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The U.P. State and anr. Vs. Mohan Lal - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtAllahabad High Court
Decided On
Case NumberF.A.F.O. No. 342 of 1969 and Civil Revn No. 1834 of 1969
Judge
Reported inAIR1971All521
ActsArbitration Act, 1940 - Sections 30 and 33
AppellantThe U.P. State and anr.
RespondentMohan Lal
Appellant AdvocateK.N. Singh, Adv.
Respondent AdvocateG.P. Bhargava and Bhola Nath Srivastava
DispositionAppeal and revision allowed
Excerpt:
.....33 of arbitration act, 1940 - certain work done by the contract for which he is not entitled to extra payment - arbitrator has not committed a mistake apparent on the face of award - decision binding on parties. - - the question whether this work of excavation of roots of trees was covered by the contract was clearly a dispute relating to the contract, and hence, was capable of being referred to arbitration, in accordance with the arbitration clause. it was clearly laid down under 'site clearance' in p. he endorsed the view of sri ahsan that the claim of the contractor was inadmissible under the conditions of the contract. both the points of dispute were answered by the arbitrator to the best of his ability. 11. this is precisely what the learned counsel for the contractor asksus..........of roots of trees while the work of earth filling at the site was going on. he claimed that this extra work was done under verbal orders of the engineers on the spot. the department did not accept this claim. it was of the opinion that this work was a part of the work provided for in the contract, and, hence, no extra payment could be claimed.2. on 24-5-1966, the contractor moved an application for reference , of this dispute to the arbitration of the chief engineer, l. s. g. e. d., as provided by clause 24 of the contract bond. clause 24 provided that the decision of the chief engineer shall be final, conclusive and binding on all parties to the contract upon all questions, including questions of claims in any way arising out of, or relating to the contract. the question whether this.....
Judgment:

Satish Chandra, J.

1. On 18th March, 1963, Mohan Lal, the respondent entered into a contract with the State Government for the construction of a 9 feet wide service road along the Jhansi Babina Gravity Main, under contract bond No. 5/9/SE of 1962-63. After the work was finalised and payment in full and final settlement of its claim was made to the contractor, he raised a dispute claiming a sum of Rupees 35000/-, on the ground that he had spent this money over the extraction of roots of trees while the work of earth filling at the site was going on. He claimed that this extra work was done under verbal orders of the Engineers on the spot. The Department did not accept this claim. It was of the opinion that this work was a part of the work provided for in the contract, and, hence, no extra payment could be claimed.

2. On 24-5-1966, the contractor moved an application for reference , of this dispute to the arbitration of the Chief Engineer, L. S. G. E. D., as provided by Clause 24 of the contract bond. Clause 24 provided that the decision of the Chief Engineer shall be final, conclusive and binding on all parties to the contract upon all questions, including questions of claims in any way arising out of, or relating to the contract. The question whether this work of excavation of roots of trees was covered by the contract was clearly a dispute relating to the contract, and hence, was capable of being referred to arbitration, in accordance with the arbitration clause.

3. On 5-10-1966, the Chief Engineer gave his award, rejecting the claim of the contractor. The State Government made an application under Section 14 of the Arbitration Act, praying that the award be filed in court. The contractor, on the other hand, made an application under Section 33 of the Act, with a prayer that the award be declared invalid. Both the matters were consolidated together and disposed of by a common judgment. The court below held that on the basis of oral and documentary evidence on the record and the legal aspect of the matter, the excavation of the roots of trees from the site was not a part of the original contract dated 18th March. 1963. It was an independent work, not covered by the said contract. The arbitrator had no jurisdiction to give an award regarding the dispute about this extra work; and, consequently, the award was illegal and invalid.

4. On this principal finding, the award was set aside. The application under Section 33 was allowed, while the application under Section 14, Arbitration Act, was rejected.

5. Aggrieved, the State has come up in appeal to this Court.

6. In the award, the arbitrator stated that the case of the contractor was that when the work was started at the site, it was found that there existed plenty of roots of trees embedded in the ground, which needed extraction. Since a work of this kind was not provided for in the contract, it was an extra item of job to be done. The contractor's case was that he referred the matter to the Executive Engineer, who orally asked him to carry on the work and extra rate will be prepared for this item of work. Consequently, the contractor continued the work. This extra work came to 76,830 square feet; and, at the rate of Rs. 4.50 per 100 square feet, the contractor was entitled to a sum of Rupees 35,000/-,

7. The award goes on to state that the contractor was unable to produce any written order of any of the Engineers agreeing to make extra payment for this work. The award then takes up the evidence of the Department. The Executive Engineer and some of the Assistant Engineers had appeared. The award notes that Sri Ahsan, the Executive Engineer, in whose time the work was done, stated that although the extra rates for items not provided in the contract were prepared and got signed by the contractor, but at no stage, any commitment, as alleged by the contractor, had been made by him that the contractor would be paid accordingly. He stated that the contractor had been only told that due consideration will be given to his claim for this item of work within the terms and conditions of the contract bond.

He also stated that before the contractor's case for extra claim was submitted to the Superintending Engineer for his final orders, it was pointed out by the Assistant Engineer, Sri R. P. Khare, that as per Clause 50 of the contract, it was clear that the P. W. D. Specifications are applicable to this bond. It was clearly laid down under 'Site clearance' in P. W. D. Specification Part I, Section A (Buildings) that no separate payment for the site clearance should be made unless otherwise specified. Sri Ahsan agreed with this view. The award then notes the evidence of Sri P. N. Srivastava, the Executive Engineer, in whose time the contract was finalised. He said that, according to his opinion, there was no provision in the contract for this kind of a work, and, so, the contractor was entitled to extra payment. Sri R. N. Misra, the Superintending Engineer, did not agree with Sri P. N. Srivastava. The award states that, before the work was allotted to Mohan Lal, the contractor, quite a considerable amount of jungle cutting was got done departmentally, but it was possible that some roots of shrubs might have been there, which the contractor had to remove in connection with the construction of the service road along the gravity main, during the execution stage of the work, which was allotted to him under the contract. He endorsed the view of Sri Ahsan that the claim of the contractor was inadmissible under the conditions of the contract. The same view was also held by Sri Virendra Kumar and Sri R. P. Khare, Assistant Engineers, The Superintending Engineer was of the view that, according to Schedule 'A' of the contract bond, general Engineering practice had to be followed.

8. The arbitrator then stated in the award that :--

'The Superintending Engineer further stated that the inquiries made by him have revealed that neither any wood or roots of trees were handed over to the Division which might have been dug out by the contractor during the process of site clearing which, as alleged by him had to be extracted by him. The Executive Engineer has also clarified that on the adjoining land, only shrubs and not trees are to be found and as such no wood is expected to be available by cutting these shrubs. It was also stated by the Superintending Engineer that the measurements recorded in the Measurement Book had not been checked too by any authority at any time.'

Thereafter the arbitrator gave his award. After thoroughly examining the evidence placed before him by the parties and considering the documenary evidence and arguments, he held that under the conditions of the contract, the claim of the contractor had no force. He therefore, rejected the claim.

9. It will be apparent that the arbitrator decided two matters. He held, in agreement with the views of the Superintending Engineer supported by the views of other Engineers, that this work was covered under the contract, and the contractor was not entitled to any extra payment on the footing that this job was outside the purview of the contract. The second finding recorded was that the contractor, in fact, had not removed any wood or roots of trees, etc., while doing earth work. On both these grounds, he rejected the claim of the contractor. It will be seen that the principal dispute referred to arbitration was whether the work of extracting roots of trees, while executing earth work at the site, was or was not within the purview of the contract, and if not, whether the contractor was entitled to the amount claimed by him. Both the points of dispute were answered by the arbitrator to the best of his ability. For holding that the work of extracting roots of trees was within the purview of the contract, the arbitrator has relied upon not only Clause 50 of the contract, but also the evidence of the various Engineers led before him.

10. In this situation, it cannot, in law, be said that the arbitrator has committed a mistake apparent on the face of the award or in any documentwhich has been incorporated in it.

A similar question arose before the Supreme Court recently in Alien Berry and Co. Pvt. Ltd. v. Union of India, (AIR 1971 SC 696). In that case, the dispute referred was, first, as to what was sold, and, secondly, whether besides the sale-notes 160 and 167, the subsequent clarifications or explanations were binding on the Government. The arbitrator construed the various terms of the said sale-notes in the light of the evidence led by the parties. He consequently came to the conclusion that the subsequent clarifications and assurances were not binding, and; that what was sold was only the store of vehicles located at the depots at the relevant time. It was argued that the arbitrator had misconstrued the sale-notes, and, that, by referring to the terms of the sale-notes in the award, the arbitrator would be deemed to have incorporated the contract as a document appended to the award; so the court was entitled to look into the reasoning of the arbitrator, and, if it came to the conclusion that the interpretation put upon the clauses of the sale-notes was wrong, the court could interfere. The Supreme Court rejected this submission.

It held that the questions referred to were partly of fact and partly of law. Prima facie, the findings of the umpire would bind the parties, unless the umpire is held to have laid down any legal proposition, which is the basis of the award, and which is, on the face of the award, erroneous. It was a case where in deciding the questions referred to him, the umpire had to decide a point of law. In doing so, the umpire, no doubt, laid down the legal proposition that the clarifications or assurances given subsequent to the dates of the said sale-notes by an officer or officers of the department were not binding on the respondents, nor could they affect the scope of the sales. That answer the umpire was entitled to give. But the fact that he answered a legal point does not mean that he had incorporated into the award a document or documents, the construction of which, right or wrong, is the basis of the award. The error, if any, in such a case cannot be said to be an error apparent on the face of the award entitling the court to consider the various documents placed in evidence before the umpire but not incorporated in the award so as to form a part of it, and then to make a search if they have been misconstrued by him.

11. This is precisely what the learned counsel for the contractor asksus to do. This is precisely what the] court below has done. It has gone on the merits, and came to the conclusion that the job of extracting roots of trees etc. was outside the purview of the contract bond. This was , the question specifically referred to arbitration. An arbitrator is a domestic tribunal appointed by the parties. Its decisions, right or wrong, are binding on the parties. The court cannot question its decision as a court of appeal on facts. As held by the Supreme Court, an error in the construction of the clauses of the agreement is not an error apparent on the face of the award; by referring to the clauses of the agreement, the arbitrator does not incorporate the contract in the award, so as to form part of it. In our opinion, the court below had no jurisdiction to go into this question, much less to hold that the arbitrator had no jurisdiction to decide this matter.

12. In the result, the appeal, which is directed against the order setting aside the award, as well as the connected revision, which is directed against the order dismissing the application under Section 33 of the Arbitration Act are both allowed. The impugned order is set aside. The award is made a rule of the court. A decree shall follow thereon. The appellant shall be entitled to its costs from the respondents.


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