U.P. State Bridge Corporation ... vs Union Of India.
2012 Latest Caselaw 238 Del

*                  IN THE HIGH COURT OF DELHI AT NEW DELHI

+                      IA.No.10687/1998 & CS(OS) No.1520A/1997

%                            Date of Decision: 13.01.2012

U.P. State Bridge Corporation Ltd.                           .... Petitioner

                           Through   Mr. Vivekanand   Advocate      for     the
                                     Petitioner



                                      Versus

Union of India.                                             .... Respondent

                           Through Mr. Amitabh Marwaha, Advocate for the
                                   respondent.

CORAM:
HON'BLE MR. JUSTICE ANIL KUMAR



ANIL KUMAR, J.

*

1. This order shall dispose of the claimant/petitioner's objections

against the award dated 19th March, 1997 passed by Shri S.K. Khanna,

Chief Engineer (Designs) in the matter of U P State Bridge Corporation

vs. Union of India regarding the construction of a flyover at the I.P.

Estate intersection.

2. The petitioner contended that it is a Government owned company

incorporated under the Indian Companies Act, 1956 having its

registered office at Lucknow, U.P., and branch offices all over India

including Delhi and Ghaziabad.

3. The respondent, Public Works Department of Delhi, Government

of NCT of Delhi invited tenders for the construction of the flyover bridge

at I.P. Estate intersection, New Delhi. In response to the invitation of

tenders, the petitioner submitted his tender which was accepted and

the work was awarded to the petitioner by letter dated 6th January,

1981. The stipulated period of completion was 16th months and the

work was to be completed by 12th May, 1982 commencing from 13th

January, 1981. A formal agreement bearing No.1/EE/FOP/AG/D

IV/80-81 was executed between the petitioner and the respondent

which was to be governed by the general conditions of contract,

providing for settlement of all claims, disputes arising out of and

relating to the said contract, by way of arbitration under clause 25 of

the contract.

4. The petitioner contended that the work was of significant nature

on account of the ASIAD 1982 and therefore was executed by the

petitioner on priority basis. The operations of the bridge was put to use

and opened for the traffic by the respondent in July 1982. According to

the petitioner, the respondent, however, had accorded the completion of

the work on 21st October, 1982 and the time was extended without

levying any penalty.

5. The assertion of the petitioner is that during the course of the

execution of the work, allegedly many extra/substituted/additional

items and quantities of the work were executed which were not

contemplated under the agreement for the construction of the flyover

and consequently disputes arose between the parties which were

referred to various Arbitrators by the respondent since 1983 and lastly

to Shri S.K. Khanna, Chief Engineer (Designs), CPWD, New Delhi vide

letter dated 7th August, 1989 who entered upon reference on 19th

January, 1990 and made and published the award on 19th March,

1997.

6. Pursuant to the notice of filing of the award by the Arbitrator in

the High Court which was allegedly received by the petitioner on 27th

October, 1990, the petitioner has filed objections in respect of 42 items

of disputes involving an amount of Rs.81,86,498/-. The Arbitrator has

awarded a sum of Rs.5,92,672/- in respect of the claims of the

petitioner bearing No.3, 7, 8, 9, 11, 15, 23, 29, 30, 31, 34, 41 and 42

(vi) to (viii). According to the petitioner, no amount has been awarded

against the claim Nos.1, 2, 5, 6, 10, 12, 13, 14, 16, 17, 18, 19, 20, 21,

22, 24, 25, 26, 27, 28, 32, 33, 35, 36, 37, 38, 38A, 39 and 40. The

petitioner has challenged the award on the ground that the Arbitrator

had mis-conducted himself during the proceedings, as he had ignored

the petitioner's documents placed on record. The award is also

challenged on the ground of being contrary to the basic conditions of

the contract between the parties and it is argued that there are many

errors apparent on the very face of the record. The award is also

impugned on the ground that only conclusions have been given by the

Arbitrator and no reasons for arriving at the said conclusions has been

noted down. The inferences given in the award are without disclosing

his mind and the award is contrary to the pleas and contentions of the

petitioner in respect of many claims. The award is also challenged on

the ground that the award is inconsistent and is contrary in respect of

various claims.

7. The objections raised by the petitioner are contested by the

respondent contending inter alia that the objections raised do not

satisfy the ingredients of Section 30 of Indian Arbitration Act, 1940.

The respondents have relied on the proposition that the jurisdiction of

the court to interfere with an award of the Arbitrator‟s is a limited one

and it is not open to the court to attempt to probe the mental process

by which the Arbitrator has reached his conclusion. It is further

contended that it is not open to the court to re-assess the evidence to

find out whether the Arbitrator has committed an error or to decide the

question of adequacy of the findings, as the court cannot sit in appeal

on the conclusions of the Arbitrator by re-examining and re-

appreciating the evidence considered by the Arbitrator. It is also

asserted by the respondent that the court cannot substitute its own

evaluations of the conclusions of the law or fact to come to the

conclusion that the Arbitrator had acted contrary to the bargain of the

parties. Emphasis has also been laid on the contention 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 nor can the

court examine the reasonableness of the reasons given therein. It is

also contended that the Arbitrator has clearly indicated his mental

process though not giving a very detailed and elaborate reasons in the

award. It is asserted that this court is not to disturb this mental

evaluation by substituting its own conclusion as they do not reveal, or

disclose, any illegalities whatsoever and rather it reflects the firm grasp

of the issues referred to by the learned Arbitrator during his

adjudication.

8. The learned counsel for the petitioner has relied on College of

Vocational Studies v. S.S.Jaitley, AIR 1987 Delhi 134; Jajodia

(overseas) Pvt Ltd v. Industrial Development Corporation of Orissa Ltd,

(1993) 1 SCR 229; S.N.Mukherjee v. Union of India,

MANU/SC/0346/1990; M.L.Jaggi v. MTNL, (1996) 1 SCR 25 and Jai

Singh v. Delhi Development Authority & Ors, MANU/DE/1254/2008 to

contend that the arbitrator has only given his conclusions and has not

disclosed the mental process which ultimately culminated in the said

conclusions and has also not given the reasons for the same. Therefore

it is contended that the award is contrary to clause 25 of the Arbitration

Agreement and is hence, liable to be set aside.

9. Per contra the learned counsel for the respondent has relied on

Union of India v. Ms.Kundra Shoes, CS(OS) No.1257-A of 2000 and

M/s. Kundra Shoes v. Union of India, CS(OS) No.516-A of 2000,; India

metals v. Union of India, 2006 (88) DRJ 430; D.D.A. v. Bhagat

Construction Co. Pvt. Ltd., 126 (2006) DLT 466 (DB); M/s Housing &

Urban Development v. M/s DSA Engineers (Bombay), 113 (2004) DLT

744 (DB); Delhi Development Authority v. Bhagat Construction Co.(P)

Ltd. & Anr., 2004(3) Arb.LR 548 (Delhi) (DB); Delhi Development

Authority v. WEE ARR Constructive Builders & Anr., 114 (2004) DLT

578 (DB); Delhi Development Authority v. Saraswati Construction Co.

& Anr., 114 (2004) DLT 385 (DB); Municipal Corporation of Delhi v.

Jagan Nath Ashok Kumar & Anr. AIR 1987 SC 2316; State of

Rajasthan v. Puri Construction Co. Ltd. & Anr. (1994) 6 SCC 485;

Arosan Enterprises Ltd. v. Union of India & Anr., 1999 (9) SCC 449 and

U.P.State Electricity Board v. Searsole Chemicals Ltd, AIR 2001 SC

1171.

10. Detailed arguments have been heard on behalf of the parties. This

is not disputed by either of the parties that under Clause 25 of the

agreement, the Arbitrator was under an obligation to give his reasons

for his findings and the award. The petitioner has raised this plea in his

objections in para 10(iv). In reply to the objections it is not denied that

under Clause 25 of the agreement the arbitrator was under an

obligation to give his reasons for the findings. What is instead stated by

the respondent is that the arbitrator has given a reasoned award. The

allegation on behalf of the petitioner, that the arbitrator has only given

conclusions and not disclosed the reason, or his mental process, as to

how he had arrived at the conclusions is rather not specifically denied.

According to the respondent the arbitrator has made a reasoned award

and has also disclosed his reasoning and mental process. Thus what is

to be seen and examined is whether the arbitrator has indeed given the

`reasons‟ while allowing the claims in the award.

11. The Oxford English Dictionary defines „reason‟ as a cause,

explanation or justification or as a good or obvious cause to do

something or as logic or a premise of an argument in support of a belief.

The Webster‟s Dictionary defines „reason‟ as the cause that makes a

phenomenon intelligible. A Single Judge of this Court while dealing with

as to what would constitute „reason‟ in Jai Singh (Supra) in paragraphs

5 & 6 had held as under:-

5. The Oxford's English Dictionary defines reason as a cause, explanation or justification or as a good or obvious cause to do something or as logic or a premise of an argument in support of a belief. The Black's Law Dictionary defines reason as a faculty of mind by which it distinguishes truth from falsehood, good from evil and which enables the possessor to deduce inferences from facts or from propositions. Websters Dictionary also defines reason as the cause that makes a phenomenon intelligible.

6. Reason is the foundation, explanation, consideration, rationale or a ground for an action. It is the statement of a fact employed as an argument to justify or condemn some act. It is a fact or circumstance forming a ground or motive leading or sufficient to lead a person to reject or adopt some course of action or belief.

12. Though an arbitrator is not required to give a detailed judgment

just like a Civil Court, what is expected of the arbitrator at the very

least is that he must cull out the trend of his thought process. Thus

where there is no detailed note justifying the amounts allowed by the

arbitrator, it will not amount to a misconduct and on this ground alone

the award given by the arbitrator is not liable to be set aside. However,

it is imperative that an award should contain the basic reasoning from

which it would be possible to ascertain as to logically how an arbitrator

has arrived at a particular conclusion. The reason indicates the thought

process of the person giving the reasons and provides an insight into

the rationale behind it.

13. In College of Vocational Studies (supra) it was held that from a

reasoned award it should be possible to ascertain as to logically how an

arbitrator has arrived at a particular conclusion. The reason denotes

the thought process of the person giving the reasons. In the said

judgment it was further held that mere conclusions and verdict would

not be sufficient and that the reasons are the links on the material,

documentary or oral evidence, adduced before the arbitrator on which

certain inferences are drawn and conclusions are made and therefore

there should be some rational nexus between the two indicated in the

award. In Jajodia (Overseas) Pvt. Ltd (supra) the Supreme Court had

held that merely giving answers to the claims and the issues raised

between the parties would not constitute the reasons and such an

award will not be a speaking and reasoned award. The Supreme Court

in S.M.Mukherjee (supra) had elaborated on the requirement to state

reasons in the award including recording of clear and explicit reasons.

14. The judgments relied on by the learned counsel for the

respondents on the other hand do not militate against the proposition

contended by the petitioners, regarding the issue of what are reasons

and whether by merely giving reasons to the claims or the conclusions

on the basis of the record would tantamount to reasons.

15. In Kundra Shoes (supra) by relying on S.Harcharan Singh v.

Union of India, AIR 1991 SC 945, it was rather held that if an

interpretation to a particular clause of agreement is given by the

arbitrator, such an interpretation although may be erroneous is final

and binding and the Court does not have the power to upset the

finding. However, if the arbitrator passes an award by ignoring the

stipulation and prohibition contained in the agreement, then the

arbitrator travels beyond his jurisdiction. It was further held that there

are limits for judicial reviewability and that the Courts exercise limited

jurisdiction in proceedings for setting aside an award under Section 30

of the Act. Even if it is presumed that there is an error in the inferences

of an arbitrator, the same shall be error within his jurisdiction and the

Court will not substitute its decision with the decision of an arbitrator

who has considered all the materials which are relied on by the parties.

16. In India Metals (supra) which is relied on by the respondent, the

Court had held that an official who is appointed as an arbitrator by

name will continue after his retirement, unless it is specifically agreed

or at the time of reference it is so stipulated that after retirement, the

arbitrator shall not be entitled to continue with the reference. The

Court, however, had not dealt with the issue of what would constitute

as „reasons‟ by an arbitrator. In Bhagat Construction Co. Pvt. Ltd

(supra) the arbitrator had awarded a sum of Rs.3,50,000/- from the

claim of Rs.16,60,000/- and the arbitrator had not disclosed the basis

or the mental process for arriving at such a figure. It was held that the

arbitrator was well versed in the matter before him as a Former Director

General of CPWD and he was not required to write a detailed judgment,

as the Judges do. In Housing & Urban Development (supra) it was held

that when parties have chosen a forum other than the normal forum of

Civil Court and have chosen to have their dispute decided by an arbitral

forum, the Court should be reluctant to substitute its opinion with that

of the arbitrator.

17. In Bhagat Construction Co. (P) Ltd (supra) the Court had held

that if the award shows application of mind it is to be taken as correct

and the arbitrator does not need to disclose the mathematical

conclusions in the award. It was further held that the Court would not

substitute its own opinion with that of the arbitrator. In the instant

matter it was again reiterated that the arbitrator need not disclose the

mathematical calculations in the award because if the award shows the

application of mind, then the view which is plausible according to the

arbitrator shall be taken as correct. In the instant case the award

comprises of 25 pages and in the first five pages the arbitrator has dealt

with the reasons for arriving at a finding, that the delay was

attributable to the appellant and other reasons.

18. In Wee Aar Constructive Builders & Anr (supra) a Division Bench

of this Court had held that when the parties choose the forum to refer

their disputes to be adjudicated not by the Civil Court by a suit, the

Court while exercising its appellate power will not substitute its opinion

with that of the arbitrator. Similarly in Saraswati Construction Co &

Anr (supra) it was held that the arbitrator was a retired Director of

CPWD and was conversant with the directions and that the Court while

exercising the appellate jurisdiction 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. In Jagan Nath Ashok Kumar & Anr

(supra) the Supreme Court had held that in commercial activities the

endeavour should be to uphold the awards of the skilled persons when

the parties themselves have selected to decide the questions at issue

between them. If the arbitrator has acted within the terms of his

submission and has not violated any of the rules of what is so often

called natural justice, the Courts should be slow indeed to set aside the

award. Similarly in Puri Construction Company Ltd (supra) it was held

that if the arbitrators have not taken into consideration any matter

outside the scope of reference and the arbitrator has adjudicated the

disputes and differences covered by the written agreement nor has any

extraneous matter been taken into consideration by the arbitrator and

the arbitrators have referred to and relied upon the material on record,

then it cannot be reasonably contended that there was no basis

whatsoever to the findings made by the arbitrators upon the

consideration of the material on record. The dispute whether the

arbitrator had given a reasonable award or not was not considered by

the Court nor was the award set aside on the ground that the award

was not a reasonable award. In Arosan Enterprises Ltd (supra) it was

held that mere fixation of a period of delivery or a time in regard thereto

does not by itself make the time as the essence of the contract. It was

further held that the agreement has to be considered in its entirety and

on proper appreciation of the intent and purport of the clauses

incorporated therein. In Searsole Chemicals Ltd (supra) it was held that

if on the basis of the pleadings and evidence two views are possible,

then the view taken by the arbitrator would prevail.

19. It is well established that the ratio of any decision must be

understood in the background of the facts of that case. What is of the

essence in a decision is its ratio and not every observation found

therein nor what logically follows from the various observations made in

it. It must be remembered that a decision is only an authority for what

it actually decides. It is well settled that a little difference in facts or

additional facts may make a lot of difference in the precedential value of

a decision. The ratio of one case cannot be mechanically applied to

another case without having regard to the factual situation and

circumstances in both the cases. The Supreme Court in Bharat

Petroleum Corporation Ltd and Anr. v. N.R.Vairamani and Anr. (AIR

2004 SC 778) had held that a decision cannot be relied on without

considering the factual situation. In the judgment the Supreme Court

had observed:-

" Court should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of Courts are neither to be read as Euclid's theorems nor as provisions of the statute and that too taken out of their context. These observations must be read in the context in which they appear to have been stated. Judgments of Courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes.

20. Under claim Nos.1 and 2, the petitioner had claimed a sum of

Rs.12.22 lakh and Rs.5.14 lakh regarding additional length and

number of piles respectively. The Arbitrator has not awarded any

amount. The Arbitrator has relied on clause 2.4.3 and 2.4.4 while

denying the same. These clauses of the agreement contemplate that the

design of foundation had to be modified to suit the properties of the soil

encountered and revealed and nothing extra was to be paid for the

same. The Arbitrator has also noticed para 7.5 on page 281. The

Arbitrator has rejected the said claims of the petitioner stating that the

test piles were cast in January 1981 and the test was done in August

1981 and that the results were submitted in September 1981. The

respondent has contended that in letter dated 06.01.1981 it was made

clear that the acceptance of the designs submitted by the petitioner was

to be subject to approval of the Delhi Urban Arts Commission and the

petitioner was liable to carry out any modification or alterations. Under

condition 4.3, in the event of any discrepancy or contradiction amongst

various specifications, the conditions stipulated in the additional

conditions of the tender had to prevail. In the circumstances it is

contended that the petitioners plea that the design of 1.2 m and 76 cm

dia 15 m deep board piles was not subject to further modifications is

not correct and is wholly misconceived. The petitioner was liable to

carry out all the modifications as desired by the Ministry of Shipping

and Transport and therefore the petitioner was not entitled for any

additional compensation. It was not admitted that the

change/modification was not due to actual soil properties barred on

account of over cautiousness and intention to provide more soundness

and the strength/load bearing capacity than actually required as per

site conditions. The contention that the work was completed in a hurry

being time bound and so the claim could not be made earlier was also

rejected. The plea of petitioner that the design was not modified to suit

the properties of the soil actually met but for other consideration was

not accepted either. The plea that the 0.76 cm dia number of piles were

increased from 32 to 44 on theoretical basis without any justification or

without conducting actual tests at the site was also not accepted. The

plea of the petitioner that the designs submitted by the petitioner was

based on formula and nothing wrong was found with the same, has not

been accepted as well. The arbitrator is the Chief Engineer (Design)

CPWD, New Delhi and is a skilled person and consequently he was

required to give reasons for not accepting the pleas of the petitioner.

The Arbitrator has considered clauses 2.4.3 and 2.4.4 and para 7.5,

while denying the claim of the petitioners, however, he has failed to

explain how, and why they do not support the pleas of the petitioner,

as no reasons for the same have been given. The arbitrator has only

given his conclusions and not disclosed the reason, his mind and

mental process, as to how he had arrived at the conclusions.

21. Regarding claim No.3 the contention of the claimant for recovery

of Rs.1.35 lakhs from the claimant‟s final bill was held to be unjustified

though it was stated that the dispute related to only the initial load test

and there was no dispute about the actual test which was done for each

diametric pile. The claim, however, consists of two parts one relates to

refund of an amount of Rs.1.35 lakhs recovered by the respondent for

not doing two initial load tests and the other which was on account of

expenses allegedly incurred by the petitioner in casting the additional

anchor piles for the lateral test. No reason has been given for allowing

part of the claim and not allowing the later part of the claim.

22. The claim No.4 which pertain to retaining the walls from 2.7

metres to 4.45 metres high as well, was rejected by the arbitrator. The

claim had been rejected on the ground that the data of Oberoi Flyover

has no relevancy to the subject case. Merely stating that it is not

relevant will not constitute a bonafide reason. If some reason is given by

the arbitrator then the Court cannot go into the sufficiency of the

reason. However, in the circumstances, by merely saying that a

particular data is not relevant, will not constitute a valid explanation

and does not clarify the inference that are drawn from it nor does it not

make the act of rejecting the data and consequently the claim

intelligible. Hence it cannot be held to constitute "reasons" and it would

only amount to a conclusion.

23. In respect of claim No.5 the arbitrator has held that keeping the

arguments of both the parties in view nothing is payable. This is also a

conclusion without disclosing any reason. The arbitrator does not

disclose as to due to which argument or contention of which of the

parties the claim is rejected, i.e. whether the argument of the claimant

is not acceptable or is it the argument of the respondent that is

acceptable. The claimant had contended that he suffered and incurred

additional expenses and losses on account of the increase in the length

of via duct portion of the bridge on both the sides and that the amounts

were claimed on the actual rate basis. Reasons are links between the

materials on which certain conclusions are based and the actual

conclusions are arrived at. From the award it is apparent that the

arbitrator has merely given the conclusions. The arbitrator had to

decide the disputes in accordance with the material on record and the

legal rights between the parties and not what the learned arbitrator

considered as fair and reasonable.

24. Similarly in respect of claim No.6 the arbitrator has only referred

to the rival pleas and contentions of the parties. The learned counsel for

the claimant/petitioner has pointed out that the arbitrator‟s decision

was that while making the reinforcement in wearing course, the

petitioner was asked to do welding instead of binding with wire for

joining different ends of the steel reinforcement. However, in the

contract there was no provision for welding. The arbitrator could have

rejected the claim on the ground that the agreement does not

contemplate any welding nor were any rates supplied or for some other

reasons, but what is stated instead is that on considering the

arguments by the parties, it was agreed that the welding of the steel

mesh should be done and, therefore, the claim is rejected. However, this

alone does not disclose any reason for arriving at the said conclusion.

Reasons reveal the grounds on which the arbitrator reaches the

conclusions which obviously affect the interest of the parties concerned.

The rationale behind the requirement of reasons is that reasons assure

that the arbitrator has applied his mind and has not acted capriciously.

While rejecting the claim No.6 it is just not apparent as to what are the

reasons for rejecting the same. It is not evident from the conclusion of

the arbitrator, whether anything beyond the terms of the agreement was

not payable or whether the welding would also be included in the type

and part of the work which was to be carried on and, therefore, was not

to be considered as an additional item or some other reason. Apparently

no reasons have been given by the Arbitrator and only a conclusion is

arrived at.

25. In respect of claim Nos.7 & 8 though amounts have been

awarded, however, the reasons given are that on "considering the

arguments of the two parties and the fact that the claimant did not

deny the amount of Rs.3 lakhs and considering the fact that railing

provided was heavy and ornamental, an amount of Rs.1.2 lakhs" was

awarded. Even as regards claim No.8 the arbitrator has given an

amount of Rs.75,000/- which has been awarded without giving any

reasons except for narrating certain facts.

26. In respect of claim No.9 an amount of Rs.3750/- was awarded

considering the arguments of the parties, but what exactly was the

argument has not been detailed. The claim was not only for failure on

the part of the respondent in not shifting the water main but also for

shifting the water main incurred by the petitioner which also included

the delayed in the shifting which caused the machinery of the petitioner

to remain idle. Apparently no reasons have been given in the award. For

Claim No.10 the arbitrator has held that he has considered the

argument and that the claim is not tenable and is, therefore, rejected.

However, it has not been spelt out as to what the reason are for

rejecting the claim. Even with regards to this claim it is apparent that

only the conclusion has been given by the arbitrator and not the

reasons for the same.

27. From the perusal of claim No.11 it appears that on consideration

of the details it was found that certain elements had not been

considered by the respondent in his analysis and therefore an amount

of Rs.5000/- was awarded to the claimant. However, again what

elements were not considered has not been spelt out. Though the

amount claimed was Rs.23 lakhs, no reason has been given for

awarding an amount of Rs.5000/- even though the arbitrator who was

an expert was not required to give the mathematical details, however,

some reason for arriving at the said amount ought to have been given

by him.

28. Claim Nos.12, 13, 14, 16 & 18 were rejected by only stipulating

that the arguments of both the parties were considered and that

nothing is payable. Again it is glaringly apparent that there is complete

lack of reasons.

29. In respect of claim No.15 an amount of Rs.44,500/- against the

claimed amount of Rs.1.86 lakhs was awarded only on the basis of

respective arguments. Here again no reasons have been given. It is not

even detailed as to which arguments were accepted and which

arguments were not accepted. The Arbitrator had merely given his

conclusions without a thread of any reason of any type.

30. Claim Nos.19, 20 and 21 had been rejected on the ground that it

is not possible to accept the claim of the claimants which was for

providing and laying RCC 150 mm diameter, brick work in roadside

drain manhole and for using mild tor steel in RCC. Regarding claim

No.22 for Rs.12,660/- it was observed that the analysis of the rates filed

by the respondent was found to be in order and, therefore, the claim

was rejected. The petitioner has contended that no evidence of market

rate of aluminum strip is deduced and included by the respondent in

their rate or produced or filed before the arbitrator and in the

circumstances how the analysis of the rates by the respondent could

have been accepted has not been explained. Apparently no reasons

have been given. The learned counsel for the respondent is also unable

to show as to what would constitute `reasons‟ on the basis of which the

claims have been rejected.

31. In respect of claim No.23 an amount of Rs.780/- was awarded on

the basis of the arguments of the claimant; Claim No.24 was rejected on

the basis of the arguments of both the parties; claim No.25 was rejected

considering the arguments; claim No.26 for Rs.57,960/- was not

considered justified; Claim No.27 was rejected on considering the

arguments of both the parties and observing that the claimant could

not supply computation of quantities; claim No.28 was rejected

considering the arguments; as regards claim No.29 an amount of

Rs.10,000/- was awarded on the basis of the contention of the

claimant, however, no reasons are apparent in any of these claims for

either awarding or rejecting the claim or awarding a part of the amount

to the claimant. Which arguments were accepted and for what reasons,

should have been spelt out by the Arbitrator. Under claim No.30 an

amount of Rs.40,000/- was awarded for the claim of Rs.61,784/-, for

claim No.31 an amount of Rs.6000/- was awarded for an amount

claimed of Rs.12,920/-. For Claim No.32 nothing was awarded on the

ground that the work was not done according to the requirement; the

claim No.33 was rejected considering the argument of both the parties;

for claim No.34 for a sum of Rs.44,015/- claimed, an amount of

Rs.40,000/- was awarded considering the respective arguments; for

claim No.35 for Rs.40,000/- the claim was rejected considering the

respective submission of the parties; for claim No.36 the claim of

Rs.9,216/- was rejected considering the respective submissions and on

the ground that the deductions made by the respondent was found to

be in order; claim No.37 was rejected on the ground that the contention

of the respondent was held to be valid; claim Nos.38A and 38B were

also rejected on the ground that the amounts paid by the respondent

were found to be in order; claim No.39 for Rs.2759/- was rejected as

the deduction given by the respondents was considered to be justified;

Claim No.40 was also rejected as it was not considered to be justified

and in order and for claim No.42 an amount of Rs.3,400/- was awarded

considering the argument and submissions made by both the parties.

In all the claims no reasons have been given except for stipulating that

the arguments of the parties have been considered or that the

deductions made by one of the parties are justified. Obviously there

must be reasons for holding the deductions made by one of the parties

to be acceptable. It is apparent that no reasons have been given and

merely conclusions have been arrived at by the Arbitrator.

32. Similarly in respect of claim No.42 which comprised of a number

of sub claims either they have been rejected or some amount has been

awarded without even disclosing as to what was considered in some of

the sub claims. It is simply stated that the amount is either awarded or

rejected. The claims if rejected, were not considered to be justified. This

is apparent in the facts and circumstances that no reasons at all has

been given in the entire award for the various claims and sub claims

while rejecting or awarding some of the amounts. Merely stating that

the claims are not in terms of the agreement or has not been

established or that the arguments of the parties have been considered

or that it is not based on the material on record before the arbitrator do

not indicate any reasons for arriving at the said conclusions. The

arbitrator has just given his conclusions of either allowing or

disallowing the claim. The conclusions of the arbitrator in the facts and

circumstances cannot be construed to be intelligible. Such an award

cannot be construed to be in terms of Clause 25 of the agreement which

categorically contemplates that the arbitrator should give a reasoned

award. The arbitrator had a duty to decide the dispute in accordance

with the legal rights of the parties and the material on record rather

than what he considered fair and reasonable. Therefore, in the totality

of facts and circumstances the award is not in consonance with Clause

25 of the arbitration agreement between the parties which contemplates

that the arbitrator shall give a reasoned award. Hence, the entire award

given by the arbitrator dated 19th March, 1997 is liable to be set aside.

33. For the foregoing reasons, the objections of the UP State Bridge

Corporation Ltd. under Sections 30 & 33 of the Arbitration Act, 1940

are allowed. Consequently, the award dated 19th March, 1997 passed by

Sh.S.K.Khana, Chief Engineer (Design) Arbitrator is set aside as the

same is without reasons. The matter is remanded for fresh decisions

with reasons in terms of the Arbitration Agreement between the parties.

34. Learned counsel for the parties on instructions has stated that

the Chief Engineer, Sh.S.K.Khanna, who had acted as an Arbitrator has

since expired. In the facts and circumstances, the matter is to be

referred to Sh.Deepak Narain, Retd. A.D.G. CPWD of B-9/6295, Basant

Kunj, New Delhi-110070, (Mob: 9811357748) to adjudicate the disputes

between the parties. The counsels for both the parties do not object to

Mr.Deepak Narain being appointed as Arbitrator after the demise of

Sh.S.K.Khanna, Chief Engineer (Design). The Arbitrator shall give his

reasoned award within a period of four months from the date of entering

upon the reference. The Arbitrator shall be entitled to charge his fees in

accordance with CPWD Scheduled rates of fee which will be shared by

the parties equally. The parties are directed to appear before Sh.Deepak

Narain on 06.02.2012 at 1600 hours.

With these directions the petition is disposed of. Considering the

facts and circumstances, the parties are left to bear their own costs.

Dasti to the parties.

ANIL KUMAR, J.

JANUARY 13, 2012 Vk