M/S Kalyan Chandra Goyal & Co vs Executive Engineer, Southern ...
2010 Latest Caselaw 5651 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

%                     Date of Decision: 13.12.2010

+                             CS(OS) No.765/2009

       M/S KALYAN CHANDRA GOYAL & CO                  ..... Plaintiff
                      Through: Mr. Girish Aggarwal, Ms. Mugdha
                               Pandey and Mr. Abhishek
                               Aggarwal, Advocates

                     versus

       EXECUTIVE ENGINEER, SOUTHERN
       WESTERN DIVISION-8,
       DELHI DEVELOPMENT AUTHORITY                ..... Defendant
                      Through:  Mr.Bhupesh Narula, Adv.

       CORAM:

       HON'BLE MR. JUSTICE VIPIN SANGHI

1.     Whether the Reporters of local papers may
       be allowed to see the judgment?               :    No

2.     To be referred to Reporter or not?            :    Yes

3.     Whether the judgment should be reported
       in the Digest?                                :    Yes


                               JUDGMENT (Oral)

VIPIN SANGHI, J.

1. These are objections preferred by the defendant/DDA under

Sections 30 and 33 of the Arbitration Act, 1940 against the award

dated 22.11.2008 made by the Sole Arbitrator Mr.S.C.Kapoor. This

award has been made by the learned arbitrator in pursuance of the

order dated 23.07.2007 passed by this Court in CS(OS) No.2805/1995,

whereby the Court set aside the award made on claim Nos.5, 8 and 11

and remitted the said claims for re-adjudication by the learned

arbitrator. The defendant/DDA challenges the award now made on all

the three remitted claims.

2. Claim No.5 had been made by the petitioner/contractor to claim

loss of profit @ 10%, amounting to ` 2 lacs on the value of the work

that the petitioner could not execute as the contract was rescinded by

the respondent. The learned Arbitrator observes that the petitioner did

not give any details. He assessed the damages payable to the

petitioner to be 20% of the claimed amount, i.e. ` 40,000/- only.

Consequently, he awarded ` 40,000/- in favour of the

petitioner/claimant under this claim.

3. The submission of Mr.Bhupesh Narula, learned counsel for the

DDA is that the learned Arbitrator has mis-conducted the proceedings

and the award made by him is without jurisdiction. He points out that

under Clause 13 of the agreement between the parties, it is specifically

provided as under :-

"Clause 13. If at any time after the commencement of the work the Authority shall for any reason whatsoever not require the whole thereof as specified in the tender to be carried out, the Enginner-in-Charge shall given notice in writing of the fact to the contractor who shall have no claim to any payment of compensation whatsoever on account of any profit or advantage which he might have derived from the execution of the work in full, but which he did not derive in consequence of the full amount of the

work not having been carried out, neither shall he have any claim for compensation by reason of any alterations having been made in the original specifications, drawings, designs and instructions which shall involve any curtailment of the work as originally contemplated. Provided that the contractor shall be paid the charges on the cartage only of materials actually and bona fide brought to the site of the work by the contractors and rendered surplus as a result of the abandonment or curtailment of the work or any portion thereof and then taken back by the contractor provided however that the Engineer-in-Charge shall have in all such cases the option of taking over all or any such material at their purchase price or at local current rates whichever may be less. In the case of such stores having been issued from D.D.A. Stores and returned by the contractor to D.D.A. Stores, credit shall be given to him by the Engineer-in-Charge at rates not exceeding those at which they were originally issued to him, after taking into consideration and deduction for claims on account of any deterioration or damage while in the custody of the contractor and in this respect the decision of the Engineer-in-Charge shall be final." (emphasis supplied)

4. He submits that the learned Arbitrator has, therefore, acted

without jurisdiction by ignoring the contractual terms and conditions

and in view of the contractual terms aforesaid, no claim could have

been entertained by the learned Arbitrator towards loss of profit on the

quantum of work which remained to be executed on account of

rescission of the contract by the respondent. In support of his

submission, Mr.Narula has placed reliance on the decision of the

Supreme Court in Steel Authority of India Vs. J.C.Budhiraja AIR

1999 SC 3275 and M.L.Mahajan Vs. DDA 76 (1998) DLT 701.

5. In Steel Authority of India (Supra) the Supreme Court was

considering the effect of Clause 32 of the agreement which specifically

stipulated that no claim for not giving the entire site, and for giving the

site gradually will be tenable, and the contractor was required to

arrange his working programme accordingly. The Supreme Court in

the light of the said clause observed as follows:-

"15..........These conditions specifically prohibit granting claim for damages for the breaches mentioned therein. It was not open to the arbitrator to ignore the said conditions which are binding on the contracting parties. By ignoring the same, he has acted beyond the jurisdiction conferred upon him. It is settled law that the arbitrator derives the authority from the contract and if he acts in manifest disregard of the contract, the award given by him would be arbitrary one. This deliberate departure from the contract amounts not only to manifest disregard of the authority or misconduct on his part, but it may tantamount to mala fide action. In the present case, it is apparent that awarding of damages of Rs.11 lakhs and more for the alleged lapses or delay in handing over work site is, on the face of it, against the terms of the contract."

6. In M.L.Mahajan (Supra) the Court was considering the effect of

Clause 10 of the Contract which stipulated that no compensation could

be awarded even though there was delay in completion of work on

account of non-supply of any materials or stores. In that case, the

Arbitrator had awarded certain amounts in favour of the contractor for

breach committed by the respondent/DDA in respect of supply of

materials, drawings and designs which were responsible for causing

delay in the performance of the contract. By placing reliance on

another decision of this Court in M/s.M.L.Mahajan's case in Suit

No.2185/1987 and Suit No.2295A/1987 decided on 20.07.1990, and

Continental Construction Co. Vs. State of Madhya Pradesh, AIR

1988 SC 1166, the Court held as follows:-

"11. In terms of Clause 10 of the contract no compensation is to be awarded although there is delay in completion of the work on account of non-supply of any material or stores. The Arbitrator has awarded the aforesaid amount for breaches committed by the respondent in respect of materials, drawings and decisions which were responsible for causing delays in the performance of the contract. The aforesaid decision of the Supreme Court is binding on me and relying upon which the decision in M.L.Mahajan (supra) was delivered, with which I respectfully agree. Since the parties have agreed upon not to claim any compensation or damages on account of any delay in supply of all or any such materials and stores, the Arbitrator as well as this Court has to give effect to the aforesaid intention of the parties in all matters and the Arbitrator could not have given an award contrary to the aforesaid express provisions of the contract. The Arbitrator had jurisdiction only to act in accordance with the contract which is also the principle enunciated in Continental Construction Company‟s case (supra). In that view of the matter the award passed by the Arbitrator in respect of this claim is set aside."

7. Mr. Narula further submits that the petitioner had not provided

any evidence or details in support of the said claim. He submits that

the learned Arbitrator could not have arbitrarily assessed the amount

to be 20% of the claimed amount. No basis has been disclosed by the

learned Arbitrator, while making the award on claim No.5.

8. Claim No.8 had been made by the petitioner/claimant for an

amount of ` 7,86,990/- on account of damages for prolongation of

contract. The submission of the claimant was that the stipulated

period of completion under the contractual terms was 12 months.

However, the work could not be completed due to delays and defaults

by the respondent/DDA. During the extended period of contract, the

contractor had to maintain staff for the engineers etc. Under the terms

of the agreement, which could not be disbanded by the petitioner. The

learned Arbitrator, on the basis that the value of work done after the

specified period of contract was ` 24,18,403/-, and on the basis of

certain citations, which are not noted in the award, allowed 20% of the

claimed amount, i.e. ` 1,57,398/-. Thus, the learned Arbitrator rounded

the amount to ` 1,57,000/- while making the award.

9. The submission of Mr.Narula in relation to the award made on

claim No.8 is also that the award is contrary to the contractual terms.

In this regard, he places reliance on Clause 1 of the Additional

Specifications and Conditions of Contract under the heading „General‟

which, inter alia, provides that if part of the site is not available for any

reason, or there is some unavoidable delay in materials to be supplied

by the Department, the programme of construction shall be modified

accordingly and the contractor shall not claim for any extra

compensation on this account. Clause 10 of the Conditions of

Contract, inter alia, provides that the contractor, in no case shall be

entitled to any compensation or damages on account of delay in

supply or non-supply of the materials and stores. Mr.Narula submits

that the learned Arbitrator has ignored these contractual terms and

conditions which are binding on the parties. Consequently, he has

acted beyond jurisdiction. He submits that the Arbitrator is bound to

enforce the contractual terms and conditions and cannot go contrary

to them. It is, therefore, submitted that the learned Arbitrator has mis-

conducted himself while making the award on claim No.8. It is also

pointed out that the learned Arbitrator observes in his award that the

petitioner had not given full details, and there is no measure of the

damages claimed by the petitioner. Despite that, the learned

Arbitrator has arbitrarily, without any basis, awarded 20% of the

claimed amount, i.e. ` 1,57,000/-.

10. Claim No.11 had been made by the petitioner/contractor for `

6,04,625/- on account of extra rates. The learned Arbitrator awarded

an amount of ` 1,20,000/- on this account. The learned Arbitrator

observes that the contractual period was 12 months. However, the

contract got extended for 44 months, i.e. there was an increase in the

period of contract by 32 months. During this period the value of the

work done was ` 24,18,403/-. During the extended period the claimant

had to spend extra amount on labour, material, POL etc. The Arbitrator

observes that the impact of extra work could not be more than 5%,

considering that escalation was payable to the contract or Clause

10CC. Consequently, he awarded the amount of ` 1,20,000/- in favour

of the petitioner/claimant.

11. The submission of the Mr. Bhupesh Narula is that the said award

is in the teeth of the contractual conditions. The contract provides the

formula for computation of escalation due to delay in the execution of

the work for which the respondent is responsible. He submits that the

claim made by the petitioner under Clause 10CC due to delays and

defaults of the respondent, had been allowed by the learned Arbitrator

and the said amount stands already paid to the petitioner. Once the

contract provides for the manner of computation of escalation, no

further amounts could be claimed or awarded in favour of the

contractor.

12. Mr.Narula also submits that while making the earlier award on

Claim No.11, the learned Arbitrator had rejected the said claim on the

basis that the petitioner had been awarded compensation under

Clause 10 CC of the contract. Mr.Narula, therefore, submits that the

learned Arbitrator was conscious of the fact that the award made by

him under claim No.11 was not justified, yet he made the award. This,

he submits amounts to misconduct by the learned Arbitrator.

13. On the other hand, Mr. Girish Aggarwal, learned counsel for the

plaintiff submits that clause 13 of the agreement relied upon by the

defendant was not even cited before the learned arbitrator. In this

respect, he has drawn my attention to the written submissions filed by

the respondent dated 30.06.2008. In this written submission, the

defendant had made reference to only clauses 5, 10 and additional

condition no.1. He, therefore, submits that the objector cannot, at this

stage, seek to place reliance on clause 13 of the contract. He further

submits that interpretation of the contractual terms is a matter which

falls in the exclusive domain of the arbitrator, and the court cannot sit

in appeal over an interpretation given to the contractual clause by the

arbitrator, unless it is perverse.

14. In his rejoinder, Mr. Narula submits that no hearing had taken

place before the learned arbitrator after the remand, and the learned

Arbitrator merely called for the written submissions of the parties. He

submits that it is for this reason that the defendant could not

specifically bring to the notice of the learned arbitrator clause 13 of the

agreement. He further submits that the learned arbitrator ought to

have acquainted himself with the contractual terms, even if it is

assumed that the parties had not referred to any particular contractual

term.

15. The submission of Mr. Narula that no hearing had taken place

before the learned arbitrator after the remand, is not borne out from

the record. The record of the learned arbitrator shows that he had

fixed the hearing on 28.02.008 vide notice dated 02.02.2008. However,

that date was not convenient to the plaintiff/claimant, and a

communication dated 18.02.2008 was sent by it to this effect. Vide

notice dated 07.03.2008, the hearing had been fixed on 19.03.2008.

Though, no proceeding sheet appears to have been maintained of the

hearing held on that day, from the following paragraphs it appears that

the hearing did proceed on that date.

16. On 30.06.2008, the objector filed its written submissions. In

these submissions, the respondent stated that "in compliance of

directions given by the arbitrator, submission on claim no.5, 8 and 11

are submitted as under in addition to already submitted during the

hearing of arbitration case". Even in the impugned award, the learned

arbitrator has observed while dealing with claim no.5 that "the

claimant had submitted during the hearing that they had relied on Exh.

E-53 for loss of profit".

17. However, I find merit in the submission of Mr. Narula that the

learned arbitrator should have acquainted himself with the contractual

terms. I had the occasion to deal with a similar submission made in

Delhi Jal Board v. V.K. Dewan & Co., OMP No.50/2002 decided on

08.10.2010. I have held that the arbitral tribunal is obliged to acquaint

itself with the contractual terms between the parties before making the

award. He cannot ignore the contractual terms, which he is bound to

enforce. The arbitral tribunal cannot ignore the contractual terms and

go contrary thereto.

18. Mr. Aggarwal has placed reliance on the decision of the Supreme

Court in A.T. Brij Paul Singh & Bros. v. State of Gujarat, AIR 1984

SC 1703 to contend that in a works contract, if the party entrusting the

work commits breach of the contract, the contractor would be entitled

to claim damages for loss of profit, which he expected to earn by

undertaking the works contract. The claim under this head was held to

be admissible.

19. Unlike in the case of A.T. Brij Paul Singh (supra), in this case,

the parties have consciously contracted out of the said liability, insofar

as the objector is concerned. In the case of A.T. Brij Paul Singh

(supra), the court was not confronted with contractual clauses of the

kind contained in the contract in question. In my view, therefore, the

said decision does not apply in the facts of this case.

20. Mr. Aggarwal has also placed reliance on G. Ramachandra

Reddy & Company v. Union of India & Anr., (2009) 6 SCC 414 and

a decision of this court in A.S. Sachdeva & Sons v. DDA in CS (OS)

No.73/1996 decided on 06.10.2009 by a learned Single Judge of this

Court following G. Ramachandra Reddy (supra).

21. In G. Ramachandra Reddy (supra), clause 11C of the General

Conditions of Contract was relied upon to contend that in terms

thereof, no damages were payable. While dealing with this submission,

the Supreme Court observed as follows:

"35. The award of the arbitrator in respect of Claim 4 has been accepted by the Division Bench. Mr. B.B. Singh has drawn our attention to Clause 11(c) of the general conditions of the contract to contend that in terms thereof, no damages were payable.

36. The question as to whether damages were payable for illegal termination of contract cannot be a subject-matter of contract. The learned arbitrator has categorically held that not only was the termination of contract illegal, the same was mala fide. Furthermore, the contention raised before us by Mr. Singh has not been raised before the High Court.

37. In any event, there is a delay of 411 days in filing the SLP of the respondent, for which no sufficient explanation has been given." (emphasis supplied)

22. The aforesaid decision was referred to and relied upon in the

decision in A.S. Sachdeva (supra). This court, in para 8 of the said

decision, held as follows:-

"8. I would, at this stage, refer to a recent judgment of the Supreme Court reported as G. Ramachandra Reddy and Co. Vs. Union of India and Anr. 2009(6)SCC414. The Supreme Court in this recent judgment has held that a contract cannot provide for non-payment of damages if the same are allowable in law. The following paragraphs of the judgment of Supreme Court makes this clear:-

... .... .... ....

In view of the ratio of the Supreme Court in this recent judgment in G. Ramachandra Reddy's case, it is clear that entitlement of damages cannot be denied on the ground of a contractual clause." (emphasis supplied)

23. Mr. Narula in his rejoinder has placed reliance on the decision of

the Supreme Court in Ramnath International Construction Pvt.

Ltd. v. Union of India, 1 (2008) SLT 82. In this case, the Supreme

Court was dealing with section 11 of the General Conditions of Contract

which relate to time, delay and extension. After extracting the said

clause, the Supreme Court held as follows:

"Clause (C) provides that where extensions have been granted by reason of the delays enumerated in Clause (A) which were beyond the control of the contractor, or on account of the delays on the part of the employer specified in Clause (B), the contractor is not entitled to make any claim either for compensation or otherwise, arising in whatsoever manner, as a result of such Sub-clause (viii) of Clause (A) specifically mentions delay on account of any other cause beyond the control of the contractor. The causes for delays specified in Clause A, thus, encompass all delays over which the contractor has no control. This will necessarily include any delays attributable to the employer or any delay for which both the employer and the contractor are responsible. The contract thus provides that if there is any delay, attributable either to the contractor or the employer or to both, and the contractor seeks and obtains extension of time for execution on that account, he will not be entitled to claim compensation of any nature, on the ground of such delay, in addition to the extension of time obtained by him. Therefore, the claims for compensation as a consequence of delays, that is Claim 24 of Hangar Contract and Claims 13 to 16 of Road Contract are barred by Clause 11(C).

12. We are fortified in this view by several decisions of this Court. We may refer to two of them. In Associated Engineering Co V. Government of Andhra Pradesh, 1991 (4) SCC 93, this Court was concerned with an appeal which related to similar claims based on delays in execution. The High Court had held (reported in AIR 1990 AP 294) thus:

"Applying the principle of the above decision to the facts of the case before us, it must be held that Clause 59 bars a claim for compensation on account of any delays or hindrances caused by the department. In such a case, the contractor is entitled only to extension of the period of contract. Indeed, such an extension was asked for, and granted on more than one occasion. (The penalty levied for completing the work beyond the extended period of contract has been waived in this case). The contract was not avoided by the contractor, but he chose to complete the work within the extended time. In such a case, the claim for compensation is clearly barred by Clause 59 of the APDSS which is admittedly, a term of the agreement between the parties."

This Court noticed that the claims were set aside by the High Court on the ground that those claims were not supported by any agreement between the parties, and that the Arbitrator had travelled outside the contract in awarding those claims. This Court held that the said claims were not payable under the contract and that the contract does not postulate, in fact prohibits, payment of any escalation under those heads. It affirmed the decision of the High Court setting aside the award of those claims.

In Ch. Ramalinga Reddy v. Superintending Engineer, 1999 (9) SCC 610, while considering the similar claim, this Court observed thus:

"Claim 8 was for „payment of extra rates for work done beyond agreement time at schedule of rate prevailing at the time of execution‟. The arbitrator awarded the sum of Rs.39,540. Clause 59 of the A.P. Standard Specifications, which applied to the contract between the parties, stated that no claim for compensation on account of delays or hindrances to the work from any cause would lie except as therein defined. The claim falls outside the defined exceptions. When extensions of time, were granted to the appellant to complete the work, the respondents made it clear that no claim for compensation would lie. On both counts, therefore, Claim 8 was impermissible and the High Court was right in so holding."

We, therefore, answer the first question in the affirmative." (emphasis supplied)

24. Mr. Narula submits that the decision in Ramnath International

Construction (supra) is an earlier decision of a co-ordinate bench of

the Supreme Court. This decision, and the two decisions referred to

above, have not been noticed by the Supreme Court while deciding the

case of G. Ramachandra Reddy (supra). He further submits that the

observations relied upon by the learned counsel for the plaintiff as

made in G. Ramachandra Reddy (supra) cannot be said to be the

ratio of the said decision. Evidently, that was not the issue raised

before, or discussed by the Supreme Court. On the other hand, the

decision in Ramnath International Construction (supra) is squarely

rendered in the light of section 11 of the General Conditions of

Contract. While rendering the said decision, the court has taken note of

two earlier decisions in Associated Engineering Co. v. Govt. of

Andhra Pradesh, (1991) 4 SCC 93; and Ch. Ramalinga Reddy v.

Superintending Engineer, (1999) 9 SCC 61. He submits that this

aspect was not brought to the notice of this court when the decision in

G. Ramalinga Reddy (supra) was relied upon while deciding A.S.

Sachdeva (supra).

25. Having considered the submissions and perused the judgments

of the Supreme Court in Ramnath International Construction (supra)

and G. Ramchandra Reddy (supra), I find merit in the submission of Mr.

Narula. In my view, it cannot be said that the ratio in the judgment of

G. Ramchandra Reddy (supra) is that the entitlement to claim damages

cannot be denied on the ground of contractual clauses. Moreover G.

Ramchandra Reddy (supra) was rendered without considering the

decision in Ramnath International Construction (supra) or the earlier

decisions cited in that decision in the cases of Associated Engineering

Co. (supra) or Ch. Ramlinga Reddy (supra). The decision in Ramnath

International (supra), on the other hand, contains a detailed discussion

on the very issue in question. I, therefore, reject the submission of Mr.

Aggarwal founded upon decision in G. Ramachandra Reddy (supra).

26. A perusal of the judgment in A.S. Sachdeva (supra) shows that

the court rejected the reliance placed on the decisions in M.L. Mahajan

(supra); J.C. Budhiraja (supra); and Republic Construction Co. v. DDA in

CS (OS) No.454/2009 decided on 13.07.2009, on the basis of, what the

learned single Judge held, to be the ratio of the decision in G.

Ramachandra Reddy‟s (supra) case. However, as I have already

discussed, the decision in G. Ramachandra Reddy (supra), cannot be

held be lay down that entitlement of damages cannot be denied on the

ground of contractual clause. The decisions in Ramnath International

Construction (supra), Associated Engineering Co. (supra) and Ch.

Ramlinga Reddy (supra) were not brought to the notice of this court

which decided A.S. Sachdeva (supra).

27. The decisions cited by Mr. Narula in the case of J.C.Budhiraja

(supra) and M.L. Mahajan (supra), in my view, squarely apply in the

facts of the present case.

28. Pertinently, Mr. Aggarwal has not, on a reading of clause 13,

disputed that the said clause would bar the claim as made under claim

no.5. In the face of clause 13 of the agreement, the award made on

claim no.5 cannot be sustained, inasmuch, as, clause 13 specifically

provides that "the contractor ... ... ... shall have no claim to any

payment of compensation whatsoever on account of any profit or

advantage which he might derive from the execution of the work in

full, but which he did not derive in consequence of the full amount of

the work not having been carried out ... ... ...". The same is,

accordingly, set aside.

29. In response of submission of Mr. Narula objecting to the award

made on claim no.8, Mr. Aggarwal submits that this court in A.S.

Sachdeva (supra) has also considered the same clauses of the contract

and rejected the reliance placed thereon by the objector DDA.

30. I have already discussed hereinabove the decision in A.S.

Sachdeva (supra). In the light of the decision of the Supreme Court in

Ramnath International Construction (supra), no reliance can be placed

on A.S. Sachdeva (supra) for the proposition that the contract cannot

provide for non-payment of damages if the same are allowable in law.

The Plaintiff did not challenge the validity of any of the contractual

clauses before the learned Arbitrator. This dispute cannot be raised at

this stage. Consequently the clause 1 of the additional specifications

and clause 10 of the conditions of contract are liable to be enforced

and given effect to. As already noticed, clause 1 squarely provide that

if a part of the site is not available for any reason, or there is some

unavoidable delay in supply of materials stipulated by the department,

the programme of construction shall be modified accordingly, and the

contractor shall have no claim for any extras or compensation on this

account. Clause 10 of the conditions of contract provides that the

contractor shall in no case be entitled to compensation or damages on

account of any delay in supply or non supply of any materials and

stores. As the learned arbitrator has rendered his award in

contradiction of the aforesaid clauses, he has acted beyond his

jurisdiction and has misconducted himself. Consequently the award

made on claim no.8 cannot be sustained.

31. In relation to the objections raised to award on claim no.11, Mr.

Aggarwal has placed reliance on the decision of this court in DDA Vs.

S.S. Jetley, 2001 (1) Arb. LR 289 (Del). In this case, it was held that in a

case where prolongation of contract had taken place due to the fault of

the employer, and the contractor was made to incur the expenditure

towards idle staff, machinery, centering, shuttering and other ancillary

requirements like electricity, water, petroleum, etc, the claim would be

maintainable to recover the unnecessary expenditure incurred by the

contractor due to the fault of the employer DDA in prolonging the

contract by reference to Sections 73 & 74 of the Contract Act. The

court rejected the argument of the DDA that as the contractor has

been compensated by resort to clause 10 CC, the contractor would not

be entitled to clam any further damages.

32. Mr. Aggarwal submits that the said claim No. 11 did not pertain

only to the revised rates of material or labour but it also arose on

account of the extra work that the contractor was required to perform

due to prolongation of the contractual period. He refers to the original

award, which records that the said claim had been made, inter alia, for

the extra work done by the claimant as trenches were filled with Malba

due to delay on the part of the objector.

33. Having considered the award made on claim 11, it appears that

despite the direction of this court requiring the learned arbitrator to

give his reasons, in so far as claim No. 11 is concerned, no reasons

have been furnished by the learned arbitrator while making the

impugned award. In fact, the aspect of extra work (as cited by the

plaintiff) has not even been considered by the learned Arbitrator. He

only notes that "the impact of extra work could not be more than 5%

considering the escalation payable under clause 10 CC, i.e., 5% of Rs.

24,18,403.00 i.e Rs.1,20,920.00". The arbitrator does not take note of

the evidence that the parties may have led with regard to the extra

work that the plaintiff contractor may have been required to perform

due to prolongation of contract. No doubt, the arbitrator is entitled to

resort to some amount of guess work, but that does not mean that the

arbitrator can, in the process, make a wild guess which has no basis,

foundation or logic.

34. Accordingly, the award made on Claim Nos. 5, 8 and 11 cannot

be sustained and is set aside. I am of the view the award made on

Claim No. 11 alone deserves be remitted back to the arbitrator for

reconsideration. It is ordered accordingly. The arbitrator shall decide

Claim No.11 after giving opportunity of hearing to the parties and by

recording his reasons for the award that he may make. The petition

stands disposed of.

(VIPIN SANGHI) JUDGE DECEMBER 13, 2010 vg