A.S. Naidu, J.
1. Both these appeals are directed against the order dated 5th August, 2005 passed by the Learned District Judge, Cuttack in Arbitration Petition No. 150 of 2003. The facts and the points of law arising in connection therewith being same, both the appeals were heard together and are disposed of by this common Judgment.
2. M/s.Samantaray Construction Private Limited, the Appellant in Arbitration Appeal No. 49 of 2005, (hereinafter referred to as 'the contractors'), was awarded with the work of 'Construction of Mahanadi Barrage on the Right Side from the Right Divide Wall including Right Head Regulator', vide Agreement bearing No. LCB-2/1985-1986. The total cost of the project was Rs. 5, 15,63, 1 06.00 and the date fixed for completion of the work was 11th November, 1987. The work, it is averred, was financed by the World Bank. After entering into the agreement the contractors commenced the work, but then they could complete only 24.99% of work within the time stipulated under the agreement. On the request of the contractors the time for completion of the work was extended by the concerned authorities up to 21st of March, 1988. Within the extended period also the contractors were able to complete only 36.81 % of work. At that juncture of time, it is alleged, invoking Clause 46 of the General Conditions of Contract, the agreement was terminated on 21st April, 1988. By that date, it is stated, only 47.67% of work could be completed by the contractors. The order terminating the agreement/contract was disputed by the contractors ensuing exchange of a number of correspondences between the parties. As the matter could not be settled amicably, the contractors raised a dispute claiming Rs. 6,99,00,000,00 (six crores ninety-nine lakhs). On such dispute being raised, the State Government appointed Shri Justice B.K.Behera, a retired Judge of this Court, to be the Special Arbitration Tribunal to adjudicate the dispute inter se between the parties arising out of the aforesaid agreement and give his award. During continuance of the arbitration proceeding before the Special Arbitration Tribunal, due to amendment of the Arbitration Act, the dispute was transferred to the State Arbitration Tribunal and the records were transmitted to the said Tribunal. The dispute remained pending before the State Arbitration Tribunal until.6th of April, 2001 when the Tribunal dropped the case as no extension of time was obtained for making the award. Aggrieved by such action of the State, Arbitration Tribunal, the contractors moved this Court for appointment of an Arbitrator under the provisions of the Act and Shri Justice Behera was once again appointed as the Arbitrator by order dated 21st. September, 2001 passed by this Court in MJC No. 233 of 2001. The said Judgment of this Court was challenged by the State before this very Court in a Writ application, being OJC No. 17163 of 2001. The Writ application was however not entertained by this Court.Thereafter the State filed an application for review and by order dated 15th February 2002 the review application being Civil Review No. 15 of 2002 was dismissed. Then the State moved SLP before the Supreme Court against the order of appointment of Shri Justice Behera as the Arbitrator and the order passed in the Review Petition. The SLP was dismissed by the Supreme Court on 30th September, 2002. Thus considerable time was consumed in the litigation with regard to appointment of Arbitrator and at last Sri Justice Behera proceeded with the arbitration.
3. Before the Arbitrator both sides, apart from their respective pleadings, filed a number of documents. Both sides also agreed that they would rely on evidence already adduced by them before the State Arbitration Tribunal. After hearing Learned Counsel for both sides and perusing the written notes of arguments the Arbitrator framed ten issues for adjudication which are quoted hereinbelow:
(1) Whether the Respondent was guilty of causing impediments in due execution of the work assigned to the claimant for performance under the Agreement Ext. 8 ?
(2) Whether the claimant was guilty of not preforming his part of the contract?
(3) Whether the time was of essence of the contract and if so was the claimant guilty of not adhering to the time schedule?
(4) Whether the claimant was duly given notice identifying deficiency in performance and demanding corrective action?
(5) Whether there was justification for invoking Clause 46 of Ext.8 and if so, whether action there-under has been duly taken as per the Agreement in between the parties?
(6) Whether the Respondent had justifiable reasons to take away the execution of the Head Regulator part of the contract from the claimant for getting the same executed through other agency at claimant's expense?
(7) Whether any of the counter-claims advanced by the Respondent is sustainable and if so to what extent?
(8) Whether any of the claim items of the claimant is sustainable and if so to what extent?
(9) Whether claim items constituting Annexures- A, B, D, E/A and E/B of the claim application are not sustainable for adjudication as barred by time fixed under Clause 52 read with Clause 53 of the Agreement, Ext.-8 ?
(10) To what relief, if any, the parties are entitled ?
4. The claimants exhibited twenty-three documents which were marked as Exts.l to 23 while the Respondents exhibited thirty-one documents which were marked as Exts-A to X-1. Both sides also adduced oral evidence by examining one witness each. The claimants raised twenty-six items of claim and at the other hand the State raised ten counter-claims. The Arbitrator refused to pass any award in respect of claim item Nos. 1 to 4,6 to 16, 19, 20, 22 and 24 to 26 of the contractors and allowed their claim in respect of item Nos. 5, 21 and 23 besides allowing the claim in respect of item Nos. 17 and 18 in part. Similarly, out of ten counter-claims of the State, the Arbitrator rejected its claim item Nos. 1, 4, 8 and 9; and allowed claim item Nos. 2, 6, 7 and 10 besides allowing claim item Nos. 3 and 5 in part. Ultimately the Arbitrator passed an award in favour of the contractors to a tune of Rs. 4,45,27,453.00 (four crores forty-five lakhs twenty-seven thousand four hundred fifty-three) and in favour of the department to a tune of Rs. 1,37,16,892.00.
5. After receipt of the award, an application was filed under Section 34 of the Act by the State before the District Judge, Cuttack with a prayer to set aside the said award on the ground that the Arbitrator had committed illegalities and irregularities while passing the same and the same was also against the public policy and that the findings recorded by the Arbitrator were not supported by any reason. The said petition was resisted on behalf of the contractors on the grounds that the award was a reasonable one; it was neither against the public policy nor did it suffer from the vice of non-consideration of any material evidence; and thus the petition filed under Section 34 of the Act was liable to be dismissed in limine.
6. Before the District Judge, as would be evident on a perusal of the impugned Judgment,lengthy arguments were advanced by both sides. The District Judge after vividly discussing the points of law; scanning through the materials produced and appreciating the arguments advanced; discussing each item of claim and counterclaim vis-a-vis the findings of the Arbitrator thereon, came to the conclusion that the Arbitrator had assigned very good reasons while refusing or allowing the claims made and that he (District Judge) did not find any error apparent on the face of the record. He also held that a Court while hearing on a petition under Section 34 of the Act and examining the correctness of the reasons was not required to substitute its own finding. On the basis of such conclusion the Learned District Judge held that the contractors were not entitled to get Rs. 3,00,00,000,00 (three crores) which had been awarded under claim item No. 18, but they were entitled to get only Rs. 68,44,332.00 (sixty-eight lakhs forty-four thousand three hundred thirty-two). Similarly he held that the contractors were not entitled to get Rs. 2,67,300.00 (two lakhs sixty-seven thousand three hundred) under claim item No. 21 in the face of the materials on record.Thus the total excess amount awarded in favour of the contractors, according to the Learned District Judge, was Rs. 2,34,22,968.00 (two crores thirty-four lakhs twenty-two thousand nine hundred sixty-eight) under claim item Nos. 18 and 21. Thus it was held that out of the total amount of Rs 4,45,27,453.00 if the excess amount of Rs. 2,34,22.968.00 is deducted, the net amount payable to the contractors was Rs. 2,11,04,485.00 (two crores eleven lakhs four thousand four-hundred eighty-five) and accordingly awarded the said amount in favour of the contractors. The arbitration petition filed before the District Judge was thus allowed in part on contest and the amount awarded by the Arbitrator was modified from Rs 4,45,27,453.00 to Rs. 2,11,04, 485.00. The State was directed to pay the said amount to the contractors with interest at the rate awarded by the Arbitrator.
7. As stated earlier, the State has challenged the said order of the Learned District Judge in Arbitration Appeal No. 52 of 2005 on the ground that the Arbitrator failed to appreciate sub-clause (iii) and (iv) of Sub-section (2)(a) and sub-clause (ii) of Sub-section (2)(b) of Section 34 of the Act; and that the disputed letter dated 26-7-1991 being of confidential nature and having never been accepted in evidence, the Arbitrator acted illegally and with material irregularity in relying on the same while passing the award. It was further submitted that Clause 46 of the General Conditions of Contract had been rightly invoked as the contractors did not complete the work within the time-stipulated, the time being essence of the contract. It is-submitted that the Arbitrator had lost sight of the said fact and erroneously came to the conclusion that time was not the essence of the contract which was contrary to law and therefore the award of the Arbitrator suffered from mis-interpretation of the terms of the contract. It is further alleged that both the Arbitrator and the Learned District Judge failed to appreciate the materials on record and illegally and with material irregularity allowed claim item No. 5 of the contractors though there was gross violation of Section 28(3) of the Act as well as Clauses 31 and 32 of the General Conditions of Contract. It is also alleged that amount awarded by the Arbitrator towards escalation of price which was continued by the Learned District Judge was without any basis or justification and was unwarranted. According to the State, there was gross violation of the statutory provisions, there was mis-interpretation of terms of contract, and last but not the least, there was consideration of some materials which ought not to have been done; and the award is contrary to public policy.
8. The contractors have also challenged a part of the order rejecting their claim to an extent of Rs. 2,34,22,968.00 under claim item Nos. 18 and 21 as stated above on the ground that the Learned District Judge while hearing the application under Section 34 of the Act had no jurisdiction to investigate and/or re-adjudicate any dispute already decided by the Arbitrator and/or re-assess the materials and interfere with the findings and reasonings given by the Arbitrator unless and until there is an error apparent on the face of the award. As such, it is submitted, the order of the Learned District Judge modifying the award of the Arbitrator without assigning any valid reason and on misinterpretation of the award is unjust, illegal and liable to be set aside. It is further stated that the Learned District Judge committed error on facts that the claim of the contractors as per item No. 18 was for Rs. 68,44,332.00 and not -Rs.5,00,000.00,00 The hire charges for machinery allegedly seized by the Respondent and not released in favour of the contractors up to the date of submission of claim statement was Rs. 68,44,332.00. The period of calculation commenced from 21-4-1988, i.e. date of termination of the contract till the date of handing over the plants and machinery. Thus there was absolutely no ambiguity and the amount of Rs. 3 crores awarded by the Arbitrator was just and proper.
9. According to the contractors, setting aside the award under claim item No. 21 without assigning any valid reasons was also illegal, pervert, irrational and not tenable in law. On the basis of the aforesaid pleadings it is prayed that the order of the Learned District Judge modifying a part of the award of the Arbitrator may be set aside.
10. Before delving into the facts and various disputes raised before this Court, it is necessary to have a glance through the provisions of law dealing.with interference with arbitral awards.
Section 34 of the Act deals with recourse of a party to approach Court against an arbitral award and the grounds on which such award can be set aside. The word 'only' appearing in sub-Section(l) of Section 34 lends to the conclusion that a Court cannot suo motu intervene or set aside an arbitral award nor can an award be set aside by any other mode. It further emphasizes that an arbitral award may only be set aside on the grounds more-fully spelt out under Sub-section (2) of Section 34.
11. The relevant provision is quoted hereinbelow :-'34(2) An arbitral award may be set aside by the Court only if (a) the patty making the application furnishes proof that-
(i) a party was under some incapacity; or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for ' the time being in force;
12. The Supreme Court in the case of M/s.Sudarsan Trading Co. v. Government of Kerla and Anr. reported in : [1989]1SCR665 , has observed that it is not open to the Court to probe the mental process of the Arbitrator and speculate where no reasons are given by the Arbitrator as to what impelled the Arbitrator to arrive at his conclusion. Once there is no dispute as to the contract, what is the interpretation of that contract is a matter for the Arbitrator and on which the Court cannot substitute its own decision. It has been further observed:
If on a view taken of a contract, the decision of the Arbitrator on certain amounts awarded is a possible view'though perhaps hot the only correct view, the award cannot be examined by Court.
In the case reported in AIR 1987 SC 2045, the Supreme Court further observed that on award can only be set aside where there is an error on its face.Further, it is an error of law and not mistake of fact committed by the Arbitrator which is justiciable in the application before the Court. If there is no legal proposition either in the award or in any document annexed with the award which is erroneous and the alleged mistakes or alleged errors are only mistakes of fact, and if the award is made fairly after giving adequate opportunities to the parties to place their grievances in the manner provided by the arbitration agreement, the award is not amenable to correction by the Court.
Even assuming that there was an error of construction of the agreement, or even that there was an error of law in arriving at a conclusion, such an error is not an error which is amenable to correction, even in a reasoned award, under law. In order to set aside the award there must be a wrong proposition of law laid down in the award as the basis of the award.
In the case of State of Rajasthan v. Puri Construction Co. and Anr. : (1994)6SCC485 , the Supreme Court has held that even if it is assumed that on the materials on record a different view could have been taken and the Arbitrator has failed to consider the documents and materials on record in their proper perspective, the award is not liable to be struck down. Error apparent on the face of the record does not mean that on a closer scrutiny of the import of the document and the materials on record the finding made by the Arbitrator may be held to be erroneous. An error of law or fact committed by an Arbitrator by itself does not constitute misconduct warranting interference with the award.
Referring to a catena of decisions, the Supreme Court in the case of Bhagabati Oxygen Ltd. v. Hindustan Copper Ltd. 2005 AIR SCW 1966, authoritatively held that the Court while considering the question whether the award should be set aside, does not examine that question as an Appellate Court. While exercising the said power, the Court cannot re-appreciate all the materials on record for the purpose of recording a finding whether on the facts and circumstances of a particular case the award could have been made in a proceeding. In other words, it was held that the Court cannot sit on appeal over the conclusions of the Arbitrator by re-examining or re-appraising the evidence considered by the Arbitrator.
In the case of Hindustan Construction Co. Ltd. v. State of Jammu and Kashmir reported in : AIR1992SC2192 , the Supreme Court observed that even if in fact the Arbitrator had interpreted relevant clauses of the contract in making his award on the impugned items and even if the interpretation is erroneous, the Court cannot Judge the award as it is within the jurisdiction of the Arbitrator to interpret the contract. It further held that whether the interpretation is right or wrong, the parties will be bound.
While dealing with a plea that the award was opposed to public policy, the Supreme Court in the case of Oil Natural Gas Corporation Ltd. v. Saw Pipe Ltd : [2003]3SCR691 , held that an award could be set aside if it is so unfair and unreasonable and that too shocks the conscience of the Court. Only such an award can be said to be opposed to public policy and is required to be adjudged void. Merely because there is some illegality in the award which is of trifle nature, it cannot be held that award is against public policy. In the said decision the Supreme Court concluded that award can only be set aside if it is contrary to-
(a) a fundamental policy of Indian law; or
(b) the interest of India; or
(c) justice or morality; or
(d) if it is patently illegal
13. In the decision reported in : [1999]3SCR490 succinctly it was held that while exercising jurisdiction to set aside an award under Section 34 of the Act, the Court ought to interfere with the award -
(a) where there is existence of total perversity in the award and the award is based on wrong proposition of law;
(b) where the award deals with dispute not contemplated or not falling within the terms of submission to Arbitrator; or if it contains a decision on matter beyond the scope of submission before the Arbitrator;
(c) where the Court finds any error apparent on the face of records;
(d) where the Arbitrator misconducted himself by going beyond the arbitration reference or acted in a manner which is not in conformity with law taking extraneous materials into account while passing the award; or
(e) where a party is otherwise prevented to present its case.
14. In the touch-stone of the aforesaid legal principles set by the Supreme Court in decisions more-fully taken note of in the preceding paragraphs, now I proceed to deal with the specific objections raised by the State first.
15. The main plank of submission made by the Learned Addl.Govt.Advocate is with regard to the letter issued by the Chief Engineer, Mahanadi-Birupa Project addressed to the Commissioner-cum-Secretary to Government of Orissa, Irrigation Department dated 26th July, 1991. In the said letter the Chief Engineer intimated that the claimant-contractors had executed 46% of critical portion of the project within twenty-one months where the easier portion of balance 54% of the work was completed by the second agency within twenty-four months and he made an observation that if the claimants would have been allowed that much of time they could have completed the work:.
16. It is pertinent to mention here that the authenticity of the said document is not disputed. It is admitted that in fact the Chief Engineer had written the letter in question. But then the only argument advanced is that the said letter being a privileged document and having been produced at a later stage of the arbitration proceeding, the Arbitrator acted with material irregularity in referring to the same. Some arguments have also been advanced claiming privilege over the said document. But then the Learned Addl.Govt. Advocate failed to substantiate such submissions specially in view of the fact that authenticity of the letter is not disputed. At the other hand, it is admitted that the Chief Eng. who was in charge of the Project in question did in fact write thy said letter. This aspect has been elaborately dealt with by the Arbitrator in para-14 of the award. After perusing the said letter it has been observed by the Arbitrator that a copy thereof had been annexed to an affidavit sworn by the claimants. The contents of the letter appeared to be a report of the Chief Engineer to the State Government. It further revealed that the Chief Engineer had made a thorough verification of the work done by the claimants and it made a comparison with the work done by the other agency. The document in question was not a scrap one. It was an independent report given by a high-ranking officer without any prejudice. It has been observed that an Arbitrator is not bound to follow the technical rules embodied under the Evidence Act or the technical rules contained in the Code of Civil Procedure. He is to act on his own without the technicalities mentioned in the Code of Civil Procedure and the Evidence Act by following the principles of natural justice. Referring to Sub-section (4) of Section 19 of the Act which empowers the arbitral tribunal to determine the admissibility, relevancy, materiality and the weight of evidence, the Arbitrator, considered the report of the Chief Engineer to be a material document and accepted the same In evidence specially on the ground that the said document threw substantial light on the disputes and assisted the Arbitrator to resolve the controversies effectually and efficaciously
17. A part from the reasonings given by the Arbitrator, it would be evident on a reading of Section 19 that the arbitral tribunal has been embodied with the power to decide the question of admissibility of any document.
18. On the case at hand, as stated earlier the authenticity, of the document in question is not in dispute. At the other hand the State Counsel admitted the fact that the letter/report had been submitted by the Chief Engineer after field verification to the State Government and the same was in connection with the work in question. It is, therefore, not possible to set aside the arbitral award merely on the ground that the Arbitral Tribunal had taken into consideration the said document which was very much available on records and thus the principles of natural justice had not been violated in the present case nor was there any violation of sub-clause (iii) of Section 34(2)(a) of the Act)
19. The second ground of attack on behalf of the State is to the finding of the Learned Arbitrator that it was not a fit case in which the State should invoke Clause 46 of the agreement and rescind the contract on the ground of laches on the part of the claimant-contractors in execution of the work. This finding is mostly based on facts. The Learned Arbitrator has vividly discussed the evidence, both oral and-documentary produced before it. As stated earlier, the award of an Arbitrator can only be interfered with if it is so unfair and unreasonable that it shocks the conscience of the Court. In the touchstone of the aforesaid dictum, this Court once again scanned through the materials available on record.
20. Clause 46 of the agreement stipulated that rf the contractor shall neglect or fail to proceed with the work with due diligence or violates any of the provisions of the contract, the Engineer in charge may give the contractor notice identifying the deficiencies in performance and demanding corrective action. If the contractor fails to take satisfactory corrective measures within fourteen days after receipt of the notice, the said Engineer in charge will terminate the contract in whole or in part.
21. On perusal of the materials, i.e. evidence both oral and documentary, the Tribunal came to the conclusions that there was inordinate delay in commencement of the work. It also came to the conclusion that the laches of non-completion of the work within the time stipulated in the contract could not be attributed solely to the contractor. That apart, as would be evident from the facts and circumstances of the case, the State Government had granted extension of time to complete the work after being satisfied that there were reasonable grounds for the delay. This action lent support to the submission made by the contractor that time was never the essence of the contract and in fact in given circumstances the same could be extended.
22. Perusal of the-materials further reveal that the contractor after completing the most difficult part of the work had applied for extension of time for a period of seven months, i.e. till 10-6-1988.The said application of the contractor was duly recommended by the Chief Engineer to the State Government, vide Ext. E. But before any communication with regard to that application was received by the contractor, it was alleged by the contractor that the authorities took action under Clause-46 of the GCC and illegally rescinded the contract on 21-4-1988, as per Ext. 17. It is submitted that the contractor was eagerly waiting for extension of time and in fact he was carrying on the work with expectation that extension would be granted. Even otherwise, according to the contractor, in consonance with Clause 46 he could have been intimated earlier to complete the work within the time specified so that he would have made extra endeavour to do that. From the materials on record it further appears that in fact the application of the contractor for extension of time was allowed and time was extended till 21-3-1988, vide Ext. 17. But then the said communication Ext.L. was not received by the contractor before 21-4-1988, i.e. the date when the contract was rescinded. This aspect has been elaborately dealt with by the Arbitrator and the reasonings given by him in the award appear to be just, proper and reasonable.
23. The only other legal submission made on behalf of the State is that the impugned award of the Arbitrator is contrary to public policy and, as such, the same is liable to be set aside.
24. The Supreme Court in a catena of decisions has held:
Public policy or the policy of the law is an illusive concept; it has been described as 'untrustworthy guide', 'variable quality', 'uncertain one', 'unruly horse', etc.; the primary duty of a Court of Law is to enforce a promise which the parties have made and to uphold the sanctity of contracts which form the basis of society, but in certain cases, the Court may relieve them of their duty on a rule founded on what is called the public policy. The doctrine of public policy is extended not only to harmful cases but also to harmful tendencies the principles have been crystallized under different heads and though it is permissible for Courts to expound and apply them to different situations, it should only be invoked in clear and incontestable cases of harm to the public; though heads (of public policy) are not closed and though theoretically it may be permissible to evolve a new head under exceptional circumstances of a changing world, it is advisable in the interest of stability of society not to make any attempt to discover new heads in these days. (See Gherulal Parakh v. Mahadeodas Maiya : AIR1959SC781 ; Chitty on Contracts, 28th edn., p.936-37, para 17-003; Wilkinson v. Osburne (1915) 21 CLR 89 at 97; Multiservice Bookbinding Ltd. v. Marden (1979) Ch D 84 : (1978) 2 All ER 489; Newland v. Simons & Wilter (Hairdresses) Ltd.(1981) ICR 521; Enderby Town Football Club Ltd. v. The Football Association Ltd. (1971) Ch 591 at 606 : (1971) 1 All ER 215 (CA))
The Indian Contract Act does not define the expression 'public policy'. From the very nature of things, the expression 'public policy', 'opposed to public policy' or 'contrary to public policy' are incapable of precise definition. Public policy, however, is not the policy of a particular Government. It connotes some matter which concerns the public good and the public interest.
Considering the facts and circumstances of the present case in the touchstone of the ratio of the Supreme Court Judgments vis-a-vis the agreement and the award passed by the Arbitrator, this Court finds that in the present case no public policy has been infringed nor is the award contrary to public policy.
25. In the case at hand, as would be apparent from the pleadings, it is nobody's case that the agreement was opposed to public policy of India and as such, the award can be touched or interfered with only-
(1) If there is existence of total perversity in the award and the award is based on wrong proposition of law;
(2) if the award deals with disputes not contemplated or not falling within the terms of submission to the Arbitrator;
(3) where the Court finds that there is an error apparent on the face of the record;
(4) if the Arbitrator mis-conducted himself by going beyond the arbitration reference and acted in a manner which was not in conformity with law taking extraneous materials into account while passing the award, and last but not the least;
(5) where the party is otherwise prevented to present its case, as has been held by the Supreme Court in the decision reported in AIR 1999 SC 2102.
26. This is not a case where the Arbitrator blindly accepted the claim of the contractor. In course of hearing, Learned Counsel for the State could not point out any error apparent on the face of the record or misconduct of the proceeding.
27. Now coming to the question of counter-claim, it appears that the question of counter-claim raised by the State has been dealt with and considered by the Arbitrator in the award. Elaborate discussion has been made and after hearing the resistance offered by the claimant-contractor the Arbitrator decided the issues. At no point of time it was ever argued by the State that recording of fact in the award by the Arbitrator was incorrect. Therefore, going by the recitals of the arbitral award it cannot be disputed that the counter-claims were referred for adjudication by the Arbitrator. The claimant resisted the said counter-claims. The Arbitrator after perusing the materials and giving thought over it decided the said claim. This being the admitted factual position, there is no merit in the submissions raised.
28. The only other point that needs discussion is with regard to the finding of the Learned District Judge with regard to two claim item Nos. 18 and 21. The Learned District Judge has partly modified the award passed by the Arbitrator and has reduced the awarded amount substantially. Claim item No. 18 related to hire charges of the seized machineries and a few plants along with accessories. The claimant in para 59(b) of the claim petition made the following averments:
The various machineries which were purchased by the claimants against sanction of advance from the Respondents along with the own machineries of the claimants and those brought on hire from the private parties have been seized by the Respondents. The Respondents are to pay hire charges on each machinery as calculated in Annexure- P for the period those machineries are detained by the Respondents. The hire charges of the machineries calculated till 31-10-1989 amount to & Rs. 68,44,332.00.
Against the said claim the Arbitrator awarded Rs. 3,00,00,000,00 (three crores) on the ground that the termination of the contract with effect from 21-4-1988 having been found to be illegal, improper and arbitrary, the claimant-contractor was entitled to hire charges all through. After coming to the said conclusion the Arbitrator awarded the aforesaid sum of Rs. 3,00,00,000,00 which1 according to him was fair, reasonable and equitable. The Learned District Judge however modified the award against this item of claim by reducing the same from Rs. 3,00,00,000,00 (three crores) to Rs. 68,44,332.00 (sixty-eight lakhs forty-four thousand three hundred thirty-two) on the ground that the claimant was not entitled to any amount other than that he had claimed.
29. Learned Counsel for the claimant-contractor forcefully submitted that such modification is not permissible and it is fit case where the order of the Learned District Judge reducing the amount awarded by the Arbitrator so far as claim item No. 18 is concerned may be set aside and the amount awarded by the Arbitrator may be confirmed. Learned Counsel for the State at the other hand strenuously contended that the claimant is not entitled to any more amount so far as this claim item is concerned.
30. Para 59(b) of the claim petition refers to Annexure-P. In the said Annexure while claiming Rs. 68,44,332.00 towards hire charges with effect from 21-4-1988, the claimant mentioned as follows:
This amount has been calculated till the preparation of this claim statement, i.e. up to 31-10-89 and the actual amount shall be arrived at after taking into consideration the period from 1-11-1989 till the date of handing over all the aforesaid plants and machinery by the Respondents to the claimants.'
The Learned District Judge lost sight of the said claim. The Arbitrator while considering the said claim though came to a finding that the claimant was entitled to much more than Rs. 3,00,00,000.00 (three crores) observed that an award of Rs. 3,00,00,000,00 (three crores) would be fair, reasonable and equitable. It appears that the Arbitrator considered all aspects, and I do not find any error in the conclusions arrived at by him. As stated earlier, the Learned District Judge tost sight of Annexure-P to the claim petition. Thus the Judgment of the Learned District Judge so far as reducing the award amount of Rs. 3,00,00,000,00 (three crores) to Rs. 68,44,332.00 (sixty-eight lakhs forty-four thousand three hundred thirty-two) is concerned cannot be sustained. Accordingly while setting aside the impugned Judgment so far as it relates to claim item No. 18, this Court confirms the award of the Arbitrator with regard to the said claim item No. 18.
31. The District Judge has also modified the amount awarded by the Arbitrator so far as claim item No. 21 is concerned. Under the said claim item, the claimant stated:
That the Respondents supplied cement for consumption in the work on cost recovery basis as per recovery statement of materials attached to the agreement, vide Annexure- V(A)) at page GCC 32. The cost of 'each bag' of cement as specified therein is Rs. 28.18. This obviously includes the cost of the gunny bags containing cement. The Respondent set forth a condition in the agreement as modified vide item 9 of the addendum that all the empty cement bags to be returned to the Respondents after utilization of the cement failing which a penalty of Rs. 2/- per bag shall be recovered from the claimants' bill. This condition does not mean that the claimants are bound to return the empty gunny bags free of cost. The claimants returned total 1,33,650 Nos. of empty cement bags in good condition and so are due to get Rs. 2,67,300.00 on this account.
Against the said claim item, as would be evident from the averment made in the claim petition, the contractors claimed Rs. 2,67,300.00. The Arbitrator has observed that as per the GCC and subsequent clarifications, all empty cement bags were to be returned to the Respondent-authorities, failing which a sum of Rs. 2/- per bag would be recovered from the bill of the claimant The Respondent-authorities had supplied cement in gunny bags and the claimant admittedly returned 1,33,650 Nos. of empty bags. Thus the claimant is entitled to the cost of the empty gunny bags which had been deducted from his bill.
But then a reading of the relevant clause and other materials available makes it clear that the claimant was not entitled to receive any cost towards return of the empty gunny bags. At the other hand if the claimant-contractor failed to return the empty gunny bags he was liable to pay penalty at the rate of Rs. 2/- per bag. In view of the aforesaid clear stipulation, the Arbitrator committed an error apparent on the face of the record and a patent illegality in making the award in respect of this claim item and the Learned District Judge has rightly set aside the award of the Arbitrator against that claim item.
32. So far as other claim items and the awards made in respect of each item are concerned, this Court after going through the records, including evidence, both oral and documentary, is satisfied that the Arbitrator has not committed any error and the reasonings given by him are just proper and in consonance with law calling for no interference by this Court.
33. In view of the discussions made above, this Court finds that the Arbitrator had not blindly accepted the claims of the contractor. There was also no bias, nor was any misconduct committed by the Arbitrator. The Arbitrator followed the principles of natural justice and equity. He discussed all the materials available before him and after giving reasons in his own way arrived at the conclusion.
34. Thus while setting aside the impugned Judgment of the District Judge with regard to claim item No. 18 and upholding the said Judgment with regard to other claim items, this Court disposes of both the Arbitration Appeals.