Union of India (Uoi) Vs. Om Construction Company - Court Judgment

Excerpt:
- swatanter kumar, j.1. in this civil revision the limited challenge on behalf of the petitioners is to awarding of a claim of rs. 2,00,000/- on account of damages suffered due to prolongation of contract period. the facts on which this contention has been emphasized by learned counsel for the petitioners is that one m/s. om construction company which is respondent in this petition was awarded a contract for the provision of oim accn for the station workshop jotogh for a lump sum amount of rs. 10,27,603.64. the work was required to be completed within 15 months. the date of completion is stated to have been extended finally upto to 8.6.1987. certain disputes arose between the parties and the respondent company invoked the arbitration clause of the, agreement and made a request for reference of its dispute to the arbitrator. in all 11 claims were raised by the petitioner which were referred in accordance with the terms and conditions of the agreement to the arbitrator appointed by the petitioner. the arbitrator col. a.k.s. bawa presented and published his award dated 23.5.1992. this award was submitted to the court of senior sub judge, chandigarh for being made rule of the court and drawing the decree m terms thereof. this award which came to be exhibited as ex. ow l/a was made rule of the court and the objections filed by the union of india were dismissed. the court also awarded future interest on the total sum awarded at the rate of 12% per annum from the date of the decree till realisation. this judgment and decree of the learned trial court dated 10.3.1995 was assailed in appeal before the learned district judge, chandigarh. the appeal was dismissed consequently upholding the amounts that had been awarded by the arbitrator under different claims to the petitioners.2. it is this order of the district judge, chandigarh dated 23.12.1995 which has been assailed in the present revision petition.3. the scope for interference specially in a revision petition, whereby the award of the arbitrator has been upheld concurrently by both the courts below obviously is very narrow and limited. the learned counsel for the petitioner has further not disputed before me that award of an arbitrator can be interfered with or upset on certain very limited grounds and one of such grounds is an act without jurisdiction on the part of the arbitrator.while arguing the case within this limited scope the contention of learned counsel is that in face of clause 11-c of the agreement between the parties, the learned arbitrator could not have awarded the compensation for the extended period.4. to appreciate this contention of the learned counsel for the petitioner it will be relevant at the very outset to refer to condition no. 11-c of the contract between the parties, which reads as under'11-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.'thus, it is clear from an admitted contract between the parties that condition no. 11c would govern and bind the parties at all stages. it is a settled rule of law that an arbitrator and for that matter even courts cannot substitute an agreement between the parties. the contract is one which is agreed and entered upon between the parties voluntarily and by which they opt to be bound. this term of the contract specifically bars grant of any claim of compensation as a result of extension granted under conditions (a) and (b) of the contract. the parties having opted to and having agreed to this term and to be bound by the same cannot be permitted to avoid its consequences at any stage. the claimant respondents had with their eyes open signed this agreement which contained this clause and in fact the arbitration clause itself is a part of this agreement which has been invoked by the claimants. the learned arbitrator had no jurisdiction to alter the agreement between the parties or to frustrate an agreed term by his award.5. the limited scope of determination of grounds on which the award can be interfered has now been well defined by. the hon'ble supreme court of india in jagdish chander bhatia v. lachhman dass bhatia, jt 1993(1) supreme court 232.6. the function of the arbitrator is primarily to arbitrate within the terms of the agreement and he has no power to act beyond the terms of the contract because it is the document which vests the arbitrator with jurisdiction to act. if an arbitrator travels outside the bounds of contract he would be said to have acted without jurisdiction. the parameters provided in the contract determine the jurisdiction of the arbitrator and transgression of such terms would be an error apparent on the face of record suffering from lack of jurisdiction. such an error cannot be said to be an error within the jurisdiction of the arbitrator. in fact it is an error of jurisdiction itself and therefore to that extent would render the award liable to be interfered.7. in the case of associated engineering co. v. government of andhra pradesh and anr., a.i.r. 1992 supreme court 232, the court while considering somewhat similar arguments and where the umpire had transgressed his jurisdiction by travelling beyond the terms of the contract held as under:-'where it is apparent not by construction of the contract but by merely looking at the contract that the umpire travelled totally outside the, permissible territory and thus exceeded his jurisdiction in making the award, it is an error going to the root of his jurisdiction.''by granting certain claims in favour of the contractor in the instant case, the umpire decided matters strikingly outside his jurisdiction. he outstepped the confines of the contract. he wandered far outside the designated area. he digressed far away from the allotted task. his error arose not by misreading or misconstruing or misunderstanding the contract, but by acting in excess of what was agreed. it was an error going to the root of his jurisdiction because he asked himself the wrong question, disregarded the contract and awarded in excess of his authority.'8. the specific terms of a contract are to be respected and cannot be overlooked to pass an order to the contrary. arbitrator, therefore, must confine himself to the reference and within the meaning and scope of the contract between the parties. if the parties had chosen to agree to clause 11, thus prohibiting claim of compensation for the extended period, the arbitrator would not be justified in granting such a relief and it must limit the relief within the purview and scope of stipulations of agreement. in the present case there was no challenge or no exception even pleaded to clause 11-c. as such the question of looking into this claim from any other point of view would not arise.9. in the case of bharathi knitting company v. dhl worldwide express courier division of airfreight ltd., j.t. 1996(6) s.c. 254, where the supreme court was concerned with the interpretation of clause 6 of the terms and conditions imposed by the courier, it has been held as under :-'in view of the above consideration and findings, we are of the opinion that the national commission was right in limiting the liability undertaken in the contract entered into by the parties and in awarding the amount for deficiency in service to the extent of the liability undertaken by the respondent. therefore, we do not think that there is any illegality in the order passed by the commission.'10. the learned counsel for the claimant-respondents has relied upon a judgment of division bench of this court in case of union of india v. harbans singh tuli and sons, 1981(1) i.l.r. (punjab and haryana) page 561. firstly the facts of this case were different as the primary question involved for adjudication before a division bench was with regard to making of a reference to a claim which was hit by clause 11-c on the ground of limitation. the court had held that such plea can be gone into by the arbitrator and, therefore, the dispute was referred to it. firstly, is not the dispute here. secondly, in any case the judgments of the supreme court as aforestated, have given completely new dimensions to the law governing the subject which were not in existence at that time when the division bench of this court decided the case. as such i am of the view that said judgment is not of much consequence and does not support the case of the claimants.11. another contention raised by the learned counsel for the respondent claimant is that the petitioners had referred the dispute themselves for arbitration and consequently they were estopped from challenging the same on the grounds of clause 11-c of the agreement. this contention is also without any merit because the dispute fell within the competence of the arbitrator. it is the determination of the claim which is without jurisdiction in face of clause 11-c of the agreement. the conduct of the respondents in the present case in referring the dispute would be of no consequence and cannot be said to be a waiver of any kind by the petitioners. reference of a dispute is one thing while determination of dispute is another. for example a dispute may seem to be barred by time but a party to an agreement who has to appoint an arbitrator cannot decline to refer the dispute on that ground because such a matter would fall within the domain and jurisdiction of the arbitrator alone. in this regard it may be relevant to make a reference to the case titled as tamil nadu electricity board and anr v. n. raju reddiara and anr., j.t. 1996(6) s.c. 14, where the supreme court held as under :-'the only other question which survives for consideration is whether the conduct of some of superintending engineers in passing some of the bills on multi-slab basis can be pleaded as an estoppel against the defendants and can form the basis of plaintiff's case. the answer to this question must be negative......but such a recommendation or such passing of bills on one count or multi-slab basis cannot be construed to have conferred a right on the plaintiffs to get the payments on multi slab basis, until and unless it is proved by the plaintiff that the defendants agreed under the written contract to pay on multi-slab basis................that has not been established in the case in hand.therefore, in our considered opinion the division bench of the high court wholly erred in law in allowing the plaintiffs' appeal and granting the decree accepting plaintiffs claim that the rate has to be paid on multi-slab basis.'it is not disputable on record that the extensions were granted by the petitioner as per condition ii (a) and (b) and without effecting any other term of the agreement or making out an exception to clause 11-c of the agreement.12. no other point was urged before me and in fact no other claim awarded by the arbitrator in favour of the respondent-claimant calls for any interference by this court in revisional jurisdiction.13. consequently this revision petition is partly allowed to the extent that the award of the learned arbitrator in regard to claim no. 4 vide which he awarded a sum of rs. 2 lacs on account of damages due to prolongation of contract period is set aside. the award and the consequent judgment and decree by the court below shall stand modified to that extent.no orders as to costs.