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Mohinder Singh Dhamrait Vs. Union of India and ors. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtDelhi High Court
Decided On
Case NumberSuit Appeal No. 454A of 1974
Judge
Reported in13(1977)DLT272
AppellantMohinder Singh Dhamrait
RespondentUnion of India and ors.
Advocates: B.K. Divan,; A.B. Saharia and; V.B. Saharya, Advs
Cases Referred and Union of India v. Bunge Steel Furniture Private Ltd.
Excerpt:
.....whatsoever, in any was arising out of or relating to the contract, designs, drawings, specifications estimates instructions, orders or these conditions or otherwise concerning the works or the execution or failure to execute the same whether arising during the progress of the work or after the completion or abandonment thereof shall be referred to the sole arbitration of the person appointed by the chief engineer, c. (4) the petitioner's counsel has urged that the award cannot be set aside only because of the failure of the arbitrator to disclose reasons for the decision reached by him. ' (russel on arbitration, seventh edition, page 233). (6) shri gupta's failure to render reasons for his award was tantamount undoubtedly to judicial misconduct and transgression of the bounds of the..........or abandonment thereof shall be referred to the sole arbitration of the person appointed by the chief engineer, c.p.w.d. in charge of the work at the time of dispute or if there is no chief engineer, the administrative head of the c.p.w.d. at the time of such appointment. a dispute of the type contemplated by the agreement did arise and the contractor claimed from the government a sum of rs. one lac and odd. this claim was not acceptable to the authorities of the central public works department and the dispute was, thereforee, reterned by the chief engineer concerned as per clause 25 of the agreement to the arbitration of shri m. b. rao. after some time shri rao resigned and the chief engineer appointed in his place shri h. c. gupta as he sole arbitrator. shri gupta was told in the.....
Judgment:

M.S. Joshi, J.

(1) Mohinder Singh Dhamrait, a contractor, executed the work of providing certain roads and paths with bitumen surface for the Union of India. The agreement under which this work was accounted stipulated that all questions and disputes relating to the meaning of the specifications, designs, drawings and instructions mentioned in it and as to the quality of workmanship or materials used on the work or as to any other question, claim, right matter or thing whatsoever, in any was arising out of or relating to the contract, designs, drawings, specifications estimates instructions, orders or these conditions or otherwise concerning the works or the execution or failure to execute the same whether arising during the progress of the work or after the completion or abandonment thereof shall be referred to the sole arbitration of the person appointed by the Chief Engineer, C.P.W.D. in charge of the work at the time of dispute or if there is no Chief Engineer, the Administrative Head of the C.P.W.D. at the time of such appointment. A dispute of the type contemplated by the agreement did arise and the contractor claimed from the Government a sum of Rs. one lac and odd. This claim was not acceptable to the authorities of the Central Public Works Department and the dispute was, thereforee, reterned by the Chief Engineer concerned as per clause 25 of the agreement to the arbitration of Shri M. B. Rao. After some time Shri Rao resigned and the Chief Engineer appointed in his place Shri H. C. Gupta as he sole arbitrator. Shri Gupta was told in the order of reference that 'on case the amount of claims in dispute is Rs. 50,000.00 or above the arbitrator shall give reasons for the award'. This directive was issued in view of a term in the original agreement between the parties requiring the arbitrator to do so.

(2) Shri Gupta took up the arbitration in pursuance of the reference made to him. He framed 13 issues to facilitate adjudication with the consent of the parties and on consideration of the evidence adduced thereon made an award on August 24, 1974. Mohinder Singh Dhamrait, the contractor, preferred an application in this court with a prayer that the arbitrator be ordered to file the award and in compliance with a process received from the court in this behalf Shri Gupta filed his 'award- on October 4, 1974. Notice of the filing of the award was given to the parties. The contractor took no exception to the same but the Union of India filed objections and urged that the award was liable to be set aside because the arbitrator had misconducted himself and the proceeding and he had transgressed the limits of his authority. In the light of the objections of the respondent and the petitioner's reply there to the following issues were framed in the case :

'1. Whether the arbitrator has misconducted himself and the proceedings

2.Whether the award is beyond the scope of reference

3.Whether the award is liable to be set aside qua item Nos. 1, 4,6, 7 and 13 of the award as the said items are separable from the other portion of the award 4. Relief.'

(3) Issues No. 1 & 2- The one plea on which the respondent has mainly relied is that although the claim of the contractor referred to the arbitrator was more than rupees one lac in value the arbitrator did not give any reasons for the award. As we learn from the award there were thirteen issues before the arbitrator and he took them up one by one for consideration and reached an indedendent decision with regard to each of them. But the fact remains that not only the claim considered was for a such exceeding Rs. 50,000.00 the award too favored the contractor to the tune of Rs. 54,911.26. The arbitration clause and the order of reference made it obligator for the arbitrator to give his reasons for allowing the aforesaid sum to the contractor and it is not disputed by the petitioner that such reasons have not been furnished. The arbitrator has observed at one place that the claim under the issue stands proved and as such the claimant is entitled to recover the amount asked for and at another that withholding of the security by the respondent is not justified under the terms and conditions of the agreement and as such the amount in question is payable by the respondent to the claimant. And so on. It must be conceded that the arbitrator's bald verdict whether the claim is proved or not or it is justified or not fails to fulfill the requirement of recording reasons in herent in his appointment.

(4) The petitioner's counsel has urged that the award cannot be set aside only because of the failure of the arbitrator to disclose reasons for the decision reached by him. It goes without saying that ordinarily the arbitrator is not required to give a reasoned judicial decision nor is it permissible for the court to probe his mind to ascertain what analytical process led him to the particular conclusion. But the case where it 'is enjoined upon him by the agreement between the parties and the terms of the reference to record his reasons would stand on a different footing and that is what happened here.

(5) Unlike a court of law an arbitrator does not have authority to adjudicate upon claims and disputes between people in general, he becomes a judge of only that matter which the parties choose to refer to him. The extent of his jurisdiction is strictly limited by the terms of his appointment and he cannot travel beyond them. There may be dozens of disputes between the self same persons but if the reference is confined only one of them the arbitrators has to content himself by investigating that dispute alone ; he cannot of his own sweet-will enlarge the area of his enquiry It is open to the parties again to decide in what manner disputes is to be determined, the arbitrator cannot set another course for himself. Where the agreement requires that the evidence be taken orally the arbitrator's receiving affidavits would amount to misconduct. If the time provided for the adjudication expires the parties may agree to extend it: it is beyond the competence of the arbitrator to grant any extension to himself. Where the parties set limits to action by the arbitrator he must follow them scrupalously, otherwise his award would become invalid. If he is required to give an independent decision on different parts of a particular claim he will not be allowed to give a consolidated award. The reference provides the source of his authority and he must conform to it in substance and form. Giving reasons for the award, it must be understood, is not a meaningless formality; it ensures proper appraisement of the evidentiary material on which the decision has to be based and due application of the mind to the issues arising for determination. Where a Civil or criminal court though required by the relevant code to do so omits to give reasons for its judgment that judgment becomes liable to be set aside irrespective of its consonance with merits and demonstrable correctness. Even executive authorities find themselves under an obligation in so many matters to pass a speaking order and nonfulfilment of that obligation robs such order of all its validity. 'As an arbitrator (and subsequently any umpire) obtains his jurisdiction solely from the agreement for his appointment it is never open to him to reject any part of that agreement or to disregard any limitations placed on his authority' (Halsbury's Laws of England. Fourth Edition, Vol. 2 p. 302). 'The award must be made in such a way as to comply in point of form with any directions contained in the submission. Unless these directions are complied with the award will not be valid, unless the directions are of an immaterial character.' (Russel on Arbitration, Seventh Edition, page 233).

(6) Shri Gupta's failure to render reasons for his award was tantamount undoubtedly to judicial misconduct and transgression of the bounds of the reference. The issues are decided against the petitioner. Issue No. 3:

(7) The arbitrator has allowed the petitioner's claim for Rs. 13,412.00 referred to in the award as item No. 1. This amount was deducted by the respondent because of delay in the execution of the work on the part of the contractor. It has been urged for the Union of India that the Chief Engineer Trade Fair was entitled by clause 2 of the agreement to order the said deduction and his decision with regard thereto being final it was not competent for the arbitrator to go into the issue and order the refund. When the matter of delay was brought up before the arbitrator the contractor replied with that although he was expected to complete the work by 26th October. 1972 a part of the site was made available to him' as late as 1st November, 1972 despite repeated requests in this behalf and, thereforee, the respondent itself was responsible for the little delay for which he is being blamed. There was an obvious dispute about the liablity of the contractor to pay compensation for 8th day's delay in the preformance of the contract and the Chief Engineer, a party to that dispute would not determine it in his own favor. The clause invoked by the respondent would make the decision of the Chief Engineer final as to the amount payable by the contractor but before he acquires the -right to settle the amount the arnirator must say that a liability to compensate the respondent has been incurred by the contractor. See Seth Karorimal Adwani v. Union of India. A.I.R. 1969 cal. 430 Moreover, when the total claim of the petitioner to title relevant item on account of the alleged finality attaching to the Chief Engineer's decision was made and when Shri H. C. Gupta, the arbitrator framed an issue 'whether levy of Rs. 13,412.00 under clause 2 of the agreement as compensation for alleged delay by the respondent is justified and in accordance with the agreement, if not to what effect' and enquired into the same, no objection as to its being beyond the purview of the reference was raised. The respondent submitted to the jurisdiction of the arbitrator unconditionally and took the chance of obtaining a favorable verdict from him. It is estopped now from challenging the award on the score of the said finality clause.

(8) Items Nos. 5, 6 and 7 of the petitioner's claim are concerned with certain deductions, for defects alleged to have been found in the work executed by him, made with reference to clause 14 of the agreement. But the said clause required the Chief Engineer to bring the alleged defects to the notice of the contractor within six months of the completion of the work and to require him to rectify the same. It is not denied that the petitioner was never asked to remedy the flaws for which he is being penalised and the Central Public Works Department decided to recover he amount on its own more than a year after the job had been accomplished, Then the dispute concerned with items 4, 6 and 7 fell squarely within the sphere of the arbitration clause and the arbitrator's decision thereon cannot be attacked before this Court.

(9) The respondent's objection about the competence of the arbitrator to award interest too has no legs to stand upon. The arbitration clause is very comprehensive in its scope and the arbitrator could, thereforee, certainly adjudicate upon the claim of the petitioner for interest on the amount payable to him under the contract. The Supreme Court held in Firm Madanlal Roshanlal Mahajan v. Hukum Chand Mills Ltd. : [1967]1SCR105 and Union of India v. Bunge Steel Furniture Private Ltd., : [1967]1SCR324 that the arbitrator can award pendents lite and future interest if the claim with regard there to has been referred to him. The contractor did raise a dispute with regard to his right to recover interest from the respondent and the issue of liability of the respondent to pay it was specifically referred to arbitration by the Chief Engineer (NDZ). The arbitrator was thereforee, fully clothed with authority to award interest in the way it has been done. Issue No. 3 is accordingly decided against the respondent.

4.The award has been found to be had on account of the failure of the arbitrator to give his reasons thereforee. It shall, thereforee, be remitted to him to do the needful.

5.The parties shall appear before the arbitrator on 29th May, 1976. The arbitrator shall complete his proceedings within two months from that date.

6.There shall be no order as to the costs of these proceedings.


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