Anoop V. Mohta, J.
1. Both these Appeals, under Section 37 of the Arbitration and Conciliation Act, 1996 (for short, the Arbitration Act ) (Appeal and Counter-Appeal), filed by both the contesting parties (Claimant and Respondent No.1), against Judgment and order dated 16 November 2005, passed by the learned Single Judge on a Petition under Section 34 of the Arbitration Act in Arbitration Petition No. 449 of 2003 whereby, the award passed by the learned Arbitrator ( the Arbitrator ) dated 4 July 2003, has been substantially set aside and partly maintained.
2. The Appellant(Original Claimant)Larsen and Toubro Limited ( LandT ) in Appeal No. 26 of 2006, which is a company registered under the provisions of the Companies Act, has preferred the Appeal, as the learned Single Judge has set aside the award qua Claim Nos. 1, 2, 4, 9, 15, 16, 21 (i), 21(iii) and 21(iv) awarded by the Arbitrator.
In the other Appeal, the Appellant is Respondent No.1-Hindustan Petroleum Corporation Ltd. ( HPCL ), which is a Government undertaking has challenged the order passed by the learned Single Judge only with regard to Claim No. 19 and supported the Judgment on other claims. Both the parties are the Appellant and Respondent No.1 in their respective Appeals.
3. Following are the basic events, which lead to the Arbitration proceedings.
On 23 April 1996, LandT submitted its tender for work relating to the laying, testing, pre-commissioning and commissioning of 18 diameter 350 Kms. pipeline from Vishakhapatnam to Vijaywada, including temporary cathode protection and optical fiber cable work. On 25 November 1996, HPCL issued its Letter of Intent ( LOI ), which was followed by a Letter of Allotment ( LOA ). Engineers India Limited ( EIL ) was the Engineerin-Charge ( the consultant ). The total contract price was Rs.53,64,39,858/-. The rate for the laying of the pipeline and other works was all inclusive of rate all across the terrains. The contractual date of commencement of work was 10 December 1996 and the completion date was 25 November 1997. On 29 August 1997, LandT submitted Bill No. 1 for extra work in the amount of Rs.27,71,146/-. On 23 September 1997, LandT applied for an extension for completion of contract upto 31 March 1998. On 10 December 1997, LandT sought further extension upto 30 April 1998. On 11 March 1998, LandT submitted Bill No. 2(A) for extra work in the amount of Rs.12,39,57,262/-. The EIL reviewed these claims and concluded that Bill No. 2A was not tenable. On 13 April 1998, EIL extended the period till 30 April 1998 with the consent of HPCL. On 18 April 1998, LandT could not complete the work , hence applied for further extension till 30 June 1998. On 23 April 1998, the consultant declined to grant extension beyond 30 April 1998 for reasons stated in the letter. On 20 August 1998, LandT completed a major portion of the work and HPCL issued a completion certificate, except a submission of no balance documents and the liquidation of checklist points. LandT raised their Final Bill for Rs.53,66,77,790/- reserving their rights to claim extra amount for the additional work.
4. Disputes arose between HPCL and LandT. On 22 August 2000, LandT invoked Arbitration as per Clause 14 and called upon the Marketing Director of HPCL to nominate an Arbitrator. On 21 September 2000, HPCL appointed the General Manager, who was a technically expert qualified engineer, as the arbitrator.
5. Strikingly, both the parties had agreed not to lead any oral evidence, but to submit their written arguments only. Both the parties further agreed that they would not be represented by the advocates to argue the case and they would be represented by their functional departmental officers and or law officers.
6. The Arbitrator prepared his Award. The total amount claimed in 30 Claims was Rs.27,82,74,107/-. 16 Claims out of 30 Claims, were allowed, the aggregate amount was Rs.7,43,66,44/-. On 30 September 2003, HPCL filed Arbitration Petition No.449 of 2003 under Section 34 of the Arbitration Act. HPCL challenged the Award in respect of 8 Claims allowed by the Arbitrator. Insofar as Claim No. 21 is concerned, Claim Nos. 21(i), (iii) and (iv), were amongst others allowed by the Arbitrator, there challenged. On 16 November 2005, the impugned Judgment was passed by the learned Single Judge, in Arbitration Petition.
7. Both the learned counsel appearing for the respective parties, read and referred the reasons set by the learned Expert Arbitrator and the learned Single Judge, including the terms and conditions of the contract, apart from the Judgments of the Supreme Court and the High Courts in support of their particular claims and counter-claims, including their written submissions.
8. In view of the specific Arbitration clause between the parties, and as the significant power of appointment of Arbitrator was exclusively with HPCL, the Arbitrator was preferred unilaterally. There was no consent obtained from LandT for the same Both the parties proceeded before the Arbitrator, keeping in mind the clauses, where the technical terms and the facets of such construction contract becomes relevant to resolve the disputes. Both the parties agreed to proceed before the Expert Arbitrator, without leading any oral evidence. Even the assistance of the advocates was not sought for. The respective representatives of the parties appeared and participated facing the Arbitrator. However, there is no serious issue that the respective claims and counterclaims were submitted along with supporting documents, with all the requisite, actual and technical financial details. All representatives, officers, apart from the Expert Arbitrator, were fully aware of the importance of such documents and its technical details, and the nature of disputes which were required to be determined.
9. The learned Senior Counsel appearing for LandT made submissions, in above background relying upon the law to reconsider and decide rejected claims again by the Appellate Court, as the expert Arbitrator had awarded the same, after hearing the parties, but the Court has set aside. The learned Arbitrator was the General Manager-ENG and Procurement in the HPCL organization. The appointment was made by the Respondent(HPCL). The parties raised specific issues. Both the parties agreed and left the issues for the expert Arbitrator to decide, based upon the documents, charts, statement and material placed on record by the parties towards its claims and counter-claims, apart from the knowledge and the experience in the filed of such contract. The parties did not lead any oral evidence. The agreed Arbitration procedure, as permissible in law, binds all the parties. Legal proposition when the expert Arbitrator is appointed
a) Mediterranean and Eastern Export Co. Ltd. Vs. Fortress Fabrics (Manchester) Ltd. (1948 (2) AER 186 @ 187-189)
i) In appointing an expert arbitrator, it must be taken that the parties are content and intend to accept the judgment of a man in their own trade on whose judgment they know they can rely (Page 188).
ii) An award of a technical arbitrator must be taken to mean that he has acted on his own knowledge and experience (Page 189).
This judgment has been approved by the Supreme Court of India and the Delhi High Court.
b) Municipal Corporation of Delhi Vs. M/s Jagan Nath Ashok Kumar and Anr. (AIR 1987 SC 2316)
i) This is a case of construction contract and the arbitrator was the Superintending Engineer.
ii) This judgment reaffirms the position in law held in Mediterranean case (supra) and describes the approach in the earlier case as an appropriate attitude.
10. The Award given by the Expert Arbitrator, need not be lightly interfered with, was the another submission
a) Jagdish Chander Vs. Hindustan Vegetable Oils Corpn. (AIR 1990 Del 204).
This case refers to the Mediterranean case with approval citing a different part of that judgment.
11. It is thus made clear that, in the case of an Expert Arbitrator, who is a technical person and in the case a nominee of contractor in the Arbitration, it is not necessary to articulate views and findings with precision, as expected from a judicially trained person.
a) EM and EM Associate Vs. Delhi Development Authority and Anr. (2002 (2) Arb. LR 222).
i) This is a case where the Division Bench described the approach of the Single Judge as that of a Court of Appeal and disapproved the same (Page 235).
ii) This is also a case where the Division Bench held that a court should be hesitant to interfere with an award made by an arbitrator appointed by the Respondent (Page 233).
12. It is also contended on behalf of L and T that in the case of an expert Arbitrator, there must be some reason for the decision and it is not deficient because every process is not set out. Subject matter needs to be looked at. The agreed Arbitration procedure, not to lead evidence, is fundamental basis for the Court to proceed with the contentions, to interfere with such experts Arbitral award.
a) Rajesh Khanna Vs. Govt. of NCT of Delhi and Ors (2005 (1) Arb. LR 247 (Delhi).
i) Every process is not set out : subject-matter needs to be looked at and it cannot be overlooked that the arbitrator cannot function like a judge in a court.
ii) Parties in choosing experts from the field display an implied faith in the personal judgment of the expert arbitrator and in such circumstances meticulous reasons are not to be looked into.
b) M.L. Mahajan Vs. DDA (2005 (1) Arb. LR 561 (Delhi)
i. This judgment reiterates the same principles as set out the in the previous case.
13. Having considered the above legal position, we now examine the submissions as made on behalf of the parties in regard to the claims which are the subject matter of these Appeals.
The Claims and the reasons-Claim No.1-Claim for Additional work for canal at Chainage 205 km (introduced by irrigation dept.)
14. We have considered the above position of law and the scope and purpose of the appointment of Expert Arbitrator in a dispute of this nature, where technical details are relevant for proper adjudication of the claims and the counter-claims. We have also noted the chart submitted by the learned counsel appearing for the parties, covering the nature of claims and submission of LandT and also of HPCL, referring to respective claims. The convenience charts with the respective contentions and references, apart from the reasons given by the learned Arbitrator and the learned Single Judge, have been read and distinguished. We are dealing separately each claim and counterclaims.
For all the claims and particularly for Claim No.1, we have to note the agreement clauses.
15. The following are the relevant clauses of agreement with regard to the Arbitration, alterations and additions to the specifications, designs and works:
14.1. Disputes or differences arising out of or in relation to agreement/contract shall be referred to the Director Marketing of the owner who may either act himself as Sole Arbitrator or nominate some Officer of the owner to act as an Arbitrator to adjudicate the disputes and differences between the parties (except those in respect of which the decision of any person is by the Contract expressed to be final and binding.
ALTERATIONS AND ADDITIONS TO SPECIFICATIONS,. DESIGNS AND WORKS
The Engineer-in-Charge/Site-in-Charge shall have powers to make any alterations, additions and/or substitutions to the schedule of quantities, the original specifications, drawings, designs and instructions that may become necessary or advisable during the progress of the work and the Contractor shall be bound to carry out such altered/extra/ new items of work in accordance with instructions which may be given to him in writing signed by the Engineer-in-Charge/Site-in-Charge .......
5.j.4. If the rates for the altered, additional or substituted work cannot be determined in the manner specified above, then the Contractor shall, within seven days of the date of receipt of order to carry out the work, inform the Engineer-in-Charge/Site-in-Charge of the rate at which he intends to charge for such class of work, supported by analysis of the rate or rates claimed and the Engineer-in-Charge/Site-in-Charge shall determine the rates on the basis of the prevailing market rates for both material and labour plus 10% to cover overhead and profit of labour rates and pay the Contractor accordingly. The opinion of the Engineer-in-Charge/Site-in-Charge as to current market rates of materials and the quantum of labour involved per unit of measurement will be final and binding on the contractor.
16. The reliance was placed on the following contract clauses by the learned counsel appearing for HPCL-Arbitration clause ...... to adjudicate the disputes and differences between the parties (except those in respect of which the decision of any person is by contract expressed to be final and binding) .
Clause 5.j.4 specifically states The opinion of the Engineer-in-charge/Site-in-Charge as to current market rates of materials and the quantum of labour involved per unit of measurement will be final and binding on the contractor .
It is submitted, as per the above clauses, the rates for altered, additional and substituted work is to be determined by Engineeri-n-Charge. For determining the rate, current market rate of the materials and quantum of labour for unit measurement has to be considered. These are only two components for determining the correct rate. After determining the same rate, which is arrived at by Engineer-in-Charge is final and binding on the contractor and hence, the same is not arbitrable i.e. the Arbitrator has no jurisdiction to adjudicate on the issue. On 15 April 1998, the Engineer-in-charge determined the rate by giving detail analyses as per the clause of contract and the rate arrived at by Engineer-in-charge was Rs.4,86,280/-, which was final and binding on the contractor and not arbitrable.
17. We have noted the Arbitrator's following reasons-Original claim amount was Rs.27,71,146/- and revised claim amount was Rs.16,26,160/-.
(a) The valuation of the Consultants appears to be correct when compared to the value claimed by the Claimants for similar canal work .........
(b) Compared to similar work and cost thereof, the cost of Rs.4,86,280/- as worked out by the Consultants is fair and reasonable. It may be noted that the Bill of the Claimants was not correct and not based on actual work performed by them as can be seen from the conduct of the Claimants in reducing the bill amount about Rs.16 lakhs.
(c) I have carefully considered the respective cases of the parties, their Written Submissions and authorities cited and hold that while the evaluation of Claim No.1 at Rs.4,86,280/- is in accordance with the Clause 5.j. of the GCC to the contract, that the Claimants raised their bill on estimated basis and not on actual work done by them. The Claimants declined to accept the valuation of the Consultants on vague and unsustainable grounds vide Exhibits C-8 and C-9 of Volume 5.
(d) After holding as above, the Learned Arbitrator stated that Irrespective of the fact that the opinion of the Engineer-in-Charge in this behalf is final and binding on the Claimants under Clause 5jof GCC of the Contract, being a technical person myself, I have looked into the actual amount of work involved in this extra claim. I find that the revised Claim of the claimant is still exaggerated and high. The work is not equal to Rs.16 lakhs or so which has been the revised claim, claimed by the Claimant. The estimate of the Engineer in charge M/s.EIL is a little to conservative and the work cannot be completed in Rs.4.86 lakhs, which has been estimated by them. Accordingly, I have gone through in detail and I find that a sum of Rs.10,00,000/- will represent a true and proper valuation of the work done by the Claimant and I award this amount of money.
(e) After holding that Engineer-in-charge decision is final and binding under clause 5j of GCC of the Contract, the Learned Arbitrator without any rate analysis or detail calculation, has awarded Rs.10 lakhs.
18. The Learned Judge stated that It is, thus, clear that once the Engineer-in-charge had made his decision, the Learned Arbitrator had no jurisdiction to interfere and direct the Petitioner to pay higher amount. It is clear from the award itself that the learned arbitrator has directed the Petitioner to pay an amount of Rs.10 lakhs without disclosing any reason and without disclosing the decision making process, according to which the learned Arbitrator reached the conclusion that the Respondent is entitled to receive Rs.10 lakh.
19. Under Section 31(3) of the Arbitration Act The Arbitral Award shall state the reasons upon which it is based . Under section 28(3) of the Arbitration Act, In all cases, the Arbitral Tribunal shall decide in accordance with the terms of the contract. We have already distinguished the specific agreement between the parties, not to lead any oral evidence and left the Arbitrator to draw the conclusion. The Tribunal's decision so taken, therefore, binds all, unless there is any perversity or misconduct.
20. Both the learned counsel read and referred the various clauses of the contract between the parties, including the clauses so reproduced above. The Arbitration clauses and specifically, clause
5.j.4 needs to be read in totality. The power of Engineer-in-Charge/Site-in-charge to make the alterations, additions and/or substitutions to the specification, to the designs and the work, during the progress of the work is required to be followed by the contractor. The rates, as per clause 5.j.4, for any altered, additional or substituted work, if not agreed, the contractor required to submit within seven days the rate at which he intends to charge for such class of work, supported by the analysis so rate or rates claimed. The concerned officer, should determine the rates on the basis of the prevailing market rates for the material, as well as, the labour plus 10% overhead and profit and pay the contractor, accordingly. The rates so fixed, including the opinion given by these officers would be final and binding on the contractor. LandT, never agreed for the rates, so fixed for such works. The correspondences were exchanged accordingly, with reference to the additional canal at Chain age 205 km. By communication dated 15 April 1998, after analyzing the subject work, it is communicated to LandT by HPCL that, You may kindly negotiate with the contractor and settle the claim suitably . The same is supported by the chart of claim also. HPCL, by communication, as noted, forwarded a cheque of Rs.4,86,280/- with clear rider to treat it as full and final settlement of above claims. This was based upon the detailed workings and revised statement of account dated 1 May 2006, submitted by HPCL to LandT. This was admittedly, after the impugned award and the Judgment passed by the learned Single Judge in the Arbitration Petition of HPCL. This amount so arrived at by the Engineer-in-Charge/Site-in-Charge on 15 April 1998,, was final and binding on the contractor and so not arbitrable, is the case of HPCL. Merely because HPCL forwarded the cheque of Rs.4,86,280/- after deriving the figure as noted above on 1 March 2006, that itself shows that this amount was due and payable to LandT by HPCL for the additional work done, so recorded above. LandT never accepted this amount. The learned Arbitrator, after considering the clauses of the agreement between the parties, apart from the statement and the record so placed, directed HPCL to pay a lump sum amount of Rs.10 lakhs.
21. There is no issue that the Arbitral Award should state the reasons above, which is based upon Section 31(3) of the Arbitration Act, and further that the Arbitral Tribunal should decide in accordance with the terms of contract under Section 28(3) of the Arbitration Act. Having once adopted and specifically, agreed to proceed before the expert Arbitrator without producing any oral evidence and even without assistance of the advocates, and as the parties have accordingly proceeded, are bound by the procedure. This, in our view, is sufficient for the Arbitral Tribunal to decide the Arbitration disputes, based upon the available documents on record. The decision taken by the Arbitral Tribunal, was in accordance with the terms of the contract and specifically agreed terms. The Arbitrator and/or the Court has always power to decide the claim even in cases where the decision of Executive Engineer, in such case is final. This was in view of the Correspondences so referred above, as it was never agreed or accepted by LandT.
22. Therefore, the assessment and analysis of the expert Arbitrator, in the present facts and circumstances, ought to have been accepted. The grant of Rs.10 Lakhs, ought not to have been interfered with by the learned Single Judge on the stated ground of no reason and/or without disclosing the decision making process to arrive at the conclusion. The final and binding decision of the officers, of which, LandT sought inspection, had opposed the rate and the amount so fixed for the additional work. The clauses so read and referred above, basically for the running/agreed work, the agreed working situation, the additional work so ordered and directed and proceeded by LandT under their supervision, though after raising the contract, in no way are sufficient to accept the submission of HPCL that the Arbitrator has no jurisdiction to decide the claim so raised by LandT in this regard. The dispute was arbitrable by the Arbitrator and rightly decided accordingly.
23. The correspondence shows that the parties were directed to negotiate and settle the claims. As the amount could not be settled, therefore, the dispute for the additional work, as admittedly carried out, supported by material and resolved by the learned Arbitrator, in our view, was arbitrable.
24. This is not the case, where the objections were raised that there were no documents whatsoever in support of the claims filed by the Appellant. The grounds for challenge so raised, are about the non-availability of reasons and the decision making process. We have to consider here, also the fact of not leading oral evidence by the parties, as agreed and permitted by the Arbitrator, to decide the disputes, based upon the material so referred above. The experts in the field, therefore, had decided the issue and awarded the amount of Rs.10 Lakhs. This, in our view, cannot be stated to be a case of award of amount without disclosing the decision making process . This aspect has been fortified by conduct of HPCL, where the concerned officers of HPCL, based upon the material and/or documents so placed on record, without assigning or giving any reasons, fixed the amount of Rs.4,86,280/-. There was no specific reason provided therein. LandT refused to accept the said amount. Having once agreed for payment, based upon the material so referred, the expert's opinion, as the dispute was arbitrable, overruled the decision of the officers and awarded Rs.10 Lakhs, therefore, ought not to have been interfered with by the learned Single Judge. The fact of not granting even Rs.4,86,280/- by the learned Arbitrator, this itself, is a reason to interfere with the order so passed by the learned Single Judge, as at least, this amount could have been or should have been awarded by modifying the award, which admittedly not done in the present case. The impugned Judgment, therefore, itself required to be interfered with, at least to this extent. Therefore, the submission so raised by HPCL is unacceptable.
Claim No.2. Claim towards Additional Liability for repair of coal tar enamel (CTE) coating by heat shrink sleeves
25. This claim No.2 towards additional liability for repair of Coal Tar Enamel (CTE) coating by Heat Shrink Sleeves. The learned Arbitrator, while awarding the restricted amount of Rs.4,13,00,000/- i.e. 1/3rd (33%) of the total amount so claimed of Rs.12,39,57,262/- observed as under:
a) Most importantly, I find and hold that the very design criteria/decision to use Coal Tar Enamel for a cross country pipeline of this size is questionable.
b) It is well known that CTE coated pipes have a tendency to go soggy in open terrain heat conditions while laying cross country pipelines.
c) By the time of this contract, the usage of PERP coated pipes was well recognized to be having superior benefits. However PERP was not eh chosen material.
d) Yet the huge amount of damages leaves me with no alternative but to hold that part of it is due to the account of the Respondent due to poor design choice.
e) After careful consideration of the full facts, I am inclined to award one third of the claim amount to the Claimant....rounded off sum of Rs.4,13,00,000/-.... the balance claim is rejected.
26. The learned Single Judge, however, referring to Section 28 of the Arbitration Act and further for the reasons that LandT failed to lead evidence for the expenses incurred has set aside the award for this claim. The important aspect in this matter is that there is no specific challenge to the findings given by the learned Arbitrator referred above, so also the fact that LandT has done the work under the supervision, as per the agreement and HPCL has got the benefits of the same. There is no contra material and/or averments, that no such work was done by LandT. The submission so made by HPCL, referring to clause 5.1 and other clauses that it was obligation on the contractor to complete the work without any extra compensation for repair and/or rectification of defects recorded at the time of taking over . There is no specific challenge to the findings given by the learned Arbitrator about the design criteria/decision to use the CTE for cross country pipeline of the questionable size. The observation of the learned Arbitrator that CTE coated pipes have tendency to go soggy in open terrain heat conditions while laying the cross country pipeline.
27. Admittedly, LandT completed the additional work under the supervision of HPCL, the rejection of total claim by the learned Judge, in our view, would untenable. We are not inclined to accept the submission of HPCL and the reasons so given by the learned Judge of rejecting claim No.2, as awarded by the Arbitrator in Toto. The party, one who has incurred the expenses for the additional work and as the work was admittedly done, is entitled for the expenses so incurred from the party one who got the benefit out of it. HPCL, having obtained the benefit, in our view, ought not to have denied the claim. The learned Judge, ought not to have therefore, rejected the claim , as done in the present case.
28. In view of above, there is no substance in the submission of HPCL that the learned Arbitrator was not the General Manager Pipe Line and the Arbitrator's assignment in the office had nothing to do with laying and/or design with the Pipe Line. Having once appointed the expert Arbitrator, who was General Manager (Engineer and Projects), his expertise assessment ought not to have been discarded in such fashion.
29. The observation referred and relied upon by HPCL, made by the Arbitrator, that the damages occurred due to wrong handling of the pipes by the claimants and the other companies like BPCL and IOCL were also using such CTE pipes. The learned Judge while setting aside the award has not dealt with the subject precisely as sought to be submitted by the learned counsel appearing for HPCL. The reasons cannot be added first time in the written submission before the Appellate Court. The reasons, if not recorded by the learned Single Judge while setting aside the award on this claim, which itself, is a factor to interfere with the award. The non-consideration and/or not providing the reasons to set aside the expert's opinion/reasons of the Arbitrator and the submission so made, this itself is an additional factor to interfere with the award. There should have been clear reasoning, as sought to be contended by HPCL in Appeal, before setting aside the award for want of reasons. The rejection of claim by the learned Single Judge, so awarded by the Arbitrator, therefore, requires an interference. The amount awarded by the Arbitrator, in the facts and circumstances, should have been retained as HPCL has gained out from the said work done by LandT.
Claim No.4. Claim for additional work for tree cutting and sizing of stem in Vizag port area
30. So far as Claim No.4, the learned Arbitrator had awarded a lump sum amount of Rs.2 Lacs for additional work for tree cutting and sizing of stem in Vizag Port area, though the claim was of Rs.2,40,724/-.
31. The learned Arbitrator, while awarding this claim by keeping in mind Clause 5.2 whereby, it was obligatory on the part of claimant (LandT) to comply with all the requirements of the authorities at no extra costs to HPCL. It was held that
it is to be understood that a contractor can only do work which is reasonably expected out of him. Since the requirement of grubbing the trees, sizing them in accordance with a particular pattern and then having them transported to a particular place resulted in some extra work and efforts, I am inclined to award this amount .
32. The learned Single Judge, however, has rejected this claim of amount of Rs.2 lacs for want of no evidence in support of such claim by LandT. HPCL has also supported the order passed by the learned Single Judge, even on this part. The L and T's submission is that such work was part of the contract terms 4.4 (ROW clearing and grading) for specification of pipe line construction. The extra work so done was at the behest of the competent Authorities. The reasoning, therefore, so given by the learned Arbitrator, by considering the nature and requirements of the contract and as such by interpreting the clauses, ought not to have been rejected. The findings, therefore, given by the learned Judge of setting aside the claim, is required to be reconsidered in the background of the litigation and the procedure, which the parties have followed to proceed with the Arbitration.
Claim No.9.Claim for additional work involved due to issue of Optical Fiber Cable of shorter length
33. So far as claim No.9 is concerned, the learned Arbitrator had considered the claim of LandT whereby, the amount of Rs.28,78,713/- was claimed for additional work involved due to issue of Optical Fiber Cable of shorter length. It is clear from the record that HPCL had given OFC of 2 kilometer length, but a small number of 1 kilometer length of OFC was given as the repeat station, are not exactly at 2 kilometer distance. It is recorded even by HPCL that actual cable required was found to be around 360 kilometers, hence, about 180 number of joints should have been required. However, only 174 number of joints have been carried out by LandT. Having noted the above facts and that resulted into additional costs, the learned Arbitrator, being expert in field, keeping in mind the actual work, additional work/expenses required to be incurred by LandT, had granted Rs.15,10,000/-, though claimed more. Therefore, once the issue of OFC shorter length is not in dispute, that resulted into increase in joints and therefore awarded the amount, though not as per the contract terms as observed, but for the fact of an additional costs, so incurred and for the extra work done, this was also not the claim which ought to have been rejected by the learned Single Judge on the same foundation of no evidence and/or any evidence. The additional expenses incurred, so referred above, because of supply of shorter length of OFC, which the Arbitrator, being an expert person in the field, realizing the actual additional expenses incurred, had restricted the amount that, also ought not to have been interfered with by the learned Single Judge. Merely because, HPCL on 15 July 1998, rejected the claim of additional work, that itself, should not have been the reason to deny the claim so awarded by the learned Arbitrator in the background so referred above, specifically in the recorded fact of number of joints, required to be carried out by LandT.
34. The Supreme Court, reiterated the principle of Section 34 of the Arbitration Act and the scope of Court to interfere with the findings given by the Arbitrator. In the present case, as recorded above, the expert Arbitrator in the field appointed by HPCL themselves. The parties, as recorded, proceeded with the Arbitration without leading any oral evidence and proceeded through their respective representatives. The scope of Section 34 of the Arbitration Act, in the present case, in view of the interference ought not to have been made. (Associate Builders Vs. Delhi Development Authority (AIR 2015 SC 620). It is also settled that, another view even if possible, that should not have been the reason to interfere with the award. (Union of India Vs. Moti Enterprises and Anr. (2003 Arb.LR 229 (Bom).
Claim No.15-Claim for additional work executed in connection with civil works for isolation valve near the station outside the battery limits
35. In claim No. 15, the Arbitrator has granted Rs.10,17,361/- for additional work executed in connection with civil works for isolation valve near the station outside the battery limits, as claimed by LandT, based upon the material placed on record by them and supporting facts and circumstances, so recorded by the Arbitrator.
36. Clause 10 of schedule of rates was read and referred by the learned counsel appearing for HPCL and also submitted that the entire scope of work, as shown in the diagram, is within the scope of contract of LandT. The learned counsel read and referred even the ground showing the scope of pipe line laying contract and pointed out from their respective points of view, the issue about battery limits as defined. The drawing shows, as contended by the learned counsel for HPCL that the scrapper launcher from Vishakhapattnam dispatch station to scrapper receiver station at Vijaywada receiving terminal.
The Arbitrator's findings, after rejected the contention of the HPCL that the civil work pertaining to isolation valve near the station would be within the scope of work of the claimant and also within the battery limits, it is observed that since the drawing shows that it is outside the battery limits, they had to pay for this extra work. The observation, which is relevant here, that there is no argument made regarding the amount to be paid as claimed by LandT and therefore, awarded the total amount as claimed.
37. The amount was awarded by the learned Arbitrator again for the extra work done by LandT. There is no denial to the fact that the extra work was done. The submission of HPCL is that the work in question, was well within the contract as awarded to LandT within the scope of work and therefore, there is no question of claiming extra amount, was not accepted. The observation relied upon by HPCL and as recorded by the learned Judge that, the work was outside the battery limits according to the drawing , is correct statement, but in which context the statement so made was not considered. The learned Judge, ought not to have reappreciated the findings, including the scope of contract and the payment so awarded by the learned Arbitrator for the extra work. (Associated Builders (Supra) and Venkatesh Construction Company Vs. Karnataka Vidyuth Karkhane Limited (Kavika) (2016(1) SCALE 409).
Claim No.16-Claim for additional work for laying of pipeline for Pullivagu Canal and Claim No.1-Claim for Additional work for canal at Chainage 205 km (introduced by irrigation dept.)
38. In claim No.16, LandT has also claimed for additional work for laying of pipe line for Pullivagu Canal for Rs.4,67,425/-. This claim is in any way, connected with claim No.1.
39. There is no serious issue that the claimant had to demobilize, as instruction for anti-buoyancy measure was not given, though, asked by letter dated 6 April 1997. HPCL could not deny this demobilization of these resources. The claim was, therefore, for incurring additional expenses. LandT had received the payment for laying anti-buoyancy measure. The issue, therefore, is of laying and anti-buoyancy measure, which have been paid in relevant items of SOR specifically, when LandT denied the same and claimed for extra work. The learned Arbitrator, after considering the rival contentions and the work actually done for laying of pipe line, had opined that the Pullivagu is a canal crossing. This was also on the foundation that the permission was required to be obtained from the Competent Authority for the same and was the part of record. The issue, therefore, is canal crossing or not, so raised by HPCL, also untenable. It was also observed by the learned Arbitrator, that HPCL, while dealing with Claim No.1, admitted indirectly that the claim amount of Rs.4,67,245/- was reasonable. The learned Single Judge, ought not to have interfered with the award so passed in favour of LandT. The submission of prompt reply, in view of the findings given by the learned Arbitrator, is of no assistance to interfere with the award so passed. Here also, the additional work actually done was not in dispute and so also the amount so incurred.
Claim No. 19 and Counter-Claim-Claim for release of Liquidated Damages-40 This claim No.19 is revolving around the contract clauses of penalty and liquidated damages (LD). The relevant clause 10 of penalty and other relevant clauses 2.18, 5.1, 7.1 are as under:
Clause 10: Penalty In case of delay in completing the work beyond the period of contract the contractor shall be liable to pay penalty at the rate of 0.5% of the total contract value for every week or part thereof of the delay subject to a maximum of 5% of the total contract value. The penalty shall be recovered by the Owner out of the amounts payable to the Contractor or from the Guarantees or Deposits furnished by the Contractor or the Retention Money retained from the Bills of the Contractor, should the amount of penalty is not recoverable or recovered in any manner in part or in full, the same shall be payable by the Contractor on demand by the owner with 24% p.a. interest till the date of payment.
The Work shall mean the works to be executed in accordance with the Contract or part thereof as the case may be and shall include extra, additional, altered or substituted works as may be required for the purposes completion of the work contemplated under the Contract.
Clause 5.1: COMPLETION OF WORK AND COMPLETION CERTIFICATE.
As soon as the work is completed in all respects, the contractor shall give notice of such completion to the site-in-charge or the Owner and within thirty days of receipt of such notice the site in charge shall inspect the work and shall furnish the contractor with a certificate of completion indicating:
a) defects, if any, to be rectified by the contractor b) items, if any, for which payment shall be made in reduced rates.
c) the date of completion..........
7.1 General: - Commissioning of pipeline shall be considered completed when the line is charged with the product at operating pressure after pre-commissioning is completed and the total system operated at normal operating parameters for a minimum period of 72 hours.
Contractor shall submit a detailed commissioning procedure for company's approval.
41. The relevant findings of the Arbitrator to Claim No.19 are as under:
a) A deeper look at the entire facts reveals that though the work was completed as per the contract only on 20 August 1998 (and there is no dispute on this), the pipeline had been laid and given for charging of water/product on 10 May 1998 and so charged with water and then product on 11 May 1998.
b) However the Respondent's main requirement of petroleum transportation, through pipe line was commenced/achieved on 11 May 1998 itself. The Respondent could not suffered loss beyond that date.
c) I find that the delay committed by the Claimant is only 11 days.
42. Both the learned counsel read and referred their respective submissions from their perceptive. There is no issue that the time was extended for various reasons, including the defaults of HPCL. There is no issue that the penalty clause comes into the operation when there is a delay in completing the work beyond the period of contract. The learned Arbitrator while awarding the claim had given various reasons. The basic reasons are
a) I accept the case of the Respondent that the Claimant was responsible for the delay in completion of the work even by the extended date of completion.
b) Decision of the Consultant in regard to the extension is final and binding and therefore, not arbitral.
c) The claimant accepted the completion certificate without any demur or protest.
d) The actual work got completed on 20 August 1998 hence, prima facie, the application of full liquidated damages by the Respondent, at first glance looks correct.
e) The levy of penalty is as per Clause 10 of GTC and letters dated 6 December 1997 and 23 April 1998, fully supported the action of Respondent in levying penalty.
f) The Respondent also demonstrated the losses that are suffered by them on account of delay hence, there is losses to the Respondent by various means including ideal investment etc.
g) The contention of the claimant regarding waiver of penalty, are not correct.
h) It may be technically correct that actual work was completed in all respects as per the contract only on 20 August 1998, but the pipe line had been laid and given for charging of water on 10 May 1998 and then product on 11 May 1998. The Respondent could not have suffered loss beyond that date.
i) The Respondent have shown that even if we assume the delay of 10/11 days, they had suffered loss in excess of the entire liquidated damages amount.
j) After holding at above, the learned Arbitrator states
Thus I find and hold that delay committed by the Claimant is only 11 days and I also find that the damages are proved by the Respondent far in excess of the liquidated damage amount and hence, I hold and award that the Respondent is entitled to levy only 1% of the contract value as liquidated damages and balance 4% of the contract value must be returned to the Claimant .
k) The Respondent is directed to pay back to the claimant a sum of Rs.2,01,60,000/-.
43. The learned Single Judge, so far as this claim is concerned as there was no proper ground raised by HPCL in the Petition and as it unable to challenge the findings of facts, except by making allegations, has maintained the award passed by the learned Arbitrator. The learned counsel appearing for LandT, therefore, supported this part of the award by relying on Hudson's on Building and Engineering Contracts-Eleventh Edition and ONGC Vs. Saw Pipes. (2003(51)ARBLR5SC)The learned counsel appearing for HPCL however, challenged this part of the order.
44. HPCL submitted that LD clause is applicable only if there is a delay in completing the work beyond the period of contract. The work was completed on 20 August 1998, as pre-contract the pre-commissioning was done on 11 May 1998, by charging water on 10 May 1998, and for product on 11 May 1998. HPCL has submitted their evidence before the learned Arbitrator that there was only 10/11 days delay and they had incurred losses to the extent of Rs.2.52 crores. Therefore, the learned Single Judge, as well as, the Arbitrator could not have awarded this claim for liquidated damages. This is in the background that the Engineer-in-Charge has given a detail analysis and assessed the quantum and hence his decision ought to have been treated as final and binding. The Arbitrator had no jurisdiction to decide and reassess the issue. We are not inclined to accept the submission of HPCL, as the learned Single Judge has upheld the reasons and the award so granted by the learned Arbitrator, by accepting the findings given by the learned Arbitrator about the pipe line so charged with the product on 11 May 1998, was factually incorrect.
45. The learned counsel appearing for HPCL tried to distinguish the Judgments cited by the learned counsel appearing for LandT, mainly on the ground of clause 5.j.4 the contract terms whereby, the decision being final and binding and therefore, not arbitrable. For the reasons already noted that such disputes are arbitrable and therefore, rightly considered by the learned Arbitrator and the learned Single Judge. We see there is no reason to interfere with the same, as this part of award is well within the framework of law and the record.
Claim No.21-Claim for release of disputed rebates under the Contract. (3 Items):
46. Claim No.21 consists of 3 items for release of disputed rebates under the contract. The Arbitrator's findings in this regard of Item Nos. (i), (iii) and (iv) are as under:
Claim No.21, item No.(i)a) -
What has been found missing by the Respondent/consultant is that they have not taken into account the special nature of the E-7010 electrodes, which were substituted for E-8010 electrodes.
b) These Electrodes, namely the E-7010 were not the normal E-7010 electrodes but, having 77,000 psi UTS. Thus, this UTS was far above the normal base metal UTS of 70,000 psi. Hence this aspect not having taken into account, there really cannot be any price differential between this E-7010 electrodes used in the pipe line and E-8010 originally contemplated under the contract.
c) Hence the Respondent cannot maintain this rebate. Claim Allowed Rs.6,48,013/-
Claim No.21, item No.(iii)
a) I find that while it may be contractually correct to seek a rebate, it can be seen that the deletion of this item was by the Respondent to expedite the commissioning.
b) The Claimant had mobilized and got ready.
c) They would certainly have incurred expenses in mobilizing and readiness for swabbing.
d) Even though the work was deleted, the Claimant has incurred some expenditure.
Claim Allowed Rs.3,60,280/-
Claim No.21, item No.(iv)
Having considered the above documents and the stand taken by the parties, I find that such a deduction is not in the proper spirit of the contract.
Claim Allowed Rs.60,71,920/-
47. The learned Single Judge accepted HPCL's submission that the decision of the Engineer-in-Charge is final and therefore, the Arbitrator has no jurisdiction to interfere with the calculation made by the Engineer-in-Charge. The Arbitrator was duty bound to make the award in accordance with the contract. There was no question of making an equitable consideration. The learned Judge, therefore, rejected the award granted in favour of LandT, solely on the ground that it is not arbitrable.
48. The submission made by the learned counsel appearing for LandT with regard to item No.(iii) is made in support of the award of claim of all these items by the Arbitrator. The same arguments and the Judgments so cited read and referred, with submission to retain the order passed by the learned Arbitrator. This is again on the foundation that LandT had incurred extra expenses in mobilization. The deletion of item, at the instance of Respondent HPCL to accept the commission was not in dispute, therefore, the claim so made cannot be stated to be beyond the contract.
49. We are inclined to observe that the Arbitrator had not gone beyond the contract and he had to adjudicate this claim as consultant. The Arbitrator had taken note of the special nature of E-7010 electrodes, which was substituted for E-8010 electrodes. The price difference, so recorded by the learned Arbitrator, is required to be maintained. There was no reason to interfere with the expert's decision on the same. The decision of the learned Single Judge, therefore, in this claim is unsustainable.
Scope and Power of Court under Section 34 of the Arbitration Act
50. The Judgments cited by the learned counsel appearing for LandT in support of their submissions revolving around Section 34 of the Arbitration Act and some of them are recent Supreme Court Judgments, reiterating the law on the subjects are also distinguished.
51. As the issue is settled and reiterated by the Apex Court and, therefore, being principle of law, we are inclined to reproduce the same for deciding the present Appeals.
52. In Navodaya Mass Entertainment Ltd vs. I. M. Combines (2015) 5 SCC 698), it is observed as under:
8. In our opinion, the scope of interference of the court is very limited. Court would not be justified in reappraising the material on record and substituting its own view in place of the arbitrator's view. Where there is an error apparent on the face of the record or the arbitrator has not followed the statutory legal position, then and then only it would be justified in interfering with the award published by the arbitrator. Once the arbitrator has applied his mind to the matter before him, the court cannot reappraise the matter as if it were an appeal and even if two views are possible, the view taken by the arbitrator would prevail see Bharat Coking Coal Ltd. v. L.K. Ahuja,  5 SCC 109; Ravindra and Associates v. Union of India,  1 SCC 80; Madnani Construction Corporation (P.) Ltd. v. Union of India,  1 SCC 549; Associated Construction v. Pavanhans Helicopters Ltd.,  16 SCC 128 and Satna Stone and Lime Company Ltd. v. Union of India,  14 SCC 785.
53. Recently, in Associate Builders (Supra), the Apex Court has elaborated those principles in following words:
15. This Section in conjunction with Section 5 makes it clear that an arbitration award that is governed by part I of the Arbitration and Conciliation Act, 1996 can be set aside only on grounds mentioned Under Section 34(2) and (3), and not otherwise. Section 5 reads as follows:
5. Extent of judicial intervention. Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part.
16. It is important to note that the 1996 Act was enacted to replace the 1940 Arbitration Act in order to provide for an arbitral procedure which is fair, efficient and capable of meeting the needs of arbitration; also to provide that the tribunal gives reasons for an arbitral award; to ensure that the tribunal remains within the limits of its jurisdiction; and to minimise the supervisory roles of courts in the arbitral process.
17. It will be seen that none of the grounds contained in Sub-clause 2(a) of Section 34 deal with the merits of the decision rendered by an arbitral award. It is only when we come to the award being in conflict with the public policy of India that the merits of an arbitral award are to be looked into under certain specified circumstances.
24. In DDA v. R.S. Sharma and Co., (2008) 13 SCC 80, the Court summarised the law thus:
21. From the above decisions, the following principles emerge:
(a) An award, which is
(i) contrary to substantive provisions of law; or
(ii) the provisions of the Arbitration and Conciliation Act, 1996; or
(iii) against the terms of the respective contract; or
(iv) patently illegal; or
(v) prejudicial to the rights of the parties;
is open to interference by the court under Section 34(2) of the Act.
(b) The award could be set aside if it is contrary to:
(a) fundamental policy of Indian law; or
(b) the interest of India; or
(c) justice or morality.
(c) The award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the court.
(d) It is open to the court to consider whether the award is against the specific terms of contract and if so, interfere with it on the ground that it is patently illegal and opposed to the public policy of India.
29. It is clear that the juristic principle of a "judicial approach" demands that a decision be fair, reasonable and objective. On the obverse side, anything arbitrary and whimsical would obviously not be a determination which would either be fair, reasonable or objective.
30. The audi alteram partem principle which undoubtedly is a fundamental juristic principle in Indian law is also contained in Sections 18 and 34 (2)(a)(iii) of the Arbitration and Conciliation Act. ...
31. The third juristic principle is that a decision which is perverse or so irrational that no reasonable person would have arrived at the same is important and requires some degree of explanation. It is settled law that where:
(i) a finding is based on no evidence, or
(ii) an Arbitral Tribunal takes into account something irrelevant to the decision which it arrives at; or
(iii) ignores vital evidence in arriving at its decision, such decision would necessarily be perverse.
32. A good working test of perversity is contained in two judgments. In Excise and Taxation Officer-cum-Assessing Authority v. Gopi Nath and Sons (1992 Supp. (2) 312, it was held (SCC p.317, para 7):
7. ...It is, no doubt, true that if a finding of fact is arrived at by ignoring or excluding relevant material or by taking into consideration irrelevant material or if the finding so outrageously defies logic as to suffer from the vice of irrationality incurring the blame of being perverse, then, the finding is rendered infirm in law.
In Kuldeep Singh v. Commr. of Police (1999) 2 SCC 10 : 1999 SCC ( L and S) 429, it was held: (SCC p.14 para 10)
10. A broad distinction has, therefore, to be maintained between the decisions which are perverse and those which are not. If a decision is arrived at on no evidence or evidence which is thoroughly unreliable and no reasonable person would act upon it, the order would be perverse. But if there is some evidence on record which is acceptable and which could be relied upon, howsoever compendious it may be, the conclusions would not be treated as perverse and the findings would not be interfered with.
34. It is with this very important caveat that the two fundamental principles which form part of the fundamental policy of Indian law (that the arbitrator must have a judicial approach and that he must not act perversely) are to be understood.
Interest of India
35. The next ground on which an award may be set aside is that it is contrary to the interest of India. Obviously, this concerns itself with India as a member of the world community in its relations with foreign powers. As at present advised, we need not dilate on this aspect as this ground may need to evolve on a case-by-case basis.
36. The third ground of public policy is, if an award is against justice or morality. These are two different concepts in law. An award can be said to be against justice only when it shocks the conscience of the court. An illustration of this can be given. A claimant is content with restricting his claim, let us say to Rs. 30 lakhs in a statement of claim before the arbitrator and at no point does he seek to claim anything more. The arbitral award ultimately awards him Rs. 45 lakhs without any acceptable reason or justification. Obviously, this would shock the conscience of the court and the arbitral award would be liable to be set aside on the ground that it is contrary to "justice".
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.
(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.
59. The Arbitrator has dealt with this clause in detail and has construed and applied the same correctly while dealing with Claims 2, 3 and 4 and has obviously not applied the said clause to Claims 9, 10, 11 and 15 as no occasion for applying the same arose. The award cannot be faulted on this ground.
63. The appeal is, therefore, allowed and the judgment of the Division Bench (DDA V. Associate Builders, 2012 SCC OnLine Del 769) is set aside. The judgment of the Single Judge [DDA V. Associate Builders, OMP No. 304 of 2005, Order dated 3-4-2006 (Del)] is upheld and consequently, the arbitral award dated 23-5-2005 is as a whole upheld.
There will be no order as to costs.
The Award can be modified by applying even doctrine of severability:-
The issue about the Power of Court to modify the award by applying the doctrine of severability is settled. The learned Judge in this case itself maintained the Award, in reference to claim No.19 but rejected the other claims and accordingly modified the award.
54. A Full Bench of this Court in R. S. Jiwani (M/s.) v. Ircon International Ltd, Mumbai (2010 (1) Mh. L. J. 547)after considering the judgments of the Supreme Court settled the issue that the award can be modified in para 38 which reads thus:
38. For the reasons afore recorded, we are of the considered view that the dictum of law stated by the Division Bench in the case of Ms. Pushpa Mulchandani (supra) is not the correct exposition of law. We would predicate the contrary view expressed by different Benches of this Court for the reasons stated in those judgments in addition to what we have held hereinabove.
It is difficult to prescribe legal panacea which, with regard to the applicability of the principle of severability can be applied uniformally to all cases. We find that the principle of law enunciated by us hereinabove is more in comity to object of the Act, legislative intent, UNCITRAL Model Law and will serve the ends of justice better. Thus, we proceed to record our answers to the questions framed as follows:
1. The judicial discretion vested in the court in terms of the provisions of Section 34 of the Arbitration and Conciliation Act, 1996 takes within its ambit power to set aside an award partly or wholly depending on the facts and circumstances of the given case. In our view, the provisions of Section 34 read as a whole and in particular Section 34(2) do not admit of interpretation which will divest the court of competent jurisdiction to apply the principle of severability to the award of the Arbitral Tribunal, legality of which is questioned before the court. The Legislature has vested wide discretion in the court to set aside an award wholly or partly, of course, within the strict limitations stated in the said provisions. The scheme of the Act, the language of the provisions and the legislative intent does not support the view that judicial discretion of the court is intended to be whittled down by these provisions.
2. The proviso to Section 34(2)(a)(iv) has to be read ejusdem generis to the main section, as in cases falling in that category, there would be an absolute duty on the court to invoke the principle of severability where the matter submitted to arbitration can clearly be separated from the matters not referred to arbitration and decision thereupon by the Arbitral Tribunal.
Admittedly, additional work done-ntitlement for extra amount:
55. Most of the claims of LandT, in the present case in hand, are for the extra/additional work, than the work awarded. The amount so claimed by LandT is for the costs of additional work so completed, under the supervision of HPCL. The additional work as done is not in dispute. The Arbitrator, therefore, based upon his experience and knowledge of the nature of the work, awarded the lump sum amount for such extra work. The main contention of HPCL throughout was, as recorded by the learned Arbitral Tribunal and the learned Judge, and even as per the submission made before this Division Bench, that though extra/additional works was done, but same was within the scope and conditions of the main contract and therefore, there was no question of extra payment, LandT was under obligation to perform these additional part even if any, to complete the project in time. The finding given by the learned Arbitrator with regard to the additional/extra work based upon the material and the documents placed on record, though no oral evidence was lead by the parties, as agreed, the same ought not to have been interfered with by the learned Judge, HPCL was aware of the fact of additional/extra work, but to deny the payment for the same, in our view, was wrong.
56. It is held by the Supreme Court in Venkatesh construction Company (Supra) that:
14 ...............When the evidence and material clearly depict the change of nature of work involved and when the extra work to be done was also admitted by DW-1, parties cannot be expected to go for a revised agreement/contract. Moreover, having regard to the fact that the work was to be completed within a specified timeframe, the parties cannot be expected to go for a second round of negotiation and reframe the terms and conditions of the work. While so, the High Court was not right in placing reliance upon Clause 11 of the contract to reverse the findings of fact recorded by the trial court.
16. The Appellate Court may not interfere with the finding of the trial court unless the finding recorded by the trial court is erroneous or the trial court ignored the evidence on record. The High Court reversed the decree passed by the trial court without discussing oral and documentary evidence and several grounds raised before the trial court. The High Court veered away from the main issue and went on to elaborate on the law of arbitration and the mode of setting aside the arbitral award under Section 34 of the Arbitration Act, which in our view, was not warranted. Without considering the oral and documentary evidence, the High Court erred in interfering with the factual findings recorded by the trial court and the impugned judgment is liable to be set aside.
57. We are of the view that, therefore, in the present case, the learned Judge ought not to have interfered with arbitration decision on the findings of facts by interpreting the provisions of the contract in the background of his special knowledge/expertise in the field. The learned Judge's total rejection of the claim of additional work done, as awarded by the learned Arbitrator is unjust and contrary to the record. This is in the background, when HPCL is not in position to content that no extra work was done by LandT. There is an error in the impugned judgment to this extent of reversing the award for all the extra works by stating it to be within the scope of the contract. Considering the scope and purpose of Section 34 of the Arbitration Act read with the power of learned Judge to interfere with the finding of facts, arrived at by the learned Arbitrator based upon the possible agreed method to deal with the claims and by taking the reasonable view by keeping in mind the nature of the work, based upon the contract, ought not to have been quash and set aside. The learned Judge has maintained the award of liquidated damages in the background itself. Remand and Power of Appellate Court under Section 37 of the Arbitration Act
58. We have to keep in mind the scope and object of the Arbitration while deciding the Appeal arising out of Judgment on Section 34 Petition of the learned Single Judge, where the award passed by the Arbitral Tribunal may be confirmed or reversed or modified. The scope of Section 34has been elaborated. The Court, if not to interfere with the decision given by the Arbitrator, unless there is perversity and illegality, then the Appellate Court needs to test the decision of the learned Judge if it is against the law (supra). We find no perversity and illegality in the Award. There was no case to interfere with the Award. We, therefore, inclined to remand the matter to the learned Single Judge, as this will give an opportunity to all to deal with the claims again, except the LD claim. There will be fresh reasons on these remaining claims/decisions, so that the Appellate Court may reconsider it in accordance with law, if necessary.
59. Resultantly, the following order:
a) Judgment and order dated 16 November 2005, passed by the learned Single Judge is quashed and set aside, except claim No.19. The order on Claim No.19 is maintained.
b) The Arbitration Petition No. 449 of 2003 is restored and remanded back to the learned Single Judge for reconsideration. The learned Single to reconsider the same within three months from today, in view of above order/observation.
c) There shall be no order as to costs.