D.S.R. Varma, J.

1. Heard both sides.

2. This Civil Miscellaneous Appeal is filed assailing the order and decree, dated 15-7-2004, in Arbitration O.P. No. 1064 of 2003, passed by the Chief Judge, City Civil Court, Hyderabad.

3. The appellant is the Railways, the respondent No. 1 is the claimant and the respondent Nos. 2 to 4 are the Arbitrators.

4. For the sake of convenience, the appellant, the respondent No. 1 and the respondent Nos. 2 to 4 will be referred to as 'the Railways', 'the claimant', and 'the Arbitrators', respectively.

5. The facts that led to filing of the appeal are as under:

The claimant was awarded with Turn key Contract for execution of certain works for a total value of Rs. 2.66 Crores stipulating the specific date of completion as 26-8-1994. The said period was extended up to 30-6-1997 from time to time at the request of the claimant. The works were completed, however, a few ancillary works and supplies remained incomplete. Hence, time was again extended till 30-6-1998 at the request of the claimant.

6. The claimant had submitted a total claim for a sum of Rs. 96,56,5627- plus escalation charges of labour along with certain other amounts. The Railways had offered to pay a total sum of Rs. 3,40,010/- plus release of security deposit after deducting certain amounts as per the terms of the agreement.

7. Consequently, the claimant sought for appointment of Arbitrator to refer the dispute for adjudication and respondents 2 to 4 were appointed as Arbitrators.

8. The total claim of the claimant was for Rs. 1,08,37,405/-, however, the award was passed for Rs. 85,20,313/-.

9. The said award was challenged by the Railways under Section 34 of the Arbitration and Conciliation Act, 1996 (for brevity 'the Act') before the Court below in Arbitration OP. No. 1064 of 2003, on various counts.

10. The Court below dismissed the said O.P., both on law and facts. Hence, the present Civil Miscellaneous Appeal.

11. The solitary question of law raised by the learned Counsel appearing for the Railways is that the award of the Arbitral Tribunal was communicated to the Railways on 28-1-2003, but the said award was dated 24-1-2003. In other words, it is the contention of the learned Counsel for the Railways that the copy of award was ante-dated as 24-1-2003 though passed on 28-1-2003. Therefore, the same amounts to misconduct and consequently, would fall within the ambit of sub-clause (ii) of Clause (b) of Sub-section (2) of Section 34 of the Act, rendering the Arbitration Award in conflict with the 'public policy'.

12. The further contention of the learned Counsel appearing for the Railways is that when once the award is passed, the Arbitrators or the Arbitral Tribunal would become functus officio and therefore, there cannot be any change in the date of the award.

13. At the outset, for ready reference, Section 34 of the Act is extracted hereunder to the extent relevant:

34. Application for setting aside arbitral award:-

(1)...

(2) An arbitral award may be set aside by the Court only if, -

(a) ...

(b) the Court finds that,-

(i) ...

(ii) the arbitral award is in conflict with the public policy of India.

Explanation:- Without prejudice to the generality of sub-clause (ii), of Clause (b), it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81.

(3)...

(4)...

14. The facts, as borne out from the record in this regard, appear to be that after the arbitration proceedings were concluded by the Arbitral Tribunal, the Arbitrators prepared the award and informed the parties through a letter, dated 3-2-2003, as under:

It is hereby informed that the 'AWARD' in respect of the above Arbitration has been signed by the members of the Arbitral Tribunal on the 24th January, 2003 and the copy of the same is enclosed herewith. The original copy of the 'AWARD' on non-judicial stamp paper is sent to the Respondent.

This is issued on this day i.e. 3-2-2003.

15. Subsequently, non-judicial stamp papers worth of Rs. 260/- were purchased by the Railways on 28-1 -2003 and furnished to the Arbitral Tribunal. Upon such furnishing, the award was engrossed on the said non-judicial stamp papers indicating the date as 24-1-2003. In the result, the award was engrossed on non-judicial stamp papers dated 28-1-2003, but the date of the award was indicated as 24-1-2003. Hence, it is contended by the learned Counsel appearing for the Railways that actually the award was passed on 28-1-2003, but it was ante-dated as 24-1-2003 by the member of the Arbitral Tribunal and the same amounts to misconduct or contrary to the 'public policy.'

16. In this connection, it is necessary to examine whether the Arbitral Tribunal had followed the due procedure or acted mala fide, amounting to 'misconduct' or 'contrary to the public policy.'

17. Section 31 of the Act deals with form and contents of arbitral award, which is extracted for ready reference, to the extent relevant as under:

31. Form and contents of arbitral award:-

(1) An arbitral award shall be made in writing and shall be signed by the members of the arbitral tribunal.

(2) For the purposes of Sub-section (1), in arbitral proceedings with more than one arbitrator, the signatures of the majority of all the members of the arbitral tribunal shall be sufficient so long as the reason for any omitted signature is stated.

(3) The arbitral award shall state the reasons, upon which it is based, unless,-

(a) the parties have agreed that no reasons are to be given; or

(b) the award is an arbitral award on agreed terms under Section 30.

(4) The arbitral award shall state its date and the place of arbitration as determined in accordance with Section 20 and the award shall be deemed to have been made at that place.

(5) After the arbitral award is made, a signed copy shall be delivered to each party.

18. There is no dispute with regard to compliance of the provisions of Section 31 of the Act, except Sub-section (5).

19. In the instant case, it could be seen from the record that the Presiding Arbitrator, for and on behalf of the Arbitral Tribunal, informed both parties specifically through a letter dated 3-2-2003 that the members of the Arbitral Tribunal signed the award on 24-1-2003 and further, that the original copy of the award on non-judicial stamp papers was sent to the Railways. It appears, non-judicial stamp papers were furnished by the Railways itself. However, it was made clear in the said letter dated 3-2-2003 that the award was passed and it was signed on 24-1-2003 and the same was informed to the parties.

20. The learned Counsel appearing for the Railways, while not disputing the fact of engrossing of the award on non-judicial stamp papers and informing the parties, however, lays much stress on the date of the copy of the award furnished to the appellant. He also contended that when non-judicial stamp papers indicate the date as 28-1-2003, the members of the Arbitral Tribunal ought not to have put the signature as 24-1-2003. According to him, this amounts to 'antedating' the award, consequently 'misconduct'.

21. Admittedly, the award was signed on 24-1-2003. The application or request was made by the Railways for copy of the award by purchasing non-judicial stamp papers. Upon such request, copy of the original award had been engrossed on such non-judicial stamp papers furnished by the Railways itself and the same had been communicated through letter dated 3-2-2003. Therefore, it should be understood that for all purposes, the original award was passed and signed by the Arbitrators on 24-1-2003 and only the copy of the said original award was furnished to the Railways when non-judicial stamp papers were purchased on 28-1-2003. That does not mean that the award was antedated. The award was, in fact, passed on 24-1-2003. Therefore, it cannot be said that the award was passed on 28-1-2003 and was ante-dated as '24-1-2003'.

22. What Sub-section (5) of Section 31 of the Act contemplates is that after the arbitral award is made a signed copy shall be delivered to each party.

23. It is further not in dispute that the award shall be furnished to the parties on non-judicial stamp papers in accordance with Item 12 of Schedule 1-A of Indian Stamp Act, 1899.

24. Further, it is clear that the award was prepared and signed on 24-1-2003 itself and it was categorically informed to the parties that the original copy of the award on non-judicial stamp papers was sent to the Railways.

25. In fact, original copy of the award cannot be forwarded, more so, on non-judicial stamp papers. In other words, the language implied in the letter dated 3-2-2003 that 'original copy of the award' on non-judicial stamp papers was sent to the Railways should be understood as 'copy of the original award' on non-judicial stamp papers was sent to the Railways. The above defect in expression in the said letter is minuscule in nature but cannot be magnified to the extent of great material irregularity, amounting to misconduct or contrary to the public policy.

26. However, in order to clear the doubt on this aspect, we directed the Arbitrators, who figured as respondents 2 to 4 herein, to furnish the original copy of the award, which is expected to be in the custody of the Arbitral Tribunal. Consequently, the original copy of the award was faithfully furnished to this Court. From a perusal of the original copy of the award, we noticed that the award was prepared and signed by all the three Arbitrators on 24-1-2003 and that the said original copy of the award has been in the custody of the Arbitral Tribunal itself, which is dated 24-1-2003. Therefore, the information furnished by the Arbitral Tribunal through the letter dated 3-2-2003 that the award was signed on 24-1 -2003 is undoubtedly true and it further clarifies that, it is only a copy of the original award, signed on 24-1-2003, was furnished to the parties engrossed on non-judicial stamp papers.

27. Furthermore, the information furnished by the Arbitrators through letter dated 3-2-2003 further implies that the award was made ready and a copy of such award would be furnished on demand. Perhaps, understanding it in right perspective, non-judicial stamp papers were purchased by the Railways on 28-1-2003 and the award was engrossed on those stamp papers, which is to be treated as 'copy of the original award.' Further, the said copy of the original award also should indicate the date of the award i.e. as 24-1-2003. In other words, even if copy of the original award is furnished at a later date in any manner, as required by the parties, i.e. may be either on non-judicial stamp papers or otherwise, shall be treated as copy of the original award and there shall not be any change whatsoever including the date of passing of the original award. In fact, if there is any change in the date other than as 24-1-2003, such a change may amount to 'misconduct' depending upon other circumstances.

28. From the above, we are of the view that the award was passed on 24-1-2003. Merely because copy of the award was engrossed on non-judicial stamp papers subsequent to passing of the award, upon furnishing of non-judicial stamp papers, indicating the original date of award, the same shall not be treated as a discrepancy, amounting to any 'misconduct', nor the award can be said to be 'in conflict with public policy'. Accordingly, the submission of the learned Counsel appearing for the Railways in this regard does not hold water and the same is rejected as not sustainable.

29. In this context, the learned Counsel appearing for the Railways relied upon a decision of the apex Court in Oil and Natural Gas Corporation Ltd., v. Saw Pipes Ltd. : [2003]3SCR691 wherein Their Lordships observed, at paragraph No. 15, as follows:

15. The next clause which requires interpretation is Clause (ii) of Sub-section (2)(b) of Section 34 which inter alia provides that the Court may set aside arbitral award if it is in conflict with the 'Public Policy of India.' The phrase 'Public Policy of India' is not defined under the Act. Hence, the said term is required to be given meaning in context and also considering the purpose of the section and scheme of the Act. It has been repeatedly stated by various authorities that the expression 'public policy' does not admit of precise definition and may vary from generation to generation and from time to time. Hence, the concept 'public policy' is considered to be vague, susceptible to narrow or wider meaning depending upon the context in which it is used. Lacking precedent the Court has to give its meaning in the light and principles underlying the Arbitration Act, Contract Act and constitutional provisions.

30. From the above judgment, it can be seen that considering various circumstances in each case, the concept of 'public policy' may have to be given a narrow or wider meaning, as the case may be.

31. In fact, a Division Bench of this Court in Hindustan Shipyard Limited v. Essar Oil Limited : 2005(1)ALD421 (D.B.), had also considered the aspect of 'public policy'.

32. The facts set out in the aforesaid decision are different from the one on hand. In the said case, non-impleadment of ONGC as a party to the arbitration was considered to be bad and that the award passed by the Arbitral Tribunal without impleading necessary party has no force in law. Further, it was a case where the Arbitral Tribunal made certain deviations from the Contract Act 1872, while passing the award. In the said circumstances, it was held to be an award passed contrary to the 'public policy of India.'

33. As per Section 34 of the Act and the phrase - 'public policy of India' - has to be given a wide connotation. An award could be set aside, as held in ONGC's case (1 supra), which broadly unfolds the following four circumstances:

(a) Fundamental policy of Indian law; or

(b) The interest of India; or

(c) Justice or morality; or

(d) In addition, if it is patently illegal.

34. 'Illegality' must go to the root of the matter and if the illegality is of trivial nature it cannot be held that award is against the public policy. It was further held by the apex Court in ONGC's case (1 supra) that the award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the Court and such an award is opposed to public policy and is required to be adjudged as void.

35. In Union of India v. Satyanarayana Construction Co. : 2005(4)ALD199 (D.B.), another Division Bench of this Court set aside the arbitral award in that case on the ground that the Arbitrators did not consider the case properly and there was no adherence to the terms of the contract and also that various documents filed by the Railways in support of its case were not considered.

36. The decision of the Delhi High Court in Mahanagar Telephone Nigam Ltd. v. Siemens Public Communication Network Ltd. 2005(1) RAJ. 463 (Del.) also deals with the scope and ambit of the provisions of Sections 31(2), 31(4) and 34(2)(a)(v) of the Act. That was a case where the award was undated and reasons were not stated for the absence of the signature of the third Arbitrator and under those circumstances, it was held to be not a valid award.

37. The learned Counsel appearing for the Railways also contended that Claim Nos. 8 and 10 awarded by the Arbitrators are beyond the terms of the contract and the award was passed on surmises and conjectures without any basis and no material or evidence has been placed before the Arbitrators to substantiate the claims and hence, the award is liable be set aside insofar it relates to Claim Nos. 8 and 10 are concerned.

38. In the decision relied upon by the learned Counsel for the Railways in Hindustan Shipyard Limited (2 supra), a Division Bench of this Court surveyed the entire case law on the subject as to when the award of the Arbitrator can be set aside and as to when the Arbitrator can be said to have acted in excess of his jurisdiction. In that regard, the decisions of the apex Court in Rajasthan State Mines and Minerals Ltd. v. Eastern Engineering Enterprises : AIR1999SC3627 and Bharat Cooking Coal Limited v. Annapurna Construction : AIR2003SC3660 were taken note of. In Bharat Cooking Coal Limited's case6, the apex Court held that the jurisdiction of the Arbitral Tribunal is confined to the four corners of the contract and the Arbitrator cannot ignore the provisions of the contract. Similarly, various other cases also have been taken note of while discussing the jurisdiction of the Arbitrator.

39. In Union of India v. Satyanarayana Construction Co., (supra), a Division Bench of this Court, while relying on ONGC's case (supra), Sikkim Subba Associates v. State of Sikkim Sikkim Subba Associates case : [2001]3SCR261 and other judgments, went into the question of validity of granting certain claims by the Arbitrator, eventually held that the Arbitrator exceeded his jurisdiction in passing the award.

40. In Sikkim Subba Associates case : [2001]3SCR261 , Their Lordships of the apex Court observed as under:

14. It is also, by now, well settled that an arbitrator is not a conciliator and his duty is to decide the disputes submitted to him according to the legal rights of the parties and not according to what he may consider to be fair and reasonable. An arbitrator was held not entitled to ignore the law or misapply it and he cannot also act arbitrarily, irrationally, capriciously or independently of the contract (see Rajasthan State Mines and Minerals Ltd. v. Eastern Engg. Enterprises : AIR1999SC3627 ).

15...the arbitrator could not have awarded any damage whatsoever and, at any rate, such a fabulous and astronomical sum on mere conjectures and pure hypothetical exercise, absolutely divorced from rationality and realities, inevitably, making law, equity and justice, in the process, a casualty. ...The arbitrator who is obliged to apply law and adjudicate claims according to law, is found to have thrown to the winds all such basic and fundamental principles and chosen to award an astronomical sum as damages without any basis or concrete proof of such damages, as required in law.

16...

(a) ...

(b) ...

(c) ...

(d) ...

(e) The award of an arbitrator cannot be opposed to law and what is not permissible in law cannot be granted or even approved by courts merely because it was an arbitrator who granted it.

17. Consequently, we have no hesitation to set aside the award of the arbitrator, as affirmed by the District Judge, insofar as it purports to award damages to the tune of Rs. 37,75,00,000/- in favour of the appellants, as wholly uncalled for and illegal.

41. There is no controversy with regard to the said propositions inasmuch as the apex Court time and again, depending upon the facts and circumstances of each case, held that the award passed by the Arbitrator should be in terms of the substantive law and also the terms and conditions of the contract and if the award is 'in conflict with the Public Policy of India' or tainted with any material irregularity, which includes patent irregularity, the award can be set aside.

42. A Division Bench of this Court in Superintending Engineer v. B. Subba Reddy : 1999(1)ALD170 (D.B.) held that the award could be set aside if it is vitiated by error of law apparent on the face of the record or if the Arbitrator exceeded his jurisdiction.

43. At this juncture, it is relevant to notice Clause 17 (3) of the General Conditions of the Contract (for brevity 'the GCC'), which reads thus:

In the event of any failure or delay by the Railway to hand over the Contractor possession of the lands necessary for the execution of the works or to give the necessary notice to commence the work or to provide the necessary drawings or instructions or any other delay caused by the Railway due to any other cause whatsoever, then such failure or delay shall in no way affect or vitiate the contract or alter the character thereof or entitle the contractor to damages or compensation therefor but in any such case, the Railway may grant such extension or extensions of the completion date as may be considered reasonable.

44. From the above clause, it is clear that the delay on the part of the Railways in any respect cannot be a ground for making any claim towards damages or compensation by the claimant. The only relief accorded in the said provision is to the extent of extending the time for the execution of the works.

45. Insofar as Claim No. 8 is concerned, it is to be seen that the said claim is under the heading 'AMOUNT DUE UNDER ESCALATION CLAUSE I.E., CLAUSE-11 OF THE CONTRACT AGREEMENT READ WITH ANNEXURE-VI OF THE CONTRACT AGREEMENT (WITH TWO STATEMENTS)'. Obviously, the claim is towards Relays and Cables along with actuals of escalation for labour costs etc.

46. The Railways contended before the Arbitrators that they need not pay the said escalation charges as per the Conditions of the Contract, as the claimant has to supply the Relays and Cables within eight months of L.O.A, and inasmuch as extensions have been granted by the Railways to the claimants to supply the Relays and Cables basing on the difficulties expressed by the firm with other conditions and stipulations. It is to be seen from the contentions raised by the Railways before the Arbitrators that there was no specific plea as regards the application of Clause 17 (3) of the GCC.

47. Therefore, in our considered opinion, the amounts granted towards Claim No. 8 cannot be faulted since the Arbitrators assigned reasoning in extenso and considered all the material factors including the ground realities that were relevant. In our considered view the said claim, as allowed by the Arbitrators, need not be interfered with nor can it be termed as an error apparent on the face of the record or the Arbitrators exceeded their jurisdiction or had gone beyond the terms and conditions of the Contract.

48. Insofar as Claim No. 10 is concerned, it was made towards compensation for time over run of the Contract as a result of breach of Contract conditions by the Railway.

49. In this regard, it is to be seen that it is the specific contention as recorded by the Arbitrators that -.It was strongly contended that due to delay in supply of the final approved signalling plan and approved table of control, as also last minute changes during the execution of the work at site had been responsible for delayed commissioning of the work which got shifted from 26-8-94 to 16-5-97 i.e., for nearly 32 months. The Claimant had claimed for the compensation for this over run period @ 1.00 lakh per month for maintaining the exhaustive establishment as also other overhead expenditure concerning transport, electricity and telephone bills, testing facilities etc. He has also claimed 24% interest being an SSI unit and also to cover the cost of financial plans leading to higher amount of interest to financial institutions.

50. In the reply, the Department contended as under, along with the other contentions:

Therefore, the main cause of the delay in the commissioning of the work is delay in the supply of approved plans and table of control without which the contractor would not have progressed the work at the pace required. The supply of approved table of control on 27-4-95 as against completion date of 26-8-94 as per the contract speaks volumes about the cause of delay especially keeping in view several clauses viz., 4.4, 3.5, 14.2, 14.3 etc., which bound the Claimant not to proceed without approved drawings and also be liable for criminal breach of trust. Under such conditions the delay in supply of some materials cannot be the major cause of delay in completion of the work as real meaningful work could be started only after getting final approved drawings.

51. From the above, it is obvious that the entire thrust of the claimant for making this claim as well as the Railways to deny the same directly related to the aspect of delays attributable to the Railways. Even assuming that there are delays on the part of the Railways, Clause 17 (3) of the GCC as extracted above, would make it clear that it is not obligatory on the part of the Railways to pay any compensation or damages. When the specific Clause 17 (3) was introduced in the agreement and both the parties agreed to it, there cannot be any claim of compensation by the claimant on the ground of delay on the part of the Railways.

52. Hence, in our view, particularly in the light of the contentions of both the parties, Claim No. 10 is directly hit by Clause 17 (3) of the GCC. Accordingly, the amounts awarded by the Arbitrators towards this claim is impermissible under the terms and conditions of the Contract, particularly Clause 17 (3) of the GCC and the same is an error apparent on the face of the record, in which event it goes without saying that this Court can interfere with the finding recorded by the Arbitrators in this behalf. Accordingly, the amount awarded to the claimant by the Arbitrators under Claim No. 10 is liable to be disallowed and accordingly we set aside that part of the Award of the Arbitrators in respect of Claim No. 10.

53. It is further contended by the learned Counsel appearing for the Railways that the amounts awarded under sub-claim Nos. 1 to 4,7 to 16,18 and 20 to 22 of Claim No. 1 and Claim Nos. 2 to 5, 7 to 10 and 12 i.e. claim of interest are without any basis.

54. A perusal of the award would disclose that reasons have been sufficiently assigned by the Arbitrators.

55. Coming to the present case, it is to be seen from the submissions made by the learned Counsel for the Railways that in addition to the main ground that the award was ante-dated and the same amounts to contrary to public policy, further contended that Claim Nos. 8 and 10 are not permissible in addition to some other claims.

56. Therefore, merely because the award was signed as 24-1-2003 on non-judicial stamp papers on 28-1-2003 the same shall not be understood as ante-dated. Further that, the obligation of the Arbitrators is not complete till the copy of the award is furnished to the parties. As and when a request or application is made, it is the duty of the Arbitral Tribunal to furnish a copy, more particularly in the light of this information furnished to the parties through letter dated 3-2-2003.

57. In the result, the impugned order and the award of the Arbitrators are liable to be set aside only insofar as Claim No. 10 is concerned and are set aside and the impugned order and the award of the Arbitrators insofar as all other claims are to be confirmed and are confirmed.

58. The fee of Mrs. C.V. Vinitha Reddy, the learned counsel appearing for the Railways, in this Civil Miscellaneous Appeal, is fixed at Rs. 7,500/- (Rupees Seven Thousand and Five Hundred Only), for the valuable assistance rendered by her.

59. Accordingly, the Civil Miscellaneous Appeal is allowed in part to the extent indicated above. However, there shall be no order as to costs.

60. The interim applications, if any, pending in the Civil Miscellaneous Appeal are hereby closed.