ARB.A/2/2007 of MS SAB INDUSTRIES LTD. Vs HPSEB on 30 December 2009

1. Arbitration Appeals No.1, 2, 3, 4, 18 of 2007:

M/s.SAB Industries Ltd.

...Appellant.

Versus

H.P.State Electricity Board ...Respondent.

For the appellant: Mr.P.S.Rana with Mr.Karan Singh Kanwar, Advocates. Singh Kanwar, Advocates.

For the respondent: Mr.J.S.Bhogal, Sr.Advocate with Mr.Suneet Goel, Advocate and Mr.K.D.Sood, Advocate. Mr.Suneet Goel, Advocate and Mr.K.D.Sood, Advocate.

2. Arbitration Appeal No.5 of 2007:

H.P.State Electricity Board ...Appellant.

Versus

M/s.SAB Industries Ltd. ..Respondent.

For the appellant: Mr.J.S.Bhogal, Sr.Advocate with Mr.Suneet Goel, Advocate with Mr.Suneet Goel, Advocate For the respondent: Mr.P.S.Rana with Mr.Karan Singh Kanwar, Advocates. Singh Kanwar, Advocates.

3. Arbitration Appeal No.3 of 2008:

H.P.State Electricity Board ...Appellant.

Versus

M/s.SAB Industries Ltd. ..Respondent.

For the appellant: Mr.K.D.Sood, Advocate. For the respondent:Mr.P.S.Rana with Mr.Karan Singh Kanwar, Advocates.

Coram

. Hon’ble Mr.Justice R.B.Misra, Acting Chief Justice Hon’ble Mr.Justice Rajiv Sharma, Judge.

Whether approved for reporting?[1]

R.B.Misra, Acting Chief Justice:

This judgment shall dispose of Arbitration Appeal No.2 of 2007 (SAB Vs. HPSEB) and Arbitration Appeal No.5 of 2007 (HPSEB Vs. SAB) in Case No.67 of 2003 relating to Award dated 16.6.2003 passed by Mr.S.C.Mahajan, the sole Arbitrator; Appeal No.3 of 2007 (SAB Vs. HPSEB) passed in Case No.1 of 2002 relating to Award dated 6.11.2001 passed by Mr.S.R.Khitta, the sole Arbitrator; Arbitration Appeal No.4 of 2007 (SAB Vs. HPSEB) passed in Case No.2 of 2002 relating to Award dated 12.11..2001 passed by Mr.S.R.Khitta, the sole Arbitrator; Arbitration Appeal No.18 of 2007 (SAB Vs. HPSEB) passed in Civil Review No.3 of 2007 reviewing Judgment dated 9.1.2007 passed in Case No.2 of 2002; Arbitration Appeal No.3 of 2008 (HPSEB Vs. SAB) filed after order dated 21.9.2007 passed in Civil Review No.3 of 2007 in Case No.2 of 2002 relating to Award dated 12.11..2001 passed by Mr.S.R.Khitta, the sole Arbitrator; Arbitration Appeal No.1 Whether the reporters of the local papers maybe allowed to see the judgment?

of 2007 (SAB Vs. HPSEB) and Cross-Objection No.252 of 2007 (HPSEB Vs. SAB) in Case No.15 of 2000 relating to Award dated 7.9.99 passed by Mr.Labh Singh, the sole Arbitrator and all these appeals / cross-objections filed by respective parties being aggrieved against common judgment dated 9.1.2007 passed by learned Single Judge.

2. In order to deal with these Arbitration Appeals and Cross objections, it is necessary to go into the background of the cases giving rise to these matters. It appears an agreement No.1/89 dt.6.2.1989 was entered into between S.A. Builders, later re-named as SAB Industries Ltd., (hereinafter referred to as the ‘Contractor’) and H.P.State Electricity ‘Board’ (hereinafter referred to as the ‘‘Board’’) for execution of Civil work of Gaj Hydel Project. The contractual period for completion of work was three years i.e. up to 7.3.1992 starting from 8.3.1989. It appears the work could not be completed within stipulated contractual period of three years, as such, necessary time extensions were granted by the ‘‘Board’’ from time to time up to 30.9.1995, however, the work actually could be completed on 25.3.1996 when the extension from 1.10.1995 up to 31.3.1996 was pending before the ‘Board’.

3. Various disputes had been arising between the parties at different stages of the execution of work and in order to settle the same, different Chief Engineers as technical experts of the ‘Board’ were appointed by the ‘Board’ as Arbitrators as per arbitration clause contained in

the contract agreement. An Award dated 7.9.99 was passed by Mr.Labh Singh, a sole Arbitrator, An Award dated 6.11.2001 was passed by Mr.S.R.Khitta, the sole Arbitrator, An Award dated 12.11.2001 was passed by Mr.S.R.Khitta, the sole Arbitrator and an Award dated 16.6.2003 was passed by Mr.S.C.Mahajan, the sole Arbitrator.

4. The ‘Board’, however, has challenged all the aforesaid awards by filing objections under section 34 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as the ‘Act’). Learned Single Judge vide a common judgment dated 9.1.2007 under challenge in these Arbitration Appeals and cross objections, was pleased to dispose of all the four objection petitions filed by the ‘Board’.

5. Before dealing with the individual cases and the various contentions raised by the parties it would be pertinent to mention that the objections in all the cases have been filed under the Act. An application for setting aside the arbitral award can be filed under Section 34 of the ‘Act’ and the grounds for setting aside the arbitral award are set out in sub-section (2) of the aforesaid Section which reads as below:

“34.Application for setting aside arbitral award.-

(1) xxxxxxxxxx

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

(a) the party 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; or

(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:

Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or

(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or (b) the Court finds that—

(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or

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

Explanation.- Without prejudice to the generality of sub-clause (ii), 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.”

Section 31(3) of the Act of 1996 provides as follows:

“31,Form and contents of arbitral award.-

(1) &(2) xxxxxxxxxx

(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.”

In reference to the Arbitration Act, 1940 an award of the Arbitrator could be set aside on the grounds mentioned in Section 30 of the Act which reads as follows:

“30. Grounds for setting aside award.-Any award shall not be set-aside except on one or more of the following grounds, namely:- (a)that an arbitrator or umpire has misconducted himself or the proceedings;

(b) that an award has been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid under section 35;

(c) that an award has been improperly procured or otherwise invalid.”

It appears that both under the Arbitration Act, 1940 as well as under Arbitration and Conciliation Act, 1996 for setting aside the award, non mentioning of reason is not available as a ground but only stating of reasons in section 30 of Arbitration Act, 1996 is provided as “Form and contents of Arbitral award” .

6. Various judgments have been referred in the impugned order of learned Single Judge wherein some of the judgments relate to the Act of 1940 and some them relates to the Act of 1996. However, the verdict in every such case is applicable both in ‘Act’ of 1940 and ‘Act’ of 1996. Learned Single Judge has noticed following judgments in the impugned order:- (a) In K.P. Poulose v. State of Kerala and another, AIR 1975 SC 1259, the apex Court while considering the scope of the term of mis-conduct in Section 30 of the Act of 1940 held as follows:

“6.Under Section 30(a) of the Arbitration Act an award can be set aside when an Arbitrator has misconducted himself or the proceedings. Misconduct under Section 30(a) has not a connotation of moral lapse. It comprises legal misconduct which is complete if the Arbitrator on the face of the award arrives at an inconsistent conclusion even on his own finding or arrives at a decision by ignoring very material documents which throw abundant light on the controversy to help a just and fair decision. It is in this sense that the Arbitrator has misconducted the proceedings in this case……” an award can be set aside when an Arbitrator has misconducted himself or the proceedings. Misconduct under Section 30(a) has not a connotation of moral lapse. It comprises legal misconduct which is complete if the Arbitrator on the face of the award arrives at an inconsistent conclusion even on his own finding or arrives at a decision by ignoring very material documents which throw abundant light on the controversy to help a just and fair decision. It is in this sense that the Arbitrator has misconducted the proceedings in this case……”

(b) In Indian Oil Corporation Ltd. vs. Indian Carbon Ltd. (1988) 3 SCC 36 = AIR 1988 SC 1340, the apex Court was dealing with the question as to what is meant by the phrase ‘reasoned award’. Under the Carbon Ltd. (1988) 3 SCC 36 = AIR 1988 SC 1340, the apex Court was dealing with the question as to what is meant by the phrase ‘reasoned award’. Under the 1940 Act has observed that it was not incumbent for the Arbitrator to give a reasoned award.

(c) In Vishwanath Sood vs. Union of India and another, AIR 1989 SC 952, the apex Court held that under the Act of 1940 it was not necessary to give reasons for the award.

(d) In Associated Engineering Co., vs. Government of Andhra Pradesh and another, AIR 1992 SC 232, the apex Court while considering the scope of interference held as follows:

“….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….

….The arbitrator cannot act arbitrarily, irrationally, capriciously or independently of the contract. He has no power apart from what the parties have given him under the contract. If he has travelled outside the bounds of the contract, he has acted without jurisdiction. But if he has remained inside the parameters of the contract and has construed the provisions of the contract, his award cannot be interfered with unless he has given reasons for the award disclosing an error apparent on the face of it. A conscious disregard of the law or the provisions of the contract from which he has derived his authority vitiates the award.

……If the arbitrator commits an error in the construction of the contract, that is an error within his jurisdiction. But if he wanders outside the contract and deals with matters not allotted to him, he commits a jurisdictional error. Such error going to his jurisdiction can be established by looking into material outside the award. Extrinsic evidence is admissible in such cases because the dispute is not something which arises under or in relation to the contract or dependent on the construction of the contract or to be determined within the award. The dispute as to jurisdiction is a matter which is outside the award or outside whatever may be said about it in the award. The ambiguity of the award can, in such cases, be resolved by admitting extrinsic evidence. The rationale of this rule is that the nature of the dispute is something which has to be determined outside and independent of what appears in the award. Such jurisdictional error needs to be proved by evidence extrinsic to the award.”

(e) In Jajodia (Overseas) Pvt.Ltd. vs. Industrial Development Corporation of Orissa Ltd. (1993) 2 SCC

106, the apex Court was considering the question as to what is meant by a speaking or reasoned award. The Court held as follows:

“8.If we think necessary, first, to clear some cobwebs. A speaking or reasoned award is one which discusses or sets out the reasons which led the arbitrator to make the award. Setting out the conclusions upon the questions or issues that arise in the arbitration proceedings without discussing the reasons for coming to these conclusions does not make an award a reasoned or speaking award. The arbitrator has in the award before us only answered the issues that were framed. He has not discussed or set out the reasons for the answers. The award is, therefore, not a speaking or reasoned award.”

(f) In Tarapore & Co. vs. State of M.P., (1994) 3

SCC 521, the Apex Court has observed as follows:

“An arbitrator cannot travel beyond the contract, if an arbitrator acts beyond jurisdiction, the same would amount to misconduct because of which the award would become amenable of being set aside by a court…….

If an authority would lack jurisdiction in the sense that the subject-matter is not amenable at all to its decision, i.e. the case be of patent lack of jurisdiction acquiescence of the parties would not be material inasmuch as by agreement jurisdiction cannot be conferred….. If a challenge is made to the award on the ground that the arbitrator has no jurisdiction, the only way to test the correctness is to look into the agreement itself because the jurisdiction of the arbitrator flows from the (g)

reference and a reference can be only with regard to such disputes which are contemplated by the agreement……

Payment of wages as per the rates fixed under the Minimum Wages Act being statutory obligation and the terms of the contract being silent about payment of minimum wages, as the relevant term speaks of “fair wages”, which concept is different from minimum wages, it must be held that insofar as increased payment on account of rise in the rates of minimum wages is concerned, the parties were not in any sort of agreement—express or implied to reimburse the same. The appellant-contractor paid as per these rates not pursuant to any term of the contract but because of the mandate of law…..”

In Rajasthan State Mines & Minerals Ltd. vs.

Eastern Engineering Enterprises and another, (1999)

9 SCC 283, the apex Court summarized the entire law with regard to the objectives of 1940 Act in the following terms:

“44.From the resume of the aforesaid decisions, it can be stated that: decisions, it can be stated that: (a)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 conclusion. no reasons are given by the arbitrator, as to what impelled the arbitrator to arrive at his conclusion.

(b) It is not open to the court to admit to prove the mental process by which the arbitrator has reached his conclusion where it is not disclosed by the terms of the award. mental process by which the arbitrator has reached his conclusion where it is not disclosed by the terms of the award.

(c) If the arbitrator has committed a mere error of fact or law in reaching his conclusion on the fact or law in reaching his conclusion on the disputed question submitted or his adjudication then the court cannot interfere. adjudication then the court cannot interfere. If no specific question of law is referred, the decision of the arbitrator on that question is not final, however much it may be within his jurisdiction and indeed essential for him to decide the question incidentally. In a case where a specific question of law touching upon the jurisdiction of the arbitrator was referred for the decision of the arbitrator by the parties, then the finding of the arbitrator on the said question between the parties may be binding. decision of the arbitrator on that question is not final, however much it may be within his jurisdiction and indeed essential for him to decide the question incidentally. In a case where a specific question of law touching upon the jurisdiction of the arbitrator was referred for the decision of the arbitrator by the parties, then the finding of the arbitrator on the said question between the parties may be binding.

(d)

(e) In a case of a non-speaking award, the jurisdiction of the court is limited. The award can be set aside if the arbitrator acts beyond his jurisdiction. jurisdiction of the court is limited. The award can be set aside if the arbitrator acts beyond his jurisdiction.

(f) To find out whether the arbitrator has travelled beyond his jurisdiction, it would be necessary to consider the agreement between the parties containing the arbitration clause. The arbitrator acting beyond his jurisdiction is a different ground from the error apparent on the face of the award. beyond his jurisdiction, it would be necessary to consider the agreement between the parties containing the arbitration clause. The arbitrator acting beyond his jurisdiction is a different ground from the error apparent on the face of the award.

(g) In order to determine whether the arbitrator has acted in excess of his jurisdiction what has to be seen is whether the claimant could raise a particular claim before the arbitrator. If there is a specific term in the contract or the law which does not permit or give the arbitrator the power to decide the dispute raised by the claimant or there is a specific bar in the contract to the raising of the particular claim then the award passed by acted in excess of his jurisdiction what has to be seen is whether the claimant could raise a particular claim before the arbitrator. If there is a specific term in the contract or the law which does not permit or give the arbitrator the power to decide the dispute raised by the claimant or there is a specific bar in the contract to the raising of the particular claim then the award passed by the arbitrator in respect thereof would be in excess of jurisdiction.

(h) The award made by the arbitrator disregarding the terms of the reference or the arbitration agreement or the terms of the contract would be a jurisdictional error which requires ultimately to be decided by the court. He cannot award an amount which is ruled out or prohibited by the terms of the agreement. Because of a specific bar stipulated by the parties in the agreement, that claim could not be raised. Even if it is raised and referred to arbitration because of a wider arbitration clause such claim amount cannot be awarded as the agreement is binding between the parties and the arbitrator has to adjudicate as per the agreement. This aspect is absolutely made clear in Continental Construction Co. Ltd. vs. State of M.P. (1988) 3 SCC 82, by relying upon the following passage from Alopi Parshad v. Union of India, AIR 1960 SC 588, which is to the following effect: (SCC p.88, para 5) “There it was observed that a contract is not frustrated merely because the circumstances in which the contract was made, altered. The Contract Act does not enable a party to a contract to ignore the express covenants thereof, and to claim payment of consideration for performance of the contract at rates different from the stipulated rates, on some vague plea of equity. The parties to an executory contract are often faced, in the course of carrying it out, with a turn of events which they did not at all anticipate, a wholly abnormal rise or fall in prices, a sudden depreciation of currency, an unexpected obstacle to execution, or the like. There is no general liberty reserved to the courts to absolve a party from liability to perform his part of the contract merely because on account of an uncontemplated turn of events, the performance of the contract may become onerous.”

(i) The arbitrator could not act arbitrarily, irrationally, capriciously or independently of the contract. A deliberate departure or conscious disregard of the contract not only manifests the disregard of his authority or misconduct on his part but it may tantamount to mala fide action. irrationally, capriciously or independently of the contract. A deliberate departure or conscious disregard of the contract not only manifests the disregard of his authority or misconduct on his part but it may tantamount to mala fide action.

(j) The arbitrator is not a conciliator and cannot ignore the law or misapply it in order to do what he thinks just and reasonable; the arbitrator is a tribunal selected by the parties to decide the disputes according to law.” ignore the law or misapply it in order to do what he thinks just and reasonable; the arbitrator is a tribunal selected by the parties to decide the disputes according to law.”

(h) As far as the Act of 1996 is concerned the scope of interference by the Court in an arbitral award under Section 34 of the ‘Act’ has been the subject matter of a number of decisions. The leading decision on the point is Oil and Natural Gas Corporation Ltd. vs. SAW Pipes Ltd., AIR 2003 SC 2629, wherein after considering the entire law and all the provisions the apex Court held as follows:

“30……….Further, for achieving the object of speedier disposal of dispute, justice in accordance with law cannot be sacrificed. In our view, giving limited jurisdiction to the Court for having finality to the award and resolving the dispute by speedier method would be much more frustrated by permitting patently illegal award to operate. Patently illegal award is required to be set at naught, otherwise it would promote injustice.

31. Therefore, in our view, the phrase ‘public policy of India’ used in S.34 in context is required to be given a wider meaning. It can be stated that the concept of public policy connotes some matter which concerns public good and the public interest. What is for public good or in public interest or what would be injurious or harmful to the public good or public interest has varied from time to time. However, the award which is, on the face of it, patently in violation of statutory provisions cannot be said to be in public interest. Such award/judgment/decision is likely to adversely affect the administration of justice. Hence, in our view in addition to narrower meaning given to the term ‘public policy’ in Renusagar’s case (supra), it is required to be held that the award could be set aside if it is patently illegal. Result would be—award could be set-aside if it is contract to:- (a) fundamental policy of India law; or (b) the interest of India; or © justice or morality, or (d) in addition, if it is patently illegal.

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. Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the court. Such award is opposed to public policy and is required to be adjudged void.”

7. Learned Single Judge has analyzed the documents and the relevant provisions in respect of the claims of the contractor relating to Price Variation /Escalation allowed by all the Arbitrators. Learned Single Judge, while setting aside all the four awards, has observed that the Arbitrators were not justified in awarding escalation on the basis of notification dated 7.6.1995 issued by the ‘Board’ since the same was not a notification fixing minimum wages as per the Minimum Wages Act as laid down in M/S Hydel Construction Ltd. (supra).

8. Learned counsel for the ‘contractor’ has, however, submitted that all the four Arbitrators are ‘Technical Experts’ of the rank of Chief Engineer of the ‘Board’, appointed by the ‘Board’ itself to decide various technical and non technical aspects of disputes having arisen between the parties to the contract and the Arbitrators after considering entire material on record produced by both the parties and after affording full opportunity of hearing to both the sides have passed the awards which are final both in law as well as in facts and are not open to challenge on merits in view of limited scope of Section 34 of the ‘Act’. Though the Arbitrators are not legal experts but being engineers of the rank of Chief Engineer have passed the awards by giving reasons and they are not required to give detailed reasons like judgment of civil Court, as such, the sufficiency of reasons as well as the reasonableness of the reasons while deciding the objection is not to be gone into while deciding the objections against the awards as such awards could not have been set aside by the learned Single Judge. Learned counsel for the contractor has relied upon the following judgments in support of above submissions given as under :

9. In Union of India versus Hakam Chand & Co., [2003 (Supplement) Arb.L.R.537 (Delhi)], in Paragraph-5 it has been noted as below:- “5. The Arbitration & Conciliation Act, 1996 has given a new dimension to the Arbitral proceedings and the Awards passed under the Act. It has enlarged the powers of the Arbitrators and reduced Courts intervention at various stages. Sections 30 and 33 of the Arbitration Act, 1940 which were very often exploited for delaying the fruits of an Award to a claimant, stand substituted by Section 34 of the new Act which has reduced and restricted the grounds on which an Arbitral Award may be challenged or set aside. According to Section 34 of the Act, an Arbitral Award may be set aside by the Court only if it is shown that a party applying for its setting aside was under some incapacity or the Arbitration agreement was not valid or no proper notice was given of the appointment of Arbitrator or applicant was otherwise unable to present his case before the Arbitrator or that the Award deals with a dispute falling outside the terms of reference or it contains decisions on matters beyond the scope of submission to Arbitration or the composition of Arbitral Tribunal or Arbitral procedure was not in accordance with the agreement between the parties or the Court finds that the subject matter of the dispute is not capable of settlement by Arbitration under the law for the time being in force or an Arbitral Award is in conflict with the Public Policy of India. The objections filed under Section 34 of the Act have to be first tested on the touchstone of the provisions of the Section 34 of the Act and only when the Court finds that the objections raised in the petition are covered by any of the grounds mentioned therein the Court may consider the same and proceed to dispose them of on merits. The court does not sit in appeal against the Award and should refrain from interfering with the findings of facts arrived at by the Arbitrator.”

10. In Municipal Corporation of Delhi Versus M/s.Jagan Nath Ashok Kumar & Anr. [AIR 1987 SC 2316= (1987) 4 SCC 497], the Hon’ble Supreme Court has observed that where there was no evidence of violation of any principles of natural justice, in such a situation, the reasonableness of the reasons given by an Arbitrator in making his award cannot be challenged in special leave petition as the Arbitrator is the sole Judge of the quality as well as quantity of evidence and it will not be for the Court to take upon itself the task of being a judge of the evidence before the Arbitrator. It may be possible that on the same evidence the Court might have arrived at a different conclusion than the one arrived at by the Arbitrator but that by itself is no ground for setting aside the award of an Arbitrator.

11. In Indian Carbon Ltd. (supra), Hon’ble Supreme Court has observed that where reasons for giving the award are stated in the award and no error of law could be pointed out in those reasons, there was no error of fact and the view taken by the Arbitrator was a possible view to take and the Arbitrator has made his mind known on the basis of which he has acted; that is sufficient to meet the requirements even if it be reasons should be stated in the award. The award could not, therefore, be set aside on ground that it was not a reasoned award. It is one thing to say that reasons should be stated and another thing to state that a detailed judgment be given in support of an award. Even if, it be held that it is obligatory to state the reasons, it is not obligatory to give a detailed judgment. Arbitration procedure should be quick and that quickness of the decision can always be ensured by insisting that short intelligible indications of the grounds should be available to find out the mind of the Arbitrator for his action.

12. It is also necessary to reproduce para-10 of Indian Carbon Ltd. (supra) as below:- “... .... ....The reasons that are set out must be reasons which will not only be intelligible but also deal with the substantial points that have been raised. When the arbitration clause required the arbitrator to give a reasoned (award) and the arbitrator does give his reasons in the award, the sufficiency of the reasons depends upon the facts of the particular case. He is not bound to give detailed reasons. The Court does not sit in appeal over the ward and review the reasons. The Court can set aside the award only if it is apparent from the award that there is no evidence to support the conclusions or if the award is based upon any legal proposition which is erroneous.”

13. In M/s.Sudarsan Trading Co. Versus The Govt.

of Kerala & Anr., [AIR 1989 SC 890] = [(1989) 2 SCC 38], Hon’ble Supreme Court, following its earlier judgment in M/s.Jagan Nath Ashok Kumar’s case (supra) has observed that once there is no dispute as to the contract, the interpretation of the contract, is a matter for the Arbitrator and the Court cannot substitute its own decision and if a view of the Arbitrator in respect to a contract and on certain amount awarded, is a possible view though perhaps not the only correct view, the award cannot be examined by the Court, therefore, the High Court had no jurisdiction to examine different items awarded clause by clause by the Arbitrator and to hold that under the contract these were not sustainable in the facts found by the Arbitrator.

14. The Hon’ble Supreme Court in B.V.Radha Krishna Versus Sponge Iron India Ltd., [1997(1) Arb.L.R. 412 = (1997) 4 SCC 693], has observed that Court cannot examine the reasonableness of reasons as the Arbitrator is the sole judge of quality as well as quantity of evidence and court is not to take upon itself the task of being judge on the evidence before the Arbitrator.

15. It was argued by learned counsel for the contractor that finding of the Arbitrator was upset by learned Single Judge by going into the question as if sitting in appeal to render a contrary view, whereas, learned Single Judge has no jurisdiction to do so as there was no error apparent on the face of the record. Learned counsel has further argued that it is well settled that while exercising power under Section 30 of the Act, the learned Single Judge cannot re-appreciate all the materials on the record for the purpose of recording a finding whether in the facts and circumstances of a particular case, the award in question could have been made. In support of his contention, the learned has placed reliance on the decision of Supreme Court in Hindustan Construction Co. Ltd. Versus Governor of Orissa & Ors., [(1995) 3 SCC 8] where, the Supreme Court, while relying on its earlier decision in State of Rajasthan Versus Puri Construction Co. Ltd., [(1994) 6 SCC 485] and referring to M/s.Sudarsan Trading Co. (supra), M/s.Jagan Nath Ashok Kumar’s case (supra), Alopi Parshad & sons Ltd. versus Union of India, [1960 (2) SCR 793 and M/s.Kapoor Nilokheri Co-Op.Dairy Farm Society Ltd. versus Union of India & Ors. [(1973) 1 SCC 708 and its earlier judgment in Indian Carbon Ltd. (Supra)

has held that High Court has no jurisdiction to set aside an award by substituting its own view in place of the Arbitrator’s view as if it was dealing with an appeal. Hon’ble Supreme Court has further observed that the Court does not sit in the appeal qua the award and review the reasons and the Court can set aside the award only if it is apparent from the award that there is no evidence to support the conclusions or if the award is based upon any legal proposition which is erroneous.

16. In State of U.P. versus Harish Chandra & Co. [(1999) 1 SCC 63], Hon’ble Supreme Court has observed that the questions purely of merits of the award cannot be raised in objections under Section 30 of the Act. The proceedings under Section 30 of the Act is not in the nature of appeal against the award.

17. In H.P. State Electricity Board versus R.J.Shah and Company, {1999(2) Arb.L.R. 316 = (1999) 4 SCC 214}, the Hon’ble Supreme Court has observed that if the Arbitrator was having jurisdiction to construe the terms of the contract, the decision thereon is final and binding on the parties.

18. InM/s.Hydel Construction Ltd. (supra) it was observed that actual arithmetical computations of amount awarded by Arbitrator under different heads need not be given by the Arbitrators and it is enough if they give reasons for allowing or disallowing objections raised in respect of the claims of the parties.

19. Hon’ble Supreme Court in Indu Engineering and Textiles Ltd. versus Delhi Development Authority, [(2001) 5 SCC 691], paragrahp-5, has observed as below:- “The scope for interference by the Court with an award passed by the arbitrator is limited. Section 30 of the Arbitration Act, 1940 (for short “the Act”) provides in somewhat mandatory terms that an award shall not be set aside except on one or more of the grounds enumerated in the provision. The three grounds set out in the section are :-

i.that an arbitrator or umpire has mis-conducted himself or the proceedings; conducted himself or the proceedings;

ii.that an award has been made after the issue of an order by the court superseding the arbitration or after arbitration proceedings have become invalid under Section 35; of an order by the court superseding the arbitration or after arbitration proceedings have become invalid under Section 35;

iii.that an award has been improperly procured or is otherwise invalid. or is otherwise invalid.

Interpreting the statutory provision courts have laid stress on the limitations on exercise of jurisdiction by the court for setting aside or interfering with an award in umpteen cases. Some of the well recognized grounds on which interference is permissible are:- laid stress on the limitations on exercise of jurisdiction by the court for setting aside or interfering with an award in umpteen cases. Some of the well recognized grounds on which interference is permissible are:-

1. violation of the principle of natural justice in passing the award. justice in passing the award.

2. Error apparent on the face of the award.

3. The arbitrator has ignored or deliberately violated a clause in the agreement prohibiting dispute of the nature entertained; deliberately violated a clause in the agreement prohibiting dispute of the nature entertained;

4. The award on the face of it is based on a proposition of law which is erroneous, etc.” proposition of law which is erroneous, etc.”

In Indu Engineering & Textiles case (supra), the Hon’ble Supreme Court has also observed that it is not open to the Court within the statutory limitations set out in Section 30 of the Act to interfere with the plausible view taken by the Arbitrator unless the view of the Arbitrator is vitiated by a manifest error on the face of an award or is wholly improbable or perverse. It has further been observed that the grounds for interference are restricted to those enumerated under Section 30 of the Act.

20. In State of U.P. versus Allied Constructions, [2003 (3) Arb.L.R. 106(SC) = (2003) 7 SCC 396],theHon’ble Supreme Court has held that the power of Court to interfere with the award is restricted by virtue of Section 30 of the Act and the Court cannot re-apprise the evidence and the interpretation of the contract is within the jurisdiction of the Arbitrator and unless one or the other condition under Section 30 of the Act is specified, the award cannot be set aside. It is relevant to refer paragraph-4 of the Allied Constructions (supra), as below:- In State of U.P. versus Allied Constructions, “Any award made by an arbitrator can be set aside only if one or the other term specified in Sections 30 and 33 of the Arbitration Act, 1940 is attracted. It is not a case where it can be said that the arbitrator has misconducted the proceedings. It was within his jurisdiction to interpret clause 47 of the Agreement having regard to the fact-situation obtaining therein. It

is submitted that an award made by an arbitrator may be wrong either on law or on fact and error of law on the face of it could not nullify an award. The award is a speaking one. The arbitrator has assigned sufficient and cogent reasons in support thereof. Interpretation of a contract, it is trite, is a matter for arbitrator to determine (see M/s Sudarsan Trading Co. v. The Government of Kerala, AIR 1989 SC 890). Section 30 of the Arbitration Act, 1940 providing for setting aside an award is restrictive in its operation. Unless one or the other condition contained in Section 30 is satisfied, an award cannot be set aside. The arbitrator is a Judge chosen by the parties and his decision is final. The Court is precluded from reappraising the evidence. Even in a case where the award contains reasons, the interference therewith would still be not available within the jurisdiction of the Court unless, of course, the reasons are totally perverse or the judgment is based on a wrong proposition of law. An error apparent on the face of the records would not imply closer scrutiny of the merits of documents and materials on record. Once it is found that the view of the arbitrator is a plausible one, the Court will refrain itself from interfering [see U.P. State Electricity Board v. Searsole Chemicals Ltd. - 2001(3) SCC 397, and ISPAT Engineering & Foundry Works, B.S. City, Bokaro v. Steel Authority of India Ltd., B.S. City, Bokaro - 2001(6) SCC 347].

21. In Union of India versus Pam Development Pvt.

Ltd., [2004 (2) Arb.L.R. 480 (Calcutta), the Court has observed in para-27 as below:- “Arbitration Court cannot interferer with the award on the ground that the decision is erroneous if the Award is otherwise proper. The Award of the learned Arbitrator is ordinarily final and conclusive. Wrong or right the decision of the learned Arbitrator is final and binding if it is reached fairly after giving adequate opportunities to the parties to place their grievances during the Arbitral proceedings. It is not necessary for Arbitration Court to examine the merits of the Award with reference to the materials produced before the learned Arbitrator. The Arbitration Court cannot sit in appeal over the views of the learned Arbitrator by re-examining the re-assessing the materials produced before the learned Arbitrator. The factual determination of the learned Arbitrator cannot again be re-appreciated. Overall approach of the learned Arbitrator is neither capricious nor arbitrary. It is not open to the Arbitration court to re-appreciate reasonableness of reasons in the Arbitral award.”

22. In National Thermal Power Corporation Ltd.

versus WIG Brothers (Builders & Engineers) Ltd. [2009(2) Arb.LR 238(Delhi)], the Court has observed in para-10 as below:- “In proceedings to adjudicate the challenge to the award under Section 34, the Court has to bear in mind that it does not sit as a appeal Court that has the jurisdiction to revisit the evidence and the arguments advanced before the arbitrator and then substitute its own views with those of the arbitrators. The Court will not set aside a decision of an arbitral tribunal merely for the reason that had it heard the matter in the

first instance it would have come to a different conclusion or that the view it would have taken could have been a better view. So long as the view of the arbitral tribunal is a plausible view, the court will not interfere with the award merely because it feels that the view of the Court may have been different than the one taken by the arbitral tribunal. The jurisdiction of this Court is confined to the four corners of the Arbitration Act, in particular the provisions of Section 34, for determining whether an arbitration award is liable to be set aside or not.”

23. Learned counsel for the contractor has submitted as follows:- a.As per Clause10C of the contract, the Price variation could have been determined by either of the two methods referred, therein, whichever, being higher and since the price variation amount was higher on basis of 1[st] method relating to increase in daily wages of labour, as such, it has been correctly allowed on basis of 1[st] method and not on the basis of 2[nd] method relating to Consumer (Price Index) ,thus price variation claim could not have been denied in its entirety as done by leaned Single Judge, as it being payable under either of two methods whichever is higher. variation could have been determined by either of the two methods referred, therein, whichever, being higher and since the price variation amount was higher on basis of 1[st] method relating to increase in daily wages of labour, as such, it has been correctly allowed on basis of 1[st] method and not on the basis of 2[nd] method relating to Consumer (Price Index) ,thus price variation claim could not have been denied in its entirety as done by leaned Single Judge, as it being payable under either of two methods whichever is higher.

b.Learned Single Judge has erred in setting aside price variation awarded by learned Arbitrator on the price variation awarded by learned Arbitrator on the basis of increase of wage in pursuance to the office order dated 7.6.1995 of ‘Board’ because as per clause 19A of the contract agreement ,contractor is bound to pay wages equivalent to the wages notified by the ‘Board’. The office order dated 7.6.1995 fixing the wages of its labour in Kangra District and applicable to contractor has not been properly appreciated by learned Single Judge, because the fixing of minimum wages under the Minimum Wages Act, 1948 has nothing to do with the wages fixed by the ‘Board’ under office order dated 7.6.1995 and paid by the contractor to its labourers.

c.The contractor under Rule 25 (2) (iv) and (v) (a) of the contract labour (Regulation and Abolition) Rules 1971 was also bound to pay wages as notified by the ‘Board’ in view of its office order dated 7.6.1995 and, as such, had been paying the same. the contract labour (Regulation and Abolition) Rules 1971 was also bound to pay wages as notified by the ‘Board’ in view of its office order dated 7.6.1995 and, as such, had been paying the same.

d.The decision in M/s Hydel Construction Ltd. (supra), is not applicable to the facts and circumstances of the present case and is clearly distinguishable because in that decision, it has not been considered and held that contractor would not be entitled to Price variation under clause 10C in case it has actually paid enhanced wages under clause 19A of the Agreement to its labour on the basis of notification of the ‘Board’. (supra), is not applicable to the facts and circumstances of the present case and is clearly distinguishable because in that decision, it has not been considered and held that contractor would not be entitled to Price variation under clause 10C in case it has actually paid enhanced wages under clause 19A of the Agreement to its labour on the basis of notification of the ‘Board’.

e. In decision of M/s.Hydel Construction Ltd. Case (supra), the statutory notification under the Minimum Wages Act, fixing wages Rs.7.25 per day was issued on 18.9.1981 and the ‘Board’ issued office order on 7.6.1982 fixing wages Rs. 8.25 per day. There was nothing on record in that case that at the time of entering into agreement the office order dated 7.6.1982 was notified to the contractor.

f.Learned Single Judge has not appreciated that enforceability of wages Rs.45.75 per day retrospectively from 1.1.1994 fixed vide office order 7.6.1995 is not illegal firstly because the contractor and the ‘Board’ are bound by the contract agreement for payment of wages to the labour of the contractor and Secondly there is no bar under the agreement for fixing of wages by ‘Board’ and payment of wages by contractor at higher rate from back date, thirdly once the ‘Board’ has notified payment of enhanced wages @ Rs.45.75 per day and contractor has acted upon it by making the payment then the ‘Board’ is estopped from questioning its own office order dated 7.6.1995 and payment of wages by the contractor @ Rs.45.75 per day to its labour w.e.f. 1.1.1994 on the basis of office order dated 7.6.1995.

g.There is no bar on payment of higher wages than fixed under the Minimum Wages Act, 1948. As per clause 19A of the agreement the contractor is bound to pay wages, which the ‘Board’ notified irrespective of the fact whether those wages are higher than the wages fixed under the Minimum Wags Act 1948.

h. Learned Single Judge has erred in observing that contractor has not produced clear evidence and has failed to place any material on record to show that it had actually paid wages to its workers @ Rs.45.75 per day from 1.1.1994 whereas the contractor has produced and proved clinching evidence by way of letter dated 3.2.1996 regarding payment of wages at the rate of Rs.45.75 to its workers. The Executive Engineer Gaj Construction Division HPSEB being engineer-in-charge under the contract agreement and being responsible for all contractual and statutory compliances, vide letter dated 3.2.1996 has clearly admitted to the effect that contractor had been paying wages to its workers not less than the wages fixed by the ‘Board’ vide office order dated 7.6.1995 @ Rs.45.75 per day. The correctness of letter dated 3.2.1996 was never disputed at any stage during the arbitration proceedings or even by way of objections under Section 34 of the Act. The sole Arbitrator has also considered Rule 25 (v)(a) of the Contract Labour (Regulation and Abolition) Central Rules 1971

which clearly provides that the contractor is bound to pay wages to its workmen as being paid by the principal employer of the establishment. The liability to pay enhanced wages with effect from 1.1.1994 was fixed by the ‘Board’ vide office order dated 7.6.1995. The payment of arrears of wages from 1.1.1994 to 7.6.1995 by the ‘Board’ to its labour was internal affair of the ‘Board’ and that might require subsequent order or clarification by the ‘Board’ for its labour but as far as the payment of enhanced wages @ Rs.45.75 per day is concerned, contractor was bound to pay such wages to its workers at the rate in consonance to the office order dated 7.6.1995 read with clause 19A of the agreement. Since the ‘Board’ was paying increased wages @ Rs.45.75P per day to its workmen as per Board’s Order dated 7.6.1995, as such, the contractor was also paying the same wages, which fact, stands confirmed by the Engineer-in Charge of the work vide letter dated 3.2.1996

i.Learned Single Judge has erred in not properly appreciating price variation Clause 10C, of the agreement , under which contractor is entitled to escalation for increase in the rates of (i) labour either by increase in consumer price index (CPI) or due to increase in minimum wages which ever is appreciating price variation Clause 10C, of the agreement , under which contractor is entitled to escalation for increase in the rates of (i) labour either by increase in consumer price index (CPI) or due to increase in minimum wages which ever is higher (ii) increase in petrol oil and Lubricant (POL) (iii) increase in the rates of material other than supplied by the ‘Board’ the sum total of above (i), (ii), and (iii) comprises escalation as per clause 10C. Learned Single Judge considered price variation under clause 10C as a result of increase of rates of labour due to office order date 7.6.1995 enhancing labour wages @ Rs.45.75 per day but actually did not allow escalation due to increase in wages vide office order dated 7.6.1995 on the ground that office order has not been issued in accordance with law and therefore no benefit of increase of wages can be given to the contractor.

j.Learned Single Judge has erred in not considering escalation under clause 10C by taking into consideration above factors of clause 10C.It has not been appreciated that the ‘Board’ while calculating costs of taking over works, determined as per award dated 6.11.2001 passed by Mr.S.R.Khitta , has taken (actually paid as per record of ‘Board’ produced in the proceedings) labour rates at the rate of Rs. 45.75 per day, which rates, are the rates fixed by the ‘Board’ under office order dated 7.6.1995 w.e.f. 1.1.1994, therefore, learned Single Judge has erred in not allowing escalation to the contractor by taking labour rates @ Rs. 45.75 per day w.e.f. 1.1.1994.

k. The arbitral award could only be set aside if it is found contrary to the public policy of Indian Law, interest of India, justice or morality or is patently illegal in view of the decision of Supreme Court in found contrary to the public policy of Indian Law, interest of India, justice or morality or is patently illegal in view of the decision of Supreme Court in SAW Pipes Ltd.(supra).

24. Learned counsel for the ‘Board’, however, on the other hand has supported the verdict of learned Single Judge and has submitted that the claim regarding price variation has rightly been set aside.

25. We have duly considered the contentions raised by counsel for the parties regarding scope of interference against an award given by Arbitrator particularly in view of section 34 of the Act. However, the present appeals are to be decided in reference to the facts of the each case and principles of law applicable thereto.

26. It appears, various disputes/differences had arisen between the parties to Agreement and in order to decide the same, Chief Engineers of the ‘Board’ were appointed arbitrators by the ‘Board’ itself as such the arbitrators had the jurisdiction and they were competent to decide the claim.

27. It appears, contract-Agreement contained Price Variation clause No.10C and price variation amount was to be determined as per methods mentioned in this clause and relevant extract of this clause is as under:- Clause 10C :PRICE VARIATION:

“The amounts paid to the contractor for the work done shall be adjusted for each quarter of calendar year for increase or decrease in the rates of labour and materials (other than those to be supplied by the HPSEB) as under:- (a)PRICE VARIATION IN LABOUR COST:

Price variation in labour cost shall be computed by the following two methods viz (i) & (ii).The amount payable to /recoverable from the contractor will be the amount computed either under (i) or under (ii) whichever is higher. If during the currency of the work, the minimum daily wage of unskilled labour increases / decreases as a direct result of coming into force any fresh law or statutory rule or order, as applicable to district Kangra (HP) a corresponding increase or decrease in payment to the contractor, shall be computed on the basis of the following formula:- –V = 25% of R (W Wo)

Wo

28. The above adjustment will be allowed only after taking a certificate from the contractor that revised wages referred to above have been actually paid to the labour by the contractor.

(a) (ii) If during the currency of the contract, there is an increase or decrease in the Consumer (Price Index), number for industrial workers in H.P. (General Index), a corresponding increase or decrease in the payment to that contractor shall be computed for each quarter on the basis of the following formula:- –V = 25% of R (I Io)

Io

As per Clause-10C of contract, price variation could have been determined by either of the two methods whichever being higher and since the price variation amount was higher on basis of 1[st] method, as such it has been allowed on basis of 1[st] method and not on basis of 2[nd] method relating to Consumer (Price Index), thus price variation claim could not have been denied in its entirety, it being payable under either of two methods whichever is higher.

29. The Arbitrators have allowed Price Variation on basis of 1[st] method i.e. on basis of revised wages paid by the Contractor as per order dated 07/06/1995 which was clear order /mandate from the ‘Board’ to contractor to pay the revised wages as applicable to district Kangra (HP).

30. In our considered view the arbitrators have rightly determined price variation. Clause 10 – C provides the complete mode for calculating Price Variation as such is complete in itself as the same is not dependent upon any notification to be issued by the government under Minimum Wages Act for payment of minimum wages as per clause 19-A of the Contract. There appears absolutely no reference made to clause 19-A of Contract or issuance of government notification under Minimum Wages Act in clause 10C of Contract for determining price variation, as such, the arbitrators have rightly determined the price variation in view of Order dated 7.6.1995 issued by the ‘Board’ revising the daily wages which were paid by the contractor as per clear admission of the Executive Engineer made in his letter dated 3.2.1996.

31. It would be pertinent to mention that Clause 19-A of the contract entered into between the parties reads as follows:

“CLAUSE-19A: MINIMUM WAGES:

(a) The contractor shall pay not less than the minimum wage(s) for Kangra Distt. notified by H.P. Govt. & HPSEB from time to time for various types of labourers engaged by him on the work.

(b) The contractor shall, notwithstanding the provision of any contract to the contrary, cause to be paid not less than minimum wage to labourers indirectly engaged on the work, including any labour engaged by his sub-contractors in connection with the said work as such labourers had been in his immediate employment.

(c) In respect of all labour directly or indirectly employed in the works for performance of the contractor’s part of this agreement contractor shall comply with or cause to be complied with the HPPWD/HPSEB contractor’s labour regulations made by the Govt./HPSEB from time to time in regard to payment of wages, wage period, deductions from wages recovery of wages not paid and deductions unauthorisedly made. Maintenance of wage books or wage slips publication of scale of wages and other terms of employment inspection and submission of periodical return and all other matters of the like nature.”

32. The Board had issued a letter on 7.6.1995 which reads as follows:

“HIMACHAL PRADESH STATE ELECTRICITY BOARD OFFICE ORDER No.7/HPSEB(SECTT)IR-94 Dated:7.6.95. The H.P. State Electricity Board is pleased to fix the daily wages rates of the different categories of daily rated workers indicated against each in the enclosed Annexure w.e.f. 1.1.94.

These rates will be uniformally applicable to all the areas including backward and tribal areas of the State. The orders regarding arrears of wages w.e.f. 1.1.94 to 31.3.1995 will be issued separately.

Sd/ Secretary, H.P.State Elecy.Board, Vidyut Bhawan, Shimla-171004”

The contention of the Contractor is that he was bound to pay the wages in terms of the aforesaid letter in view of the provisions of Clause 19-A and, therefore, escalation in labour rates has to be calculated by taking into consideration minimum wages of Rs.45.75 as fixed by the Board.

33. The letter dated 3.2.1996 reads as follows:

“HIMACHAL PRADESH STATE ELECTRICITY BOARD

NO.GEN-AB-SAB/95-96-8133-34 Dated:3.2.1996

To

The superintending Engineer, Projects Constn, Circle, HPSEB, Dharamshala.

Sub:- Regarding minimum wages.

Ref:- M/s.S.A.Builders and Financiers Ltd., Chandigarh Letter No.SAB/Gaj/96-77 dated 31.01.06. Sir, In this context, it is intimated that M/s. S.A. Builders Ltd., Chandigarh are paying wages to their workers not less than the minimum wages applicable to the HPSEB, workers notified vide Secretary HPSEB, Shimla office order No.7/HPSEB(Sectt.)/IR-94 dated 7.6.95 endorsed vide No.HPSEB(Sectt)/IR-5(A)/94-55445-56145 dated 7.6.95.

So far as the contract clause 19-A Chapter-IV part-I of the contract agreement No.1/89 dated 6.2.89 under which now the contractor is claiming the escalation on enhanced rates is concerned, it is intimated that contract clause 19-A (a) is silent regarding applicability of the minimum wages rates covered under the provision of minimum wages Act, 1940.

As per contract clause 19A(a) the contractor shall pay not less than the minimum wages notified by the HP Govt/HPSEB, from time to time. The HPSEB as well as HP Govt. are now paying the minimum rates of wages to their labourers @ 45.75 p. per day w.e.f. 1.1.94.

The necessary clarification/decision may please be conveyed to this office immediately as the contractor is pressing hard for releasing the payment of their escalation bill on enhanced rates please.

Yours faithfully, Sd/- Executive Engineer, Gaj Const. Division, HPSEB:Gharoh (Kangra)”

34. The Arbitrators allowed Price Variation Claim in view of this Price Variation Clause but learned Single Judge has set aside the award pertaining to this claim without making any reference. The Arbitrator had the jurisdiction to interpret clause 10-C regarding payment of price variation amount and Clause 19-A of contract relating to payment of minimum wages and the interpretation given by the Arbitrator is final as per law laid down by Hon’ble Supreme Court in case reported in M/s.Sudarsan Trading Company’s case (supra), wherein, it was observed that once there is no dispute as to the contract, the interpretation of the contract, is a matter for the Arbitrator and the court cannot substitute its own decision. If a view of the Arbitrator in respect of the contract and regarding certain amounts awarded is a possible view though perhaps not the only correct view ,the award cannot be examined by the court, as such, the scope of judicial review by High Court to examine different items awarded clause by clause by the Arbitrator and to hold that under the contract these were not sustainable in the facts found by the Arbitrator is limited.

35. Mr.S.C.Mahajan, the sole arbitrator, after considering the pleading, documents and contentions of both the parties has come to the following conclusion:- “To construct and complete the Project, the Provisions of the contract agreement under clause 10C(a),19A (a) Clause-20; other labour laws affecting contract labour such as rules (25 (V) (a) of the Regulation and Abolition Act 1970 read with the Contract Labour (Regulation and Abolition) Central Rule 1971; were essential but minimum daily wages (s) to unskilled labour is not confined to minimum wage Act 1948 only.

36. The office order no.7/HPSEB (Sectt) IR-94 dated 7.6.1995 endorsed vide No. HPSEB (Sectt) (R-5 (A)/94-55445 dated 7.6.95 revising the daily wages rates of the different categories of the daily rated worker tantamount to a fresh law under clause-10C. The letter No.GCD-AB-SA/95-8133 dated 3.2.1996 written by the Executive Engineer Gaj Constt. Division, HPSEB, Gharoh, Kangra (who is responsible to examine, audit, accept and record the entire payment/expenditure accounts of all the AEs/ AEEs under his control and payment for work done by all the contractor under his division till completion of the project) to the superintending Engineer Project Construction Circle, HPSEB, Dharamshala, as reproduced herein before, is thus the required proof that the ‘Board’ and the contractor had paid the minimum wages of Rs.. 45.75 per day to their daily rated workers w.e.f. 1.1.1994 thus the claim raised for the escalation is maintainable.

37. In view of Clause-10C, so long as the fresh rates of the minimum wages have come into force by virtue of an order of HPSEB, whether it is notified by the Government of Himachal Pradesh or not is immaterial .There is no requirement of the notification under clause 10C and therefore the contractor is entitled for the payment for the price variation and escalation to be worked out on the minimum wages of Rs.45.75 per day w.e.f. 1.1.1994.

38. It appears, the sole Arbitrator had adjudicated the claim by affording full opportunity of hearing to both parties and has passed reasoned award by interpreting contract provisions and other material on record, as such, the High Court is not supposed to sit in appeal over conclusions arrived at by the Arbitrator for re-examining and re-appreciating entire material produced before him.

39. The ‘Board’ had issued an office order Dated: 7.6.95 which cannot be termed merely a letter but is clearly an order issued by the ‘Board’ according to which price variation is to be determined under Clause-0C (a) which clearly provides that if minimum wages of unskilled labour increases/decreases as a direct result of coming into force of any fresh law or statutory rule or order as applicable to district Kangra a corresponding increase or decrease in payment to the contractor shall be computed .For the purposes of computation of increase or decrease in payment to the contractor, an order issued by the ‘Board’ itself may be sufficient according to which Price variation may be determined, as such, issuance of Notification required to be issued regarding payment of minimum wages under Minimum Wages Act was not necessary and even otherwise under clause 19-A of Contract-Agreement contractor is required to pay not less than the minimum wages for Kangra district notified by HPSEB. Since order dated 7.6.1995 has been duly issued and notified by the ‘Board’, as such, contractor was bound to abide by the same and his claim was not to bank upon any further Notification to be issued by the State Government. The Executive Engineer, Gaj Construction Division, HPSEB: Gharoh (Kangra) who was getting the work executed and also responsible for all the statutory compliances under the Contract has clearly admitted in its letter dt.3.2.1996 that the contractor is paying wages to their workers not less than the minimum wages applicable to the HPSEB, workers notified vide Secretary HPSEB Shimla office order No.HPSEB(Sectt)/ER-94 dated 7.6.1995 and even it was also admitted that the ‘Board’ as well as Government of H.P. now paying the minimum rate of wages to their labourers @ Rs.45.75 per day w.e.f.1.1.1994 and even the ‘Board’ while calculating costs of taken over works of this very contract has taken (actually paid as per record of ‘Board’ produced in the proceedings) labour rates at the rate of Rs.45.75 per day, which rates, are the rates fixed by the ‘Board’ under office order dated 7.6.1995 w.e.f. 1.1.1994. As such in our respectful consideration, learned Single Judge has erred in not allowing escalation to the contractor by taking labour rates @ Rs.45.75 per day w.e.f. 1.1.1994.

40. Since payment of increased minimum wages as per Office Order dated 7.6.1995 was not disputed before the Arbitrator, as such, the contractor was not supposed to adduce any other evidence in this respect as such the finding of learned Single Judge that the contractor has not produced sufficient evidence to prove payment of minimum wages as per

Office Order dated 7.6.1995 is legally unsustainable and award to that extent could not have been set aside more particularly in view of the decision of Hon’ble Supreme Court in M/s.Jagan Nath’s case (supra), wherein, it was observed that the Arbitrator is the sole Judge of the quality as well as the quantity of evidence and it will not be for the Court to take up itself the task of being a Judge of the evidence before the Arbitrator, however, it may be possible that on the same evidence the court might have arrived at a different conclusion than the one arrived at by the Arbitrator but that by itself is no ground for setting aside the award of an arbitrator.

41. In our respectful consideration, learned Single Judge has not correctly relied upon the decision of Hydel Construction case (Supra), for setting aside the claim of price variation allowed by the Arbitrators and the said case has no applicability to the facts of the present case as the issue raised in Hydel Construction case (supra) was in relation to an order issued by the ‘Board’ prior to the opening of the tender, whereas, in the present case order is post contract and the order dated 7[th] June, 1995 issued by the ‘Board’, whereby, the minimum wages were increased to Rs.45.75 w.e.f. 1[st] January, 1994, whereas, the contract had been entered into in 1989 and admittedly the contractor has paid the increased wages. The Arbitrator has duly considered the order dated 7.6.1995 which directly effected price variation determinable under cl.10C which no where provides that the order issued by the ‘Board’ increasing or decreasing daily wage of unskilled labour is to be given effect to only after it has been notified under Minimum Wages Act by Government of H.P. Learned Single Judge has erroneously come to the conclusion that the order dated 7[th]June, 1995 issued by the ‘Board’ is not statutory order whereas, we notice that for all the intents and purposes the order dated 7.6.1995 issued by the ‘Board’ is binding upon the contractor under Clause 10C of the contract for the purpose of price variation and no notification is required to be issued by the Government of H.P.

42. We have considered the contentions and rival contentions of both the parties. In our respectful consideration, the Contractor and the ‘Board’ are bound by the agreement and, therefore, claimant is entitled to Price variation/escalation under clause 10C actually paid to labour i.e. Rs.45.75 per day w.e.f.1.1.1994. It has to be appreciated that it is the quality and not the quantity of the evidence that matters, as such, the ‘Board’ was bound by its letter dated 3.2.1996 which has been accepted by the Arbitrator. In reference to the decision of Hon’ble Supreme Court in B.V.Radha Krishna (supra), the awards passed by the arbitrators allowing price variation as per clause 10C of the Agreement are not against public policy as such could not have been interfered by learned Single Judge. In view of above settled position of law, learned Single Judge was not justified in interfering with the reasoned award given by the Arbitrators regarding price variation claims as the price variation amount was legally and contractually payable to the contractor thus was rightly awarded by the arbitrators who have passed reasoned award after affording full opportunity of hearing to both the parties.

43. The Arbitration Appeal No.1 of 2007 SAB Vs. HPSEB and Cross-Objection No.252 of 2007 HPSEB Vs. SABhave arisen out of Case No.15 of 2000 relating to Award dated 7.9.1999 passed by Mr.Labh Singh sole Arbitrator. The contractor has filed appeal against the impugned judgment being aggrieved to the extent of price variation claim awarded by Arbitrator having been set aside, however, the ‘Board’ has also filed Cross Objections praying for reduction of interest from 12% per annum to 9% per annum.

44. In this case the Arbitrator vide his award dated 7[th]September, 1999 has awarded a sum of Rs.9,37,128/- which includes Rs.1,19,300/- on account of escalation in favour of the contractor along with simple interest @ 12% per annum on this award amount from the date of reference to the date of the award.

45. Learned Single Judge has set aside the claim No.7 relating to price variation amounting to Rs.1,19,300/- awarded by the sole Arbitrator, however, for the reasons indicated in the preceding paragraphs, we are of the considered view that the price variation is legally and contractually payable to the contractor and the Arbitrator appears to have rightly awarded the same as such the judgment of learned Single Judge upsetting the price variation is set aside and the award is restored to that extent. The counsel for the ‘Board’ while pressing the cross-objections has submitted that learned Single Judge was expected to reduce the simple interest from 12% p.a. to 9% p.a. in view of the decision of Hon’ble Supreme Court in (Krishna Bhagya Jal Nigam Ltd Vs. G.Harishchandra Reddy and another, 2007(1) Arb.L.R 148(SC) andfollowed by this High Court in OSA No.13 of 1999 (HPSEB Vs. Ansal Properties), wherein, also rate of interest was reduced to 9% per annum.

46. The counsel for the contractor has submitted as follows:-

(i) “In view of Judgment of Hon’ble Supreme Court in B.Subba Reddy (supra), Cross Objections are not maintainable and same are liable to be dismissed, more particularly, according to counsel for the contractor, he has further submitted that otherwise also the rate of interest of 12 % p.a. is on lower side in view of award of Sh. O.C. Kaushal Sole Arbitrator who had awarded Interest @ 18% p.a. in the earlier Arbitration case under the same Agreement between the same parties which was accepted by the ‘Board’ and such rate of interest not challenged, as such, the same was made rule of Court and decree in terms thereof was passed and the awarded amount with 18% p.a. interest was paid to the contractor. in B.Subba Reddy (supra), Cross Objections are not maintainable and same are liable to be dismissed, more particularly, according to counsel for the contractor, he has further submitted that otherwise also the rate of interest of 12 % p.a. is on lower side in view of award of Sh. O.C. Kaushal Sole Arbitrator who had awarded Interest @ 18% p.a. in the earlier Arbitration case under the same Agreement between the same parties which was accepted by the ‘Board’ and such rate of interest not challenged, as such, the same was made rule of Court and decree in terms thereof was passed and the awarded amount with 18% p.a. interest was paid to the contractor.

(ii) In the light of the decision in M/s.Maharashtra Apex Corporation Ltd. versus Sandesh Kumar & Ors., 2006 (2) Arb.L.R. 282 = AIR 2006 Karnataka 138, the power of the court of District Judge under Section 34 of the Act or Apex Corporation Ltd. versus Sandesh Kumar & Ors., 2006 (2) Arb.L.R. 282 = AIR 2006 Karnataka 138, the power of the court of District Judge under Section 34 of the Act or

that of the appellate court under Section 37(1) (b) of the Act cannot be equated with the power of the Supreme Court under Article 136 of the Constitution of India in reducing the rate of interest and Interest from date of award till payment is governed by section 31(7)(b) of Arbitration & Conciliation Act,1996 which cannot be reduced.

(iii) Admittedly, award is silent regarding payment of interest from date of award till payment, thus section 31(7) (b) of the Arbitration and Conciliation Act, 1996 stands clearly attracted which is reproduced as under: interest from date of award till payment, thus section 31(7) (b) of the Arbitration and Conciliation Act, 1996 stands clearly attracted which is reproduced as under:

“31(7)(b):- A sum directed to be paid by an Arbitral Award shall, unless the Award otherwise directs, carry interest at the rate of eighteen per centum per annum from the date of Award to the date of payment.” Arbitral Award shall, unless the Award otherwise directs, carry interest at the rate of eighteen per centum per annum from the date of Award to the date of payment.”

(iv) The contractor is entitled to interest at the rate of 18% per annum when the award was silent qua the rate of interest to be paid from the date of award in view of the decision in 2004(3) Arb.L.R.137 (HP)= 2004 (1) Shim.L.C. 25, [M/s.Kataria Builders versus State of H.P.] where the Arbitrator allowed interest at the rate of 12% per annum without mentioning future interest. However, the petitioner was held entitled future interest at the rate of 18% per annum as per his claim in terms of Section 31(7)(b) of the Act from the date of award till date of payment. of 18% per annum when the award was silent qua the rate of interest to be paid from the date of award in view of the decision in 2004(3) Arb.L.R.137 (HP)= 2004 (1) Shim.L.C. 25, [M/s.Kataria Builders versus State of H.P.] where the Arbitrator allowed interest at the rate of 12% per annum without mentioning future interest. However, the petitioner was held entitled future interest at the rate of 18% per annum as per his claim in terms of Section 31(7)(b) of the Act from the date of award till date of payment.

47. In State of Haryana & others Versus Geol Projects Pvt. Ltd. 2007(1) Arb.LR 444 (P&H), the decree holder held entitled interest at the rate of 18% per annum on the awarded amount of award till realization in reference to his claim, as per Section 31(7)(b) of the Act, in absence of any directions in the award to the contrary.

48. The counsel for the contractor has, however, submitted in view of above decision that no clarification regarding interest is required and the future interest is payable @18% p.a. from date of award till payment.

49. We have considered rival contentions of learned counsel for both the parties and in our respectful consideration, in view of judgment of Hon’ble Supreme Court in Superintending Engineer & Ors. Versus B.Subba Reddy, {1999(2) Arb.L.R. 304 = (1999) 4 SCC 423}, the Cross Objections No.252 of 2007, filed by the ‘Board’ against the judgment of learned Single Judge, are not maintainable and the same are hereby dismissed. In our respectful consideration the contentions raised by counsel for the contractor that the rate of interest cannot be reduced have legal force, as the power to reduce such interest cannot be exercised by court of Distt .judge U/S 34 of the Act or by the appellate court U/S 37(1) (b) of the Act as such power cannot be equated with the power of the Supreme Court under Article 136 of the Constitution as per decision in Sandesh Kumar’s case (supra). Moreso, 12% p.a. rate of interest is not on higher side particularly

when award of Mr.O.C. Kaushal Sole Arbitrator awarding interest @ 18% per annum in the earlier Arbitration case under the same Agreement between the same parties was accepted by the ‘Board’ and the awarded amount was paid with 18% per annum to the contractor. Regarding the payment of interest from date of award till payment as the award is silent in this respect, as such, in view of section 31(7) (b) of the ‘Act’ and in view of various decisions referred above no further clarification is required as the contractor shall be entitled to 18% p.a. interest from the date of award till payment.

50. In Union of India & Anr. Versus M/s.P.C.Sharma & Co., [AIR 2007 Delhi 51], it was observed that mandate of law is that award shall automatically carry interest at the rate of 18% per annum from date of award unless otherwise directs- Even if interest was not so spelled out in award, it has to be read into award. In view of the aforesaid observations, Arbitration Appeal No.1 of 2007 is allowed and disposed of.

Appeal No.3 of 2007 SAB Versus HPSEB arising out ofCase No.1 of 2002 relating to award dated 6.11.2001passed by Mr.S.R.Khitta, the sole Arbitrator.

51. Mr.S.R.Khitta, the sole Arbitrator passed an award dated 6.11.2001 against which objections were filed by the ‘Board’ and learned Single Judge has set aside the award holding that notification dated 7.6.1995 cannot be made the basis for allowing escalation since this was not a statutory notification fixing minimum wages under the Minimum Wages Act as such the finding of the Arbitrator that the wages of Rs. 45.75 per day had come into force by virtue of the order dated 7.6.1995 w.e.f.1.1.1994 is incorrect and not in accordance with the judgment passed in Hydel Construction case (supra).

52. We have already dealt with the awards allowing price variation under clause 10C of the Agreement and upheld the same by setting aside the judgment of the Single Judge to that extent. Undisputedly, the portion of work which was to be executed by the contractor under this Agreement was withdrawn by the ‘Board’ vide its letter dated 12.7.1995 along with tools and plant and material appended thereto was also taken over and the withdrawn work was to be got executed at the risk and cost of the contractor . The ‘Board’ got this work executed at total cost of Rs.38,86,496/- at the risk and cost of the contractor, whereas, according to the contractor the ‘Board’ would have paid Rs.57,03,952.71 including price variation amount to the tune of Rs.23,73,955.21 to the contractor as per agreement rates including price variation payable under clause 10-C of the Agreement.

53. The sole Arbitrator had the jurisdiction to decide about the legality, validity and the justification of withdrawal of work, however, the Arbitrator after considering entire material produced on record by both the parties came to the conclusion that the ‘Board’ did not comply with agreement stipulations for making available the vital inputs, materials, such as, cement construction power, diesel, road blocks due to rains and maintenance of the project roads ,releasing payments of work done and escalation and did not take into account the effect of time loss on arranging security clearance, to restore work due to flash floods in July 1994, which was as per actual circumstances on the site of work, as such, held that decision for taking over the balance work was unwarranted, uncalled for and thereby a breach of contract held illegal. The Arbitrator further held that the implementation of order dt.12.7.1995 at that stage when the work was nearly on completion disturbed the contractor who had raised the infrastructure, arranged experts, equipments and establishments to finish the taken over works also, was certainly put to losses and damages.

54. The learned Single Judge has set aside the finding of facts recorded by the Arbitrator which is uncalled for in view of settled principles of law which clearly provide that the arbitration court is not to sit in appeal over the decision of the Arbitrator by re-examining and re-appreciating the material considered by the Arbitrator .The Arbitrator has given reasons and the reasonableness as well as sufficiency of the reasons cannot be gone into by the arbitration court, thus learned Single Judge should not have examined and made reappraisal of evidence and material for arriving finding on the issue on merits which has been correctly decided by the sole Arbitrator competent and appointed to decide the controversy between the parties. Even learned Single Judge has also observed that in view of the law, arbitration court cannot interfere in the findings of the Arbitrator even if it does not agree with them. The decision of the Arbitrator being well with in its jurisdiction could not be set aside by learned single judge as has been done in the present case, thus the Arbitration Appeal No.3 of 2007 is allowed and disposed of and the impugned judgment is set aside by dismissing the objections filed by the ‘Board’ and accordingly the award dated 6.11.2001 passed by the Arbitrator is restored.

Arbitration Appeal No.4 of 2007 SAB Versus HPSEBpassed in Case No.2 of 2002 relating to Award dated 12.11..2001 passed by Mr.S.R.Khitta sole Arbitrator, Arbitration Appeal No.18 of 2007 SAB Versus HPSEB passed in Civil Review No 3 of 2007

Arbitration Appeal No.3 of 2008 HPSEB Versus SAB

filed after order dt.21.9.2007 passed in Civil Review No 3 of 2007:

55. An award dated 12.11.2001 was passed by Mr.S.R.Khitta, the sole arbitrator, thereby, awarding a sum of Rs.13,39,594.00 against claim No.1 which includes escalation of Rs.8,82,213.75 and Rs.4,57,380/- on account of grouting after deducting an amount Rs.7,80,120/- on account of the cost of cement used in grouting.

56. Learned Single Judge has dismissed the objections filed by the ‘Board’ regarding the claim allowed by Arbitrator in respect of grouting work done by the contractor as such Arbitration appeal No.3 of 2008 has been filed by the ‘Board’. However since claim awarded by the sole Arbitrator relating to price variation has been set aside by learned Single Judge, as such, the contractor has filed two Arbitration appeal No.4 of 2007 and Arbitration Appeal No.18 of 2007 passed after Civil Review No 3 of 2007 allowed by learned Single Judge vide order dated 21.9.2007.

57. Learned Counsel for the ‘Board’ has contended that the objections against award relating to grouting have been wrongly dismissed by learned Single Judge and same were required to be allowed in view of objections raised in the objection petition.

58. However, counsel for the contractor has submitted that claim relating to pressure grouting has been upheld in Arbitration case No.1 of 2002 by learned Single Judge and no appeal against the judgment of learned Single Judge has been filed by the ‘Board’ in that case thus the ‘Board’ has admitted the claim relating to pressure grouting as awarded by the sole Arbitrator and further upheld by the learned Single Judge, as such, now claim allowed by Arbitrator relating to pressure grouting and further upheld by learned Single Judge, cannot be challenged through an appeal filed by the ‘Board’. Learned counsel for the contractor has also contended that otherwise also the award relating to grouting is final and not open to challenge on merits of the controversy between the parties and while upholding the claim regarding grouting, sufficient reasons have been given by the sole Arbitrator and accordingly learned Single Judge correctly dismissed the objections against the same.

59. We have considered rival contentions of counsel for both the parties and in our respectful consideration, we do not find any force in the contention raised by counsel for ‘Board’ for setting aside the claim allowed by the Arbitrator and upheld by learned Single Judge relating to pressure grouting for the reasons given by the learned Single Judge in Arbitration case No.1 of 2002. Such decision since not admittedly was further challenged by the ‘Board’, as such, the same has attained finality and is now binding on both the parties to the Agreement. Otherwise also the decision of the Arbitrator allowing the claim relating to pressure grouting was well within his jurisdiction and same has been allowed by giving sufficient reasons which does not call for any interference. Undisputedly, the sole Arbitrator is a technical expert being Chief Engineer of the ‘Board’ itself who is fully aware of nature of the work got executed by the ‘Board’ as such has rightly come to the conclusion that amount awarded is payable for grouting done by the contractor, as such, the appeal filed by the ‘Board’ relating to grouting work is without merits hence dismissed. We have already dealt with the awards allowing price variation /escalation under Clause-10C of the Agreement and have upheld the same by setting aside the judgment of learned Single Judge to that extent, hence, price variation/escalation amount of Rs.8,82,213.75 as awarded by sole Arbitrator is restored.

60. Regarding appeals filed by the contractor against the judgment of learned Single Judge setting aside price variation relating to claim No.2 for Rs.50,11,087/- we have already dealt with the awards allowing price variation under clause 10C of the Agreement and upheld the same by setting aside the judgment of learned Single Judge to that extent, as such award passed by sole Arbitrator in present case also allowing price variation/escalation amounting to Rs.50,11,087/- is restored and objections against the same are dismissed.

61. The learned Single Judge has reduced interest from 18% p.a. to 12% per annum. The contractor has challenged reduction of rate of interest, whereas, the ‘Board’ in its appeal has requested for further reduction of interest from 12% to 9% per annum.

62. The counsel for the contractor has submitted that 18% p.a. interest awarded by the Arbitrator cannot be said to be on higher side in view of the ‘Board’ having been accepting the same under various awards as well as in view of the fact that the interest @18% p.a. on simple basis comes out to 10.4% p.a. on quarterly rest basis over a period of time in question whereas interest reduced @ 12% p.a. by learned Single Judge over a period of time in question comes to 7.90% on quarterly rest basis as per banking norms. He has further submitted that 12% p.a.

interest market rate referred to by learned single judge is the market rate of the scheduled banks these days which is charged on monthly rests basis and 12% p.a. interest on monthly rest basis comes out to be more than 21% p.a. on simple basis and the interest is awarded as a compensation for blocked funds thus 18% p.a. interest is fully justified and it should not have been reduced by learned Single Judge.

Conclusion

63. We have already held that the rate of interest cannot be reduced, because the power to reduce such interest cannot be exercised by court of District Judge under Section 34 of the Act or by the appellate court under Section 37(1) (b) of the Act as such power cannot be equated with the power of the Supreme Court under Article 136 of the Constitution of India as per law laid down in Sandesh Kumar’s case (supra), as such, learned Single Judge was not having jurisdiction to reduce the rate of interest from 18% p.a. to 12% p.a. Even otherwise 18% p.a. rate of interest is not on higher side as explained above by the counsel for contractor particularly when award dated 16.8.1993 passed by Mr O.C. Kaushal Sole Arbitrator awarding interest @ 18% p.a. under the same Agreement between the same parties was accepted by the ‘Board’ without filing any objection against the same, as such, it was made Rule of Court vide judgment and decree dated 12.11.1993 and the awarded amount was paid along with interest @ 18% p.a. to the contractor. We have also already held that interest from date of award till payment is payable @18% p.a. since the award is silent in this respect as such in view of section 31(7) (b) of the Act and in view of law laid in various judgments referred to above no further clarification is required and the contractor will be entitled to 18% p.a. interest from the date of award till payment. In view of the aforesaid observations, the Arbitration Appeal No.4 of 2007 and Arbitration Appeal No.18 of 2007 are allowed and Arbitration Appeal No.3 of 2008 is dismissed.

Appeal No.2 of 2007 SAB Versus HPSEB and ArbitrationAppeal No.5 of 2007 HPSEB Versus SAB in Case No.67 of 2003 relating to Award dated 16.6.2003 passed by Mr.S.C.Mahajan, the sole Arbitrator:

64. An award dated 16.6.2003 has been passed by Mr.S.C.Mahajan, the sole Arbitrator which was challenged by the ‘Board’ by filing objection under Section 34 of the Act, learned Single Judge has partly allowed objections and partly dismissed the same vide impugned judgment dated 9.1.2007 as such, both parties being aggrieved have filed these two appeals.

65. Counsel for both the parties have been heard and item-wise decision in respect of various claims are as under:

(i) Fabrication and erection of steel products, item No.2 (iii)The counsel for the ‘Board’ has submitted that the objections against this item of award should have been accepted but learned single judge has wrongly dismissed the same. It has been argued on behalf of the ‘Board’ that this award is not based on any reasons or evidence and is contrary to Clause 12 (ii) of the Agreement .He has also submitted that the award does not show that he has done the analysis of rates in terms of the aforesaid clause and the rates were to be determined by Engineer-in-Charge whose decision shall be binding on the contractor.

66. On the other hand, learned counsel for the contractor has submitted that the Arbitrator has himself analyzed the rates and he has rightly discarded the rates approved by the Engineer-in-Charge in view of the fact that no provision had been made for carriage of material from government store to workshop site and while fixing the rates the Engineer-in-Charge did not take into account the fact that not only had the work increased but by increase in the depth of the surge shaft more labour would be required. Learned counsel for contractor further submitted that learned Single Judge has duly considered contentions of both the parties and has rightly dismissed the objections raised by ‘Board’.

67. We have duly considered the contentions raised by counsel for the parties and have come to the conclusion that learned Single Judge has rightly dismissed the objections as the Arbitrator has duly considered the entire evidence and has also analyzed the rates given by ‘Board’

in which no provision has been made for the cost of carriage of material from Government store to workshop. The Arbitrator has given reasoned award after considering the entire material produced on record by both parties and his decision on merits is final and is not open to challenge in view of limited scope of section 34 of the Act. a. Items No.16, 29 and 34.

68. The counsel for the ‘Board’ has submitted that the objections against these items of award should have been accepted in view of detailed objections raised by the ‘Board’ but learned Single Judge has erroneously dismissed the same.

69. The counsel for the ‘Board’ submitted that Arbitrator has erred in basing his award on the previous award of Sh.O.C.Kaushal and the Arbitrator is a creation of the agreement and is bound by the agreement entered into between the parties. As such, the Arbitrator was bound to analyze the rates in terms of Clause 12(ii) and could not have relied upon the award of Sh.Kaushal. The earlier award was made under the Act of 1940 and there may have been many reasons for the ‘Board’ not to have contested the Award.

70. On the other hand, learned counsel for the contractor has submitted that the award of Mr.O.C.Kaushal has been made rule of the court and, therefore, the Arbitrator was justified in fixing the rates of various concrete items on the basis of the earlier award as such learned Single Judge has rightly dismissed the objections against these items and impugned judgment does not call for interference.

71. We have appreciated contentions of learned counsel for both the parties and are of the considered view that the impugned judgment does not require any interference. The Award cannot be said to be unreasonable more particularity when it is not disputed that in the earlier award Sh.O.C.Kaushal had fixed the rate for M-10 concrete and on the basis of these calculations and the Arbitrator derived the rates for M-75, M-30 and M-25 concrete items. Since earlier award stands accepted, as such, it has to be presumed that the ‘Board’ accepted as correct the methodology applied by Sh.Kaushal. The Arbitrator is a technical expert who has given reasoned award after considering the entire material produced on record by both parties and his decision on merits is final and is not open to challenge in view of limited scope of section 34 of the Act.

(iii) Item No.33:

72. Neither party has challenged judgment and award relating to this item, therefore, the award is being rightly upheld .

(iv) Item Nos.16, 18, 21 and 26:

73. The award relating to these items has been set aside by the learned Single Judge only on the ground that the Arbitrator has not given reasons in support of the award.

74. Learned counsel for the contractor has submitted that the Arbitrator has not violated any provision of the Agreement or that of the Act while passing the award in respect of these claims. According to the contract, the Arbitrator is a Technical Expert of the rank of Chief Engineer of the ‘Board’ appointed by the ‘Board’ itself to decide various technical aspects of disputes and he after considering entire material on record produced by both parties and after affording full opportunity of hearing has passed the award which is final both in law and facts and is not open to challenge in view of limited scope of 34 of the Act. As has been submitted by learned counsel for the contract the Arbitrator is not legal expert but being an engineer has passed the award by giving short reasons though not detailed reasons like judgment of civil court, as such, the sufficiency of reasons as well as the reasonableness of the reasons while deciding the objection is not to be gone into, as such, award should not have been set aside merely on the ground that Arbitrator has not given detailed reasons. The counsel further submitted that a mere reading of the award shows that the Arbitrator has duly considered the discussions, the arguments of both the parties and also the analysis of rates submitted by ‘Board’ and thereafter, rightly came to the conclusion that the rates allowed by the ‘Board’ were not correctly determined, as such, passed the award for payment of Rs.44456-20 against claimed amount of Rs.60037.58. As such Single Judge should not have set aside the award.

75. On the other hand, counsel for the ‘Board’ has supported the judgment of learned single judge by submitting that the Arbitrator has not given reasons in the award as such award has been rightly set aside.

76. We have considered submissions of counsel for the parties and in our respectful consideration, learned Single Judge should not have set aside the award merely on the ground that reasons are not given in the award. The Arbitrator undoubtedly has given the reasons in support of the award and before reaching at a particular conclusion has considered detailed contentions of both the parties. Hon’ble Supreme Court in judgment reported in Indian Carbon’s case (supra), it has been held that where, the Arbitrator has made his mind known on the basis of which he has acted, that is sufficient to meet the requirements of giving reasons in the award. The award could not therefore be set aside on ground that it was not a reasoned award. It is one thing to say that reasons should be stated and another thing to state that a detailed judgment be given in support of an award. As has been observed it is not obligatory to give a detailed judgment and the Arbitration procedure should be quick and that quickness of the decision can always be ensured by insisting that short intelligible indications of the grounds should be available to find out the mind of the Arbitrator for his action.

77. In view of decision in Virender Singh versus Delhi Development Authority & Anr., AIR 1988 Delhi 189, when an Arbitrator gives reasoned award he is not required to write a detailed judgment setting out each logical steps of his reasoning but is sufficient if he indicates the trend of his thought process so that errors can be eliminated and arbitrariness avoided., but the court’s function remains restricted. It does not permit reviewability of the reasons nor a combing through as an appellate forum would be advised to do as this would amount to impeachment of the award, which is not permissible, the purpose of arbitration being speedy, cheapness and certainty a necessary requirement for commercial conduct of the business.Delhi Development Authority & Anr., AIR 1988 Delhi 189, when an Arbitrator gives reasoned award he is not required to write a detailed judgment setting out each logical steps of his reasoning but is sufficient if he indicates the trend of his thought process so that errors can be eliminated and arbitrariness avoided., but the court’s function remains restricted. It does not permit reviewability of the reasons nor a combing through as an appellate forum would be advised to do as this would amount to impeachment of the award, which is not permissible, the purpose of arbitration being speedy, cheapness and certainty a necessary requirement for commercial conduct of the business.

78. In view of decision in M/s.Hydel Construction case (supra), where reasons are required to be given by the arbitrator, the actual arithmetical computations of amount awarded by Arbitrator under different heads need not be given by arbitrators. The award shows that the Arbitrator has duly considered the discussions, the arguments of both the parties and also the analysis of rates submitted by ‘Board’ and thereafter rightly came to the conclusion that the rates allowed by the ‘Board’ were not correctly determined, as such, passed the award for payment of Rs.44456-20 against claimed amount of Rs.60037.58 and this amounts to comply with requirement of giving reasons as the Arbitrator is not required to give a detailed judgment like civil court as such the impugned judgment is set aside and the award allowing these claims is upheld. (v) Income tax:

79. Learned Single Judge has set aide the award relating to this item observing that the finding of the Arbitrator is totally against section 194 Income-tax Act and is violative of the Public Policy of India. The ‘Board’ had ordered recovery of Rs.17,105/- as TDS out of the final bill of the Contractor.

80. The counsel for the contractor has submitted that TDS could have been recovered only on the finalization of the Final Bill which is still under dispute and this having not been accepted by the contractor. As a matter of fact, no tax amount has been actually deposited by the ‘Board’ with the Income Tax Department till date and due to non-deposit of such tax, the ‘Board’ has not supplied any TDS certificate to the contractor According to the contractor, TDS can only be deducted at the time of payment based on the net result of the award and not at the time of the part payment. However learned counsel for the ‘Board’ has supported the judgment of learned Single Judge by arguing that it is the statutory liability cast upon the ‘Board’ to deduct income-tax at source under the provisions of Section 194 of the Income-tax Act.

81. We have considered submissions of counsel for both the patties and in my respectful consideration, the finding arrived at by the Arbitrator is correct and does not require to be interfered with. The Arbitrator has rightly held that net result of the overall claims of the contractor and counter claims of the respondent of this arbitration as on award needs to be considered for TDS at the time of payment of the award, therefore, TDS recovery is unwarranted and rightly disallowed by sole arbitrator. (v) Sales Tax:

82. Learned Single Judge has set aide the award relating to this item observing that legal duty is cast upon the ‘Board’ to deduct sales tax and in case the contractor had paid the sales tax he could easily seek refund from the assessing authority as such the award in respect of this item is also totally illegal, against the statutory provisions and therefore against the public policy of India.

83. The counsel for the contractor has submitted that as per Clause 35 of Contract Agreement Sales Tax or any other Tax on material in respect of this contract shall be payable by Contractor & ‘Board’ shall not entertain any claim whatsoever in this respect. As has been submitted that Contract Agreement dated 06/02/1989 & notification to deduct tax at source is of dated 31/07/1993 and the original date of completion of project was 7.3.1992 but actual date of completion is 25.3.1996. He further submits that No sale Tax was deducted during 1993 to 1996 by the ‘Board’ due to agreement Clause No. 35 but thereafter while raising recovery in the final bill vide Letter dated 26/12/1997 an amount of sale tax amounting to Rs.4,80,086/- has been shown which is arbitrary and rightly not allowed by Arbitrator by giving detailed reasons. He further submits that even Sale Tax certificate has not been supplied by the ‘Board’ because as a matter of fact Sales Tax was not deposited with concerned Department.

84. It has been submitted that undisputedly the Contractor got itself registered under HP General Sales Tax Act at Dharamshala & had been allotted Sales Tax No. KAN/IV/5822 dated 23.3.1989 and regular returns were filed during the Construction period and Assessment orders were also passed accordingly. The contractor had already been assessed by the assessing authority under the Act on completion of the Project & thereafter the Sales Tax Number was surrendered. As has been submitted that there is no complaint from any Government Department against contractor regarding non-deposit of sales tax and the letter dated 31/07/1993 on basis of which sales tax recovery is being raised does not apply to contractor in view of specific provision of the Agreement under which the contractor was to pay and the same has actually been paid the sale tax to the concerned department up to 19.9.1996.

85. Learned counsel for ‘Board’ during his arguments has stated that Sales Tax amounting to Rs.4,80,086/- has been deposited by the ‘Board’, whereas the liability to pay the same being that of the contractor.

86. We have heard learned counsel for both the parties and are of the considered view that sale tax recovery was rightly rejected by the Arbitrator and the award qua this item has erroneously been set aside by learned Single Judge. The learned counsel for the contractor has rightly submitted that as per Clause 35 of Contract Agreement, sales tax or any other tax on material in respect of this contract was payable by Contractor and ‘Board’ was not to entertain any claim, whatsoever, in this respect. Contract Agreement dated 06.02.1989 and notification to deduct tax at source is of dated 31.07.1993 and the original date of completion of project was 7.3.1992 but actual date of completion is 25.3.1996 but no sale Tax was deducted during 1993 to 1996 by the ‘Board’ due to agreement Clause No. 35 thus while raising recovery in the final bill vide Letter dated 26.12.1997 an amount of sale tax amounting to Rs.4,80,086/- has been shown which is arbitrary and rightly not allowed by Arbitrator by giving detailed reasons. Admittedly even sale tax certificate has not been supplied by the ‘Board’ showing actual deposit of sales tax with the concerned Department.

87. Since the Contractor got itself registered under H.P.General Sales Tax Act at Dharamshala and had been allotted Sales Tax No KAN/IV/5822 dated 23.3.1989 and regular returns were filed during the Construction period and the assessment orders were also passed and more particularly there is no complaint from any Government Department against the contractor regarding non-deposit of sales tax and the letter dated 31.07.1993 on the basis of which sales tax recovery is being raised does not apply to contractor in view of specific provision of Agreement under which the contractor was to pay and it has actually paid the sale tax to the concerned department up to 19.9.1996.

88. The Arbitrator has rightly come to the conclusion that since the contractor has already met with the liabilities at his own, as such, no amount could have been deducted from the final bill on account of the sales tax. We are of considered view that the finding arrived at by the Arbitrator is legally correct and does not require any interference. The Arbitrator has rightly held that the contractor has been meeting with all the liabilities at its own against sale tax for the work done on Gaj Hydel Project under this Contract-Agreement ,thus recovery on account of sale tax is not justified.

(vii) Recoveries on account of materials:

A)Cement: Neither party has challenged judgment and award relating to this item therefore the award has been rightly upheld. and award relating to this item therefore the award has been rightly upheld.

B)Structural Steel: Neither party has challenged judgment of Single Judge against award relating to this item. to this item.

C)Gelatine and Electrical detonator: Neither party has challenged judgment of single judge against award relating to this item.

D)Recovery of energy charges:

89. Learned Single Judge has set aside the award relating to this item holding that the Arbitrator has given no reasons for reaching his conclusion as to why he has accepted the calculations given by the contractor and rejected those given by the ‘Board’.

90. Learned counsel for the contractor has submitted that award qua this item has been wrongly set aside by the learned Single Judge. Learned counsel for the contractor has submitted that the Arbitrator has not violated any provision of the Agreement or that of the Act while passing the award in respect of this claim. As has been submitted that Arbitrator is a Technical Expert & of the rank of Chief Engineer of the ‘Board’ appointed by the ‘Board’ itself to decide various technical aspects of disputes and he after considering entire material on record produced by both parties and after affording full opportunity of hearing has passed his award which is final both in law and facts and is not open to challenge in view of limited scope of 34 of the Act. He further submits that the Arbitrator is not legal expert but being an engineer has passed the award by giving short reasons though not detailed reasons like judgment of civil court as such the sufficiency of reasons as well as the reasonableness of the reasons while deciding the objection is not to be gone into as such award should not have been set aside merely on the ground that Arbitrator has not given detailed reasons. Learned counsel for the contractor has further submitted that a mere reading of the award shows that the Arbitrator has duly considered the discussions, the arguments of both the parties and also correctly interpreted clause 8.17 of the agreement and thereafter has rightly come to the conclusion that the recovery of energy charges is not justified.

91. Learned counsel for the contractor has further submitted that recovery is to be made as per relevant clause of the Contract Agreement which comes out to be Rs.1, 61,110/- as the electricity was to be provided at fix rates and contractor has given the detailed calculations. The ‘Board’ has not given any calculations but attached the bill issued by the Assistant Engineer, Electrical Sub Division HPSEB, Shahpur.

92. As per the terms of the contract agreement electric power was to be supplied to the contractor by the ‘Board’. The agreement further provided that 90% of the power shall be deemed to have been consumed for construction purposes which shall be charged as per ‘F’ schedule bulk’ supply and the remaining 10% will be treated to be general lighting for domestic purposes and charged as per ‘A’ schedule domestic supply.

93. We have considered the arguments in respect of this item and we are of considered view that the Arbitrator had given sufficient reasons in respect of this item and was not required to give detailed reasons like a judgment of civil Court, more so as has been observed in M/s.Hydel Construction case (supra) that where reasons are required to be given by the arbitrator, the actual arithmetical computations of amount awarded by Arbitrator under different heads need not be given by arbitrators and it is enough if they give reasons for allowing or disallowing objections raised to respective claims by parties.

94. The Arbitrator had the jurisdiction to decide this claim and has correctly interpreted clause 8.17 of the agreement and thereafter rightly came to the conclusion that the recovery of energy charges being made by the ‘Board’ is not justified and the amount of Rs.1,61,110/- as worked out by the contractor under Clause 8.17 of Chapter VIII of the contract agreement is legally correct and has been thus rightly allowed to be recovered from the final bill. The interpretation of the clause of the Agreement is final and the arbitration court is not to sit in appeal over the conclusions arrived at by the Arbitrator by taking a particularly view of the matter. Accordingly, finding of the learned Single Judge setting aside award relating to this claim is set aside and objections against the same are dismissed.

E) Recovery of excess payment:

95. The learned Single Judge has dismissed objections against this item of claim and the ‘Board’ has not further challenged this finding, as such, the judgment of learned Single Judge upholding award does not require any interference.

F) Recovery on account of excess payment on machinery and labour account:

96. Learned Single Judge has set aside the award relating to this item observing that no reasons have been given by the Arbitrator and he has not made reference to any documents produced by the parties and merely because the recoveries were not shown during the intermediate stage is not a sufficient ground to hold that the same was false.

97. Learned counsel for the contractor has submitted that discussing this claim the Arbitrator has made reference to written submissions of both the parties and after appreciating the same has correctly reached at the conclusion that the recoveries were not shown /effect at intermediate stages and no correspondence in this regard with the contractor has been put forth as such the recovery has been made in the final bill unilaterally and it was the ‘Board’ which was required to justify its claim/recovery and since it failed to produce any document /correspondence in support thereof, as such, the recovery has been rightly disallowed by the arbitrator.

98. We find force in the submissions advanced for and on behalf of the contractor. In our considered view the Arbitrator has given required reasons for disallowing the recovery and learned Single Judge was not justified to examine the claim on merits to arrive at the contrary conclusions other than what has been arrived at by the sole Arbitrator having jurisdiction to decide the matter in controversy, therefore, the finding of learned Single Judge setting aside this part of award is set aside and the award is restored.

G) Escalation:

99. In respect of the appeal filed by the contractor against the judgment of learned Single Judge setting aside price variation /escalation amount of Rs.19,26,722-95, for the reasons already indicated upholding price variation under clause 10C of the Agreement by setting aside the judgment of the learned Single Judge to that extent the award passed by sole Arbitrator in present case are being allowed and also the price variation / escalation of amount Rs.19,26,722-95 is restored and objections against the same are dismissed.

H) Award on account of extra cement used and escalationthereupon: thereupon:

100. This item of award has been partly set aside relating to escalation amount and the contractor has challenged setting aside of escalation amount, however, the award qua extra cement used has been upheld and it has not been challenged further by the ‘Board’. Since claim qua escalation has been already dealt with as just mentioned above, as such the judgment disallowing escalation is set aside to that extent.

3. Release of bank guarantee: Neither party has challenged impugned judgment passed by the learned Single Judge. learned Single Judge.

J) Claim on account of re-handling of material beyond power house to intake works, surge shaft and penstock heading:

101. The claim awarded by the sole Arbitrator has been set aside by learned Single Judge by observing that as per Clause 2.3.2 of Chapter-II of the brief description of the Project, there was kacha road and also foot track and in the contract it was only mentioned that the different project sites are proposed to be suitably connected with power house road to facilitate construction and there was no stipulation that the said road was to be a metalled road. It has been further observed that the Arbitrator has not discussed any evidence that the road was not properly maintained by the ‘Board’ and he has not even given any reasons as to how he has reached the conclusion that the contractor is entitled to 80% of the amount claimed.

102. The counsel for the contractor has submitted that sole Arbitrator had the jurisdiction to decide the claim and his decision on merits of the controversy given after affording full opportunity of hearing to both the parties is final and not open to challenge on merits and the Arbitrator being a technical expert has given reasons which are sufficient, as he was not required to give detailed judgment like civil court. As per Clause 2.3.2 the roads were to be constructed by the ‘Board’ and were to be maintained during the construction period of the Project by ‘Board’. As per Clause 2.3.2 relating to Communication & Transport, the constructed / proposed communication facilities in the project area have been indicated showing description of roads i.e. width, length and stage i.e. under construction and thereafter it has been specifically written in this very clause 2.3.2.that the above proposed roads will be constructed by HPSEB and shall be maintained during the construction period of the project by ‘HPSEB’, thus, the liability to construct and maintain the roads during the construction period is clearly that of the ‘Board’. According to the contractor, during 7[th] hearing dated 18/06/2002 the Arbitrator asked for the production of Layout drawing showing layout of various features of the project and Road communication details to various work sites, which were accordingly produced before Arbitrator by the respondent on 06.07.2002.

103. It has further been submitted that the Arbitrator visited the site along with both the representative of contractor and that of the ‘Board’ on 19.06.2002 to have right perception, of the Project and for calculation of Claim average lead of 4 + 4 km has been

taken which was confirmed by the ‘Board’ in Layout Drawings submitted on 06/07/2002. The year-wise quantities taken by the Contractor is as per bills duly certified & paid by the respondent produced on record and the out turn rate of Truck No.HPC – 831 for non road works was taken as per information supplied by the Executive Engineer, Gaj Construction Division, HPSEB, Gharoh, thus showing that the calculations are as per standard engineering norms. The counsel further submitted that the respondent has never challenged the re-handling of the material, the quantities, rates, amount & calculations.

104. On the other hand, the learned counsel for the ‘Board’ has, however, submitted that the learned Single Judge has rightly set aide the award relating to this claim for the reasons given in the judgment.

105. We find force in the contentions advanced for the contractor and in our respectful consideration the learned Single Judge was not justified in setting aside the award given by a technical person who after considering Clause 2.3.2 relating to Communication & Transport the constructed proposed communication facilities in the project area showing description of roads i.e. width ,length and stage i.e. under construction and Layout drawing showing layout of various features of the project and Road communication details to various work sites and after site visit with representatives of both the parties has come to the conclusion that though the contractor was made clear with respect to the location as well as approach to the project, but it does not absolve the ‘Board’ from its responsibility of maintaining the approach roads in good condition for running of the loaded vehicles in a manner with full load of material. It has been specifically agreed between the parties as per clause 2.3.2.of the Agreement that the proposed roads will be constructed by HPSEB and will be maintained during the construction period of the project by HPSEB, thus the liability to construct and maintain the roads during the construction period is clearly that of the ‘Board’ as such the Arbitrator is fully justified in allowing the claim for re-handling the material beyond power house. The learned Single Judge has wrongly held that the award is not based on evidence rather it is clear from the award and other material produced on record and duly considered by the Arbitrator that the award is reasoned one based on material on record, site visit and result of application of mind to contract provisions, as such, his decision is not open to challenge on merits of the controversy between the parties. The Arbitrator has rightly held that the figures of the claims have been substantiated from the statements, which have been produced by the contractor and the ‘Board’ neither has put forth any comment on the improper maintenance of approach road nor has it objected to the figures of the claim. In view of limited scope of interference on merits with award of an Arbitrator particularly who is a technical expert appointed by the ‘Board’ itself to decide the controversy, is final and binding, thus, should not have been set aside, as such the judgment to that extent is set aside and objections against the award are dismissed.

K) Payment due to loss caused to the contractor for long over-run period:

106. Learned Single Judge has set aside the claim holding that the reasoning given by the Arbitrator is totally perverse as he has not considered the evidence on record and has awarded damages without any proof and justification. The counsel for the contractor has endeavored to maintain the award whereas learned counsel for the Board has argued to uphold the verdict of learned Single Judge.

107. After hearing counsel for the parties and examining the controversy between the parties, we are of the considered view that learned Single Judge had exceeded its jurisdiction by functioning as an appellate authority over the conclusions on merits arrived at by Arbitrator .The Arbitrator was competent to decide as to which party to agreement and to what extent and in what manner, was responsible for committing breaches of contract resulting damages, if any, and to what extent. Learned Single Judge has examined entire matter on merits as if it was hearing an appeal against decision of Arbitrator and thereafter has arrived at different conclusion than that of the Arbitrator which is not permissible in view of limited scope of interference with an award of any Arbitrator. Learned Single Judge has observed that the Arbitrator has also not given any reason whatsoever to come to the conclusion for awarding Rs.40 lakhs to the contractor and on what basis did the Arbitrator arrived at a magical figure of Rs.40 lakh. A mere reading of the award shows that the Arbitrator while arriving at his conclusion to award Rs.40 lacs as damages has considered the relevant documents and given detailed reasons in the award. The Arbitrator was not required to write judgment exhaustively as a civil Court, more particularly, when the Arbitrator has passed the award by considering all the facts including that the date of start at work was 8.3.89 with stipulated date of completion as 7.3.92 but the work was actually completed on 25.3.1996 with over run period w.e.f. 8.3.92 to 25.3.96 and time extension for the completion of the work granted by the ‘Board’ up to 30.9.95 with escalation and further time extension allowed with escalation up to 31.3.1996. The Arbitrator has held that grant of time extension is subjected on ground of the contractor having been unavoidably hindered in the execution of the work under the terms of contract, as such, over run period w.e.f 8.3.92 to 25.3.1996 for the completion of the contract does not attribute reasons of delay to the contractor. The Arbitrator also held that the action taken by the ‘Board’ vide letter dated12.7.95 to take over the balance works, was unwarranted, uncalled for and amounted to a breach of

contract as the implementation of this order at a stage when the work were nearly on completion disturbed the contractor which had raised the infrastructure arranged experts equipment and establishment to finish the taken over works also, were certainly put to losses and damages. The Arbitrator, in our considered view, accordingly has rightly concluded that T&P, machinery and equipments etc. deployed by the contractor remained under utilized on the project and on account of the over run period, the contractor must have undergone extra financial burden for which the contractor is due for compensation and the claim of contractor is sustainable. The Arbitrator has further considered the statement enclosed with the claim showing entire Tools, Plants and machinery and shuttering etc which remained deployed on the work in question during the over run period and he found the same to be very reasonable and accordingly partly accepted the claim for Rs. 40,00,000/- only and not awarded entire claim of Rs.5893351/- .The Arbitrator is a technical expert and could easily come to the conclusion as to what extent losses rendering T&P, machinery ,equipment etc have been caused to the contractor and required to be reimbursed by the ‘Board’ .As already held the actual arithmetical computations of amount awarded by Arbitrator under different heads need not be given by arbitrators, as such, in view of above observations, we hereby set aside the impugned judgment setting award qua this claim and restore the award.

L) Payment due against the loss caused due to overrun period of contract and because of watch and ward stall during over run period:

108. Learned Single Judge has set aside the claim holding that the reasoning given by the Arbitrator is totally perverse as he has not considered the evidence on record and has awarded compensation without any proof and justification.

109. After hearing counsel for the parties and examining the controversy between the parties, we are of the considered view that learned Single Judge has exceeded its jurisdiction by sitting as an appellate authority over the conclusions on merits arrived at by Arbitrator .The Arbitrator was competent to decide as to which party to agreement and to what extent and in what manner ,was responsible for committing breaches of contract resulting damages if any and to what extent. Learned Single Judge has examined entire matter on merits as if it was hearing an appeal against decision of Arbitrator and thereafter has arrived at different conclusion than that of the Arbitrator which is not permissible in view of limited scope of interference with an award of any Arbitrator. Learned Single Judge has observed that the Arbitrator has also not given any reason whatsoever to come to the conclusion for awarding Rs.30 lakhs to the contractor and on what basis

did the Arbitrator arrived at a magical figure of Rs. 30 lakh. A mere reading of the award shows that the Arbitrator while arriving at his conclusion to award Rs.30 lacs as losses has considered the relevant documents and given detailed reasons in the award. The Arbitrator has passed the award by considering all the facts including that date of start of work was 8.3.89 with stipulated date of completion as 7.3.92 but the work was actually completed on 25.3.1996 with over run period w.e.f. 8.3.92 to 25.3.96. and time extension for the completion of the work granted by the ‘Board’ up to 30.9.95 with escalation and further time extension allowed with escalation up to 31.3.1996 .The Arbitrator has held that grant of time extension is subjected on ground of the contractor having been unavoidably hindered in the execution of the work under the terms of contract, as such, over run period w.e.f 8.3.92 to 25.3.1996 for the completion of the contract does not attribute reasons of delay to the contractor. The Arbitrator also held that the action taken by the ‘Board’ vide letter dt.12.7.95 to take over the balance works, was unwarranted, uncalled for and amounted to a breach of contract as the implementation of this order at a stage when the work were nearly on completion disturbed the contractor which had raised the infrastructure arranged experts equipment and establishment to finish the taken over works also, were certainly put to losses and damages. The Arbitrator, in our considered view, accordingly has rightly concluded that the contractor must have under gone extra financial burden on account of the over run period for which he is due for compensation The Arbitrator has further considered the statement certified by the statutory auditors for the administrative expenses during the over run period on this project enclosed with the claim and accordingly partly accepted the claim for Rs.30, 00,000/- only and not awarded entire claim of Rs.67,00,272/. As already held the actual arithmetical computations of amount awarded by Arbitrator under different heads need not be given by the arbitrators, as such, in view of above observations, we hereby set aside the impugned judgment setting award qua this claim and restore the award.

M) Payment on account of retention of bank guarantee:

110. Learned Single Judge has set aside the claim holding that the reasoning given by the Arbitrator is illegal as he has not considered the evidence on record and has awarded this claim without any evidence. Learned counsel for the contractor has endeavored to accept the award of Arbitrator whereas learned counsel for the ‘Board’ has submitted to uphold the verdict of learned Single Judge.

111. After hearing counsel for the parties and examining the controversy between the parties, we are of the considered view that the learned Single Judge had exceeded its jurisdiction by sitting in appeal over the conclusions on merits arrived at by Arbitrator. The Arbitrator while arriving at his conclusion to award

Rs.1,50,000 as extra expenses on bank guarantee, has considered the relevant documents and given detailed reasons in the award. The Arbitrator has passed the award by considering all the facts resulting into prolongation of the contractual period from 1992 to 1996. The Arbitrator also held that the action taken by the ‘Board’ vide letter dated 12.7.95 to take over the balance works, was unwarranted, and amounted to a breach of contract as the implementation of this order at a stage when the work were nearly on completion disturbed the contractor which had raised the infrastructure arranged experts equipment and establishment to finish the taken over works also. Since the contractor has been constrained to keep the bank guarantees alive for the over run period for which it has borne commission charges which otherwise would have been ceased incase the work had been completed within the stipulated period, as such, the Arbitrator further rightly held that for the commission borne by him for the over run period which is an extra financial burden on it is required to be compensated. In view of above observations, we hereby set aside the impugned judgment and restore the award dated 16.6.2003 and allow the Arbitration Appeal No.2 of 2007.

Appeal No.5 of 2007 HPSEB versus SAB:

112. The ‘Board’ has filed appeal No.5 of 2007 against impugned judgment to the extent objections have been dismissed and the award has been upheld whereby counter claims of the ‘Board’ had been dismissed by the Arbitrator.

113. The counsel for the ‘Board’ has challenged the judgment of learned Single Judge upholding rejection of counter claims of the ‘Board’ by the Arbitrator by raising an arguments that the Arbitrator has erroneously held that the ‘Board’ was responsible for the prolongation of contract. 114.We have appreciated the submissions of learned counsel for the parties and we are of the considered view that the Arbitrator being competent to decide the counter claims and his decision on merits of the counter claims is final both in law and facts and does not require any interference in view of limited scope of section34 of the Act. The award in question is a reasoned one and has been rightly upheld by learned Single Judge as such the appeal filed by ‘Board’ qua counter claims is liable to be dismissed. 115.The counsel for the ‘Board’ has submitted that the Arbitrator could not have awarded interest w.e.f.1.4.1996 as the agreement provided for submission of Final Bill by the claimant after which the payment was to be made within six months and since the Final Bill had been submitted on 26.12.1996, no payment was due to it till after six months of the said date and as such the award of interest from 1.4.96 was in conflict with public policy of India.

116. Learned counsel for the contractor, however, submits that the ‘Board’ did not press any argument before

the learned Single Judge regarding award of interest by the sole Arbitrator which fact stands established from grounds of appeal itself because the ‘Board’ has not pleaded in the grounds of appeal that though it had pressed plea regarding interest before learned Single Judge, thus a plea which is not pressed before the learned Single Judge cannot be taken again in arbitration appeal. Learned counsel for the contractor even further submitted that even this objection was also not taken in the objection petition filed U/S 34 of the Act. The counsel for the contractor further submitted that even this objection was also not taken before the sole Arbitrator as such this objection cannot be raised now at this stage in the arbitration appeal. The counsel for the contractor also submitted that had this objection been taken before the sole arbitrator, the Arbitrator would have decided the same accordingly, thus the objection is after thought and not legally sustainable. 117.We have considered rival contentions of counsel for both the parties and in our respectful consideration the submissions of learned counsel for contractor carries legal force. Once the plea relating to interest was not taken before the arbitrator; same cannot be allowed to be taken in objection petition U/S 34 of the Act. It is pertinent to point out that this plea has not even been taken in petition Under Section 34 of the Act and even further not pressed before learned Single Judge as such cannot be permitted to be taken in arbitration appeal.

118. The ‘Board’ has also challenged award qua interest awarded by Arbitrator by making reference to Clause 9(B) and 9(C) but this point does not have any merit in view of The Board of Trustees for the Port of Calcutta versus Engineers-De-Space-Age, [1995 Arb.L.R. (SC) (Supplement) 733], Ram Nath International Pvt. Ltd. versus State of Uttar Pradesh, [1997(2) Arb.L.R. 589, B.V. Radha Krishna (supra) and judgment reported in M/s.Hydel Construction Ltd. (supra) (paras No.71 to 79), wherein similar prohibition clause in same type of Agreement was considered and it was held that such clause does not prohibit the Arbitrator from awarding interest.

119. Learned counsel for contractor has contended that admittedly the arbitrators were appointed to decide the claim relating to Price Variation, as such, they had the jurisdiction to decide the claim, as such, their decision on merits of the controversy, interpreting contractual provisions and other material on record, was not open to challenge on merits, the decision of arbitrators being within their jurisdiction and being final both in law and facts. Learned Single Judge could not have heard the objections on merits of the controversy and the arbitrators had correctly allowed price variation by passing reasoned awards by appreciating entire material produced on record by both the parties. The decisions of Arbitrators are final and binding, when the same have been reached fairly after giving adequate opportunity to the parties to place their grievances during the arbitral proceedings and it is not necessary for Arbitration Court to examine the merits of the Award with reference to the materials produced before the Arbitrator. The Arbitration Court cannot sit in appeal over the views of the learned Arbitrator by re-examining and re-assessing the materials produced before the learned Arbitrator. The factual determination of the learned Arbitrator cannot again be re-appreciated and it is not open to the Arbitration court to re-appreciate reasonableness of reasons in the Arbitral Award more particularly in view of limited scope of Section 34 of the Act.

120. Otherwise also in spite of Clauses 9 (B) and 9(C) Mr.O.C.Kaushal, the sole Arbitrator, awarded interest at the rate of 18% per annum in the earlier arbitration case under the same Agreement between the same parties relating to same work which was made rule of the Court vide Judgment and decree dated 12.11.1993 and the ‘Board’ had not challenged the said award not only on merits but also qua interest awarded @18% per annum rather the ‘Board’ has implemented the award and also in view of section 31(7)(b) of the Act, the Arbitrator is legally not correct in awarding the interest @18% per annum till payment, thus no interference is required.

121. In view of the above observations, the Arbitration Appeal No.5 of 2007 is accordingly disposed of.

122. No other points have been urged by either of the parties, however, the Arbitration appeals, indicated above, have been allowed with no order as to costs.

( R.B.Misra ) Acting Chief Justice

December 30, 2009.

(soni)

( Rajiv Sharma )

.Judge