Gauhati High Court
Arb.A./6/2010 on 18 November, 2024
GAHC010008682010
THE GAUHATI HIGH COURT
(The High Court of Assam, Nagaland, Mizoram and Arunachal Pradesh)
Principal Seat at Guwahati
Arb. Appeal No.6/2010
M/S Ranjul Baruah,
Engineers and Contractors "Raha Villa",
Rehabari,
Guwahati,
PIN - 781008.
...... Appellant.
-Versus-
1. Indian Oil Corporation Limited Refineries Division,
Guwahati Refinery,
Noonmati,
Guwahati.
2. The General Manager,
Indian Oil Corporation Limited Refineries Division,
Guwahati Refinery,
Noonmati,
Guwahati.
3. Kinetics Technology India Limited,
Corporate Office,
Ansal Towar,
38 Nehru Place,
New Delhi,
PIN-110019.
...... Respondents.
Page 1 of 60
BEFORE
HON'BLE MR. JUSTICE ROBIN PHUKAN
Advocate for the appellant :- Mr. G.N. Sahewalla, Senior Advocate
Ms. K. Bhattacharya.
Advocate for the respondents :- Mr. N. Deka.
Date of Hearing :- 20.08.2024.
Date of Judgment & Order :- 18.11.2024.
JUDGEMENT & ORDER (CAV)
Heard Mr. G.N. Sahewalla, learned Senior Counsel, assisted by Ms.
K. Bhattacharya, learned counsel for the appellant. Also heard Mr. N.
Deka, learned counsel for the respondent No.1 and 2.
2. This appeal under Section 37 of the Arbitration and Conciliation Act,
1996 is directed against the judgement and order dated 16.08.2010
passed by the learned District Judge, Kamrup (M) at Guwahati in Misc
(Arbitration) Case No. 9 of 2005.
3. It is to be noted here that vide impugned judgment and order the
learned District Judge, Kamrup (M) has set-aside the arbitral award
dated 05.04.2005, passed by the sole Arbitrator, Mrs. Justice M. Sharma
(Retd.) in Case No. Arbi (MS) No. 02/2002.
4. In order to avoid confusion, the rank of the parties, assigned to
them in this appeal, will be referred herein, for the sake of convenience.
Page 2 of 60
The Background Facts:-
5. The background facts leading to filing of the present appeal are
adumbrated herein below:-
"The appellant herein, M/s Ranjul Baruah, Engineers and
Contractors, of "Raha Villa", Rehabari, Guwahati was offered civil
works (jobs) for setting up DCU (De-Cokering Unit) and CDU
(Crude Distillation Unit) revamp project at Guwahati Refinery
valued Rs. 1,74,01,950/- within time limits on condition that the
materials jor steel, cement etc will be supplied by the respondent
to the appellant and the value of the materials will be deducted
from the Bills.
Accordingly the appellant had accepted the offer and work
order No. GR/TS/ES/09/WO-11/99, dated 16.2.99 was issued to
him for carring out execution of the work, which had to be
completed within the stipulated period. But, owing to some
difficulties, the appellant had failed to complete the task within
stipulated period. Extension of time of completion was granted on
several occasions by the respondent authority, on condition of
without any financial implication on either side. Ultimately, the
appellant had given the work on Sub-Contract to one N.C. Kalita
for completion. Thereafter, the Sub- Contractor, Mr. N.C. Kalita had
completed the work on 30.9.2000. Thereafter, final bill was
prepared in the month of May, 2001 and cheque was issued in the
name of the appellant and his authorized Sub-Contractor N.C.
Kalita had put his signatures on the measurement books, bills and
Page 3 of 60
accepted the A/C payee cheque on behalf of the appellant without
raising any objection.
Thereafter, dispute had arisen between the appellant and the
respondent for which Hon‟ble Mrs. Justice Meera Sarma (Retd.)
was appointed as sole Arbitrator by the Hon'ble Chief Justice of
Gauhati High Court to settle the alleged disputes and claims
between the parties. The learned Arbitrator had framed the
following issues for deciding the arbitral dispute in between the
parties:-
(A) Whether payments due against the enhanced
labour rates amounting to Rs. 27,72,649/-?
(B) Whether the claimant is entitled to claim
compensation/payment due against escalation
amount to Rs. 28,92,193/-?
(C) Whether claimant is entitled to incidental
claims for damages and loss for breach of
contract conditions for Lump Sum?
(D) Whether the claimant is entitled to the cost
incurred in the arbitration proceeding?
(E) Whether the claimant is entitled to interest
at the rate of 21% from the date it fallen
due?
Thereafter, hearing both the parties, and considering the
documentary evidence produced by the parties, the learned
Arbitrator had decided Issues No. A., B and E, in favour of the
appellant, however, reduced the rate of interest @ 21% per annum
to @ 6% payable to the claimant on the total amount of payment
Page 4 of 60
from the date of filing the arbitration petition U/S 11 of the Act
before the Chief Justice of Gauhati High Court till payment is made
by the respondent.
The amount claimed under different heads and the awarded
amount is shown in the Table below:-
Sl. Different Heads Amounts Amounts awarded
No. claimed
A Enhancement of Rs.27,72,649 Rs.27,72,649
labour wages
B Escalation Rs.28,92,193 Rs.28,92,193
C Compensation for Rs,10,00,000 Nil
damages and loss
of breach of
contract
D Cost of Nil
Arbitration
E Interest 21% per annum 6% interest per annum
from the date of filing
of the application till
payment
Then being highly aggrieved and dissatisfied with the arbitral
award, so passed by the learned sole Arbitrator, the respondent
herein had filed an application before the learned District Judge,
Kamrup (M) Guwahati, under Section 34 of the Arbitration and
Conciliation Act, 1996 for setting aside the award passed by the
learned sole Arbitrator on the ground that the learned Sole
Arbitrator had passed the award in contravention to the arbitral
agreement as well as General Conditions of Contract (GCC) and
admission of the appellant.
Page 5 of 60
Thereafter, hearing learned Advocates of both sides, the
learned District Judge, Kamrup (M) Guwahati had allowed the
appeal by setting aside the arbitral award on the ground that the
learned sole Arbitrator had passed the award contrary to the
General Conditions of Contract (GCC) and tender agreement and
acted beyond her arbitral jurisdiction.
Grounds:-
6. Being highly aggrieved, the appellant has preferred the present
appeal under Section 37 of the Arbitration and Conciliation Act, 1996 on
the following grounds that :-
(i) The learned Court below erred in law as well as in facts and
clearly exceeded the powers and jurisdiction in entertaining
the application and setting aside the award vide impugned
judgment and order dated 16-8-2010;
(ii) The application for setting aside the award filed by the
respondent in the District Court, Kamrup did not meet the
requirement of Section 34 of the Act and did not satisfy any
of the grounds stated in Sub-Section (2) thereof.
(iii) The dispute, when referred to arbitrator for adjudication, it
is not open to the Court to set aside the findings of the
arbitrator in awarding a claim on the ground that the award
is beyond the scope of reference and/or that the Arbitrator
has acted beyond the arbitral jurisdiction and this aspect of
Page 6 of 60
the matter, having being failed to be considered by the
learned Court below in its proper perspective;
(iv) It is well settled in catena of decisions of Hon'ble Supreme
Court that in a proceeding under Section 34 of the Act the
Court is not competent to undertake an in-depth scrutiny and
re-examination of the materials before the Arbitral Tribunal
and to interfere with the Arbitral Award on re-
examination/appreciation of the said materials or by re-
interpreting the terms of the contract. Such an exercise is
impermissible in law and would run counter to the very
scheme and object of the 1996 Act. And the impugned
judgment clearly defeats the said objective.
(v) The learned District Judge had acted contrary to the law laid
down by the Hon'ble Supreme Court and interfered with the
Arbitral Award by giving his own interpretation to some of the
provisions of the contract (ignoring others) and taking a
different view on the interpretation of the said provision as
given in the arbitration award, which is clearly beyond its
jurisdiction. The Court had no jurisdiction to substitute its
own view on the interpretation of the contract and then set
aside the award on the ground that arbitrator gave a
different interpretation to the contractual provisions. The
object of the 1996 Act was to further minimize interference
by the Courts in respect of arbitral award.
Page 7 of 60
(vi) The learned Court below acted contrary to the law by re-
examining and reassessing the materials before the Arbitral
Tribunal and in coming to its own conclusion as if it was
hearing an appeal from the award.
(vii) It is settled principle of law that even if the contract provides
otherwise, the contractor is entitled to claim for delay as a
result of the acts of the owner and the restrictive provisions
in the contract would not operate after the stipulated period
of the contract and if the period of works exceeds beyond the
time schedule fixed under the contract, the contractual
provisions prohibiting grant of compensation disappears. This
aspect of the matter was not considered by the learned Court
below in its proper perspective.
(viii) It is settled principle of law that an order on the objections
to an arbitration award should comply with the provisions of
Order 20 Rule 5 of the Code of Civil Procedure, 1908 and the
Court should state its finding on decision with the reasons
therefore upon each separate issue. But, the learned Court,
in a most perfunctory manner without assigning any reason
and without considering the pleaded case of the appellant, on
the basis of surmises and conjectures and upon perverse
appreciation of the materials and documents on records
passed the impugned judgment and order dated 16-8-2010.
(ix) The learned Court had erred in law in setting aside the well
reasoned award and the learned Court had failed to record
Page 8 of 60
any finding whatsoever not to speak of assigning any reason,
that there is any illegality in the award which goes to the root
of the matter.
(x) It is also well settled principle of law that an objection/plea
not taken/raised before the arbitrator nor pleaded before the
Arbitrator cannot be allowed to be raised for the first time
before the Court and said objection being categorically put
forward by the appellant in his objection filed by application
preferred by the appellant to the respondent under Section
34 of the Arbitration and Conciliation Act, the learned Court
below failed to consider the same.
(xi) The applicability of the clauses 1.0.24.0., 6.6.1.0, 6.6.3.0,
6.6.3.1, 6.7.1.0, 6.6.0.0., 6.8.2.0 of the General Conditions of
Contract, having being adjudicated by the Arbitrator
assigning detail reasoning and arrived at the conclusion that
the issue of maintainability of the proceeding, the learned
Court below had no jurisdiction to substitute its own view on
the interpretation of the contract and that too without
assigning any reason in a most perfunctory manner.
xii) It is well settled that the Arbitrator is the sole judge of the
quality as well as the quantity of evidence and it is not for
the courts to take the task of the evidence led before the
arbitrators and further, the arbitrators having been made the
final arbiters of the disputes between the parties, the award
is not open to challenged on the ground that the arbitrators
Page 9 of 60
have reached a wrong conclusion or have failed to appreciate
facts and on such count, the learned Court below erred in law
in re-examining and reassessing the materials before the
Arbitral Tribunal and substituting its view/opinion.
xiii) The finding recorded by the learned Court to the effect that
the respondent contractor had failed to complete the jobs
within the stipulated period in terms of the contract and
hence on the prayer of the respondent contractor time was
extended by the applicant for completion is perverse and
contrary to materials on records.
xiv) The Arbitrator, having categorically arrived at the finding at
paragraph 69 of the award to the effect that the claimant
could not complete the job within the contractual completion
time for reasons mentioned in the Note Sheet dated 15-9-99
and as such time extension was granted to the claimant up to
31-12- 1999, the learned Court below having not recorded
any reason as to why it differs from the said finding of the
Arbitrator, is perverse;
xv) The execution and validity of the letter bearing No.
RB/GR/DCE-CDU/98-99/15, dated 3-7-1999 alleged to be
sent by the appellant contractor to the Senior Manager of
I.O.C. Ltd. being categorically denied and disputed by the
claimant/appellant before the Arbitrator and the Arbitrator
having acknowledged the same and categorically recorded its
doubt as to the genuineness of the said letter in paragraph
Page 10 of 60
74 of the award, and the learned Court below without
assigning any reason as to the acceptance of the validity of
the said letter, most perfunctorily and erroneously relied
upon the said letter dated 3-7-1999 and also exceeded his
power and jurisdiction under Section 34 of the Act.
xvi) The respondent for the first time adduced a letter dated 19-8-
1999, before the learned Court below, and the learned Court
below erred in taking consideration of the same and placing
undue reliance upon the same and arriving at the finding to
the effect that the respondent contractor vide his letter dated
19-8-1999 sub-let the works to Shri N.C. Kalita contractor
inspite of the fact that the claimant/appellant had
categorically denied that vide letter dated 19-8-1999, he sub-
let the job to one Shri N.C. Kalita.
xvii) The respondents herein having not tendered the said letter
dated 19-8-1999, before the Arbitrator, is estopped from
pleading and bringing on record for the first time in its
application preferred under Section 34 of the Arbitration and
Conciliation Act, 1996, and this aspect of the matter was
ignored by the learned Court below.
xviii) That, unless and until the respondent, as per clause 4.7.1.0
G.C.C and Article 8 of the Contract dated 5-3-1999, approves
contract, sub-contracting, sub-letting of the work was
impermissible and in fact no sub-contract was given to Shri
N.C. Kalita and the letter dated 19-8-1999 was never given
Page 11 of 60
effect to and the same stands further fortified by the fact
that the respondent also acknowledged vide their letter No.
GR/PS/09/215 dated 11-8-1999 that Shri N.C. Kalita have
been engaged by the claimant/appellant as his authorized
supervisor in connection with issuing gate passes only and
moreover in paragraph 33 of the statement of defence also,
the respondents have acknowledged the fact that Shri N.C.
Kalita was respondent's authorized agent. The appellant
himself executed the work and the cheques were all along
issued in the name of the appellant.
xix) The finding of the learned Court below to the effect that in
terms of the agreement between the respondent contractor
and the sub-contractor N.C. Kalita the sub-contractor N.C.
completed the works on 30-9-2000, is patently incorrect and
perverse.
xx) The finding of the learned Court below to the effect that it
also appears that the last part of the work was done by the
sub-contractor N.C. Kalita and not by the respondent
contractor is patently incorrect and perverse.
xxi) The Arbitrator had arrived at a categorical finding to the
effect that "the Final bill was prepared and cheque payment
was made without the knowledge of the claimant and the
same was signed and accepted by someone else" the learned
Court below erred in law in not assigning any reason as to
why the learned Court below differs from said finding and in
Page 12 of 60
arriving at the purported finding to the effect "that the final
bill has been prepared in the month of May, 2001 and cheque
was issued towards the dues of the final bill and the sub-
contractor N.C. Kalita signed on the measurement books, bills
and accepted the A/C payee cheque on behalf of the
respondent contractor without raising any objection or
protest towards escalation of labour charge etc" is perverse
appreciation on the materials on records.
xxii) The Arbitrator had arrived at the finding that the admitted
position is that the respondents prepared and submitted the
final bill without including the notified claims of the claimant
and without the knowledge of the claimant, which was signed
by someone else in the name of the claimant. Thereafter, the
respondents released payment against the said Final Bill to
the claimant. And vide letter No. RB/GR/DCU/CDU/98-99/33,
dated 17-8-2000 addressed to the Senior Project Manager,
I.O.C.L the claimant informed that all the papers including
the Final Bills etc., will be signed by the appellant and that
nobody is authorized to sign any paper on behalf of the
claimant. Claimant also raised objection against such action
before the General Manager, I.O.C.L and also requested to
review or refer the dispute to arbitration. These facts and
circumstances are not denied by the respondents. It is
further noted that the cheque was issued with undue haste,
without giving any opportunity of hearing and reasonable
time, when there were communication and correspondences
Page 13 of 60
between the parties to the dispute and even there was scope
for review of the alleged Final Bill. The correspondences on
record establish that the claims of the claimant for
reimbursement etc., are notified claims, as per clause 6.6.3.0
of the GCC and the claimant vide letter No.
RB/GR/DCU/CDU/98-99/41 dated 14-5-2001 in accordance
with the provisions of Clause 6.6.1.0 of the GCC, notified the
claims. As the claim as per the letter dated 4-5-2001 was not
paid, claimant contemplated to include it as per provisions of
clause 6.6.30 of the GCC in the Final Bill. As the Final Bill was
prepared and cheque payment was made without the
knowledge of the claimant and the same was signed and
accepted by someone else, the claimant could not include the
same in the Final Bill. But, the learned Court below without
assigning any reason arrived at the finding that it appears
that till preparation of the Final Bill there was no notified
claim on the part of the respondent contractor for escalation
of the prices of the material and for enhancement of the
labour charges and thereby ignored the materials on records.
xxiii) The finding of the learned Court below to the effect that if
any loss has been sustained or incurred towards labour
charges in completion of the works due to the alleged labour
charges it will be the sub-contractor Shri N.C. Kalita who
performed and completed the works taking all the risks and
not by the respondent contractor, is patently incorrect and
perverse and contrary to the materials on records.
Page 14 of 60
xxiv) The finding of the learned Court below to the effect that it
appears that the major portion of the materials such as
cements, steels have been supplied by the IOC Ltd. to the
respondent contractor at a reasonable fixed rate below the
prevailing market price till completion of the works, is
patently incorrect and perverse and contrary to the materials
on records.
xxv) The finding of the learned Court below to the effect that the
learned sole Arbitrator has passed the award contrary to the
General Conditions of Contract and tender agreement and
acted beyond her arbitral jurisdiction, is based on surmises
and conjectures and without any reason.
xxvi) The learned Court below clearly exceeded his powers and
jurisdiction in seeking to re-examine the facts and that too
being not supported by the materials on records.
xxvii) The Arbitral Award allowed certain claims made by the
appellant are supported by the relevant materials on record
and are consonance with the applicable law and the award
does not warrant any interference, not only for the reason
that none of the grounds under Section 34 of the Act are
satisfied in the present case, but also because even if the
proceedings were in the nature of an appeal from the Arbitral
Award no interference is warranted.
xxviii) The learned Court had totally failed to appreciate and
consider the pleaded case of the appellant in its proper
Page 15 of 60
perspective and as such the impugned judgment and order
dated 16-8-2010 is liable to be set aside and quashed.
Submissions:-
7. Mr. G.N. Sahewalla, the learned Senior Counsel for the appellant has
confined his arguments mainly on following points:-
(a) The learned District Judge had committed grave error in setting
aside the arbitral award. Mr. Sahewalla, submits that the
Arbitrator is the master of both facts and laws and considering
all the facts and circumstances, the learned Arbitrator had
arrived at finding that the claims so raised are notified claim
and as such the same are arbitrable, but the learned District
Judge without considering the same and ignoring its
jurisdiction, without assigning any reason and in a cryptic
manner, set aside the same.
(b) Mr. Sahewalla, further submits that there was delay on the part
of the respondent authorities as they could not shut down the
machineries in time, for which the appellant here could not
complete the work in time and the respondent therefore
extended the time.
(c) It is an admitted fact that there was escalation of price of all the
articles including the cement and steel and as such the
Arbitrator had rightly arrived at the finding and made the award
under the said head and the learned District Judge had without
Page 16 of 60
any basis and without assigning any reason had set aside the
same.
(d) It is also an admitted fact that labour rate had increased during
the execution of the work and the Arbitrator had taken note of
the same and make award under the said head, but, the
learned District Judge had failed to take note of the same.
(e) The final bill was prepared by the respondent and payment was
made to one N.C. Kalita and the appellant had not received the
same and at no point of time the appellant had appointed N.C.
Kalita as Sub-Contractor and for the first time the respondent
had produced a letter dated 19-8-1999, before the learned
Court below, and the same was not given effect to and that as
per clause 4.7.1.0 G.C.C and Article 8 of the Contract dated 5-
3-1999, approves contract, sub-contracting, sub-letting of the
work was impermissible unless approved by the respondent.
(f) The finding of the learned District Judge in respect of sub-letting
of the work is without any reason and basis and contrary to the
provision of Section 34(2) of the Arbitration and Conciliation
Act, and therefore, liable to set aside.
7.1. In support of his submission the learned Senior Counsel has
referred following case laws:-
(1) International Airport Authority of India vs.
Mohindor Singh, reported in AIR 1996 Bom. 167.
Page 17 of 60
(2) Nilkanth and Bros Construction vs. Superintending
Engineer N.H. Salem and others, reported In AIR
1988 SC 2045.
(3) Olympus Superstructure Pvt. Ltd vs. Vijay Khetan
and others, reported in (1999) 5 SCC 651.
8. Per contra, Mr. Neelanjan Deka, the learned Counsel for the
respondents has raised following points for consideration of this Court:-
(a) That, a claim to be the subject matter of the arbitration
proceeding has to be a „notified claims‟ within the meaning of
the General Conditions of Contract (GCC), but in the present
proceeding none of the claims are notified claims and as such
the same are not disputes within the meaning of the
arbitration clause.
(b) That the claim was not made before the Site Engineer and
Engineer-In-Charge, and it was first made on 29.09.2000,
one day before the preparation of final bill;
(c) That, the appellant herein had failed to produce the Labour
Payment Register despite asking by the respondents to
substantiate the claim of increase of labour charge;
(d) That, the entire materials were supplied by the respondents
and as such there was no evidence/materials before the
Arbitrator to establish/prove the escalation of price of
materials;
(e) That, vide his letter dated 19-8-1999, the appellant herein
had sub-let the works to Shri N.C. Kalita contractor and the
same was a pleaded fact in the additional written statement
filed by the respondent herein before the Arbitrator and from
Page 18 of 60
there the learned District Judge had found the letter dated
19.08.1999 and arrived at the finding, and that no counter
was filed to the additional written statement by the
appellant;
(f) That, after payment of the final bill by way of cheque to the
sub-contractor, the respondents herein had discharged their
liability and in such a case the arbitrator has no power to
resolve such disputes.
(g) That, the award so passed by the Arbitrator is contrary to the
arbitral agreement entered into by the parties and that the
arbitrator has no jurisdiction to entertain the claim of the
appellant.
8.1. Mr. Deka has referred following decisions in support of his
submissions:-
(i) West Bengal State Warehousing Corporation and
Another vs. Sushil Kumar Kayan and Others,
reported in (2002) 5 SCC 679.
(ii) Rajasthan State Mines and Minerals Ltd. vs.
Eastern Engineering Enterprises and Another,
reported in (1999) 9 SCC 283.
(iii) OIL and Natural Gas Corporation Ltd. vs. Saw
Pipes Ltd., reported in (2003) 5 SCC 705.
(iv) National Insurance Company Ltd. vs. Boghara
Polycab Private Ltd., reported in (2009) 1 SCC
267.
(v) M/s P.K. Rammalah and Company vs. Chairman and
Managing Director, National Thermal Power
Page 19 of 60
Corporation, reported in 1994 Supp (3) SCC
126.
9. Having heard the submissions of learned Advocates of both sides, I
have carefully gone through the memo of appeal and documents placed
on record and the arbitral award so passed by the learned sole Arbitrator
and the documentary evidence produced by the parties in the arbitral
proceeding as well as the impugned judgment and order dated
16.08.2010 and also gone through the case laws referred by learned
Advocates of both the parties.
The Issue Before This Court:-
10. In view of the contentions of the parties, and the submissions, so
advanced, by their respective counsels, the issue, that has arisen for
consideration of this Court is:-
Whether the learned District Judge, Kamrup,
Guwahati (M) had exceeded its jurisdiction
conferred under Section 34 of the Arbitration
and Conciliation Act, 1996 in setting aside the
Arbitral award dated 05.04.2005, while the
Arbitrator is the master of both law and facts?
Legal Proposition:-
11. Before a discussion is directed into the issues raised in this
application, it would be in the interest of justice to understand the power
of the Courts under Section 34 and 37 of the Arbitration and Conciliation
Act, 1966. While dealing with the power of the Court under Section 34(2)
Page 20 of 60
of the aforesaid Act, Hon‟ble Supreme Court in Saw Pipes
Ltd.(Supra), has held as under:-
(A) (1) The court can set aside the arbitral award under
Section 34(2) of the Act if the party making the
application furnishes proof that:
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under
the law to which the parties have subjected it
or, failing any indication thereon, under the
law for the time being in force; or
(iii) the party making the application was not given
proper notice of the appointment of an
arbitrator or of the arbitral proceedings or
was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not
contemplated by or not falling within the
terms of the submission to arbitration, or it
contains decisions on matters beyond the scope
of the submission to arbitration.
(2) The court may set aside the award:
(i)(a) if the composition of the Arbitral Tribunal
was not in accordance with the agreement of
the parties,
(b) failing such agreement, the composition of the
Arbitral Tribunal was not in accordance with
Part I of the Act.
(ii) if the arbitral procedure was not in accordance
with:
(a) the agreement of the parties, or
(b) failing such agreement, the arbitral procedure
was not in accordance with Part I of the Act.
However, exception for setting aside the
award on the ground of composition of Arbitral
Tribunal or illegality of arbitral procedure is
Page 21 of 60
that the agreement should not be in conflict
with the provisions of Part I of the Act from
which parties cannot derogate.
(c) If the award passed by the Arbitral Tribunal is
in contravention of the provisions of the Act
or any other substantive law governing the
parties or is against the terms of the
contract.
(3) The award could be set aside if it is against the
public policy of India, that is to say, if it is
contrary to:
(a) fundamental policy of Indian law; or
(b) the interest of India; or
(c) justice or morality; or
(d) if it is patently illegal.
(4) It could be challenged:
(a) as provided under Section 13(5); and
(b) Section 16(6) of the Act.
12. In the case of Associate Builders vs. DDA, reported in (2015)
3 SCC 49, while dealing with the issue of patent illegality has held that it
has comprises of three requirements:-
"42. In the 1996 Act, this principle is
substituted by the "patent illegality" principle
which, in turn, contains three subheads:
42.1. (a) A contravention of the substantive law
of India Would result in the death knell of an
arbitral award. This must be understood in the
Page 22 of 60
sense that such illegality must go to the root of
the matter and cannot be of a trivial nature.
This again is really a contravention of Section
28(1) (a) of the Act which reads as under:
"28.Rules applicable to substance of
dispute.-(1) Where the place of arbitration
is situated India-
(a) in an arbitration other than an
international commercial arbitration, the
Arbitral Tribunal shall decide the dispute
submitted to arbitration in accordance with
the substantive law for the time being in
force in Inida;‛
42.2.(b) A contravention of the Arbitration Act
itself would be regarded as a patent illegality -
for example if an arbitrator gives no reasons for
an award in contravention of Section 31(3) of the
Act, such award will be liable to be set aside.
42.3.(c)Equally, the third subhead of patent
illegality is really a contravention of Section
28(3) of the Arbitration Act, which reads as
under:
"28.Rules applicable to substance of
dispute,-(1) - (2) ***
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(3) In all cases, the Arbitral Tribunal
shall decide in accordance with the terms of the
contract and shall take into account the usages
of the trade applicable to the transaction."
This last contravention must be understood
with a caveat. An Arbitral Tribunal must decide
in accordance with the terms of the contract, but
if an arbitrator construes a term of the contract
in a reasonable manner, it will not mean that the
award can be set aside on this ground.
Construction of the terms of a contract is
primarily for an arbitrator to decide unless the
arbitrator construes the contract in such a way
that it could be said to be something that no
fair-minded or reasonable person could do.
13. Again in the case of Haryana Tourism Ltd. v. Kandhari
Beverages Ltd., reported in (2022) 3 SCC 237 Hon‟ble Supreme
Court has held as under:-
‚9. As per settled position of law laid down by this
Court in a catena of decisions, an award can be set
aside only if the award is against the public policy
of India. The award can be set aside under Sections
34/37 of the Arbitration Act, if the award is found
to be contrary to: (a) fundamental policy of Indian
law; or (b) the interest of India; or (c) justice or
morality; or (d) if it is patently illegal. None of
Page 24 of 60
the aforesaid exceptions shall be applicable to the
facts of the case on hand. The High Court has
entered into the merits of the claim and has decided
the appeal under Section 37 of the Arbitration Act
as if the High Court was deciding the appeal against
the judgment and decree passed by the learned trial
court. Thus, the High Court has exercised the
jurisdiction not vested in it under Section 37 of
the Arbitration Act. The impugned judgment and order
[Kandhari Beverages Ltd. v. Haryana Tourism Ltd.,
2018 SCC OnLine P&H 3233] passed by the High Court
is hence not sustainable.
14. In the case of UHL Power Co. Ltd. v. State of H.P.,
reported in (2022) 4 SCC 116, Hon‟ble Supreme Court has held that:-
16. As it is, the jurisdiction conferred on courts
under Section 34 of the Arbitration Act is fairly
narrow, when it comes to the scope of an appeal
under Section 37 of the Arbitration Act, the
jurisdiction of an appellate court in examining an
order, setting aside or refusing to set aside an
award, is all the more circumscribed. In MMTC
Ltd. v. Vedanta Ltd. [MMTC Ltd. v. Vedanta Ltd.,
(2019) 4 SCC 163], the reasons for vesting such a
limited jurisdiction on the High Court in exercise
of powers under Section 34 of the Arbitration Act
have been explained in the following words : (SCC
pp. 166-67, para 11)
‚11. As far as Section 34 is concerned, the
position is well-settled by now that the Court
does not sit in appeal over the arbitral award
and may interfere on merits on the limited
ground provided under Section 34(2)(b)(ii) i.e.
Page 25 of 60
if the award is against the public policy of
India. As per the legal position clarified
through decisions of this Court prior to the
amendments to the 1996 Act in 2015, a violation
of Indian public policy, in turn, includes a
violation of the fundamental policy of Indian
law, a violation of the interest of India,
conflict with justice or morality, and the
existence of patent illegality in the arbitral
award. Additionally, the concept of the
‚fundamental policy of Indian law‛ would cover
compliance with statutes and judicial
precedents, adopting a judicial approach,
compliance with the principles of natural
justice, and Wednesbury [Associated Provincial
Picture Houses Ltd. v. Wednesbury Corpn.,
(1948) 1 KB 223 (CA)] reasonableness.
Furthermore, ‚patent illegality‛ itself has
been held to mean contravention of the
substantive law of India, contravention of the
1996 Act, and contravention of the terms of the
contract.‛
17. A similar view, as stated above, has been
taken by this Court in K. Sugumar v. Hindustan
Petroleum Corpn. Ltd. [K. Sugumar v. Hindustan
Petroleum Corpn. Ltd., (2020) 12 SCC 539],
wherein it has been observed as follows: (SCC
p. 540, para 2)
‚2. The contours of the power of the Court
under Section 34 of the Act are too well
established to require any reiteration. Even
a bare reading of Section 34 of the Act
indicates the highly constricted power of
Page 26 of 60
the civil court to interfere with an
arbitral award. The reason for this is
obvious. When parties have chosen to avail
an alternate mechanism for dispute
resolution, they must be left to reconcile
themselves to the wisdom of the decision of
the arbitrator and the role of the court
should be restricted to the bare minimum.
Interference will be justified only in cases
of commission of misconduct by the
arbitrator which can find manifestation in
different forms including exercise of legal
perversity by the arbitrator.‛
18. It has also been held time and again by this
Court that if there are two plausible
interpretations of the terms and conditions of the
contract, then no fault can be found, if the
learned arbitrator proceeds to accept one
interpretation as against the other. In Dyna
Technologies (P) Ltd. v. Crompton Greaves
Ltd. [Dyna Technologies (P) Ltd. v. Crompton
Greaves Ltd., (2019) 20 SCC 1], the limitations on
the Court while exercising powers under Section 34
of the Arbitration Act has been highlighted thus :
(SCC p. 12, para 24)
‚24. There is no dispute that Section 34 of
the Arbitration Act limits a challenge to an
award only on the grounds provided therein
or as interpreted by various Courts. We need
to be cognizant of the fact that arbitral
awards should not be interfered with in a
casual and cavalier manner, unless the Court
comes to a conclusion that the perversity of
Page 27 of 60
the award goes to the root of the matter
without there being a possibility of
alternative interpretation which may sustain
the arbitral award. Section 34 is different
in its approach and cannot be equated with a
normal appellate jurisdiction. The mandate
under Section 34 is to respect the finality
of the arbitral award and the party autonomy
to get their dispute adjudicated by an
alternative forum as provided under the law.
If the Courts were to interfere with the
arbitral award in the usual course on
factual aspects, then the commercial wisdom
behind opting for alternate dispute
resolution would stand frustrated.‛
19. In Parsa Kente Collieries Ltd. v. Rajasthan
Rajya Vidyut Utpadan Nigam Ltd. reported in (2019)
7 SCC 236, adverting to the previous decisions of
this Court in McDermott International Inc. v. Burn
Standard Co. Ltd. reported in (2006) 11 SCC 181
and Rashtriya Ispat Nigam Ltd. v. Dewan Chand Ram
Saran reported in (2012) 5 SCC 306], wherein it has
been observed that an Arbitral Tribunal must decide
in accordance with the terms of the contract, but
if a term of the contract has been construed in a
reasonable manner, then the award ought not to be
set aside on this ground, it has been held thus:
[Parsa Kente Collieries Ltd. v. Rajasthan Rajya
Vidyut Utpadan Nigam Ltd., (2019) 7 SCC 236]
‚9.1. ... It is further observed and held that
construction of the terms of a contract is
primarily for an arbitrator to decide unless
the arbitrator construes the contract in
Page 28 of 60
such a way that it could be said to be
something that no fair-minded or reasonable
person could do. It is further observed by
this Court in the aforesaid decision in para
33 that when a court is applying the ‚public
policy‛ test to an arbitration award, it
does not act as a court of appeal and
consequently errors of fact cannot be
corrected. A possible view by the arbitrator
on facts has necessarily to pass muster as
the arbitrator is the ultimate master of the
quantity and quality of evidence to be
relied upon when he delivers his arbitral
award. It is further observed that thus an
award based on little evidence or on
evidence which does not measure up in
quality to a trained legal mind would not be
held to be invalid on this score.
9.2. Similar is the view taken by this Court
in NHAI v. ITD Cementation India
Ltd. [NHAI v. ITD Cementation India Ltd.,
(2015) 14 SCC 21 (para 25) and SAIL v. Gupta
Brother Steel Tubes Ltd. [SAIL v. Gupta
Brother Steel Tubes Ltd., (2009) 10 SCC 63
para 29]‛
(emphasis supplied)
20. In Dyna Technologies [Dyna Technologies (P)
Ltd. v. Crompton Greaves Ltd., (2019) 20 SCC 1],
the view taken above has been reiterated in the
following words:
‚25. Moreover, umpteen numbers of judgments
of this Court have categorically held that
the courts should not interfere with an
Page 29 of 60
award merely because an alternative view on
facts and interpretation of contract exists.
The courts need to be cautious and should
defer to the view taken by the Arbitral
Tribunal even if the reasoning provided in
the award is implied unless such award
portrays perversity unpardonable under
Section 34 of the Arbitration Act.‛
15. The proposition of law, which can be crystallized from the aforesaid
discussion, is that the jurisdiction conferred on courts under Section 34
of the Arbitration Act is fairly narrow. And when it comes to the scope of
an appeal under Section 37 of the Arbitration Act, the jurisdiction of an
appellate court in examining an order, setting aside or refusing to set
aside an award, is all the more circumscribed. The apparent reason
behind this is that when parties have chosen to avail an alternate
mechanism for dispute resolution, they must be left to reconcile
themselves to the wisdom of the decision of the arbitrator and the role
of the court should be restricted to the bare minimum. However, the
same can be interfered only in cases of commission of misconduct by the
arbitrator which can find manifestation in different forms including
exercise of legal perversity by the arbitrator if the award goes to the
root of the matter without there being a possibility of alternative
interpretation which may sustain the arbitral award. The jurisdiction
under Section 34 cannot be equated with a normal appellate jurisdiction.
The mandate under this section is to respect the finality of the arbitral
award and the party autonomy to get their dispute adjudicated by an
Page 30 of 60
alternative forum as provided under the law. Interference with the
arbitral award in the usual course by the courts on factual aspects would
frustrate the commercial wisdom behind opting for alternate dispute
resolution by the parties. Under Section 34 the Court does not sit in
appeal over the arbitral award and may interfere on merits on the limited
ground provided under Section 34(2)(b)(ii) i.e. if the award is against the
public policy of India. A violation of Indian public policy, in turn, includes
a violation of the fundamental policy of Indian law, a violation of the
interest of India, conflict with justice or morality, and the existence of
patent illegality in the arbitral award. Additionally, the concept of the
"fundamental policy of Indian law" would cover compliance with statutes
and judicial precedents, adopting a judicial approach, compliance with
the principles of natural justice, and Wednesbury reasonableness.
Furthermore, "patent illegality" itself has been held to mean
contravention of the substantive law of India, contravention of the 1996
Act, and contravention of the terms of the contract.. Construction of the
terms of a contract is primarily for an arbitrator to decide and unless the
arbitrator construes the contract in such a way that it could be said to be
something that no fair-minded or reasonable person could do, the court
should not interfere. If there are two plausible interpretations of the
terms and conditions of the contract, then no fault can be found, if the
learned arbitrator proceeds to accept one interpretation as against the
other.
Discussion:-
Page 31 of 60
16. It is not in dispute that there is an arbitration clause in the General
Conditions of Contract (GCC), being Clause No. 9.0.0.0. Clause 9.0.1.0,
which provides that subject to the provisions of Clause 6.7.1.0 and
6.7.2.0, hereof, any dispute or difference between the parties hereto,
arising out of any „notified claim‟ of the contractor included in his Final
Bill in accordance with the provision of Clause 6.6.3.0 hereof, and/or
arising out of any amount claimed by the owner (whether or not the
amount claimed by the owner or any part thereof shall have been
deducted from the final bill of the contractor or any amount paid by the
owner to the contractor in respect of the work) shall be referred to
arbitration by a sole arbitrator selected by the contractor from a panel
of three persons nominated by the General Manager.
17. Thus, a careful perusal of the aforesaid clauses reveals that a
dispute may be referred to arbitration when the same relates to a
„notified claim‟.
Notified Claim:-
18. What is a "Notified Claim" has been dealt with in Clause 1.0.24.0,
which means a claim of the contractor notified in acceptance with the
provision of Clause 6.6.1.0, which clearly states that if the contractor
considers that he is entitled to any extra payment or compensation in
respect of the work, over and above the amounts due in terms of the
contract, as specified in Clause 6.3.1.0 hereof, or should the contractor
dispute the validity of any deduction made or threatened by the owner
Page 32 of 60
from any running account bills, or any payments due to him in terms of
the contract the contractor shall forthwith give notice in writing of his
claim in this behalf to the Engineer-In-charge and the Site Engineer
within 10 days from the date of the issue of orders or instructions
relative to the works for which the contractor claims such additional
payment or compensation or on the happening of any other event upon
which the contractor based such claim.
18.1. The said clause further provides that such notice shall contain
full particulars of the nature of such claim and the grounds on which
such claims is based and the amounts claimed. The contractor shall not
be entitled to raise any claim nor shall the owner anyway be liable in
respect of any claim by the contractor unless notice of such claim shall
have been given by the contractor to the Engineer-in-Charge and the
Site- Engineer in the manner and within the time aforesaid and the
contractor shall be deemed to have waived any or all claims and all his
rights in respect of any claim not notified to the Engineer-in-Charge and
the Site-Engineer in writing in the manner and within the time aforesaid.
18.2. Further, Clause 6.6.3.0 provides that any or all claims of the
contractor notified in accordance with the provision of Clause 6.6.1.0.,
hereof as shall remain at the time of preparation of final bill by the
contractor shall be separately included in the final bill prepared by the
contractor in the form of a Statement of Claims attached thereto, giving
particulars of the contractor in the claim, grounds on which it is based,
and the amount claimed and shall be supported by a copy(ies) of the
notices(s) sent in respect thereof by the Engineer-in-Charge and Site
Engineer under Clause 6.6.1.0 hereof. In so far as such claim shall in any
Page 33 of 60
manner particular be at variance with the claim notified by the contractor
within the provision of Clause 6.6.1.0 hereof, it shall be deemed to be a
claim different from the notified claim with consequence in respect
thereof indicated in Clause 6.6.1.0 hereof, and with consequences in
respect of the notified claim as indicated in Clause 6.6.3.1 hereof.
18.3. It also appears from the said clause that any and all notified claim
not specifically reflected and included in the final bill in accordance with
the provisions of Clause 6.6.3.0 hereof shall be deemed to have been
waived by the contractor and the owner shall have no liability in respect
thereof and the contractor shall not be entitled to raise or include in the
final bill any claim(s) other than a notified claim conforming in all respect
in accordance with the provision of C lause 6.6.3.0 of GCC.
18.4. On the other hand, Clause 6.6.4.0 provides that no claim(s) shall
on any account be made by the contractor after the final bill, with the
intent the final bill prepared by the contractor shall reflect any and all
claims, whatsoever, of the contractor against the owner arising out of or
in connection with the contract or work performed by the Contractor
there under, or in relation thereto and the Contractor shall
notwithstanding any enabling provision in any law or contract and
notwithstanding any claim in quantum meruit that the contractor could
have in respect thereof, be deemed to have waived any and all such
claims not included in the final bill and to have absolved and discharged
the owner from and against the same, even if in not including the same
as aforesaid, the contractor shall have acted under a mistake of law or
fact.
Page 34 of 60
Finding of the Arbitrator:-
19. The sole Arbitrator had categorically held that the claims so raised
are notified claim. While dealing with the issue in para No. 29, the
Arbitrator had held that the admitted position is that the respondent
prepared and submitted the Final Bill without including the notified
claims of the claimant and without the knowledge of the claimant, which
was signed by someone else in the name of the claimant. Thereafter, as
alleged, the respondents released payment against the said Final Bill to
the claimant. It is to be noted here that vide letter No.
RB/GR/DCU/CDU/98-99/33 dated 17.08.2000 (Annexure-XXXIII)
addressed to the Senior Manager, I.O.C.L. the claimant informed that all
the papers including the Final Bills etc. be signed by the claimant, Ranjul
Baruah, who is the sole proprietor and that nobody is authorised to sign
any paper on behalf of the claimant. Claimant also raised objection to
such action before General Manager, I.O.C.L. and also requested to
review or refer the dispute to arbitration. These facts and circumstances
are not denied by the respondents.
19.1. Further, in para No.30, it has been held that -„In view of this, I
hold that the respondents are aware of the claims which are apparently
notified claims. It is further noted that the cheque was issued with
undue haste, without giving any opportunity of hearing and reasonable
time, when there were communications and correspondence between
the parties to the dispute and even there was scope for review of the
alleged Final Bill. The correspondence on record established that the
claims of the claimant for re-imbursement etc. are notified claim.
Page 35 of 60
Contention of the appellant:-
20. It is the contention of the appellant that the Arbitrator is the master
of both facts and laws. And once the Arbitrator has formed an opinion
based upon materials, placed before it, the courts ought not to have
interfered with the same merely because in the given facts and
circumstances placed on record another view is possible. It is the further
contention of the appellant that there was delay on the part of the
respondent authorities as they could not shut down the machineries in
time for which the work could not be completed in time and that it is an
admitted fact that labour rate had increased and the learned District
Judge had failed to take note of the same and that the payment was
made to one N.C. Kalita and the appellant had not received the same
and at no point of time the appellant had appointed N.C. Kalita as Sub-
Contractor and the finding of the learned District Judge in this regard is
perverse.
Contention of the respondent:-
21. The claims, so raised by the appellant herein, before the learned
Arbitrator in arbitration proceeding were not notified claims, and as such
the claims were barred by the contract and the Arbitrator could not have
awarded any amount against such claim. It is the further contention of
the respondent that once the final bill is paid and the security deposit of
the contractor is released the respondent is discharged of its obligation
under the contract in view of clauses 6.7.1.0, 6.8.2.0 and 6.8.3.0 of the
GCC.
Finding of the learned District Judge:-
Page 36 of 60
22. The learned District Judge, in the impugned judgment, taking note
of the Clause 6.6.3.0., 6.6.3.1., 6.7.1.0., and 6.8.2.0. of the GCC and the
letter dated 03.07.1999, No. RB/GR/DCU-CDU/98-99/15, and the letter
dated 19.08.1999, No. RB/GR/DCU/CDU/98-99/21, held that till
preparation of Final Bill, there was „no notified claim‟ on the part of the
Contractor for escalation of the prices of the materials and for
enhancement of the labour charges. And thereafter, arrived at the
finding that the sole Arbitrator has passed the award contrary to the
General Conditions of Contract (GCC) and tender agreement and acted
beyond her arbitral jurisdiction.
Finding of this Court:-
23. Here in this case, it appears that the appellant Contractor had not
given any notice in writing of his claim in this behalf to the Engineer-In-
Charge and the Site Engineer within 10 days from the date of the issue
of orders or instructions relating to the works for which the Contractor
claims such additional payment or compensation or on the happening of
any other event on which the contractor based such claim, in terms of
Clause 6.6.1.0. He had given notice to the Chief Technical Services
Manager of Indian Oil Corporation, on 29.09.2000, as is apparent from
the Document No. XX, in page 32 of the written argument filed by the
respondent, instead of to the Engineer-In-Charge and the Site- Engineer,
within 10 days, from the date of the issue of orders or instructions
relative to the works. Thus, the claims so made by the appellant, in the
given facts and circumstances placed on the record, appears to be not
„notified claim‟ in as much as the same were not made in accordance
with the terms of General Conditions of Contract. In holding so, this
Page 37 of 60
Court derived authority from a decision Hon‟ble Supreme Court in the
case of Indian Oil Corpn. Ltd. v. NCC Ltd. reported in (2023)
2 SCC 539, wherein it has been held that only those claims which are
notified after following the procedure shall be considered as notified
claim. The relevant paragraph is reproduced herein below :-
‚80. Thus, on a fair reading of the aforesaid
provisions, it can be seen that only those claims
which are notified after following the procedure
as referred to hereinabove shall be considered as
‚notified claim‛ and in respect of any claim
other than the notified claim, the owner is not
liable to pay and as such is absolved and
discharged under the said clauses.‛
23.1. It has also been held in paragraph No. 85 of the aforesaid case
that on a fair reading of Clause 9.0.0.0, only the dispute arising out of
a notified claim of the contractor included in the final bill in accordance
with the provisions of Clause 6.6.3.0 shall be referred to arbitration, that
too, subject to Clause 9.0.2.0 and any dispute/matter falling within
Clause 9.0.2.0 shall have to be first decided by the General Manager,
including, whether or not a claim sought to be referred to arbitration by
the contractor is a notified claim. Therefore, if the claim is not a notified
claim, as per Clause 6.6.1.0 and the same is not included in the final bill,
such a claim is outside the purview of the arbitration agreement.
23.2. Besides, a perusal of Clause 6.7.1.0. of GCC reveals that the
acceptance by the contractor of any amount paid by the owner to the
contractor in respect of the final dues of the contractor determined in
accordance with the provisions of Clause 6.3.1.0 hereof, upon condition
Page 38 of 60
that the said payment is being made in full and final settlement of all the
said dues to the contractor shall without prejudice to the claim of the
contractor included in the final bill in accordance with the provisions
under Clause 6.6.0.0. hereof and associated provisions there under be
deemed to be in full and final satisfaction of all such dues to the
contractor not withstanding any qualifying remarks protest or condition
imposed or purported to be imposed by the contractor relative to the
acceptance of such payment, with the intent that upon acceptance by
the contractor of any payment made as aforesaid, the contract (including
the arbitration clause) shall subject to the provisions of Clause 6.8.2.0.,
hereof stand discharged and extinguished except in respect of the
notified claims of the contractor included in the final bill and except in
respect of the contractor's entitlement to receive the unadjusted portion
of the security deposit in accordance with the provision of Clause
6.8.2.0., hereof on successful completion of the defect liability period.
23.3. Perusal of the Clause 6.7.2.0 indicates that the acceptance by the
Contractor of any amount paid by the owner to the contractor in respect
of the notified claims of the contractor included in the final bill in
accordance with the provisions of Clause 6.6.0.0. hereof and associated
provisions there under upon the condition that such payment is being
made in full and final settlement of all the claims of the contractor shall
subject to the provisions of Clause 6.7.3.0. thereof, be deemed to be in
full and final satisfaction of all claims of the contractor notwithstanding
any qualifying remarks, protest or condition imposed or purported to be
imposed by the contractor relative to the acceptance of such payment
Page 39 of 60
with the intent that upon acceptance by the contractor of any payment
made as aforesaid, the contract (including arbitration clause) shall stand
discharged and extinguished in so far as relates to and/or concerns the
claims of the contractor.
23.4. Clause 6.8.2.0., provided that within 15 days of application made
by the contractor in this behalf accompanied by the final certificate, or
within 15 days of passing of the contractor‟s final bill by the owner,
whichever shall be later, the owner shall pay/refund to contractor the
unadjusted balance (if any) of the security deposit for the time being
remaining in the hands of the owner and upon such payment/refund the
owner shall stand discharged of all obligations and liabilities under the
contract.
23.5. In the case in hand, it appears that the appellant himself applied
for releasing his security deposit, vide his letter dated 24.09.2001, and
on receipt of the same, the security deposit was released vide cheque
No. 964079, on 05.10.2001 and the same was received by the appellant
on 08.10.2001. Thus, it appears that once the final bill is paid and the
security deposit of the appellant was released, the respondent herein
stands discharged from all its obligation under the contract in view of
Clause 6.7.1.0, 6.8.2.0 and 6.8.3.0 of the GCC.
23.6. It is to be noted here that in the case of Indian Oil Corpn.
Ltd.(Supra) in paragraph No. 82, Hon‟ble Supreme Court has held that
once such payment is being made in full and final settlement of all the
claims of the contractor shall, subject to the provisions of Clause 6.7.3.0,
be deemed to be in full and final satisfaction of all claims of the
Page 40 of 60
contractor notwithstanding any qualifying remarks, protest or condition
imposed or purported to be imposed by the contractor relative to the
acceptance of such payment with the intent that upon acceptance by the
contractor of any payment made, the contract (including the arbitration
clause) shall stand discharged and extinguished insofar as relates to
and/or concerns the claims of the contractor.
23.7. In view of the decision of Hon‟ble Supreme Court in Saw Pipes
Ltd.(Supra) the Court can set aside the arbitral award under Section
34(2) of the Act if the party making the application furnishes proof that
the arbitral award deals with a dispute not contemplated by and not
falling within the terms of the submission to arbitration. Here in this
case, it is established that the arbitral award deals with a dispute not
contemplated by and not falling within the terms of the submission to
arbitration.
23.8. Though, the appellant has contended that the final bill was
prepared by the respondent and payment was made to one N.C. Kalita
and the appellant had not received the same and at no point of time the
appellant had appointed N.C. Kalita as Sub-Contractor and for the first
time the respondent had produced a letter dated 19-8-1999, before the
learned Court below, and the same was not given effect to and that as
per Clause 4.7.1.0 of G.C.C and Article 8 of the Contract dated 5-3-1999,
approves contract, sub-contracting, sub-letting of the work was
impermissible unless approved by the respondent, yet the same appears
to be incorrect in as much as the letter dated 19.08.1999, No.
RB/GR/DCU-CDU/98-99/21 was part of the Additional Written Statement,
Page 41 of 60
being Document-R-21, filed by the respondent herein, on 22.01.2003.
But, the said piece of document was not taken into consideration by the
learned Arbitrator. Further, from the Document No.R-18 of the
respondent herein, which is a letter dated 04.10.1999, addressed to the
Senior Project Manager, (Engineer-in-Charge) IOCL, indicates that the
appellant herein authorised Sri N.C. Kalita Sub-Contractor, to sign MB,
Bills, etc. and to draw A/C Payee Cheques on behalf of his company, and
also attested signature of N.C. Kalita, in the said letter.
23.9. Thus, drawing premises from the illuminating discourse as above,
and considering the well settled legal proposition, this Court is of the
considered opinion that the finding, so arrived at by the learned District
Judge that till preparation of Final Bill, there was no notified claim on the
part of the Contractor for escalation of the prices of the materials and for
enhancement of the labour charges, and that the sole Arbitrator has
passed the award contrary to the General Conditions of Contract (GCC)
and tender agreement and acted beyond her arbitral jurisdiction, cannot
be said to be illegal or arbitrary. And being the arbitral award deals with
a dispute not contemplated by and not falling within the terms of the
submission to arbitration, under Section 34(2) of the Act, the learned
District Judge has the power to set aside the award on the said ground,
and exercise of such power cannot be said to be beyond jurisdiction.
The Issue of Escalation of Price of Materials:-
24. The appellant, before the Arbitrator had made a claim of Rs.
28,92,193/- on account of escalation of price of materials calculated
@15% on the basis of job awarded.
Page 42 of 60
24.1. It also appears that the Sole Arbitrator had granted escalation @
15%.
Contention of the appellant:-
25. It is the contention of the appellant that the finding of the learned
District Judge to the effect that it appears that the major portion of the
materials such as cement, steel have been supplied by the IOC Ltd. to
the respondent contractor at a reasonable fixed rate below the market
price till completion of the works, is patently incorrect.
Contention of the respondent:-
26. The respondent has contended that the claim of price escalation is
barred by the contract. And as such no award can be made under this
head. Further contention of the respondent is that the award here in this
case was granted without evidence and if a party raises a claim for loss
or profit, it has to prove the same in accordance with law, in view of
decision of Hon‟ble Supreme Court in M/s Unibros vs. All India
Radio reported in (2023) 14 SCR 683 and in Batliboi
Environmental Engineers Ltd. vs. Hindustan Petroleum
Corporation Ltd., reported in (2024) 2 SCC 375, and since the
appellant had not produced any material to show that there was any
increase in the rate of Cement, Steel etc. he is not entitled to any relief
on this count. The further contention of the respondent is that major
portion of the materials such as Cement, Tor steel, Structural steel were
supplied by the I.O.C. Ltd. to the appellant contractor at a reasonable
fixed rate below the prevailing market price till completion of the works.
It is the further contention of the appellant that the rate of price
Page 43 of 60
escalation was calculated on the basis of Reserve Bank of India‟s price
index submitted at the time of arbitration proceeding, which according to
the respondent related to consumer products only and nothing to do
with the case in hand.
Discussion:-
27. A careful perusal of Clause 6.3.2.0 of the GCC reveals that without
prejudice to generality of the provisions of Clause 6.3.1.0 thereof, the
schedule of rates shall be deemed to be included and cover:-
...............
(vii) The cost of all escalation (foreseen and
unforeseen) including but not limited to
increase in Government taxes and dues, labour
cost and material cost.
............
27.1. On the other hand Clause 6.3.3.0 indicates that the rates stated
in the schedule of rates shall not be subject to escalation or increase on
any account whatsoever.
27.2. Thus, it appears that there is clear bar in respect of the claim for
escalation of rates. It is well settled in the case of Ramachandra Reddy
& Co. v. State of A.P., reported in (2001) 4 SCC 241, that an
arbitrator being a creature of the agreement, unless the agreement
either specifically or inferentially provides for a higher rate to be
awarded for any additional or excess work done by the contractor, it
would not be permissible for the Arbitrator to award for the so-called
additional work at a higher rate. Again in the case of The State of
Madhya Pradesh vs. M/s Sew Construction Limited & Ors.,
reported in (2022) 9 SCR 731, Hon‟ble Supreme Court has held that
a contractual clause which provides for the finality of rates quoted by the
contractor and disallows any future claims for escalation is conclusive
and binding on the parties. If the clause debarring future claims permits
escalation subject to certain conditions, no claim is admissible if the
conditions are not satisfied. However, if the conditions are satisfied, the
Contractor will have a right to claim escalation. This is a contractual
right. The right originates and subsists by virtue of the contract itself.
27.3. In the instant case, it appears that the appellant contractor had
failed to complete the jobs within the stipulated period in terms of the
contract. As per work order, the schedule time of completion of job, Part
A- DCU revamp project was 2 months, and Part-B CDU revamp project
was 3 months. Admittedly, and also indisputably, the projects could not
be completed within stipulated period. The appellant herein had made
several requests to the respondent for extension of time. And on his
prayer, the time was extended by the applicant respondent for
completion of the job. It also appears from the letter No. RB/GR/DCE-
CDU/98-99/15, dated 03.07.99 sent by the appellant contractor to the
Senior Manager of I.O.C. Ltd. that for extension of time for completion of
the work there will be no financial implication on either sides and
considering this aspect the time was extended for completion of the
works. Thereafter also, vide letter dated 19.08.1999 and vide another
undated letter, extension of time was sought for and granted till
30.09.2000. In the said two letters also no claim for escalation was
made.
27.4. Even thereafter also, the appellant contractor had failed to
complete the works due to labour strike and some other grounds.
Ultimately, the appellant contractor vide his letter No. RB/GR/DCU/
CDU/98-99/21, dated 19.8.99, sub-let the works to Sri N.C. Kalita,
Contractor, Guwahati Refinery, Noonmati, Guwahati for completion on
condition that charge of materials issued by him or by Guwahati Refinery
will be recovered from the payment of the sub-contractor. Payment will
be released only after getting payment by him from the owner within a
week. All standard deductions towards Income Tax, Sales Tax, Security
deposit or any other deductions as applicable will also be deducted from
the bills of the sub-contractor. Issue rate of materials for cement,
reinforcement steel and structural steel received by the sub-contractor
from I.O.C.L., Guwahati Refinery will be as per G.C.C. and tender
agreement. Any excess or less issue of materials by the owner shall be
on the account of the sub-contractor. Other materials such as steel,
cement, stone chips, sand issued by the contractor to the sub-contractor
shall be recovered from the bill on market rate and the shuttering plates‟
plywood and steel board shall be recovered from the sub-contractor. The
machineries such as mixture machine, vibrator, pump, concrete breaker,
dewatering pump etc the hire charge of the same will be recovered on
market rate. The work so far done by the contractor shall be measured
and no payment for the same will be given to the sub-contractor.
27.5. It is also stated in the said letter that the rates are firmed and no
escalation in any case will be given to the sub-contractor. The labour
escalation, from Rs. 60 to Rs. 75, which the contractor is likely to get
from the respondent, as per tender provision, is no way payable to the
sub-contractor. Further, it is stated the retention money of 10% towards
security deposit will be shared @ 5% each of the parties on release of
the same after defect liability period.
27.6. Though Mr. Sahewalla submits that the letter dated 19.08.1999
was produced for the first time before the learned District Judge, in the
proceeding on the petition under Section 34 of the Arbitration and
Conciliation Act, yet, said submission left this court unimpressed in view
of the fact that in the additional written statement, at paragraph No.7
the respondent had taken a stand to that effect and enclosed the said
letter as document No. R-21. Notably, the appellant herein had not filed
any counter to the additional written statement filed by the respondent
herein. It is incorrect to say that the letter dated 19.08.1999, was
produced for the first time before the learned District Judge, in the
proceeding on the petition under Section 34 of the Arbitration and
Conciliation Act. It was very much before the Arbitrator.
27.7. It also appears that in terms of the agreement between the
respondent contractor and the sub-contractor N.C. Kalita, the sub-
contractor, Shri N.C. Kalita had completed the works on 30.9.2000.
Further, it appears that before preparing the final bill, notice was issued
to the contractor for depositing the labour register. But, the appellant
herein had failed to produce the labour register. Thereafter, the final bill
was prepared in the month of May, 2001 and cheque was issued towards
the dues of the final bill and the sub-contractor N.C. Kalita had signed on
the measurement books, bills and accepted the A/C payee cheque on
behalf of the appellant contractor, on being authorised by him, vide his
letter dated 04.10.1999, without raising any objection or protest towards
escalation as well as labour charge etc.
Finding of This Court:-
28. It is well settled in the case of M/s Unibros(Supra) and also in
the case of Batliboi Environmental Engineers Ltd.(Supra) that
in order to sustain a claim for loss of profit from a delayed contract it is
imperative upon the claimant to substantiate the same by adducing
convincing evidence that he had executed the contract promptly. But, in
the case in hand, it is not in dispute that the claimant has sought for
extension of time on several occasions. In the letter, No. RB/GR/DCE-
CDU/98-99/15, dated 03.07.1999, written by the appellant to the Senior
Manager, IOC Ltd. the extension was sought for without any financial
implication on either side. Though, the appellant has denied sending the
said letter and also incorporating the line 'without any financial
implication on either side' and taken a stand that somebody,
without the authority knowledge and consent of the appellant inserted
the said words, yet, he could not discharge the burden, And this aspect
of the matter would be dealt with in later part of the this judgment.
28.1. Thus, there appears to be substance in the contention so made by
the respondent herein, in this regard. It is also not in dispute that major
portion of the materials, such as Cement, Tor Steel, Structural steel were
supplied by the I.O.C. Ltd. to the appellant contractor at an agreed rate.
Moreover, no evidence, whatsoever, was produced before the learned
Arbitrator, who had calculated the escalation @ 15% on the basis of
Reserve Bank of India‟s price index, which, according to the respondent,
has nothing to do with the case in hand.
28.2. Further, in the letter dated 19.08.1999, the appellant, while sub-
letting the work to N.C. Kalita, had stated that the rates are firm and no
escalation on any account would be payable to him.
28.3. In view of the discussion made herein above and in view of the
legal position, the award so made by the Arbitrator under this head,
appears to be contrary to the contract. And the award, therefore, cannot
sustain under this head. The learned District Judge, therefore, appears
to be right in interfering with the award.
The Issue of Enhanced Labour Wages :-
29. The appellant, before the Arbitrator has made a claim of Rs.
27,72,649/- on account of enhanced labour wages, which is 14.38% of
the entire contract value, due to the increase of the labour wages by Rs.
15/- on the ground that the labour component of the job was 50%.
29.1. It also appears that the sole Arbitrator had held that the claimant
is entitled to actual labour component of Rs. 14.38% of the total value of
the labour component 50% value of which was given under notified
claim.
Contention of the Appellant:-
30. The appellant has contended that during execution of the work the
labour wages was increased by Rs. 15/- and he had paid the same. But,
he has categorically denied the execution and validity of the letter No.
RB/GR/DCE-CDU/98-99/15 dated 03.07.1999, alleged to be sent by the
appellant contractor to the Senior Manager, IOC Ltd. before the sole
Arbitrator and the Arbitrator also acknowledged the same and recorded
its doubt about the genuineness of the letter, but, the learned Court had
re-appreciate the materials on record and arrived at a different finding,
and under Section 34 of the Act the same is not permissible.
30.1. The appellant also contended that vide letter dated 19.08.1999, it
has not sub-let the work to N.C. Kalita and that N.C. Kalita was
authorised Supervisor in connection of the issuance of Gate Pass only
and the said fact is admitted by the respondent.
30.2. It is also contended that the finding of the learned District Judge
to the effect that in terms of the agreement between contractor and the
sub-contractor N.C. Kalita, the sub-contractor had completed the works
on 30.09.2000 is patently incorrect and perverse.
30.3. Further contention of the appellant is that the finding of the
learned District Judge, without assigning any reason, had set aside the
finding of the sole Arbitrator to the effect that 'the Final Bill was
prepared and cheque payment was made without the knowledge
of the claimant and the same was signed and accepted by
someone else' is a perverse appreciation of the materials on record.
30.4. And also it is contended that the finding of the learned District
Judge that if any loss is incurred towards labour charge then it will be
the sub-contractor who had performed and completed the work is
perverse and contrary to the materials on the record.
Contention of the respondent:-
31. The contention of the respondent is that the claim for enhanced
labour wages is not tenable in view of the terms and conditions of the
GCC as well as under facts and circumstances of the case. It is the
further contention of the respondent that no evidence was led or
produced to establish that the labour component of the job was 50%. It
is also stated that the wages of contract labourers were revised by the
respondent No.1, vide its communication No. P/Cont.Lab/ 6/98/4431
dated 19.09.1998, which is document R12 of the statement of defence,
whereby the rate of wages was revised based on the Memorandum of
Settlement arrived at between the Contractor's Association and the
Contract Labour Association and at the time of submission of the tender
by the appellant for the present contract, the revised rate of wage was
already prevailing.
31.1. It is the further contention of the respondent that under the
contract clauses (Clause 11.3 of the General Instructions to the
Tenderers), the respondent was not required to pay any amount to the
appellant on account of escalation of labour wages, yet, the respondent
vide letters dated 14.9.2000, 26.03.2001, 26.04.2001 (Documents - 14,
15 and 16 of the SOD) and other letters requested the appellant to
produce the labour payment register so as to prove that the labourers
were indeed paid as per the enhanced labour rates. But, the appellant
refused to submit the register and instead raised the aforesaid claim.
31.2. It is also the contention of the respondent that no Contractor can
engage contract labourers without obtaining a labour licence from the
competent authority under the Contract Labour (Abolition and
Regulation) Act, 1970. The appellant had a labour license dated
31.03.1999, document - R8 of the statement of defence, for a maximum
number of 60 contract labourers for the period from 31.3.99 to
30.3.2000. Thereafter, the appellant obtained another labour license
dated 27.7.2000 (Document R20) for the period from 24.7.2000 till the
end of the contract for 20 contract labourers, and during the
intermediate period the appellant did not have any labour licence i.e. the
appellant could engage less than 20 contract labourers and even
assuming, but not admitting, that the appellant had indeed paid the
labourers at the enhanced rate, the maximum, the appellant would have
paid is for the aforesaid number of labourers only. And since the labour
payment register was not produced by the appellant even after several
requests, the respondent enquired into with the Employees Provident
Fund Organization and vide letter dated 06.11.2003 (Document - R22)
[Page 49 of this written argument] the Provident Fund authorities were
requested to furnish the details of the Provident Fund contribution made
by the appellant in respect of the workers engaged by him during the
period of the contract i.e. between 23.3.99 to 30.9.2000, and the
Regional Provident Fund Commissioner, vide letter dated 07.11.2003
(Document - R23) informed that during the period of execution of the
contract i.e. during the year 1999-2000 and 2000-2001, the appellant
had enrolled only 3 persons as members of the Provident Fund.
31.3. And it is further contended that there is grave doubt regarding
payment to the labourers as vide his letter dated 19.08.1999 (Document
- R21) the appellant had sub-contracted the job to one Shri N. C. Kalita,
who is the person who had received the security deposit amount on
behalf of the appellant. And vide aforesaid letter the appellant also made
it clear to the sub-contractor N.C. Kalita that payment would be made to
him shall be firm and no escalation on any account would be payable to
him and that the appellant will not pay to him the escalation of the
labour rate from Rs. 60/- to Rs. 75/-, which according to the appellant
was likely to be received by the appellant from the respondent, which
goes to shows that the work was executed at the rates prevailing at the
time of award of the work and no escalation had taken place. It is the
further contention of the respondent that at the time of sub-contracting
the job, the balance work to be completed was about 90%.
31.4. It is also contended by the respondent herein that the contention
of the appellant that letter dated 19.08.1999, was not given effect to is
belied by the fact that the said N. C. Kalita was all along associated with
the appellant and immediately after the letter dated 19.08.1999, the
appellant, vide another letter, dated 04.10.1999, (Document - R18 of the
SOD) had authorised N. C Kalita to sign bills, receive account payee
cheques etc. and the signature of N. C. Kalita was also attested by the
appellant and in the final bill and security deposit, which was paid by
account payee cheques in the name of the appellant was received by N.
C Kalita and the appellant had nowhere alleged that the appellant had
not received any payment against those cheques as the cheques were
account payee cheques drawn in favour of the appellant.
31.5. Further it is stated that the contention of the appellant that as
Shri N.C. Kalita was not authorised to sign the Final bill and as such, the
claims of escalation and labour wages could not be included in the Final
Bill and therefore, the said claims should be considered as notified claims
is untenable and barred by the principles of approbation and
reprobation. A party cannot be permitted to take advantage of a
particular transaction and thereafter deny the same, as held by Hon‟ble
Supreme Court in the case of Union of India Vs. N Murrugesen,
reported in (2022) 2 SCC 25, wherein, considering its earlier
decisions in Nagubai Ammal Vs. B Shama Rao, reported in AIR
1956 SC 593 and Rajasthan State Industrial Development and
Investment Corporation and Another Vs. Diamond & Gem
Development Corporation Limited and Another, reported in
(2013) 5 SCC 470 and held that a party cannot be permitted to blow
hot and cold. When a party accepts the benefit of any contract or
conveyance, he is estopped from denying the validity thereof. And on
such count the appellant cannot be allowed to turn around and to say
that the final bill, which was signed by the said N. C. Kalita was without
any authority. Besides, the appellant had received the final bill and the
security deposit, without any objection and no issue was raised as regard
preventing him from including the claims made before the Arbitrator, in
the final bill. Now, he cannot be allowed to contend that the final bill was
prepared by someone else without his authority.
31.6. Referring to the clauses in the contract, specially Clause No.
8.3.1.0 and 8.3.4.0, it is stated that the contractor is bound to comply
with all labour laws and referring to the decision of Hon‟ble Supreme
Court in Rajasthan State Mines and Minerals Ltd. (Supra), it is
contended that when a claim for escalation is barred by the contract, the
same cannot be allowed by the Arbitrator and allowing such claim by the
Arbitrator by disregarding the specific terms of the contract would
amount to misconduct and may even be treated to be a mala-fide act.
Referring to another decision in Union of India Vs. Varinedra
Constructions, reported in (2018) 7 SCC 794, it is contended
that when parties voluntarily agree that the prices shall not be subject to
escalation, any departure from the said clause cannot be permitted even
though there may be an increase in labour wages due to a statutory
hike.
31.7. And that the learned District Judge has arrived at a categorically
finding that the final bill was prepared in the month of May and account
payee cheque, for the work was issued by the respondent in favour of
the appellant, which was accepted by the appellant without raising any
objection regarding escalation of labour charge etc. It is also contended
that the work being executed by the sub contractor, if any loss towards
labour escalation was suffered then it was suffered by the sub-contractor
and not by the appellant. It is also contended that the finding of the
learned District Judge is supported by the judgment of the Hon‟ble
Supreme Court in the case of Delhi Development Authority Vs.
R.S Sharma and Company, reported in (2008) 13 SCC 80, wherein
it has been held that when an award is against the terms of the contract,
the award is liable to be set aside u/s 34 of the Arbitration and
Conciliation Act, 1996. It is also stated that the learned Court had rightly
arrived at the aforesaid findings and as such, the same warrants no
interference.
Findings:-
32. The learned District Judge, considering the legal positions and the
record, found that till preparation of the final bill there was no notified
claim on the part of the respondent contractor for escalation of the
prices of the material and for enhancement of the labour charges and
the learned sole Arbitrator has passed the award contrary to the General
Conditions of Contract (GCC) and tender agreement and acted beyond
her arbitral jurisdiction. And accordingly, set aside the arbitral award
passed by the sole Arbitrator on 5.4.2005, in case No. Arbi(MS) No.
2/2002.
32.1. The contentions, so made by the respondent herein appears to
have substance in as much as there was no evidence before the sole
Arbitrator to show that the labour component of the job was 50%.
Further, it appears that the wages of the contract labourers were revised
by respondent No.1 vide letter dated 19.09.1998, and the same was in
force at the time of submission of the tender by the appellant. Besides,
the appellant had failed to produce the labour payment register despite
asking by the respondents to substantiate payment of wages to the
labourers at the enhanced rate. Further, in the letter dated 19.08.1999,
the appellant, while sub-letting the work to N.C. Kalita, it was stated that
the rates are firm and no escalation on any account would be payable to
him. Thus, in view of the terms and conditions of GCC and Clause 11.3
of the General Instruction to the Tenderers, the respondents are not
required to pay any amount. And when the claim of escalation is barred
by the contract, any departure is not permissible in view of decision of
Hon‟ble Supreme Court in Rajasthans Mines and Minerals Ltd.
(supra) and Varindra Constructions (supra). Since the award is
against the term of the contract the learned District Judge has the
authority to set aside same in view of decisions of Hon‟ble Supreme
Court in Delhi Development Authority (supra).
32.2. Thus, it also appears that the finding of the sole Arbitrator that
„the Final Bill was prepared and cheque payment was made without the
knowledge of the claimant and the same was signed and accepted by
someone else‟, cannot be said to be based on materials placed on record
as the letter dated 19.08.1999, indicates that the appellant had not only
sub-let the work, but also immediately after the letter dated 19.08.1999,
the appellant, vide another letter, dated 04.10.1999, document - R18 of
the statement of defence, had authorised N. C Kalita to sign bills,
receive account payee cheques etc. and the signature of N. C. Kalita was
also attested by the appellant and in the Final Bill and security deposit,
which was paid by account payee cheques in the name of the appellant
was received by N. C. Kalita. The appellant had nowhere alleged that the
he had not received any payment against those cheques as the cheques
were account payee cheques drawn in favour of the appellant. That
being so, the contention of the appellant that N.C. Kalita was not
authorised to sign the Final Bill for which the claim of escalation could
not be incorporated in the Final Bill is not acceptable in as much as he
cannot be allowed to approbate and reprobate at the same time, as held
by Hon‟ble Supreme Court in the case of N. Murrugesen (supra).
32.3. It also appears that though the appellant has categorically denied
the execution and validity of the letter No. RB/GR/DCE-CDU/98-99/15
dated 03.07.1999, alleged to be sent by the appellant contractor to the
Senior Manager, IOC Ltd. before the sole Arbitrator and the Arbitrator
also acknowledged the same and recorded its doubt about the
genuineness of the letter, yet it appears that the appellant had doubted
before the learned Arbitrator about incorporation of one line i.e.
'without any financial implication on either side' but the
learned Counsel for the appellant, before the Arbitrator had admitted
issuing the said letter by the appellant but no stipulation with regard to
'without any financial implication on either side' was there
and somebody without the authority knowledge and consent of the
appellant inserted the said words. (Para 73 of the Arbitral
Award). It is to be noted here that the burden to prove that the said line
was not there in the letter dated 03.07.1999, is upon the appellant. But,
he could not discharge the burden. When fraud, misrepresentation or
undue influence is alleged by a party in a proceeding, normally, the
burden is on him to prove such fraud, undue influence or
misrepresentation. Reference in this context can be made to a decision
of Hon‟ble Supreme Court in Gian Chand and Bros. v. Rattan Lal,
reported in (2013) 2 SCC 606 and also in Krishna Mohan
Kul v. Pratima Maity reported in (2004) 9 SCC 468. Thus, denial
simpliciter by the appellant is not sufficient. It is to be noted here that
the learned District Judge, while arriving at the conclusion, had not
solely relied upon the letter dated 03.07.1999, but also relied upon other
materials on record.
32.4. It has already been held that the power of this Court under
Section 37 of the Arbitration and Conciliation Act, 1996 is very
constricted. This court while dealing with the appeal under Section 37 of
the Arbitration and Conciliation Act, cannot entered into the merits of the
claim, unlike deciding an appeal against the judgment and decree passed
by the learned trial court as held by Hon‟ble Supreme Court in the case
of Haryana Tourism Ltd.(supra).With such constricted power and
limited scope of interference, and in view of the settled legal proposition,
while the impugned judgment of the learned District Judge, Kamrup is
examined, this Court is unable to satisfy itself that there exists any scope
of interference in the impugned judgment of the learned District Judge,
since no patent illegality appears to be committed. No doubt the learned
District Judge has not entered into detailed discussion by analysing each
and every aspect of the matter, which is also not at all permissible. But,
it appears that reasons are assigned in arriving at such a finding by the
learned District Judge. With the limited scope of interference, under
Section 34 of the Arbitration and Conciliation Act, 1996, it is neither
desirable nor permissible to enter into elaborate discussion of materials
placed on record.
32.5. In the result, I find this appeal bereft of merit and accordingly,
the same stands dismissed. Send down the record of the learned Court
below with a copy of this judgment. The parties have to bear their own
costs.
JUDGE
Comparing Assistant
