construction Co. Ltd. v. State of J&K. In particular, it drew our attention to para 10 of the judgment and the portion extracted from the decision in Sudarsan Trading Co. case wherein it was said that by purporting to construe the contract the Court could not take upon itself the burden of saying that this was contrary to the contract and, as such, beyond jurisdiction. That is exactly what the Court has done in the instant case. Therefore, the issue stands covered by this decision and the learned counsel for the respondents could not in the face of this decision argue otherwise."

25. "From the aforesaid decisions of this Court, and the last one in particular, it is clear that when the arbitrator is required to construe a contract then merely because another view may be possible the court would not be justified in construing the contract in a different manner and then to set aside the award by observing that the arbitrator has exceeded the jurisdiction in making the award."

18. The observations of the Supreme Court in Indu Engineering & Textile Ltd. v. Delhi Development Authority; are also relevant where it was held that even assuming that the arbitrator had committed an error in coming to the conclusions that the appellant, in that case, was entitled to the claim of the escalated price of the commodity under the terms of the agreement and the Division Bench felt that the conclusions should have been otherwise, it was not open to the Court to interfere with the award on that score. Similarly in Smita Conductors Ltd. v. Euro Alloys Ltd., (2001) 7 SCC 728, at page 740 it was observed by the Supreme Court that if a view taken by the Arbitrator is plausible and not impossible, it will not be appropriate to substitute the view of the arbitrator. The Supreme Court observed as under: -

"15. The view taken by the arbitrators on the effect of the force majeure clause in the light of Reserve Bank of India's directives is a plausible view and cannot be ruled out as impossible of acceptance, and, therefore, the question of substituting our view for that of the arbitrators would not arise. Question of public policy would have arisen if there was complete restriction on the implementation of the terms of the contract. There was no such restriction imposed. But, on the other hand, certain restrictions were imposed which could have been worked out by resorting to appropriate measures in terms of the contract as held by the arbitrators. In that view of the matter, we do not think any question of public policy as such arises for consideration in a situation of this sort. The argument is almost a red herring and does not constitute a valid reason for interference with the award. Therefore, we reject the contentions raised on behalf of the appellant."

19. The appellant has relied on , Rajasthan State Mines and Minerals Ltd. v. Eastern Engineering Enterprises and Anr.; 2003 (2) Arb. L.R 5 (SC), Oil and Natural Gas Corporation Ltd. v. Saw Pipes Ltd.; , Union of India v. M/S Ajit Mehta & associated; , Thawardas Pherumal and Anr. v. Union of India do not negate the proposition that when the arbitrator is required to construe a contract then merely because another view may be possible, the court would not be justified in construing the contract in a different manner and then set aside the award by observing that arbitrator has exceeded the jurisdiction in making the award.

20. In the circumstances, award granting interest to the respondent is not without jurisdiction nor the award is liable to be set aside on that account.

21. In the grounds of appeal the appellant has only challenged the award of interest by the Arbitrator and learned Single Judge to the respondent on various grounds and no other ground is taken regarding arbitration proceedings being premature and against the terms of contract that respondent failed to refer their claim/dispute to the 'Engineer' and obtain his decision in terms of clause 43(i) of GCC nor has assailed the award regarding rejection of claim of appellant for Rs. 6,65,765.40 towards the alleged hire charges. The same can not be considered and allowed in the facts and circumstances. No infirmity is found in the award and the appeal is without any merit.

22. We find no merits in this appeal and the same is, accordingly, dismissed with no order as to costs.