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Krishan Kumar Madhok Vs. Union of India and ors. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtDelhi High Court
Decided On
Case NumberSuit Appeal No. 955A of 1978
Judge
Reported inILR1980Delhi164
ActsArbitration Act, 1940 - Sections 14 and 17
AppellantKrishan Kumar Madhok
RespondentUnion of India and ors.
Advocates: A.B. Saharia and; Arun Kumar, Advs
Cases ReferredAllen Berry and Co. Private Ltd. v. The Union of India
Excerpt:
.....act (v940) - sections 14/17 & 30/33--arbitrator sole judge of fact and law--if in giving his award, the arbitrator does not give any reason, the award is not vitiated on that ground alone.; the petitioner entered into a contract with the union of india for the construction of officers' mess and other buildings at delhi cantonment. by the 12th june 1974 and phase ii was to be completed by 12th january 1974. the work was to commence by the 13th march 1973, but it could not be commenced on time because possession of the site was given on may 16, 1973 and the garrison engineer suspended the work for sometime and thus the work was delayed and disputes and differences arose between the parties and they were referred to arbitration.; the arbitrator gave his award on 11th september, 1979...........of any central act or regulation.'(10) for the above reason, the first objection against the award on claim no. 1 is rejected. the learned counsel for the parties have taken me through the record and i find that it cannot be said that the award is based on no evidence. the contractor had produced before the arbitrator muster rolls and a certificate from a chartered accountant showing the total amount of wages paid to the labour during the periods in question. the government had also produced the works diary which showed the strength of the labour employed on various dates. the arbitrator had given the award on the basis of the evidence produced before him by the partics. it -s not open to this court to re-appraise the evidence and substitute its own conclusions for the conclusions.....
Judgment:

R.N. Aggarwal, J.

(1) The petitioner M/s. Krishan Kumar Madhok 'hereinafter called 'the contractor') entered into a contract with the Union of India for the construction of technical accommodation, officers mess, servant quarters, garages and static tanks at Delhi Cantonment. The contract was a 'lumpsum' contract. The amount agreed was Rs. 22,97,243.70. The contract was a time bound contract and phase Ii was to be completed by 12th January 1974 and phase I by 12th June 1974. The work was to commence by 13th March 1973, but it could not be commenced a? the possession of the site was given on May 16, 1973. The Garrison Engineer suspended the work on 14th September 1973 and the work of phase It was resumed on 6th November 1973 and that of phase I on March 1, 1974.

(2) The contract contained an arbitration clause. Dispute arose between the parties and they were referred to the sole arbitration of Major General Surendra Singh Chhachhi. The parties filed their claims and counter-claims before the arbitrator. The arbitrator gave his award on 11th September 1979. The arbitrator awarded it sum of Rs. seven lacs and odd to the contractor.

(3) The contractor filed a petition under sections 14/17 of the Arbitration Act for making the award a rule of the Court. The respondent No. 1 Chief Engineer, Delhi Cantonment filed objections under sections 30 and 33 of the Arbitration Act to the award. The contractor has contested the objections.

(4) On the pleadings of the parties, the following issues were framed :

'1. Whether the award in question is liable to be set aside for the reasons mentioned in the objection petition?

2. Relief.

(5) To appreciate the contentions, it will be useful to reproduce the relevant claims and the amounts awarded thereon by the arbitrator and that portion of the award reads as under :

__________________________________________________________________________________ 'Sl. Claim Findings Amount No. awarded __________________________________________________________________________________ 1. Claim No. 1. Increase in minimum The claim is partly 1,52,2291.00 awages by established statutory Notification issued by Central Government. 2. Claim No. 2. Damages and losses caused The claim is partly by various breaches of established and is contrac. allowed to the extent shown against each sub-item. (a) Idle Labour & Staff 42,465.00 (b) Overheads expenditure 88,000.00 during the extended period. (c) Increase in cost of works 2,98,280.00 (d) Idle Plant & Machinery 15,340.00' __________________________________________________________________________________

(6) The objection's as to the validity of the award against claim No. 1 are two-told : (i) that it is against the express provisions of the agreement between the parties and (ii) that there is no evidence to prove the claim.

(7) It is not disputed that by a notification dated 25th April 1973 the 'Central Government had incrcased the labour wages under the Minimum Wages Act. Shri Arun Kumar learned counsel for the objection- petitioner/respondent contended that under conditions No. 26 and 58 of the General Conditions the contractor is to pay the fair wages to the labour and that if by any local regulations or otherwise the fair wages are incrca.scd. the contractor is not entitled to claim the money paid by him in excess of the fair wages shown in the schedule of fair wages, as provided by condition No. 3.1 of the Special Conditions which also governs the contract. The fact that under clauses No. 26 and 58 the contractor is to pay the fair wages to the labour has, in my opinion, no relevance to the claim made by the contractor for reimbursement on account of the increased wages paid by him because of the notification by the Central Government increasing the labour charges. Special condition No. 3.1 reads as under :

'THE contractor shall have no claim whatsoever, if on account of any local regulations or otherwise he is required to pay wages in excess of the fair wages shown in the sehedule of fair wages.'

(8) The increase in the fair wages was not affected by any local regulations, but by a notification issued by the Central Government. The word 'otherwise' employed in the special condition No. 3.1 is lo be read as ejusdem generis with the words 'local regulations' and it would mean increase in wages due to local causes.

(9) The above clauses were considered by me in the case Bengal Trading Syndicate v. Union of India and others (suit No. .1028-A of 1978 decided on 15th May 1979) (1) and I had held as under :

'CLAUSE 26, in my view, has no bearing on the point in issue Clause 26 merely fixes the liability on the contractor for th2 payment of all wages or other moneys that may becomes payable to his work-people or employees under various enactments under the Payment of Wages Act etc. Clause 26 cannot be construed to mean that if on account of Government law the minimum wages of a labour are enhanced the contractor cannot claim the extra expenditure incurred due to statutory increase in the wages of labour.

Clause 5 (clause 5 is in same terms as condition No. 3.1) of the contract agreement does provide that if on account of local regulation or otherwise the contractor is required to pay wages in excess of minimum wages shown in the schedule of minimum wages he shall not be entitled to any claim in that respect. The case of the contractor is that the minimum wages of labour were increased with effect from 25th April 1973 under Government of India's notification S. O. No. 247(S) dated 25th April 1973 and as a result thereof the contractor had to pay the increased wages to his labour as prescribed by the notification dated 25th April 1973. The respondent Union of India in its reply has not disputed the assertion of the contractor that the Government of India had issued notification dated 25th April 1973 under which the wages of labour were increased. Respondent No. 1 in reply besides relying on conditions 5 and 26 contended that the contractor had not furnished any documentary proof in support of the actual wages paid by him duly certified by Chartered Accountant and verified by Labour Enforcement Officer Clause 5 only speaks of local regulations and not of regulations or enactments made by the Government of India. It appears that the parties by inserting condition 5 in the contract agreement only contemplated that if due to any local regulation or any other local cause there is increase in the minimum wages shown in the schedule of minimum wages the contractor shall not be entitled to lay any claim on account of any such increase, but the parlies did not mean to include the increase in the minimum wages on account of any Central Act or regulation.'

(10) For the above reason, the first objection against the award on claim No. 1 is rejected. The learned counsel for the parties have taken me through the record and I find that it cannot be said that the award is based on no evidence. The contractor had produced before the arbitrator muster rolls and a certificate from a Chartered Accountant showing the total amount of wages paid to the labour during the periods in question. The Government had also produced the works diary which showed the strength of the labour employed on various dates. The arbitrator had given the award on the basis of the evidence produced before him by the partics. It -s not open to this Court to re-appraise the evidence and substitute its own conclusions for the conclusions arrived at by the arbitrator. It is also not open to the Court to go into the question of sufficiency of evidence. Claim No. 2 :

(11) As already stated, the contract was a time bound contract, phase Ii of the work was to be completed by 12th January 1974 and phase I by 12th June 1974. The work was to commence by 13th March 1973, but it could commence only on 166th May 1973 because of non-availability of the site. The work. was ordered to be suspended on 14th September 1973. The work of phase Ii was resumed on 6th November 1973 and that of phase T on 1st March 1974. The work of phase I was completed on 27th March 1976 and that of phase Ii on 11th March 1975.

(12) The contention of the contractor is that though in the order suspending the work no reason is assigned for it, but in reality the work was suspended on account of financial difficulties; that clause 9 of the General Conditions of the contract was not meant to be operated to meet such contingency and that the said clause was intended to be invoked only in the interest of works and for no other reason and that the respondent is guilty of breach of the contract. The contention further is that on account of the breach of the contract the contractor had to incur extra expenditure not contemplated by the contract agreement for which he is entitled to compensation under the law. It was also contended that the respondent defaulted in issuing stores as and when stores were required and that resulted in the labour and machinery remaining idle. It was further contended that the contractor was in i position to complete the works within the period contemplated in the agreement and that on account of suspension of the work and failure to supply the stores at the right time the execution of the works was prolonged and which resulted in heavy loss to the contractor as the prices of the materials had shot up.

(13) The respondent countered the allegations of the contractor and contended that under clause 9 of the General Conditions of contract, the Garrison Engineer was fully competent to suspend the execution of the works or any part or parts thereof and that the suspension of the work on 14th September 1973 was strictly in terms of condition No. 9 and that the contractor cannot lay any claim for damages on account of the suspension of work as he was fully aware that under the contract the respondent could have suspended the execution of the work. It was further contended that on account of the delay in the supply of the stores the period for completion of the work was extended from time to time in terms of clause Ii of the conditions of the agreement and under the said condition the contractor is not entitled to any damages for the non-supply of the stores. Clause 9 and the relevant part of clause Ii of the General Conditions of Contract read as follows:

'9. Suspension of Work. The Contractor shall suspend execution of the works or any part or parts thereof, whenever called upon in writing by the Garrison Engineer to do so, and shall not resume work thereon until so directed in writing by the Garrison Engineer. The Contractor will be allowed by the G. E. and extension of time (not less than the period of suspension) for completion of the item or group of items of work for which a separate period of completion is given in the contract and of which 'the suspended work forms part but no other claims in this respect for compensation or otherwise, howsoever, shall be admitted.'

'11. Time, Delay and Extension (A) xxx xxx xxx (B) If the works be delayed : (a) by reason of non-availability of Government stores mentioned in Schedule 'B' ; or (b) by reason of iioa-availability or breakdown of Govt. Tools and Plant mentioned in Schedule 'C';

Then, in any such event, notwithstanding the provisions hereinbefore contained, the G. E. may in his diserction grunt such extension of time as may appear reasonable to him and the Contracror shall be bound to complex the works within such extended time. In the everit of the contractor not agreeing to the extension granted by I ho Garrison Engineer, the matter shall be referred to the Accepting Officer (or C.W.E. in case of contract accepted by Garrison engineer) whose decision shall be final and binding.

(C) No claim in respect of compensation or otherwise, howsoever arising, as a result of extensions granted under Conditions (A) and (B) above shall be admitted.'

(14) There is no doubt that under clause 9 of the General Conditions of the contract the Garrison Engineer could suspend execution of the works or any part or parts thereof and the contractor was to resume work only when directed in writing by the Garrison Engineer. The said term further provides that in case of suspension of work the contractor would not be entitled to claim any compensation in respect thereof.

(15) A perusal of the statement of claims and the reply filed thereto by the respondent shows that the case of the contractor is that the suspension of the work was for a reason which was beyond the contemplation of the parties and the respondent is liable to compensate the contractor for the loss and damages suffered by him on account of the suspension of the work. The controversy whether the suspension of the work was justified or not is essentially a matter to be determined by the arbitrator. The arbitrator has not given reasons for his decision. It is now a settled principle that if an arbitrator, in deriding a dispute before him, does not record his reasons and does not indicate the principle of law on which he has proceeded, the award is not on that ground vitiated. It is only when the arbitrator proceeds to give his reasons or to lay down principles on which he has arrived at his decision that the Court is competent to examine whether he has proceeded contrary to law and is entitled to interfere, if such an error of law is apparent on the face of the award itself See : Bungo Steel Furniture (Pvt) Ltd. v. Union of India, A.I.R 1067 Supreme Court 378(2).

(16) I find nothing on the face of the award to show that the arbitrator has committed any error of law or fact. Mr. Arun Kumar on behalf of the respondent vehemently contended that clause 9 of the contract expressly provides that the Garrison Engineer can suspend the execution of the work at any time and the contractor shott not be entitled to claim any compensation in respect of the period of the suspension and, thereforee, according to the counsel, the award of damages by the arbitrator in respect of the period of susponsion is contrary to caluse 9 of the contractor and is vitiated. I do not agree in this contention. The disputes in their very nature required the arbitrator to determine whether the suspension of works was a valid and bonafida exercise of power. The arbitrator is the judge both of fact and law. It is also a well established principle in the matter of arbitration awards that where a cause or matters in difference are referred to an arbitrator, whether a lawyer or a layman, he is constituted the sole and final judge of all questions both of law and fact. The only exceptions to the above rule are cases where the award is the result of corruption or fraud, or where the question of law necessarily arises on the face of the award, or upon some paper accompanying and forming part of the award. See : M/s. Allen Berry and Co. Private Ltd. v. The Union of India, : [1971]3SCR282 .

(17) The arbitrator had on claim No. 2 found that the contractor is entitled to the sums mentioned against claim No. 2 by way of damages for breach of contract. I find no legal flaw in tile above conclusion. Moreover, the award in question is a non-speaking award and it is not possible to spell out beyond conjecturing on what principles or by process the arbitrator had come to his conclusion. In Jivaraibhai Ujamahi Sheth and others v. Chintamanrao Balaji and others : [1964]5SCR480 , it was held :

'IT is not open to the Court to speculate, where no reasons are given by the arbitrator, as to what impelled the arbitrator to arrive at his conclusions. On the assumption that the arbitrator must have arrived at his conclusion by a certain process of reasoning the Court cannot proceed to determine whether the conclusion is right or wrong. It is not open to the Court to attempt to probe the mental process by which the arbitrator has reached his conclusion where it is not disclosed by the terms of his award.'

(18) The arbitrator had given' his award on claim No. 2 after hearing the parties and examining the pleadings and evidence produced before him. It is just not possible to enter into the mind of the arbitrator to discover on what principles and by what process the arbitrator had come to his conclusion.

(19) Mr. Arun Kumar pointed out to Ex. R. 17 dated 27th November 1973 and contended that at the time of the grant of extension of time from 12th June 1974 up to 4th August 1974 in the case of phase I, it was specifically stated that it involved no financial effect, and according to the counsel the contractor is bound by the above statement in Ex. R. 17 and he is estopped from claiming any compensation regarding the suspension of the work relating to phase 1. It is not clear from the document as to what the parties intended by writing 'financial effect -nil'. I presume that the arbitrator must have taken the document into consideration while making the award.

(20) Mr. Arun Kumar next contended that the award on claim No. 2 is based on no evidence and is thereforee liable to be quashed. find my inability to agree in this contention. I have been taken through the record and I find that it cannot be said that the award is based on no evidence.

(21) Mr. Arun Kumar also assailed the validity of the awards given against claim Nos. 3 and 19. lam unable to appreciate how the awards on the said claims are vitiated.

(22) No other point was urged at the bar. In the result the objections to the award are rejected and the award is made a rule of the Court. The respondent shall pay the amount awarded to the contractor within 10 weeks, failing which the contractor shall be entitled to interest at the rate of 6 per cent per annum on the amount payable to it under the award from the date of the decree until the amount is paid. The parties are left to bear their own costs.


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