Jharkhand High Court

State Of Bihar (Now Jharkhand) ... vs M/S Jai Guru Construction on 17 March, 2023

            IN THE HIGH COURT OF JHARKHAND AT RANCHI

                        Arbitration Appeal No.14 of 2007

           State of Bihar (Now Jharkhand) through the Executive Engineer,
           Kharkai Canal Division, P.O. B. Kutung, P.S. - Raj Nagar, District -
           Seraikella Kharsawan             ...     ...     Appellant/Applicant
                                     Versus
           1. M/s Jai Guru Construction, having its Head Office at 21 Bentick
              Street, Kolkata 700001, (West Bengal)
           2. Paramjit Singh Jaggi, S/o Sardar Gurubachan Singh Jaggi
           3. Sardarin Surjit Jaggi, W/o Sri Paramjit Singh Jaggi
              Sl. No.2 & 3 are partners of the firm M/s Jai Guru Construction 21,
              Bentick Street, Kolkata 700001, (West Bengal)
           4. P.R. Maity, B.E. 184, Sector - I, Salt Lake City, Kolkata 700064
                                     ...      ... Respondents/Opposite Parties
                                     ---

CORAM: HON'BLE MRS. JUSTICE ANUBHA RAWAT CHOUDHARY

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For the Appellant : Mr. Sachin Kumar, A.A.G. II For the Opposite Party : Mr. Indrajit Sinha, Advocate : Ms. Puja Agarwal, Advocate

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36/17.03.2023

1. Heard the learned counsel for the parties.

2. This arbitration appeal has been filed for the following reliefs:

"That the instant appeal has been preferred against the judgment dated 26.3.2007 decree date 5.4.07 passed by Sr. B.C. Jha, Sub-Judge-I, Seraikella Kharsawan in T. (Arb.) Case No. 14/94, whereby and whereunder the learned Court below after setting aside the objection filed under Section 30 & 33 of the Arbitration Act 1940 (for sake of brevity 'The Act') made the award dated 27.1.1995 (Rule of the Court)."

3. This case arises out of a contract with respect to execution of earthwork and bed lining in Icha Right Main Canal entered into between the then State of Bihar through its Executive Engineer and the claimant namely Jai Guru Construction, a partnership firm. The work was from km 20.07 to 30.21 kms covered vide agreement no. LCB 14/84 of Kharkai Barrage (Canal), Division - Ganjia. The arbitrator was Sri P.R. Maiti, Retired Chief Engineer, Irrigation and Waterways Directorate, Government of West Bengal and the arbitration proceeding is governed by the Arbitration Act, 1940.

4. The background under which the learned Arbitrator entered into reference has been mentioned in the award itself. It has been recorded in the award that during execution of work and at the termination of contract on 06.04.1991, disputes and differences arose between the parties and the claimants being unable to settle their disputes amicably expressed their intention vide letter dated 07.09.1993 to refer the matter to the Chief Engineer for appointment of a sole arbitrator for settlement of disputes. The claimants in their letter dated 28.10.1993, requested the Chief Engineer, Subarnarekha Multipurpose Project to send a list of three officers of the rank of Superintending Engineer or higher who do not have any connection with the work under the contract in terms of clause 52 of the General Conditions of Contract. The appellant failed to take action within the specified period of 30 days as mentioned in clause 52. Accordingly, the claimants, in their letter dated 13.12.1993, sent a list of three Chief Engineers with a request to select and appoint one of them as sole arbitrator within 15 days as per clause 52 of the General Conditions of Contract. The respondent (appellant herein) failed to select and appoint one officer from the list and the claimants in their letter dated 14.02.1994 addressed to the appellant, selected and appointed the learned Arbitrator namely P.R. Maiti as a sole arbitrator as per clause 52 of the General Conditions of Contract to the Agreement No. LCB 14/84.

Consequently, the sole arbitrator entered into reference on 15.04.1994 and called upon the claimants to submit their statement of claims/facts which was duly submitted.

However, the State, after receipt of registered notice summoning it to attend the proceedings on specified date, time and place, participated in first hearing and approved the rates of arbitrator's remuneration and other miscellaneous expenses of the arbitration proceedings. The minutes of 1st hearing was signed by the Executive Engineer of the state -respondent (appellant herein), but after 1st hearing and in spite of receipt of date, time and place of successive hearing through registered notice, failed and neglected to participate in the proceedings and after much effort, the learned Arbitrator proceeded with the

reference ex-parte. The learned Arbitrator has recorded in the award that he had examined and considered the evidence both oral and documentary and recorded that to his judgment the claims of the claimants succeed in part and passed the following award:

"AND Whereas I have examined and duly considered the statement of Claims and/or facts submitted by the Claimant and scrutinized the reasons behind such claims as under.

AND Whereas I have also duly examined and considered the evidence, both oral and documentary adduced before me on their behalf and have come to my judgement that the Claims of the Claimant do succeed in part.

Now, therefore, I make and publish my award as follows under reference to me.

That the Respondent, the STATE OF BIHAR acting through the Executive Engineer, Kharkai Canal Division, Hata, P.O. B-Kutung, Dist. Singbhum (West), Bihar shall pay to the Claimant M/S. Jai Guru Construction a net amount of Rs. 1,04,53, 110.00 (Rupees One Crore Four Lakhs fifty-three thousand and one hundred ten) only.

The Respondent, the State of Bihar, acting through Executive Engineer is also liable to refund the Security Deposit as stated by the Claimant during the hearings, if not refunded. The Respondent also shall pay the Escalation Cost in terms of the Agreement, if not paid. That the Claimant M/S. Jai Guru Construction shall bear the full cost of stamp paper used for making the AWARD. REASON FOR ARRIVING AT THE AWARD IS SHOWN AT ANNEXURE A Annexure A to Award Agreement No. L. C. B. 14/84, Dated 31st August, 1984 Claim Description of Amount Amount Brief reason for the awards No. Claim claimed in Rs. awarded in (5) (1) (2) (3) Rs.

I Alleged final bill 8,00,000.00 4, 00,000.00 Last R. A. bill i.e. 34 R.A. bill amount was paid on 28.12.89 and the work continued upto 31.3.91 for which no payment was made. Hence, I allow 50% of the claimed amount i.e. Rs. 4, 00,000.00 II Work done but not paid and/or measured. a) Non- 8,58,000.00 5,14,800.00 The Claim was intimated in measurement of writing several times but the hard rock for a same was neither admitted nor quantity of denied. Hence, I allow Rs. 22,000 M3 at 5,14,800.00 after due Km 20.13 to consideration. 22.30 @ Rs. 39.00 M3

b) Non- 54,000.00 Disallowed As the Claimant could not measurement of produce adequate documentary earthwork in evidence

filling zone at Km 23.70 to Km 23.91 for a quantity of 3000 M3 @ 18.00 per M3 III Payment transportation of 7000 M3 earth to a distance of 2 Km between 24.21 Km and 24.575 Km @ Rs. 21.00 per M3 IV Difference in cost between Soft rock and Hard rock which was executed by blasting for 1,81,122 M3 @ 18.50 M3 V Unreasonable deduction from the running account bills @ 10% VI Cost of burned up Dumper No. ABV 1777 which was burnt by villagers forcibly at work site. VII Stoppage of work by the local people and threatened the labourers and the truck drivers. Being afraid all these labourers left the Site without any intimation and as a result of which suffered loss to the tune of Rs. 1,12,260.00 VIII Compensation for Machineries and equipments etc. which could not be utilised for the full time from 31.8.84 for 31.5.88 for 46 months @ Rs. 50,000.00 per month IX Compensation for loss on account overhead establishment for a period of 52 months beyond the stipulated period of completion i.e. beyond 31.5.86 @ Rs. 32,551.00 per month for 1,47,700.00 44,310.00 The claim was intimated to the Respondent in writing several times but the same was neither admitted nor denied. Hence, I allow Rs. 44,310.00 after due consideration. 33,50,757.00 16,75,378.00 The Claim was intimated in writing to the Respondent several times but the same was neither admitted nor denied. Hence, I allow Rs. 16,75,378.00 on this account after due consideration 4,00,000.00 1,16,149.00 The Claimant already admitted during the hearing that they already received Rs. 2,83,851.00 and also produced the documentary evidence before me. Hence, I allow 1,16,149.00. 5,00,000.00 2,00,000.00 Only depreciated cost of machine has been allowed i.e. I allow Rs. 2,00,000.00 1,12,260.00 56,000.00 Claim allowed partly on the basis of the documentary evidence produced before me during the hearing. Hence, I allow Rs. 56,000.00 23,00,000.00 6,90,000.00 The Claimant wrote on this claim several times but the Claim was neither admitted nor denied. Hence, I allow Rs. 6,90,000.00 on the basis of the documentary evidence. 16,92,600.00 4,36,153.00 The Claim was allowed partly on the basis of calculation from of the records produced before me during the hearing. Hence, I allow Rs. 4,36,153.00

X Compensation 75,00,000.00 25,00,000.00 The Claim was intimated in for losing writing to the Respondent but reputation and/or the same was neither admitted good will due to nor denied. After due illegal issue of consideration I allow Rs. public notice in 25,00,000.00 daily UDIT BANI dated 5.7.88 AMRITA BAZAR PATRIKA dated 8.7.88 and in RAHI NAEERAH dt. 23.4.91 XI Compensation 11,34,479.00 7,58,320.00 The Claimant produced Two for loss on Case Laws viz. AIR 1977 business for not Supreme Court 1481 and AIR allowing to do the 1984 Supreme Court 1703, balance work wherein both the Judgment the amount to Rs. Court allowed 15% of the 75,83,294.00 for amount of the balance work. no fault of ours. But I allow 10% instead of 15% i.e. I allow Rs. 7,58,320.00 XII Compensation for the machineries and equipments etc. remaining idle for no fault of ours. a) From June 10,20,000.00 Not allowed As these are overlapped with 1988 to other items of claim. Hence, I December disallowed. 1988 for 4 months excluding rainy season @ Rs. 2,55,000.00 per month b) From January, 1989 to December, 24,30,000.00 Not Allowed As these are overlapped with 1989 for 9 other items of claim. Hence, I moths disallowed. excluding rainy season @ 2,70,000.00 per month. c) From January 25,65,000.00 Not Allowed As these are overlapped with 1990 to other items of claim. Hence, I December disallowed. 1990 for 9 months excluding rainy season @ Rs. 2,85,000.00 XIII Compensation 76,55,438.00 30,62,000.00 The Claimant produced xerox for loss on copy of G.T. GAJRIA 2nd business due to edition and HUDSON's unnecessary Building Contract 10th edition. prolongation of Both the Author accepted the work for a period same for formula as mentioned of 4 years 7 in the books for loss of months beyond Business due to prolongation the original date of the work. This work was of completion i.e. actually prolonged for a period beyond 31.8.86 of 4 years 7 months beyond the for no fault of Contract period of 24 months. ours. It is seen that the delivery of possession of land required for

the work was not completed even upto 14.5.90. The Claimant submitted the Claims as per formula given by G.T. GAJRIA and/or HUDSON's Building Contract but I allow Rs. 30,62,000.00 after due consideration. XIV Interest @ 12% Disallowed on Rs. 1,02,15,317.00

5. The learned arbitrator awarded an amount of

Rs. 1,04,53,110.00 to be paid to the claimants within 90 days from the date of Publication of the Award, failing which the Respondent- State was made liable to pay simple interest at the rate of @ 12% per annum on the amount of Award till the date of realization or Decree, whichever is earlier.

Factual background as submitted by the Appellant

6. 24.02.1991 was the date fixed for final measurement, but the claimants did not participate. On 25.02.1991, the final measurement was taken in absence of the claimants and was communicated to the claimants; on 15.05.1991 a request was made for further extension of time till 30.06.1992 but the same was refused. Thereafter, on 25.05.1991 the contract was terminated. On 25.01.1992 claimants demanded money which was turned down on 31.01.1992. On 07.09.1993, claimants requested the Engineer in Charge to settle the dispute and differences and on 06.10.1993 such request was also turned down by the Engineer in Charge.

7. The grievance of the appellant State is that the claimants ought to have preferred appeal against the order dated 06.10.1993 before Chief Engineer in terms of clause 51 of the agreement but instead of preferring appeal, on 28.10.1993 the claimants requested for appointment of sole arbitrator in terms of clause 52 of the agreement. Thus, the procedure prescribed for appointment of arbitrator has not been followed.

8. On 13.12.1993, the claimants called upon the Chief Engineer to select one name to be appointed as arbitrator within 15 days; On 25.02.1994 Chief Engineer informed the claimants that the appointment of the arbitrator was not as per clause 51 of the agreement; On 14.02.1994, claimants unilaterally appointed Mr. P.R.

Maiti as sole arbitrator. On 15.04.1994, the Sole Arbitrator informed the Chief Engineer that he has entered into reference and asked him to attend the proceeding on 11.05.1994. It is the case of the appellant that on 11.05.1994, the Chief Engineer, handed over a letter dated 07.05.1994 to the learned arbitrator personally at his residence stating that the appellant is not submitting itself to the jurisdiction of the learned Arbitrator as appointment is not in accordance with the agreement and he has no authority to proceed.

9. Thereafter on 27.05.1994, the appellant filed Title (Arb) Suit No. 14/1994 under Section 5 of the Arbitration Act, 1940, to revoke the authority of the arbitrator with a prayer for stay. On 24.06.1994, interim order of stay was passed by the Court and notice was issued to the respondents. On 07.10.1994 the Stay was vacated. Misc. Appeal No. 12/1994 was filed before the learned District Judge which was admitted on 06.01.1995 and order of restraint was passed against the learned Arbitrator and notice was issued to the claimants as well as the learned Arbitrator fixing 20.01.1995 as the date for appearance. It has been stated that on 12.01.1995 a Registered letter was sent to the learned arbitrator intimating him about order of restraint and on 18.01.1995 the learned court below received the order dated 06.01.1995. It has been submitted that 19.01.1995 was the date fixed in the Title Suit, and the learned Counsel for the claimants appeared.

10. It has been argued by the learned counsel for the appellant that in spite of order of restraint, a collusive award purported to be signed on 27.01.1995 was passed despite knowledge of the interim order. Vide letter dated 15.02.1995, the learned arbitrator handed over the award to the claimants which was filed by the claimants on 22.02.1995 in Title Suit No. 14/1994, which has been made rule of the court.

11. Claimants filed Civil Revision No. 95 of 2000(R) before the High Court which was disposed of on 03.04.2000. The High Court, by order dated 03.04.2000, modified the order dated 08.02.2000 to the extent that the learned Court below shall proceed with all the questions with regard to arbitration proceeding itself, firstly he shall decide the authority of the Arbitrator as contemplated under section 5 of the Act

and if it is found that the arbitrator has the authority, then he can proceed to decide other issues. The Appellant challenged the order dated 03.04.2000 by filing SLP No. 16098/2000 before the Hon'ble Supreme Court, however, the same was dismissed on 15.11.2002.

12. On 07.09.2000, learned court below passed the order upholding the authority of Respondent No.4 to give an award. Civil Revision No.491/2000 was filed by the State against the order dated 07.09.2000. Said Civil Revision No.491/2000 was disposed of vide order dated 10.01.2001 holding that the trial court was to decide all the issues in one composite Judgment and not separately, so that the aggrieved party is entitled to go in appeal under section 39 of the act. This court refused to interfere with the order dated 07.09.2000 at that stage which would form a part of the final judgment to be passed on other issues for which the date of hearing had already been fixed by the trial court. Consequently, on 26.03.2007 the impugned judgment was passed by the learned Sub Judge-I, Chaibasa in Title (Arb) Suit No.14/1994 holding that the Arbitrator was validly appointed and the objection filed by the State to the award under Section 30/33 of the 1940 Act was rejected and the award was made the rule of the Court.

13. With the aforesaid background the pointwise argument of the learned counsel for the appellant and that of the claimants in a tabular form are as under: -

Pointwise Arguments of the Appellant Pointwise reply of the Claimants

A. Without resorting to clause 51 of the Clause 51 of the Agreement squarely conditions of contract, the claimants covers the work demanded by the were not entitled to invoke clause 52 i.e. contractor outside the agreement like arbitration clause. drawings, records or rulings arising out of the contract or the carrying out of Clause 51 of the conditions of Contract, work to be accepted. Clause 51 does not provides for in-house mechanism for apply to the work covered by the settlement of disputes. The Contractor has agreement. Clause 52 of the agreement to approach the Engineer in charge at the is independent of clause 51 of the first instance, who is required to give his agreement and the arbitrator is to be decision in writing within thirty days. If appointed under the clause 52 when

decision is not given or the contractor is disputes and differences arising out of dissatisfied with the decision of the the contact has not been settled. The Engineer in Charge, the contactor may learned court below in its order dated within thirty days, appeal to the Chief 07.09.2000 has rightly held that there is Engineer, who shall give opportunity to no application of Clause 51 of the the contractor to be heard and to offer agreement in this case. Hence, the evidence in support of his appeal and shall arbitrator has been appointed by give a decision within thirty days after following the due procedure laid down evidence is adduced by the contractor. in clause 52 of the agreement.

Clause 51 further provides that if the contractor is dissatisfied with this decision, the contractor within thirty days from receipt of the decision shall indicate his decision to refer the dispute to arbitration failing which the said decision shall be final and conclusive.

Clause 52 further provides that the arbitration shall be in respect of only those disputes or differences in respect of which the decision has not been final and conclusive.

SUBMISSION

1. Since, no appeal was preferred before the Chief Engineer within thirty days, the decision of the Executive Engineer became final and conclusive and no reference ought to have been made to the arbitrator. Reference may be made to the Judgment of the Hon'ble Supreme Court in the case of "Mitra Guha Builders (India) Co. Vs. ONGC" reported in (2020) 3 SCC 222.

2. An arbitral Tribunal being a creature of contract is bound to act in terms of the contract under which it is constituted.

B. The Arbitrator was appointed by the The contention of the Appellant that the claimants unilaterally in violation of arbitrator has been appointed provisions of Section 8 and Section 20 of unilaterally is completely the Arbitration Act, 1940. misconceived. Due procedure has been followed by the Respondent no.1-3 as As mentioned above, there was a dispute provided for in clause 52 of the with regard to invocation of clause 52 of Agreement. The respondent nos. 1 to 3 the Conditions of Contract and there were by letter dated 28.10.1993 requested the differences between the parties with regard Chief Engineer to appoint a sole to applicability of clause 52 itself, the arbitrator by providing a list of 3 claimants should have approached the officers, eligible under clause 52 to be Competent Court of law under Section 8 of appointed as arbitrator, within 30 days Arbitration Act, 1940 for appointment of which the appellant neglected.

arbitrator instead of appointing the Subsequently, long after the expiry of arbitrator unilaterally.

30 days, the respondent nos. 1 to 3 on 13.12.1993 called upon the Chief Engineer to select one name out of three names provided by them to be appointed as arbitrator within 15 days of the letter.

On failure of the Chief Engineer to the same, the Respondent no.1-3 chose one name out of the three names provided.

C. The Arbitral Award is null and void That an application for extension of having been rendered after the statutory time under Section 28 of the Act was period in violation of section 28 of the Arbitration Act, 1940 read with Schedule- filed by the Arbitrator in the impugned

Title Suit No.14/1994 which had not 14.02.1994- Respondent unilaterally appointed the sole Arbitrator been adjudicated upon. However, 15.04.1994- The Arbitrator informed the during the pendency of the application, Chief Engineer his decision to proceed with the arbitration. the Arbitrator passed an award in order 05.12.1994- Arbitrator had prayed for to minimize the duration of Arbitration extension of time for making the award by

filing an application in the title arbitration proceeding, which is the main objective case No. 14/1994. However, neither said of the process of arbitration.

application was pressed nor any order for extension of time was passed by any The power given to this Hon'ble Court competent court of law.

under Section 28 is wide enough to 06.01.1995- Restrain order was passed in Misc. Appeal No 12/1994. extend the time even if the award is 27.01.1995- Alleged Award was rendered.

made beyond four months from the 15.02.1995- Alleged award was handed over to the Respondent Nos.1 to 3 for process date of the arbitrator entering filing in the court upon the reference by using it's judicial 22.02.1995- The award was filed by the claimants in the Court below in Title (Arb) discretion. Suit No.14/1994 i.e the suit which was Judgement relied: Jatinder Nath Vs. filed by the appellant to revoke the authority of the sole arbitrator. Chopra Land Developers (P) Ltd. & Anr. (2007) 11 SCC 453 (para 17).

The Judgment of the Hon'ble Supreme Court in the case of "State of Punjab Vs. Hardyal" reported in (1985) 2 SCC 629 may be referred. Paragraphs 9, 10, 13 and 14 of the judgment may be referred. It has been held by the Hon'ble Supreme Court that the time to be fixed for making the award is initially one of agreement between the parties to the agreement. But if no time has been specified by the parties in the agreement, then the award must be given within four months as prescribed in section 3 read with clause 3 of the First Schedule. The Act has injuncted the arbitrator to give an award within four months. The arbitrator has no jurisdiction to make an award after the fixed time. The court alone has been given full discretionary power under section 28 to extend time even after the award has been given or after the expiry of the period prescribed for the award.

D. The Arbitral Award is null and void for From the perusal of the award with the want of reasons as required under clause annexure to the award marked as 52 of the Conditions of Contract:

'Annexure - A', it would be clear that The award has been passed in violation of the learned Arbitrator has applied it's Clause 52 of the Conditions of Contract, mind in passing the said award. The which clearly states that for the award of annexure provides for a specific column Rs. 1 Lakh and above, the Arbitrator shall containing the 'Brief Reasons for the be required to assign reasons. The award is awards' which shows that the a non-speaking award and is without any documents were relied on to allow or reason.

disallow the particular claim. For In this regard reference may be made to the Reference: Claim II (b) has been Constitution bench Judgment of the disallowed because the claimant could Hon'ble Supreme Court in the case of not produce documentary evidence.

Raipur Development Authority and ors. -

Again, even the judgments have been versus- M/s. Chokhamal Contractors and cited relying on which claim XI has ors. Reported in (1989) 2 SCC 721. Para been allowed. Hence, it is being 19, 33, 35, 37 and 38.

submitted that the mentioning of factors in the award on the basis of which the arbitrator has reached the conclusion, should be sufficient for compliance with the requirement to 'state reasons'.

Judgement relied: Indian Oil Corporation Ltd. Vs. Indian Carbon Ltd. (1988) 3 SCC 36 (para 8, 9 & 10)

E. The Court below erred in making the It has been submitted that the filing of award Rule of the Court in spite of the award under Section 14 of the Act is violation of provisions of section 14 read a clerical act which could have been with section 17. done by anyone, including the parties The signing and filing of the award are authorized by the Arbitrator. It is an Important duties of the arbitrator in terms admitted fact that the Arbitrator had of section 14 of the Act of 1940. In the authorized to the claimants to submit present case, the arbitrator failed to act in that Award in the learned Court below. terms of Section 14. The award was never It also has to be pointed out that this filed by the arbitrator. The filing of the particular ground was never raised by award by the claimants was in violation of the appellant in the Ld. Court below. statutory provision of the Act and there

was no occasion for the learned Court It is further submitted here that Section below to pass judgment based on the 14 (2) of the Act does not make actual award. filing by the umpire essential, but it is sufficient if the umpire causes the awards to be filed.

Judgment relied: Kumbhamawji Vs. Dominion of India, AIR 1953 SC 313 (para 8)

F. Award is null and void having been It is being submitted that no proof of passed in spite of knowledge of the order communication or the alleged registered of restraint passed by the Ld. Appellate post vide which communication Court. regarding restrain order has been made, has been attached by the Appellant.

From the list of dates, it is clear that the That no communication was received order of restraint was communicated to the regarding the restrain order neither by Learned Arbitrator through registered post the respondent nos. 1 to 3 nor by the and was also communicated to the learned learned Arbitrator. Only a notice was Court below. In spite of that, the award received from the District Judge, was passed purported to be signed on Chaibasa that the State had preferred an 27.01.1995 though the same was handed appeal but from the said order, it never over to the claimants on 15.02.1995 and appeared that the District Judge had filed by the claimants in the court below on granted stay of proceedings before the 22.02.1995. Arbitrator.

Concluding submissions Concluding submissions The learned Court below erred in rejecting In view of the above submissions, it is the objection filed by the appellant and prayed that the Arbitration appeal be making the award rule of the Court. The dismissed as the Appellant have not award was challenged on various other made out any case for setting aside the grounds, however, the learned Court impugned judgement. below failed to consider the same.

Reference may be made to para-20 of the memo of appeal, wherein various grounds of challenges have been raised. The learned Court below also erred in

enlarging the scope of the Suit filed by the appellant and erred in making the award rule of the Court.

Findings of this Court.

14. It is important to note that two orders are under consideration before this court. first, the order dated 07.09.2000 passed under section 5 of the Arbitration Act, 1940, upholding the authority of the learned arbitrator and second, the judgement dated 26.03.2007 whereby the award dated 27.01.1995 has been made the rule of the court after rejecting the objection raised by the appellant under Sections 30 and 33 of the Arbitration Act, 1940.

While passing the impugned judgement dated 26.03.2007, the learned court below has specifically referred to the issues decided vide order dated 07.09.2000.

Point no. A Whether the claimants were entitled to invoke clause 52 i.e. the arbitration clause without resorting to clause 51 of the conditions of contract?

15. The learned counsel for the appellant has relied upon the judgement passed in the case of "Mitra Guha Builders (India) Co. Vs. ONGC" reported in (2020) 3 SCC 222.

16. Clause 51 and 52 of the agreement are quoted as under:

"51. SETTLEMENT OF DISPUTES:

If the contractor considers any work demanded of him to be outside the requirements of the contract, or considers any drawings, records or ruling arising out of the contract or the carrying out of the work to be acceptable, he shall promptly ask the Engineer-in-charge in writing for written instructions or decision.

Upon receipt of written instruction or decision the contractor shall promptly proceed without delay to comply with such instruction or decisions.

If the Engineer-in-charge fails to give his instruction or decision in writing within a period of thirty days after being requested, or if the contractor is dissatisfied with the instructions or decision of the Engineer-in-charge the

contractor may within thirty days after receiving the instructions or decision, appeal to Chief Engineer who shall afford an opportunity to the contractor to be heard and to offer evidence in support of his appeal. This officer shall give a decision within a period of thirty days after the contractor has given the evidence in support of his appeal.

If the contractor is dissatisfied with this decision, the contractor within a period of thirty days from receipt of the decision shall indicate his intention to refer the dispute to arbitration, failing which, the said decision shall be final and conclusive.

52. ARBITRATION:

All the disputes differences in respect of which the decision has not been final and conclusive shall be referred for arbitration to a sole arbitrator appointed as follows. Within thirty days of receipt of notice from the contractor of his intention to refer the dispute to arbitration the Chief Engineer, Subernarekha Project, Icha and Galudih Complex Adityapur shall send to the contractor a list or three officers of the rank of Superintending Engineer or higher who have not been connected with the work under this contract. The contractor shall within fifteen days of receipt of this list select and communicate to the Chief Engineer the name of one officer from the list who shall then be appointed as the sole arbitrator. If contractor fails to communicate his selection of name, within the stipulated period, the Chief Engineer shall without delay select one officer from the list and appoint him as sole arbitrator. If the Chief Engineer fails to send such a list within thirty days, as stipulated, the contractor shall send a similar list to the Chief Engineer within fifteen days. The Chief Engineer shall then select one officer from the list and appoint him as the sole arbitrator within fifteen days. If the Chief Engineer fails to do so the contractor shall communicate to the Chief Engineer the name of one officer from the list who shall then be the sole arbitrator.

The arbitration shall be conducted in accordance with the provision of the Indian Arbitration Act 1940 or any statutory modification thereof. The decision of the majority of arbitrators shall be final and binding on the parties thereto. The arbitrators shall determine the amount of costs of arbitrations to be awarded to either parties.

Performance under the contract shall continue during the arbitration proceedings and payments due to the contactor by the owner shall not be withheld unless they are the subject matter of the arbitration proceedings.

All awards shall be in writing and in case of awards amounting to Rs. 1.00 lakh and above, such awards shall state the reasons for the amount awarded.

Neither party is entitled to bring a claim to arbitration if the arbitrator has not been appointed before the expiration of thirty days after defect liability period."

17. Upon perusal of clause 51 of the agreement it is clear that the same applies under specified circumstance i.e. if the contractor considers any work demanded of him to be outside the requirements of the contract, or considers any drawings, records or ruling arising out of the contract or the carrying out of the work to be acceptable, he shall promptly ask the Engineer-in-charge in writing for written instructions or decision. It also provides that upon receipt of written instruction or decision, the contractor shall promptly proceed without delay to comply with such instruction or decisions. There is also an appellate remedy in clause 51 mentioning that when the Engineer-in- charge fails to give his instruction or decision in writing within a period of thirty days after being requested, or if the contractor is dissatisfied with the instructions or decision of the Engineer-in-charge, he may file appeal within thirty days to Chief Engineer who in turn was to decide the appeal within a period of thirty days after the contractor has given the evidence in support of his appeal. It is at this stage, the contractor, if dissatisfied with this decision, may indicate his intention within thirty days to refer the dispute to arbitration, failing which, the said decision shall be final and conclusive.

18. The records of the case reveal that the appellant challenged the appointment and jurisdiction of the arbitrator in entering into reference in Title Arbitration Case No. 14 of 1994 filed under Section 5 of the Indian Arbitration Act, 1940, and primarily raised the following grounds: -

a. The claimants could not demand appointment of Arbitrator as per terms of clause 52 of the agreement as they did not follow the procedure laid down under Clause 51 of the contract and therefore there was no valid reference of Arbitration to the learned arbitrator.

b. The appellant-state felt that the learned arbitrator was biased and made up his mind to enter in to reference in spite of the

fact that irregularity and/or illegality in his appointment was pointed out to him.

19. A petition for injunction was also filed. Injunction was granted vide order dated 24.06.1994 in favour of the appellant restraining the learned arbitrator from proceeding further. However, the said injunction was vacated vide order dated 07.10.1994 by holding as follows: -

"In the present case the work agreement of the contract of O.P. No. 1, 2 and 3 was terminated so in my opinion clause 51 of the agreement is not applicable. The said clause deals settlement of dispute for work outside the requirement of the contract or the carrying out of the work. Clause 52 provides about the Arbitration. In my opinion O.P. No. 1 to 3 have complied the provisions of 52 and there is nothing that they skipped the provisions of clause 51 of the agreement. There is no allegation of misconduct or delay against the Arbitrator. In my opinion the applicant has no prima facie case and the balance of convenience also not lies in favour of the applicant. Because of the fact that the sole arbitrator has been appointed and entered into the reference and the applicant and O.Ps. participated in the arbitration proceeding. The applicant is not entitled to temporary injunction against the O.P. No. 4 as prayed. Therefore, the petition under Order 39 Rule 1 and 2 read with section 151 C.P.C. filed by the applicant stands rejected. The order dated 24.6.94 in respect of the ad interium injunction is hereby vacated......"

20. The specific case of the appellant-state throughout was that the claimants did not exhaust the appellate remedy under clause 51 of the Agreement and therefore the learned arbitrator could not have entered into reference. However, the learned court below while vacating the order of injunction held that clause 51 of the agreement is not applicable as it deals with settlement of dispute for work outside the requirement of the contract or outside the agreement like drawings, records or ruling arising out of the contract or the carrying out of the work to be acceptable. Clause 52 provides about the Arbitration. In the final order passed by the learned court below dealing with the issue of jurisdiction of the learned arbitrator it has been held in para 16, 23 to 25 as under:

"16. The plain reading and perusal of the aforesaid provisions of clause 51 of the agreement it is crystal clear that this provisions apply to the work demanded of the contractor outside the agreement like drawings, records or

rulling arising out of the contract or the carrying out of the work to be acceptable. The provisions of clause 51 of the agreement do not apply to the work covered by the agreement.

23. The provisions of clause 52 of the agreement clearly stipulates the manner and mode of appointment of an Arbitrator. It appears from the record that the Chief Engineer Subarn Rekha Multipurpose project, Icha. Galudih complex Adityapur, Jamshedpur refused to submit list of three officers to appoint sole Arbitrator after receipt of the letter of O.P. No. 1 in accordance with clause 52, therefore, the contractor submitted list of three Officers within 15 days and selected O.P. No. 4 as sole Arbitrator. In my opinion there is no illegality committed by O.P. No. 1 in appointing O.P. No. 4 as sole arbitrator.

24. Mere allegations of bias on the part of Arbitrator is not sufficient to revoke a submission. The Court must be satisfied of the reasonableness of such apprehension. The rejection of preliminary objections by an Arbitrator without speaking order, or non-statement of case for opinion of Court by Arbitrator, or reluctance to give reason at every stage of proceeding or plea that Arbitrator did not record minutes of meeting after certain date etc. cannot be ground for bias so as to revoke the authority of an arbitrator (See A.1.R. 1988 S. C. 1099).

25. In view of the above discussion, it is held that O.P. No. 4 has authority to give an award. It is also held that he was rightly appointed sole arbitrator by O.P. Nos. 1 to 3. These two issues are accordingly disposed of in favour of O.Ps. No. 1 to 3. Put up on 26.09.2000 for hearing on the remaining issues."

21. This court finds that it was the specific case of the appellant

-state that the claimants had not exhausted the appellate remedy under clause 51 of the agreement and therefore could not have invoked clause 52 of the agreement to appoint the arbitrator. It is not the case of the appellant state that clause 52 of the agreement does not cover the dispute involved in this case. This court has also gone through the clause 51 of the Agreement and is of the considered view that the learned court below has rightly interpreted clause 51 of the agreement and has rightly held that clause 51 of the agreement does not apply to the work covered by the agreement. Admittedly the dispute involved in the present case arose out of measurement carried out in absence of the claimants, refusal to extension of time and then termination of the

agreement. Once clause 51 is not attracted, there is no occasion of availing any remedy under clause 51 of the agreement and therefore, the claimants rightly invoked clause 52 of the agreement and appointed the arbitrator in terms of clause 52 of the agreement. This court is of the considered view that primarily interpretation of agreement is within the domain of the arbitrator, but in the present case the appellant initially appeared, participated in the proceedings on the first date on which even the fees of the arbitrator was fixed with the consent of the parties and thereafter refused to participate in the proceedings before the arbitrator and filed title suit questing the jurisdiction and appointment of the learned arbitrator and the learned court below vide impugned order rejected the plea of the appellant. This court is of the considered view that the learned court below has rightly held that the learned arbitrator was rightly appointed and had the authority to give an award.

22. Thus, it is held that the claimants were entitled to invoke clause 52 i.e., the arbitration clause without resorting to remedies provided under clause 51 of the agreement and the view of the learned court below upholding the appointment and the authority of the learned arbitrator to give the award does not call for any interference. Point no.A is accordingly decided against the appellant -state and in favour of the claimants.

Point No. B Whether unilateral appointment of the Arbitrator was in violation of provisions of Section 8 and Section 20 of the Arbitration Act, 1940?

23. It has been argued that there was a dispute with regard to invocation of clause 52 of the Conditions of Contract and there were differences between the parties with regard to applicability of clause 52 itself, the claimants should have approached the Competent Court of law under Section 8 of the Arbitration Act, 1940 for appointment of arbitrator instead of appointing the arbitrator unilaterally.

24. It is not in dispute that the claimants issued letter dated 28.10.1993 and requested the Chief Engineer, Subarnarekha

Multipurpose Project to send a list of three officers of the rank of Superintending Engineer or higher who do not have any connection with the work under the contract in terms of clause 52 of the General Conditions of Contract. The appellant failed to take action within the specified period of 30 days as mentioned in clause 52. Accordingly, the claimants, in their letter dated 13.12.1993, sent a list of three Chief Engineers with a request to select and appoint one of them as sole arbitrator within 15 days as per clause 52 of the General Conditions of Contract. The appellant- state failed to select and appoint one officer from the list and the claimants, in their letter dated 14.02.1994 addressed to the appellant, selected and appointed the learned Arbitrator as per clause 52 of the General Conditions of Contract to the Agreement No. LCB 14/84. Consequently, the sole arbitrator entered into reference on 15.04.1994. This court also finds that the arbitrator was appointed in terms of the agreement which is binding on the parties. This court finds no illegality in the appointment of the arbitrator and is of the considered view that there was no requirement to move the court in terms of section 8 /20 of the Arbitration Act, 1940 seeking appointment of the arbitrator. The fact remains that the appellant had challenged appointment of the arbitrator in the title suit by invoking section 5 of the Arbitration Act, 1940. The learned court below by well-reasoned order not only at the stage of vacating the order of injunction but also vide the final order dated 07.09.2000 decided the issue and held that the learned arbitrator was rightly appointed and had the required jurisdiction and that clause 51 of the agreement does not come into play at all. This court does not find any illegality in the order passed by the learned court below on the point of jurisdiction of the learned arbitrator. Point no.B is accordingly decided against the appellant -state and in favour of the claimants.

Point No. F and Point no C.

Point no F - Whether the Award dated 27.01.1995 is null and void having been passed in spite of knowledge of the restrain order dated 06.01.1995 passed by the Appellate Court in Misc . appeal no. 12 of 1994?

Point No. C -Whether the Arbitral Award is null and void having been rendered after the statutory period of 4 months in violation of section 28 read with section 3 and Schedule-I of the Arbitration Act, 1940? And whether, the present case is a fit case for extension of time for the learned arbitrator to file the award in the court?

25. Title suit no. 14 of 1994 was filed for revoking the authority of the Arbitrator under Section 5 of the Arbitration Act and ad interim injunction was passed restraining the arbitrator from proceeding with the Arbitration matter till further order which was vacated on 07.10.1994. Against which Misc. Appeal No. 12 of 1994 was filed in which restrain order was again passed on 06.01.1995. The grievance of the appellant is that in spite of knowledge of the restrain order passed by the appellate court, the learned Arbitrator misconducted himself and proceeded to pass the award on 27.01.1995. Further grievance is that otherwise also, there being no period prescribed for passing the award, the same ought to have been passed within 4 months. The award having been passed beyond the period of 4 months is null and void in absence of any extension of time granted by the court to publish the award and that no order was passed by the learned court below on the application seeking extension of time and in such circumstances, the award could not have been made the rule of the court. Reliance has been placed on the judgement passed in the case of "State of Punjab Vs. Hardyal" reported in (1985) 2 SCC 629.

26. The specific case of the claimants is that no communication was received regarding the restrain order either by the claimants or by the learned Arbitrator and only a notice was received from the District Judge, Chaibasa that the State had preferred an appeal. Further case of the claimants is that there is no illegality in passing the award after expiry of the statutory period of 4 months and that time can be extended even after passing the award. Reliance has been placed on the Judgement of Jatinder Nath Vs. Chopra Land Developers (P) Ltd. & Anr. (2007) 11 SCC 453 (para 17) to submit that the power given to this Hon'ble Court under Section 28 is wide

enough to extend the time even if the award is made beyond four months from the process date of the arbitrator entering upon the reference by using it's judicial discretion.

27. Upon perusal of the impugned orders passed by the learned court below , this court finds that the aforesaid two points have not been properly considered and no specific findings have been recorded . Further, even the application for extension of time to pronounce the award has not been disposed of. Parties have advanced their arguments at length and the aforesaid points are being considered as under. Publication of award in spite of knowing that the appellate court has passed a restrain order.

28. Order dated 06.01.1995 restraining the Arbitrator from proceeding with the arbitration matter was passed in Misc. Appeal No. 12/1994, communication of which has been recorded in order dated 18.01.1995 passed by the learned court below. As per order dated 06.01.1995, a copy of the order was directed to be sent to the court below with a direction to inform the Arbitrator about the direction issued in the order by forwarding a copy of the order. The next date in the appeal was fixed as 20.01.1995.

29. Thereafter, as per the order-sheet of the learned court below, the lawyer was to furnish the address of the arbitrator and in order dated 07.02.1995 it has been recorded that the address was furnished and a direction was issued to at once send the stay order dated 06.01.1995 to the learned arbitrator. On the next date a prayer was made by the State praying that the award may be called for from arbitrator and be set aside. On 22.02.1995 the award dated 27.01.1995 was filed in the court and the claimants prayed that the award submitted by the Arbitrator be made rule of the court. A petition under section 340 read with section 195 of Cr.P.C. was also filed by the state alleging forgery and collusion against the claimants and the arbitrator which was dismissed. The order sheet of the learned court below reveals that at least till 07.02.1995, the stay order dated 06.01.1995 was not communicated to the arbitrator and in the meantime, the Award was passed on 27.01.1995. The learned counsel for the appellant has not been able to show from the records of the learned

court below that the stay order dated 06.01.1995 passed by the appellate authority was communicated to the learned arbitrator on or before 27.01.1995 and it was the specific case of the claimants throughout that the stay order dated 06.01.1995 passed by the appellate authority was not communicated prior to passing of the award. In the aforesaid facts and circumstances, this court is of the considered view that the appellant has not brought on record cogent material to show that the learned arbitrator passed the award in spite of having knowledge of the stay order dated 06.01.1995 passed by the appellate authority. Point no. F is accordingly decided against the appellant and in favour of the claimants.

Publication of award beyond the statutory period and consideration of extension of time to file the award in the court.

30. As per Section 3 of the Act of 1940, an arbitration agreement, unless a different intention is expressed therein, shall be deemed to include the provisions set out in the First Schedule in so far as they are applicable to the reference. First schedule has the implied Conditions of Arbitration Agreement. Clause 3 thereof provides that the arbitrator shall make the award within four months after entering on the reference or after having been called upon to act by notice in writing from any party to the arbitration agreement or within such extended time as the Court may allow. Section 28 gives power to Court to enlarge time for making award. It provides that the Court may, if it thinks fit, whether the time for making the award has expired or not and whether the award has been made or not enlarge from time to time the time for making the award. Section 28(2) also provides that any provision in an arbitration agreement whereby the arbitrators or umpire may, except with the consent of all the parties to the agreement, enlarge the time for making the award, shall be void and of no effect. The aforesaid provisions were subject matter of consideration in the judgement passed by the Hon'ble Supreme Court in the case of "State of Punjab Vs. Hardyal" reported in (1985) 2 SCC 629 in which it has been held in paragraphs 9, 10, 13 and 14 as under:

"9. A perusal of these provisions indicates that it is open to the parties to an arbitration agreement to fix the time within which the

arbitrator must give award, but it has to be so stated in the agreement itself. If perchance no time has been specified by the parties in the arbitration agreement, then by virtue of operation of Section 3 read with clause 3 of the First Schedule the award must be given within four months of the arbitrator entering on the reference or after having been called upon to act by notice in writing from any party to the arbitration agreement or within such extended time as the court may allow.

10. Sub-section (1) of Section 28 is very wide and confers full discretion on the court to enlarge time for making the award at any time. The discretion under sub-section (1) of Section 28 should, however, be exercised judiciously. Sub-section (2) of Section 28 also makes it evident that the court alone has the power to extend time. It further provides that a clause in the arbitration agreement giving the arbitrator power to enlarge time shall be void and of no effect except when all the parties consent to such enlargement. It is not open to arbitrators at their own pleasure without consent of the parties to the agreement to enlarge time for making the award.

13. Once we hold that the law precludes parties from extending time after the matter has been referred to the arbitrator, it will be contradiction in terms to hold that the same result can be brought about by the conduct of the parties. The age-long established principle is that there can be no estoppel against a statute. It is true that the time to be fixed for making the award was initially one of agreement between the parties but it does not follow that in the face of a clear prohibition by law that the time fixed under clause 3 of the Schedule can only be extended by the court and not by the parties at any stage, it still remains a matter of agreement and the rule of estoppel operates. It need be hardly emphasised that the Act has injuncted the arbitrator to give an award within the prescribed period of four months unless the same is extended by the court. The arbitrator has no jurisdiction to make an award after the fixed time. If the award made beyond the time is invalid the parties are not estopped by their conduct from challenging the award on the ground that it was made beyond time merely because of their having participated in the proceedings before the arbitrator after the expiry of the prescribed period.

14. The policy of law seems to be that the arbitration proceedings should not be unduly prolonged. The arbitrator therefore has to give the award within the time prescribed or such extended time as the court concerned may in its discretion extend and the court alone has been given the power to extend time for giving the award. As observed earlier, the court has got the power to extend time even after the award has been given or after the expiry of the

period prescribed for the award. But the court has to exercise its discretion in a judicial manner. ......................"

31. Admittedly in the present case, a petition for extension of time was filed, but perusal of the order sheet of the learned court below indicates that no order on the same was passed. In the aforesaid judgment of the Hon'ble Supreme Court relied upon by the appellant

-state, it has also been held that the court alone has been given full discretionary power under Section 28 of the Arbitration Act, 1940 to extend time even after the award has been given or after the expiry of the period prescribed for the award, but the court has to exercise its discretion in a judicious manner and such power can be exercised even by the appellate court.

32. This court finds that the proceeding before the learned Arbitrator remained pending for no fault on the part of the learned Arbitrator. The appellant -state had also contributed in delay as apparently there was total non-co-operation from the side of the appellant-state who after their first appearance and participation in the arbitral proceedings, did not co-operate in the proceedings in spite of repeated efforts made by the learned Arbitrator. Further, the Arbitrator was restrained from proceeding in the matter by virtue of ad-interim- injunction passed on 24.06.1994 which was vacated only on 07.10.1994. In the aforesaid circumstances, this court is of the considered view that delay in publishing the award cannot be attributed to the learned Arbitrator. This court is of the considered view that the arbitral award was not fit to be set aside on account of its publication beyond four months as the learned court below ought to have considered and disposed of the petition filed on 05.12.1994 for extension of time. Considering the facts and circumstances of this case, the learned court below ought to have extended the time for publication of the award till it was filed in the court. In such circumstances, this court hereby extends the period of publication of the arbitral award dated 27.01.1995 till it was filed in the court in the month of February 1995. Point no. C is accordingly decided against the appellant and in favour of the claimants.

Point No. D

Whether the Arbitral Award is null and void for want of reasons as required under clause 52 of the Conditions of Contract?

33. In the judgement of the Hon'ble Supreme Court in the case of Raipur Development Authority and ors. -versus- M/s. Chokhamal Contractors and ors. reported in (1989) 2 SCC 721, on the point of reasons in the award in the context of Arbitration Act, 1940, it has been held in para 38 that an award passed under the Arbitration Act is not liable to be remitted or set aside merely on the ground that no reasons have been given in its support except where the arbitration agreement or the deed of submission or an order made by the court such as the one under Section 20 or Section 21 or Section 34 of the Act or the statute governing the arbitration requires that the arbitrator or the umpire should give reasons for the award.

34. It is not in dispute that the award was required to be a speaking award in terms of clause 52 of the agreement. It has been stipulated in clause 52 itself that 'All awards shall be in writing and in case of awards amounting to Rs. 1.00 lakh and above, such awards shall state the reasons for the amount awarded.'

35. In the present case, the obligation of the learned arbitrator to give reasons for the amount awarded is not in dispute. What is in dispute is whether the award has given reasons or not.

36. As per the learned arbitrator, the reasons have been mentioned in the last column of the Annexure-A to the award which is in a tabular form dealing with each and every claim separately. The entire chart of Annexure-A has been quoted above.

37. It is the specific case of the appellant -state that the award is null and void for want of reasons for the amount awarded. It is the case of the appellant that the so-called reasons mentioned in last column of Annexure -A are no reasons in the eyes of law and the amount awarded is not supported by any reasons.

38. On the other hand, the learned counsel for the claimants has submitted that the last column in Annexure- A deals with the brief reasons for the award which shows that documents were relied to allow or disallow the particular claim. The learned counsel has

referred to claim II (b) which has been disallowed as the claimants could not produce any documentary evidence in support of such claim. With reference to claim XI, it has been submitted that it was allowed by citing judgement and accordingly the reason given by the arbitrator should be accepted as sufficient compliance with the requirement to state reasons for the amount awarded. The learned counsel has also relied upon the judgment passed by Hon'ble Supreme Court reported in (1988) 3 SCC 36 (Supra), para 8, 9 and 10.

39. So far as disallowance of any of the claim is concerned, none of the parties are aggrieved by such disallowance.

40. The learned arbitrator on the merit of each claim recorded that the reasons for arriving at the award is shown in the chart as Annexure A. Upon perusal of the chart being Annexure - A, this Court finds that the altogether 14 claims have been considered. Claim No. II (b) and Claim No.XII as well as Claim No. XIV have been disallowed. Rest of the claims were partly allowed, but neither any reason has been given as to how the learned arbitrator allowed part claim and how the learned arbitrator rejected the part claim. There is no reason given in the chart i.e., Annexure - A to arrive at the figures to the extent the claim was allowed/denied. The learned Arbitrator has mentioned that the same was being allowed on the basis of documentary evidence produced by the claimant which were neither admitted nor denied by the respondents, but there is no further discussion.

41. In the present case, this Court finds that the so-called reasons mentioned in last column of Annexure-A do not reflect any application of mind with regards to the evidences produced by the claimants in support of their claim. It is important to note that the learned arbitrator has not allowed the full claim under each head and a percentage of the claim has been allowed and it is not reflecting from the so-called reasons as to on what basis part claim has been allowed and part claim has been rejected. The percentage of the claim allowed is apparently on adhoc basis, such allowed part claims are also unsupported by any reasons. A number of claims have been partly allowed by simply stating that the claim was intimated in writing several times but the same was neither admitted nor denied and after recording this, the

claim has been partly allowed on adhoc basis. No basis or evidence as such has been referred by the learned arbitrator while partly allowing the claim under most of the heads of the amount awarded. With regards to one claim the so-called reason is that last R. A. bill was paid on 28.12.89 and the work continued upto 31.3.91 for which no payment was made hence 50% of the claim amount was allowed on adhoc basis. Since the learned counsel for the claimants has specifically referred to the so-called reasons for claim no. XI, this court finds it proper to deal with it . So far as allowing the claim with regard to Claim No. XI is concerned, the same was relating to compensation for loss of business for not allowing to do balance work for no fault of the claimants. The claim was to the extent of Rs.11,34,479/- but it was allowed to the extent of Rs.7,58,320/-. The learned Arbitrator has relied upon two judgments of the Hon'ble Supreme Court reported in AIR 1977 SC 1481 and AIR 1984 SC 1703 and in the reasons column, it has been recorded that the Hon'ble Supreme Court had allowed 15% of the amount of balance work and thereafter the learned arbitrator allowed 10% instead of 15 %, but while allowing the claim to the extent of 10% of the balance work, the learned Arbitrator has not referred to any material either oral or documentary produced by the claimants to substantiate their loss of business. This Court is of the considered view that the reason cited by the learned Arbitrator to allow claim no. XI is no reason in the eyes of law for the amount awarded. As already discussed above, the other claims which were also partly allowed did not mention any reason for the amount awarded. In view of the aforesaid findings, this Court is of the considered view that the award is unreasoned for the amount awarded.

42. This court is of the considered view that the so-called reasons assigned by the learned arbitrator for the allowed claims are no reasons in the eyes of law. Accordingly, this court is of the considered view that the award has been passed contrary to the clause 52 of the Agreement for want of reasons for the amount awarded. The learned arbitrator has acted contrary to the clause 52 of the agreement and

therefore, the award cannot be sustained in the eyes of law and was not fit to be made the rule of the Court.

43. Upon perusal of the impugned judgment dated 26.03.2007, this Court finds that a specific plea was raised by the appellant State, as recorded in para 12 of the impugned judgement, that the learned Arbitrator failed to apply his judicial mind and failed to point reasons for the amount awarded by referring to Annexure - A to the award, but the learned court below has not at all considered the so called reasons mentioned in Annexure-A for the amount awarded and has not recorded any finding on this point. Further, in para 15 of the impugned judgement, the learned court below has recorded that in the instant case, the learned Arbitrator has chosen to make a speaking award and has constructed the effect of particular clause of the contract and it cannot be said that such construction is a construction which is not conceivable or possible. The learned court below further held that the award of the Arbitrator is fair after considering all the records and the conclusion arrived at by him is a plausible conclusion, therefore the Court had no jurisdiction to interfere with present award and held that the petition u/s 30 & 33 of the Act was not maintainable as per the conditions laid down u/s 30 of the Act. The learned court below having not at all considered the so-called reasons in annexure-A of the award against each claim, has failed to consider as to whether the learned arbitrator has given reasons for the amount awarded in terms of clause 52 of the agreement. The learned court below has recorded that in the event of there being no reasons in the award, question of interference of the court would not arise at all. The learned Arbitrator has referred to the general principle applicable while refusing to make the award the rule of the court and has not considered the so-called reasons in the light of clause 52 of the agreement. This Court finds that the learned court below has not at all referred to the so-called reasons which have been mentioned in last column of Annexure - A for the amount awarded and thus, the learned court below has not examined the so-called reasons for the amount awarded in the impugned award.

44. So far as the judgment passed by the Hon'ble Supreme Court reported in (1988) 3 SCC 36 (supra) and relied upon by the learned

counsel for the claimants is concerned, this Court finds that in the said judgment the learned Arbitrator had framed two issues and the Hon'ble Supreme Court found that as to how the learned Arbitrator had drawn inference, was apparent from the reasons mentioned in the award itself and in this background upheld the award. The Hon'ble Supreme Court further recorded that it is to be noted that the arbitrators to give some indication to indicate how the mind of the arbitrator acted. The Hon'ble Supreme Court referred to the judgment reported in (1976) 2 SCC 981 wherein it was observed that where an authority makes an order in exercise of a quasi-judicial function, it must record its reasons in support of the order it makes. The Hon'ble Supreme Court while upholding the award and agreeing with the view expressed by the concerned High Court held that the reasons were stated in the award and that the arbitrator has made his mind known on the basis of which he had acted which was held to be sufficient to meet the requirements of reasons. It has been held that it is one thing to say that reasons should be stated and another thing to state that a detailed judgment to be given in support of an award and even if it be held that it is obligatory to state the reasons, it is not obligatory to give a detailed judgment. With regards to the reasons in the award, it has been further held in para 10 as follows:-

"10. The purpose of Section 12 of the English Tribunal and Inquiries Act which required the statutory tribunal to furnish a statement of the reasons if requested to do so before it gave its decision was to enable a person whose property or whose interests were affected to know if the decision was against him what the reasons were. Justice R.S. Bachawat in his Law of Arbitration, First Edition 1983, pages 320 and 321 states that the provision was read as meaning that proper and adequate reasons must be given. The reasons that are set out must be reasons which will not only be intelligible but also deal with the substantial points that have been raised. When the arbitration clause required the arbitrator to give a reasoned award and the arbitrator does give his reasons in the award, the sufficiency of the reasons depend upon the facts of the particular case. He is not bound to give detailed reasons. The court does not sit in appeal over the award and review the reasons. The court can set aside the award only if it is apparent from the award that there is no evidence to support the

conclusions or if the award is based upon any legal proposition which is erroneous."

(emphasis supplied)

45. There is no doubt that neither detailed reasons nor detailed judgement is required in the award even if reasoned award is required to be passed, but the core point is that the award should make the mind of the arbitrator known on the basis of which the arbitrator had acted and also whether the reasons that are set out are intelligible and deal with the substantial points. This court is of the considered view that when the ratio of aforesaid judgement is applied to the so-called reasons mentioned in the impugned award, the award cannot be said to a reasoned award for the amount awarded which was required as per clause 52 of the agreement. The last column of annexure-A to the award cannot be said to be reasons in the eyes of law and it does not reflect as to how the learned arbitrator arrived at the amount awarded and on this aspect of the matter the award is non-speaking. This Court is of the considered view that the award passed by the learned arbitrator is un-reasoned on the amount awarded. Thus, the judgement relied upon by the learned counsel for the claimants reported in (1988) 3 SCC 36 does not help the claimants in any manner whatsoever.

46. Thus, the Arbitral Award is declared to be null and void for want of reasons for the amount awarded as required under clause 52 of the Conditions of Contract.

47. Point no D is accordingly decided in favour of the appellant and against the claimants.

Point No. E Whether the learned court below erred in making the award the Rule of the Court in spite of alleged violation of provisions of section 14 read with section 17 of the Arbitration Act, 1940?

48. It is the specific argument of the appellant-state that the award could not have been made the rule of the court as the award was not filed by the arbitrator himself and thus he acted in violation of section 14 and 17 of the Act. On the other hand, it is the case of the claimants that the Arbitrator had authorized the claimants to submit that Award in the learned Court below. It has also been pointed out that this

particular ground was never raised by the appellant in the Ld. Court below.

49. There is no doubt that the signing and filing of the award are Important duties of the arbitrator in terms of the Act of 1940. The learned counsel for the claimants has relied upon the judgement passed in the case of "Kumbha Mawji Vs. Dominion of India" reported in AIR 1953 SC 313; paragraph 8 of the aforesaid judgement deals with filing of award by the arbitrator. Paragraph 8 is quoted as under:

"8. As regards the second question, namely, as to whether with reference to the terms of Section 31 sub-section (3) the awards should be held to have been filed earlier in the Calcutta Court or in the Gauhati court, the view taken by the learned Commercial Judge was that the filing in the Calcutta Court must be taken to have been earlier. For the purpose of the consideration of this question it may be assumed that that filing was under the authority of the umpire. The learned Judge was of the opinion that the filing of the awards in the Gauhati court must be taken to have been made on the 3 rd September when in pursuance of the prior order of the Subordinate Judge dated 24th August, 1949, the present respondent filed into court the original awards with him. In coming to this conclusion the learned Judge ignored the fact that on 18th August, 1949 the umpire in response to the notice previously issued to him forwarded to the court signed copies of the awards and that the same were in that court on or before 24th August, 1949, This seems, in terms, to be sufficient compliance with the provisions of Section 14 sub-section (2) which only requires that on the directions of the court the original award or the copy thereof should be caused by the umpire to be filed into it. The learned Judge stated that he was not aware whether the copies sent to the Subordinate Judge were signed copies or not. The learned Judge failed unfortunately to notice that the umpire himself in his letter dated 18th August, 1949, stated clearly as follows:

"As directed by you I am sending herewith copies of the same (awards) signed by me."

The learned Judge was also inclined to think that the mere forwarding of the awards does not amount to the filing of them. Here again, the learned Judge has overlooked that under Section 14 sub-section (2) the actual filing by the umpire is not essential, but that it is sufficient if the umpire causes the awards to be filed. It is not suggested that sending by post in compliance with the notice is not such "causing"."

50. From the perusal of the order-sheet of the learned court below, this court finds that it has been specifically recorded in the order dated 22.02.1995 that the arbitrator filed the award and the defendant filed a petition praying therein that the award submitted by the arbitrator may be made rule of the court. From the perusal of the impugned order/judgement, this court finds that no such plea/objection has been raised by the appellant-state regarding manner of filing the award. It has been held by the Hon'ble Supreme Court in the aforesaid judgement that under Section 14 sub-section (2), the actual filing of award by the umpire is not essential, but it is sufficient if the umpire causes the awards to be filed. Considering the totality of the facts and circumstances of this case and the various points raised by the appellant state before the learned court below, this court is of the considered view that the award was filed by or under the authority of the learned arbitrator.

51. Point No. E is accordingly decided against the appellant - state and in favour of the claimants.

52. Thus, all the points, except point no. D, are decided against the appellant - state and in favour of the respondent claimants. As the point no. D has been decided in favour of the appellant -state and against the claimants, the impugned judgement making the impugned award the rule of the court cannot be sustained in the eyes of law, which is hereby set-aside. Consequently, the decree prepared on the basis of the impugned judgement is also set-aside.

53. Since this court has set-aside the award on the ground that the award does not give reasons for the amount awarded and thus has been passed in violation of clause 52 of the agreement, it will be open to the parties to proceed in accordance with law and as permissible under law.