In the first place, the High Court did not apply
the law laid down by this Court while deciding the
appeal and hence committed a jurisdictional error;
Secondly, the High Court acted like an appellate
Court and virtually treated as if the appeal arose
directly against the award and then proceeded to
examine all factual findings of the arbitrator by
appreciating the evidence. It was not permissible
in law; Thirdly, the High Court should have
confined its inquiry to find out as to whether any
legal misconduct was committed by the arbitrator
and, if so, how and in what manner. It was,
however, not done; Fourthly, the High Court went
into the factual question by referring to clause 26 of
the agreement for holding that the arbitrator passed
an award contrary to clause 26 and thereby traveled
beyond the terms of agreement which constituted a
legal misconduct on his part. This finding, in our
view, is, on the face of it, untenable in law for the
reason, inter alia, that this objection was neither
raised before the arbitrator and nor before the Trial
Court in the manner in which it was raised for the
first time in the High Court. In any event, in the
absence of any finding recorded by the arbitrator
and the Trial Court, such issue could not have been
gone into for the first time in appeal by the High
Court. That apart, it has otherwise no substance on
facts for the simple reason that it being a question
of fact, the same could not be examined in appeal;
Fifthly, the High Court failed to see that clause 26
only prohibits the appellant from assigning the
agreement to any third person. Clause 26,
therefore, had nothing to do with the claims filed by
the appellants. It was an admitted fact that the
appellant did not assign the agreement to any third
person. If some work was got done by the appellant
by employing some small contractor then it did not
constitute a case of assignment of a whole
agreement in favour of small contractors within the
meaning of clause 26 so as to empower the State to
cancel the agreement on such ground. The finding
of the High Court that the award is rendered bad
because it was passed in contravention of clause 26
of the agreement is, therefore, not legally
sustainable in law; Sixthly, the High Court further
failed to see that there was no error apparent on the
face of the record in the findings recorded by the
arbitrator; Seventhly, the High Court also failed to
see that the Trial Court had elaborately gone into all
the factual issues and rightly did not find any
substance in the objections raised by the
respondent; and lastly, the award being a reasoned
one (running into 36 pages-Annexure P5 pages
127-163 of the SLP paper book), the reasoning of
the arbitrator could not be said to be perverse to the
extent that no man with ordinary prudence could
take such view and nor any finding of the arbitrator
was against any provision of law or in contravention
of any of the clauses of the agreement so as to
constitute a case of legal misconduct on the part of
the arbitrator within the meaning of Section 30 of
the Act for setting aside an award.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No.8829 OF 2016
(ARISING OUT OF SLP (C) No. 24443/2007)
M/s Harish Chandra & Company
V
State of U.P. Thr. Superintending
Engineer
Citation:(2016) 9 SCC 478,(2017) 5 Bom CR132
2) This appeal is filed against the final judgment
and order dated 17.08.2007 of the High Court of
Uttarakhand at Nainital in O.A. No. 1097 of 2001
whereby the High Court allowed the appeal filed by
the respondent herein and set aside the judgment
and order dated 30.05.1996 passed by the Civil
Judge, Dehradun and, in consequence, allowed the
objections of the State of U.P. filed under Section
30/33 of the Arbitration Act, 1940 (hereinafter
referred to as “the Act 1940”) against the award
dated 27.11.1995 which, in turn, also resulted in its
setting aside.
3) Facts of the case need mention, in brief, infra
to appreciate the controversy involved in the appeal.
4) The appellant herein is a civil contractor
whereas the respondent is the State of U.P.
represented through Superintending Engineer
Irrigation Construction Circle, Yamuna Colony,
2Page 3
Dehradun.
5) In the year 1979, the respondent (State) invited
tender being Number 6/1979-80 for doing
"Earthwork in power channels on different routes of
various distances and also construction of drainage
crossing in Chhoti Lui falling in 6 stretches and
divided in two sections called "serial 4” and “serial
6" in a scheme called - KHARA HYDEL SCHEME".
6) The appellant submitted their tender for serial
4 and serial 6. The respondent accepted the
appellant's tender. Accordingly, two agreements
bearing nos. 5/SE/79-80 and 6/SE/79-80 were
executed between the appellant and the respondent
for execution of the work in question on 30.10.1979.
7) So far as agreement No. 5/SE/79-80 is
concerned, it was in relation to work of section
bearing serial 4 whereas agreement No. 6/SE/79-80
was in relation to work of section bearing serial 6.
3Page 4
The work, pursuant to these agreements, was to
start from 01.12.1979 and had to be completed on
or before 31.05.1982.
8) Disputes of various nature arose between the
parties in execution of both the agreements. The
disputes were related to the completion of works,
its nature, manner of its completion, non-payment
and withholding of appellant's bills, deduction of
amount from the bills etc.. Since the disputes could
not be settled amicably, the parties invoked the
arbitration clause (1.47) contained in the
agreements and approached the Civil Court for
appointment of arbitrator and for making references
to him for adjudication of the disputes which had
arisen between them in relation to 2 agreements.
The request was acceded to and accordingly some
disputes were referred to the sole arbitrator.
9) So far as this appeal is concerned, it arises out
4Page 5
of disputes, which relates to agreement No.
6/SE/79-80, i.e., (serial 6). So far as disputes
relating to agreement No. 5/SE/79-80 i.e.(serial 4)
and some disputes relating to agreement No.
6/SE/79-80 are concerned, they were also referred
to the arbitrator for his decision. One reference,
however, attained finality by the orders of this Court
in State of U.P. vs. Harish Chandra & Co., (1999)
1 SCC 63, whereas another reference is pending in
this Court.
10) Consequent upon the reference made to the
arbitrator insofar as the present appeal is
concerned, the appellant (claimant) filed 6 claims
(claim Nos. 12 to 17) before the sole arbitrator (Mr.
Harish Chandra - retired Chief Engineer). The
details of the 6 claims made by the appellant
against the respondent (State) are as under: -
Claim No. Claim Amount
12. Claim due on Rs. 1,05,00,000.00
5Page
6
account of
breaking of large
pieces of hard
rock in the filling
done from 9.00 to
9.80 KM.
along with interest
@ 24% per annum
from 31.5.86 to
the date the
amount is actually
paid.
13. Claims due as
payment on
account of
non-payment
after 30.9.85.
Rs. 11,62,650.00
along with interest
at 24% per annum
from 1.6.86 to the
date the amount is
actually paid.
14. Payment due as
claim on account
of wrongful
deduction of
Security.
Rs. 1,04,426.00
along with interest
at 24% per annum
from 1.5.85 to the
date the amount is
actually paid.
15. Payment due as
claim on account
of extra
excavation.
Rs. 5,51,250.00
along with interest
@ 24% per annum
from 1.6.86 to the
date the amount
actually paid.
16. Payment due as
claim on account
of dressing done
on slopes of filled
earth in
embankments
from Km. 9.00 to
KM. 9.80
Rs. 4,59,200.00
along with interest
@ 24% per annum
from 1.6.86 to the
date of amount
actually paid.
17. Stopping the
respondents from
deducting any
quantity of
excavation done
by petitioner
because of sitting
in the monsoon
year 1986 and
onwards, if any.
Order respondents
to accept our
measurement for
excavation on
31.5.86.
6Page 7
11) The respondent (State) contested the
aforementioned claims by filing their reply. The
State also filed their counter claims against the
appellant claiming damages. The appellant
contested the counter claims by filing their reply.
The parties adduced evidence and examined several
witnesses in support of their respective claims.
12) On 27.11.1995, the arbitrator passed a
reasoned award. Out of 6 claims, the arbitrator
allowed appellant's 3 claims, i.e., claim Nos. 12, 13
and 17 and rejected the claims Nos. 14, 15 and 16.
The arbitrator also rejected the counter claims of the
respondent (State) in toto. The details of the claims
awarded and rejected are as under:
Claim
No.
Amount demanded Rs. Amount Awarded Rs.
12. Rs. 1,05,00,000.00
24% interest from
31.5.86
Rs. 44,98,995.00
13. Rs. 11,62,650 with
24% interest upto
Rs. 10,61,450/- with
interest 18% from
7Page 8
31.5.86 1.6.86 to 27.11.95
14. Rs. 1,04,426 with
interest from 1.5.85
Rejected
15. Rs. 5,51,250/- with
interest @ 24% from
1.6.86
Rejected
16. Rs. 4,59,200/- with
interest @ 24% from
1.6.86
Rejected
17. Order respondent to
accept measurement
for excavation on
31.5.86
No deduction in
quantity already paid
vide 27th Running bill
are justified
13) The respondent, felt aggrieved, filed objections
under Section 30 of the Act 1940 before the Civil
Judge(S.D.), Dehradun against the award. The
appellant contested the objections and prayed for
passing a decree in term of the award. By order
dated 30.05.1996, the civil Judge rejected the
objections and passed a decree in term of the award
along with simple interest payable at the rate of 18%
p.a. on the awarded sum of Rs.55,60,445/- from
the date of decree till payment of amount.
14) The respondent, felt aggrieved, filed appeal
being O.A. No. 1097 of 2001 before the High Court.
8Page 9
By impugned judgment dated 17.08.2007, the High
Court allowed the appeal, set aside the order of the
Trial Court and while allowing the objections filed by
the State set aside the award. The High Court held
that the arbitrator misconducted himself in passing
the award inasmuch as he travelled beyond the
terms of the agreement.
15) Felt aggrieved, the appellant
(contractor/claimant) has filed this appeal by way of
special leave against the judgment of the High
Court.
16) Heard Mr. Vijay Hansaria, learned senior
counsel for the appellant and Mr. S.R. Singh,
learned senior counsel for the respondent.
17) Mr. Vijay Hansaria, learned senior counsel
appearing for the appellant (claimant/contractor)
while assailing the legality and correctness of the
impugned order contended that the High Court was
9Page 10
clearly in error in allowing the appeal of the State
(respondent) which resulted in allowing the
objections filed by the State before the Civil judge
which, in turn, resulted in setting aside of the said
award which was rightly upheld by the Civil Judge.
18) Learned counsel urged that there was no case
made out by the State in their objections of any
legal misconduct committed by the arbitrator and
nor there was any factual or/and legal foundation
laid so as to constitute a case of any legal
misconduct within the meaning of Section 30 of the
Act 1940 for setting aside the award.
19) Learned counsel pointed out that even cursory
reading of the order of the High Court would
indicate that the apparent legal error was committed
by the High Court while allowing the appeal. It was
his submission that the High Court virtually acted
as a first appellate Court as if the appeal before the
10Page 11
High Court arose directly against the award.
Learned counsel pointed out that the High Court
then proceeded to examine the legality and
correctness of all factual findings of the arbitrator
by appreciating the evidence and then finding fault
in the approach of the arbitrator so also finding
error in the findings set aside the award as being
bad in law.
20) Learned counsel urged that such approach of
the High Court was wholly without jurisdiction
being against the law laid down by this Court in
series of decisions wherein this Court has, inter alia,
ruled that the Court while hearing the objections
under Section 30 of the Act 1940 against the award,
cannot sit as an appellate Court over the decision of
the arbitrator.
21) Learned counsel then contended that even
otherwise on the merits, the award and the
11Page 12
judgment of the Trial Court do not suffer from any
illegality and nor any case of legal misconduct is
made out against the arbitrator so as to empower
the Court to set aside the award under Section 30
of the Act 1940. It was his submission that the
arbitrator did not travel beyond the agreement and
on the other hand discussed each and every issue
by appreciating the evidence on record with
reference to each claim and then recorded a finding
in favour of the appellant in relation to three claims
and rejected the remaining claims of the appellant.
22) Learned counsel lastly contended that this
Court should, therefore, restore the order of the
Trial Court and, in consequence, uphold the award,
which is partly in favour of the appellant and partly
against them, as being just and legal by setting
aside of the impugned order of the High Court.
23) In reply, Mr. S.R. Singh, learned counsel for
12Page 13
the respondent supported the impugned order and
contended that it does not call for any interference.
It was his submission that the reasoning and the
conclusion arrived at by the High Court for setting
aside the award is legal and proper and hence it
deserves to be upheld calling no interference.
24) Having heard the learned counsel for the
parties and on perusal of the record of the case, we
are inclined to accept the submissions of the
learned counsel for the appellant as, in our opinion,
it has substance.
25) The question which arises for consideration in
this appeal is whether the High Court was justified
in allowing the objections filed by the respondent
(State) under Section 30 of the Act 1940 and thereby
was justified in setting aside of the award passed by
the sole arbitrator on the ground of "legal
misconduct"? In other words, the question that
13Page 14
arises for consideration in this appeal is whether on
facts any case of legal misconduct on the part of the
arbitrator is made out by the State under Section 30
of the Act 1940 for setting aside of the award dated
27.11.1995?
26) This question, in our opinion, is required to be
decided in the context of Section 30 of Act 1940
since repealed.
27) What is the jurisdiction of the Court under
Section 30 when it examines the question as to
whether any case of legal misconduct on the part of
an arbitrator in passing an award is made out or not
has been the subject matter of several decisions of
this Court and remains no more res integra?
28) A three-Judge Bench of this Court in State of
U.P. vs. Allied Constructions, (2003) 7 SCC 396
while examining the scope of Section 30 held as
under:
14Page 15
“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 the arbitrator to
determine.
Sudarshan Trading Co. vs. Govt. of Kerala
(1989) 2 SCC 38: REFERRED TO:
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 herewith 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 fact 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.”
29) Justice S. Mukharji, as His Lordship then was,
speaking for the Bench in M/s Sudarsan Trading
Co. vs. Government of Kerala, (1989) 2 SCC 38
while examining the jurisdiction of Court under
Section 30 held as under:
15Page 16
“However, there is a distinction between
disputes as to the jurisdiction of the
arbitrator and the disputes as to in what way
that jurisdiction should be exercised. There
may be a conflict as to the power of the
arbitrator to grant a particular remedy. One
has to determine the distinction between an
error within the jurisdiction and an error in
excess of the jurisdiction. Court cannot
substitute its own evaluation of the
conclusion of law or fact to come to the
conclusion that the arbitrator had acted
contrary to the bargain between the parties.
Whether a particular amount was liable to be
paid or damages liable to be sustained, was a
decision within the competency of the
arbitrator in this. By purporting to construe
the contract the court could not take upon
itself the burden of saying that this was
contrary to the contract and, as such, beyond
jurisdiction. If on a view taken of a contract,
the decision of the arbitrator on certain
amounts awarded, is a possible view through
perhaps not the only correct view, the award
cannot be examined by the court.”
30) The aforesaid view was consistently followed in
later decisions by this Court in State of Andhra
Pradesh & Ors. Vs. R.V. Rayanim & Ors., (1990) 1
SCC 433 and Ravindra Kumar Gupta & Co. vs.
Union of India (2010) 1 SCC 409.
31) One cannot, therefore, dispute the legal
16Page 17
proposition, which is now fairly settled keeping in
view the aforementioned law laid down by this Court
that an award can be set aside only on the grounds
specified in sub-clause (a) (b) and (c) of Section 30 of
1940 Act and on no other grounds. Indeed this is
clear from the opening words of Section 30 itself
which starts with the words "An award shall not be
set aside except on one or more of the following
grounds." A fortiori, a reasoned award cannot be set
aside unless it falls in any of the three sub-clauses
(a) (b) and (c) of Section 30 of the Act 1940.
32) The grounds such as inadequacy of reasons in
support of an award, error committed by the
arbitrator on facts, alternate or/and more plausible
view could be taken then what is taken by the
arbitrator, improper appreciation of evidence done
by the arbitrator in recording any finding etc. are
not the grounds on which any award much less a
17Page 18
reasoned award can be set aside. In other words,
none of these grounds can be made the foundation
for setting aside the award because they do not fall
within the four corners of any of the three subclauses
of Section 30 of the Act 1940.
33) Coming now to the facts of this case, on
perusal of the impugned judgment, we find that the
High Court while setting aside of the award did not
take into consideration the aforesaid view of this
Court and thus, in our view, committed a legal
error.
34) We are constrained to observe that the High
Court virtually sat as an appellate Court as if it was
hearing the appeal arising out of the award little
realizing rather ignoring its well defined jurisdiction
in such matter and proceeded to probe into all
factual issues arising in the case. It seems to have
gone to the extent of permitting the State’s counsel
18Page 19
to file some documents in appeal as would be clear
from para 12 of the judgment. This would also be
clear from the observations of the High Court made
in Paras 12, 13, 18 and 19 which read as under :
“12 The learned standing counsel has
supplied the list of petty contractors in
whose names the bills were submitted
before the Arbitrator. The details of those
bills is as below:-
S.No. Names of Petty
Contractors
Amount
1 Harish Chandra &
Sons
Rs. 3,11,965.80
2 Vijay Gupta & Sons Rs. 3,04,828.00
3 Phool Chand Gupta
& Sons
Rs. 17,95,346.00
4 Ashok Gupta &
Sons
Rs. 178,84,942.00
5 Vijay Gupta & Sons Rs. 17,78,664.00
6 Phool Chand &
Sons
Rs. 2,97,583.50
7 Ashok Gupta &
Sons
Rs. 3,10,258.60
8 Harish Chandra &
Sons
Rs. 17,84,468.00
9 Ajay Gupta & Sons Rs. 3,00,196.90
10 Ajay Gupta & Sons Rs. 17,73,903.98
13. The department made enquiries upon
which it was revealed that in the concerned
area there exist no Firms in the aforesaid
names and addresses. The correspondence
made in this regard is filed as Annexure No.2
(Collectively) to the Stay Application in the
19Page 20
appeal before this Court. The endorsement
made by the postal department about
non-existence of the said Firms is also
Arbitrator has not considered the above facts
and allowed the claims 12, 13 and 17 filed by
the contractor. The Department’s allegation
is that the contractor for the first time raised
claim Nos. 12 to 16 before it vide his letter
No. 102/S.C.C./87 dated 20.9.87 and the
department vide its letter No.
3911/-2/case/647/86, dated 28.11.87 has
rejected the claims. Claim No. 17 was never
raised before the Department and it was
placed before the Arbitrator directly.
18.Now we proceed to scrutinize the claims
awarded by the Arbitrator to the contractor.
19. Claim No. 12 pertains to breaking of
large pieces of hard rock in the filling work
done from Km. No. 9.00 to 9.80. The
Arbitrator has allowed this claim on the
ground that the site is located in the upper
Shivalik ranges of the Himalayan mountains.
These ranges are mostly built of the
sedimentary rocks compressed of the
material flown down the rivers since millions
of years which got compressed under their
own pressure and weights and got very hard
due to the ageing process. This material
could not be dugged out manually by pick
axes or Phawaras. The possible means of
excavation were only by mechanical means
either by mechanical shovels, back hows,
rippers or by blasting. The objections of the
Department is that the Arbitrator has allowed
the claim on imagination. As per the contract
clause 8.05 boulders of 150 mm dimensions
were to be used in the filling reach and of
more than 150 mm were to be staked at the
site. The stones of dimensions of above 150
mm were not to be broken and then filled in
the filling reach. The relevant clause 8.05
clearly indicates “the boulders of more than
150 mm in dimension shall not be permitted
in the embankments unless specifically
approved by the Engineer Incharge and shall
be stacked by the contractor 10 meters away
from the toe of the bank and nothing extra
shall be paid to the contractor for this work”.
There is no mention of breaking of the stones
in the agreement clause. The Arbitrator has
acted beyond the provision of the agreement
in allowing this claim.”
35) The High Court then went on to examine the
case on facts and eventually held that the arbitrator
has travelled beyond clauses 26, 3 (1)(a) and 1.46 of
the agreement and hence committed legal
misconduct requiring the High Court to set aside
the award.
36) With respect, we can neither agree and nor can
uphold the approach and the reasoning of the High
Court. In our considered view, such approach is
wholly against the law laid down by this Court in
the decisions quoted supra.
37) In the first place, the High Court did not apply
the law laid down by this Court while deciding the
appeal and hence committed a jurisdictional error;
Secondly, the High Court acted like an appellate
Court and virtually treated as if the appeal arose
directly against the award and then proceeded to
examine all factual findings of the arbitrator by
appreciating the evidence. It was not permissible
in law; Thirdly, the High Court should have
confined its inquiry to find out as to whether any
legal misconduct was committed by the arbitrator
and, if so, how and in what manner. It was,
however, not done; Fourthly, the High Court went
into the factual question by referring to clause 26 of
the agreement for holding that the arbitrator passed
an award contrary to clause 26 and thereby traveled
beyond the terms of agreement which constituted a
legal misconduct on his part. This finding, in our
view, is, on the face of it, untenable in law for the
reason, inter alia, that this objection was neither
raised before the arbitrator and nor before the Trial
Court in the manner in which it was raised for the
first time in the High Court. In any event, in the
absence of any finding recorded by the arbitrator
and the Trial Court, such issue could not have been
gone into for the first time in appeal by the High
Court. That apart, it has otherwise no substance on
facts for the simple reason that it being a question
of fact, the same could not be examined in appeal;
Fifthly, the High Court failed to see that clause 26
only prohibits the appellant from assigning the
agreement to any third person. Clause 26,
therefore, had nothing to do with the claims filed by
the appellants. It was an admitted fact that the
appellant did not assign the agreement to any third
person. If some work was got done by the appellant
by employing some small contractor then it did not
constitute a case of assignment of a whole
agreement in favour of small contractors within the
meaning of clause 26 so as to empower the State to
cancel the agreement on such ground. The finding
of the High Court that the award is rendered bad
because it was passed in contravention of clause 26
of the agreement is, therefore, not legally
sustainable in law; Sixthly, the High Court further
failed to see that there was no error apparent on the
face of the record in the findings recorded by the
arbitrator; Seventhly, the High Court also failed to
see that the Trial Court had elaborately gone into all
the factual issues and rightly did not find any
substance in the objections raised by the
respondent; and lastly, the award being a reasoned
one (running into 36 pages-Annexure P5 pages
127-163 of the SLP paper book), the reasoning of
the arbitrator could not be said to be perverse to the
extent that no man with ordinary prudence could
take such view and nor any finding of the arbitrator
was against any provision of law or in contravention
of any of the clauses of the agreement so as to
constitute a case of legal misconduct on the part of
the arbitrator within the meaning of Section 30 of
the Act for setting aside an award.
38) We, on perusal of the award, find that the
main claim of the appellant (claimant) against the
State was "claim No. 12" which was in relation to
the work done by the appellant of breaking of large
pieces of hard rock from 9.00 Km to 9.80 Km
distance. Since the respondent (State) disputed the
appellant's claim on various factual grounds and
hence the issue centered around to the questions as
to whether the appellant did this work and, if so,
how and in what manner and to what extent and
lastly, what should be the rate at which the
appellant should be paid, if it is held that the
appellant has done the work.
39) The arbitrator in Paras 19 to 36 of the award
examined these issues on the basis of the evidence
adduced by the parties and held that the appellant
has done the work in question and, therefore, they
were entitled to claim its price for the work done.
Though the appellant, in their claim petition,
claimed the money at the rate of Rs.30 per Cu M
but the arbitrator did not accept the rates claimed
by the appellant and instead awarded the amount to
the appellant at the rate of Rs.12.97 per Cu.M.
40) So far as claim No. 13 was concerned, it
pertained to interest claimed by the appellant on
their some amount whereas the claim No. 17 was in
relation to some deductions already made by the
respondent in the appellant's bills for certain work
done under the agreement.
41) In our considered view, it is clear from the
facts of the case that the claims made by the
appellant were essentially based on facts. They were
accordingly probed on oral and documentary
evidence adduced by the parties, which resulted in
partial success of 3 claims in appellant's favour and
rejection of 3 claims. So far as the State is
concerned, they did not pursue their counter claim
consequent upon its rejection by the arbitrator.
42) We have not been able to notice any kind of
perversity in the arbitrator's reasoning and nor are
we able to notice any kind of apparent error whether
legal or otherwise in the award which may
constitute a case of any legal misconduct on the
part of the arbitrator empowering the Court to set
aside the award by taking recourse to Section 30 of
the Act. The reasoning and the conclusion arrived at
by the arbitrator is one of the possible view which is
capable of being taken by the arbitrator on the
material brought on record and we find no legal
ground to set it aside the same.
43) Learned counsel for the respondent made
sincere attempt to support the reasoning and the
conclusion reached by the High Court but in the
light of what we have discussed above, we can not
accept any of his submissions.
44) In the light of foregoing discussion, we are
unable to concur with the reasoning and the
conclusion arrived at by the High Court.
45) As a result, the appeal succeeds and is
accordingly allowed. Impugned order is set aside
and that of the Trial Court restored.
In Special Leave Petition (c) No. 23950 of 2007
As prayed for, the petitioner is permitted to
withdraw this special leave petition with a liberty
granted to the petitioner to file review petition before
the High Court. In the event of review petition being
dismissed, the petitioner would be at liberty to
challenge the impugned order including the order in
the review petition.
With the aforesaid liberty, the special leave
petition is dismissed as withdrawn.
………...................................J.
[J. CHELAMESWAR]
…...……..................................J.
[ABHAY MANOHAR SAPRE]
New Delhi;
September 08, 2016
29
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the law laid down by this Court while deciding the
appeal and hence committed a jurisdictional error;
Secondly, the High Court acted like an appellate
Court and virtually treated as if the appeal arose
directly against the award and then proceeded to
examine all factual findings of the arbitrator by
appreciating the evidence. It was not permissible
in law; Thirdly, the High Court should have
confined its inquiry to find out as to whether any
legal misconduct was committed by the arbitrator
and, if so, how and in what manner. It was,
however, not done; Fourthly, the High Court went
into the factual question by referring to clause 26 of
the agreement for holding that the arbitrator passed
an award contrary to clause 26 and thereby traveled
beyond the terms of agreement which constituted a
legal misconduct on his part. This finding, in our
view, is, on the face of it, untenable in law for the
reason, inter alia, that this objection was neither
raised before the arbitrator and nor before the Trial
Court in the manner in which it was raised for the
first time in the High Court. In any event, in the
absence of any finding recorded by the arbitrator
and the Trial Court, such issue could not have been
gone into for the first time in appeal by the High
Court. That apart, it has otherwise no substance on
facts for the simple reason that it being a question
of fact, the same could not be examined in appeal;
Fifthly, the High Court failed to see that clause 26
only prohibits the appellant from assigning the
agreement to any third person. Clause 26,
therefore, had nothing to do with the claims filed by
the appellants. It was an admitted fact that the
appellant did not assign the agreement to any third
person. If some work was got done by the appellant
by employing some small contractor then it did not
constitute a case of assignment of a whole
agreement in favour of small contractors within the
meaning of clause 26 so as to empower the State to
cancel the agreement on such ground. The finding
of the High Court that the award is rendered bad
because it was passed in contravention of clause 26
of the agreement is, therefore, not legally
sustainable in law; Sixthly, the High Court further
failed to see that there was no error apparent on the
face of the record in the findings recorded by the
arbitrator; Seventhly, the High Court also failed to
see that the Trial Court had elaborately gone into all
the factual issues and rightly did not find any
substance in the objections raised by the
respondent; and lastly, the award being a reasoned
one (running into 36 pages-Annexure P5 pages
127-163 of the SLP paper book), the reasoning of
the arbitrator could not be said to be perverse to the
extent that no man with ordinary prudence could
take such view and nor any finding of the arbitrator
was against any provision of law or in contravention
of any of the clauses of the agreement so as to
constitute a case of legal misconduct on the part of
the arbitrator within the meaning of Section 30 of
the Act for setting aside an award.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No.8829 OF 2016
(ARISING OUT OF SLP (C) No. 24443/2007)
M/s Harish Chandra & Company
V
State of U.P. Thr. Superintending
Engineer
Citation:(2016) 9 SCC 478,(2017) 5 Bom CR132
and order dated 17.08.2007 of the High Court of
Uttarakhand at Nainital in O.A. No. 1097 of 2001
whereby the High Court allowed the appeal filed by
the respondent herein and set aside the judgment
and order dated 30.05.1996 passed by the Civil
Judge, Dehradun and, in consequence, allowed the
objections of the State of U.P. filed under Section
30/33 of the Arbitration Act, 1940 (hereinafter
referred to as “the Act 1940”) against the award
dated 27.11.1995 which, in turn, also resulted in its
setting aside.
3) Facts of the case need mention, in brief, infra
to appreciate the controversy involved in the appeal.
4) The appellant herein is a civil contractor
whereas the respondent is the State of U.P.
represented through Superintending Engineer
Irrigation Construction Circle, Yamuna Colony,
2Page 3
Dehradun.
5) In the year 1979, the respondent (State) invited
tender being Number 6/1979-80 for doing
"Earthwork in power channels on different routes of
various distances and also construction of drainage
crossing in Chhoti Lui falling in 6 stretches and
divided in two sections called "serial 4” and “serial
6" in a scheme called - KHARA HYDEL SCHEME".
6) The appellant submitted their tender for serial
4 and serial 6. The respondent accepted the
appellant's tender. Accordingly, two agreements
bearing nos. 5/SE/79-80 and 6/SE/79-80 were
executed between the appellant and the respondent
for execution of the work in question on 30.10.1979.
7) So far as agreement No. 5/SE/79-80 is
concerned, it was in relation to work of section
bearing serial 4 whereas agreement No. 6/SE/79-80
was in relation to work of section bearing serial 6.
3Page 4
The work, pursuant to these agreements, was to
start from 01.12.1979 and had to be completed on
or before 31.05.1982.
8) Disputes of various nature arose between the
parties in execution of both the agreements. The
disputes were related to the completion of works,
its nature, manner of its completion, non-payment
and withholding of appellant's bills, deduction of
amount from the bills etc.. Since the disputes could
not be settled amicably, the parties invoked the
arbitration clause (1.47) contained in the
agreements and approached the Civil Court for
appointment of arbitrator and for making references
to him for adjudication of the disputes which had
arisen between them in relation to 2 agreements.
The request was acceded to and accordingly some
disputes were referred to the sole arbitrator.
9) So far as this appeal is concerned, it arises out
4Page 5
of disputes, which relates to agreement No.
6/SE/79-80, i.e., (serial 6). So far as disputes
relating to agreement No. 5/SE/79-80 i.e.(serial 4)
and some disputes relating to agreement No.
6/SE/79-80 are concerned, they were also referred
to the arbitrator for his decision. One reference,
however, attained finality by the orders of this Court
in State of U.P. vs. Harish Chandra & Co., (1999)
1 SCC 63, whereas another reference is pending in
this Court.
10) Consequent upon the reference made to the
arbitrator insofar as the present appeal is
concerned, the appellant (claimant) filed 6 claims
(claim Nos. 12 to 17) before the sole arbitrator (Mr.
Harish Chandra - retired Chief Engineer). The
details of the 6 claims made by the appellant
against the respondent (State) are as under: -
Claim No. Claim Amount
12. Claim due on Rs. 1,05,00,000.00
5Page
6
account of
breaking of large
pieces of hard
rock in the filling
done from 9.00 to
9.80 KM.
along with interest
@ 24% per annum
from 31.5.86 to
the date the
amount is actually
paid.
13. Claims due as
payment on
account of
non-payment
after 30.9.85.
Rs. 11,62,650.00
along with interest
at 24% per annum
from 1.6.86 to the
date the amount is
actually paid.
14. Payment due as
claim on account
of wrongful
deduction of
Security.
Rs. 1,04,426.00
along with interest
at 24% per annum
from 1.5.85 to the
date the amount is
actually paid.
15. Payment due as
claim on account
of extra
excavation.
Rs. 5,51,250.00
along with interest
@ 24% per annum
from 1.6.86 to the
date the amount
actually paid.
16. Payment due as
claim on account
of dressing done
on slopes of filled
earth in
embankments
from Km. 9.00 to
KM. 9.80
Rs. 4,59,200.00
along with interest
@ 24% per annum
from 1.6.86 to the
date of amount
actually paid.
17. Stopping the
respondents from
deducting any
quantity of
excavation done
by petitioner
because of sitting
in the monsoon
year 1986 and
onwards, if any.
Order respondents
to accept our
measurement for
excavation on
31.5.86.
6Page 7
11) The respondent (State) contested the
aforementioned claims by filing their reply. The
State also filed their counter claims against the
appellant claiming damages. The appellant
contested the counter claims by filing their reply.
The parties adduced evidence and examined several
witnesses in support of their respective claims.
12) On 27.11.1995, the arbitrator passed a
reasoned award. Out of 6 claims, the arbitrator
allowed appellant's 3 claims, i.e., claim Nos. 12, 13
and 17 and rejected the claims Nos. 14, 15 and 16.
The arbitrator also rejected the counter claims of the
respondent (State) in toto. The details of the claims
awarded and rejected are as under:
Claim
No.
Amount demanded Rs. Amount Awarded Rs.
12. Rs. 1,05,00,000.00
24% interest from
31.5.86
Rs. 44,98,995.00
13. Rs. 11,62,650 with
24% interest upto
Rs. 10,61,450/- with
interest 18% from
7Page 8
31.5.86 1.6.86 to 27.11.95
14. Rs. 1,04,426 with
interest from 1.5.85
Rejected
15. Rs. 5,51,250/- with
interest @ 24% from
1.6.86
Rejected
16. Rs. 4,59,200/- with
interest @ 24% from
1.6.86
Rejected
17. Order respondent to
accept measurement
for excavation on
31.5.86
No deduction in
quantity already paid
vide 27th Running bill
are justified
13) The respondent, felt aggrieved, filed objections
under Section 30 of the Act 1940 before the Civil
Judge(S.D.), Dehradun against the award. The
appellant contested the objections and prayed for
passing a decree in term of the award. By order
dated 30.05.1996, the civil Judge rejected the
objections and passed a decree in term of the award
along with simple interest payable at the rate of 18%
p.a. on the awarded sum of Rs.55,60,445/- from
the date of decree till payment of amount.
14) The respondent, felt aggrieved, filed appeal
being O.A. No. 1097 of 2001 before the High Court.
8Page 9
By impugned judgment dated 17.08.2007, the High
Court allowed the appeal, set aside the order of the
Trial Court and while allowing the objections filed by
the State set aside the award. The High Court held
that the arbitrator misconducted himself in passing
the award inasmuch as he travelled beyond the
terms of the agreement.
15) Felt aggrieved, the appellant
(contractor/claimant) has filed this appeal by way of
special leave against the judgment of the High
Court.
16) Heard Mr. Vijay Hansaria, learned senior
counsel for the appellant and Mr. S.R. Singh,
learned senior counsel for the respondent.
17) Mr. Vijay Hansaria, learned senior counsel
appearing for the appellant (claimant/contractor)
while assailing the legality and correctness of the
impugned order contended that the High Court was
9Page 10
clearly in error in allowing the appeal of the State
(respondent) which resulted in allowing the
objections filed by the State before the Civil judge
which, in turn, resulted in setting aside of the said
award which was rightly upheld by the Civil Judge.
18) Learned counsel urged that there was no case
made out by the State in their objections of any
legal misconduct committed by the arbitrator and
nor there was any factual or/and legal foundation
laid so as to constitute a case of any legal
misconduct within the meaning of Section 30 of the
Act 1940 for setting aside the award.
19) Learned counsel pointed out that even cursory
reading of the order of the High Court would
indicate that the apparent legal error was committed
by the High Court while allowing the appeal. It was
his submission that the High Court virtually acted
as a first appellate Court as if the appeal before the
10Page 11
High Court arose directly against the award.
Learned counsel pointed out that the High Court
then proceeded to examine the legality and
correctness of all factual findings of the arbitrator
by appreciating the evidence and then finding fault
in the approach of the arbitrator so also finding
error in the findings set aside the award as being
bad in law.
20) Learned counsel urged that such approach of
the High Court was wholly without jurisdiction
being against the law laid down by this Court in
series of decisions wherein this Court has, inter alia,
ruled that the Court while hearing the objections
under Section 30 of the Act 1940 against the award,
cannot sit as an appellate Court over the decision of
the arbitrator.
21) Learned counsel then contended that even
otherwise on the merits, the award and the
11Page 12
judgment of the Trial Court do not suffer from any
illegality and nor any case of legal misconduct is
made out against the arbitrator so as to empower
the Court to set aside the award under Section 30
of the Act 1940. It was his submission that the
arbitrator did not travel beyond the agreement and
on the other hand discussed each and every issue
by appreciating the evidence on record with
reference to each claim and then recorded a finding
in favour of the appellant in relation to three claims
and rejected the remaining claims of the appellant.
22) Learned counsel lastly contended that this
Court should, therefore, restore the order of the
Trial Court and, in consequence, uphold the award,
which is partly in favour of the appellant and partly
against them, as being just and legal by setting
aside of the impugned order of the High Court.
23) In reply, Mr. S.R. Singh, learned counsel for
12Page 13
the respondent supported the impugned order and
contended that it does not call for any interference.
It was his submission that the reasoning and the
conclusion arrived at by the High Court for setting
aside the award is legal and proper and hence it
deserves to be upheld calling no interference.
24) Having heard the learned counsel for the
parties and on perusal of the record of the case, we
are inclined to accept the submissions of the
learned counsel for the appellant as, in our opinion,
it has substance.
25) The question which arises for consideration in
this appeal is whether the High Court was justified
in allowing the objections filed by the respondent
(State) under Section 30 of the Act 1940 and thereby
was justified in setting aside of the award passed by
the sole arbitrator on the ground of "legal
misconduct"? In other words, the question that
13Page 14
arises for consideration in this appeal is whether on
facts any case of legal misconduct on the part of the
arbitrator is made out by the State under Section 30
of the Act 1940 for setting aside of the award dated
27.11.1995?
26) This question, in our opinion, is required to be
decided in the context of Section 30 of Act 1940
since repealed.
27) What is the jurisdiction of the Court under
Section 30 when it examines the question as to
whether any case of legal misconduct on the part of
an arbitrator in passing an award is made out or not
has been the subject matter of several decisions of
this Court and remains no more res integra?
28) A three-Judge Bench of this Court in State of
U.P. vs. Allied Constructions, (2003) 7 SCC 396
while examining the scope of Section 30 held as
under:
14Page 15
“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 the arbitrator to
determine.
Sudarshan Trading Co. vs. Govt. of Kerala
(1989) 2 SCC 38: REFERRED TO:
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 herewith 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 fact 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.”
29) Justice S. Mukharji, as His Lordship then was,
speaking for the Bench in M/s Sudarsan Trading
Co. vs. Government of Kerala, (1989) 2 SCC 38
while examining the jurisdiction of Court under
Section 30 held as under:
15Page 16
“However, there is a distinction between
disputes as to the jurisdiction of the
arbitrator and the disputes as to in what way
that jurisdiction should be exercised. There
may be a conflict as to the power of the
arbitrator to grant a particular remedy. One
has to determine the distinction between an
error within the jurisdiction and an error in
excess of the jurisdiction. Court cannot
substitute its own evaluation of the
conclusion of law or fact to come to the
conclusion that the arbitrator had acted
contrary to the bargain between the parties.
Whether a particular amount was liable to be
paid or damages liable to be sustained, was a
decision within the competency of the
arbitrator in this. By purporting to construe
the contract the court could not take upon
itself the burden of saying that this was
contrary to the contract and, as such, beyond
jurisdiction. If on a view taken of a contract,
the decision of the arbitrator on certain
amounts awarded, is a possible view through
perhaps not the only correct view, the award
cannot be examined by the court.”
30) The aforesaid view was consistently followed in
later decisions by this Court in State of Andhra
Pradesh & Ors. Vs. R.V. Rayanim & Ors., (1990) 1
SCC 433 and Ravindra Kumar Gupta & Co. vs.
Union of India (2010) 1 SCC 409.
31) One cannot, therefore, dispute the legal
16Page 17
proposition, which is now fairly settled keeping in
view the aforementioned law laid down by this Court
that an award can be set aside only on the grounds
specified in sub-clause (a) (b) and (c) of Section 30 of
1940 Act and on no other grounds. Indeed this is
clear from the opening words of Section 30 itself
which starts with the words "An award shall not be
set aside except on one or more of the following
grounds." A fortiori, a reasoned award cannot be set
aside unless it falls in any of the three sub-clauses
(a) (b) and (c) of Section 30 of the Act 1940.
32) The grounds such as inadequacy of reasons in
support of an award, error committed by the
arbitrator on facts, alternate or/and more plausible
view could be taken then what is taken by the
arbitrator, improper appreciation of evidence done
by the arbitrator in recording any finding etc. are
not the grounds on which any award much less a
17Page 18
reasoned award can be set aside. In other words,
none of these grounds can be made the foundation
for setting aside the award because they do not fall
within the four corners of any of the three subclauses
of Section 30 of the Act 1940.
33) Coming now to the facts of this case, on
perusal of the impugned judgment, we find that the
High Court while setting aside of the award did not
take into consideration the aforesaid view of this
Court and thus, in our view, committed a legal
error.
34) We are constrained to observe that the High
Court virtually sat as an appellate Court as if it was
hearing the appeal arising out of the award little
realizing rather ignoring its well defined jurisdiction
in such matter and proceeded to probe into all
factual issues arising in the case. It seems to have
gone to the extent of permitting the State’s counsel
18Page 19
to file some documents in appeal as would be clear
from para 12 of the judgment. This would also be
clear from the observations of the High Court made
in Paras 12, 13, 18 and 19 which read as under :
“12 The learned standing counsel has
supplied the list of petty contractors in
whose names the bills were submitted
before the Arbitrator. The details of those
bills is as below:-
S.No. Names of Petty
Contractors
Amount
1 Harish Chandra &
Sons
Rs. 3,11,965.80
2 Vijay Gupta & Sons Rs. 3,04,828.00
3 Phool Chand Gupta
& Sons
Rs. 17,95,346.00
4 Ashok Gupta &
Sons
Rs. 178,84,942.00
5 Vijay Gupta & Sons Rs. 17,78,664.00
6 Phool Chand &
Sons
Rs. 2,97,583.50
7 Ashok Gupta &
Sons
Rs. 3,10,258.60
8 Harish Chandra &
Sons
Rs. 17,84,468.00
9 Ajay Gupta & Sons Rs. 3,00,196.90
10 Ajay Gupta & Sons Rs. 17,73,903.98
13. The department made enquiries upon
which it was revealed that in the concerned
area there exist no Firms in the aforesaid
names and addresses. The correspondence
made in this regard is filed as Annexure No.2
(Collectively) to the Stay Application in the
19Page 20
appeal before this Court. The endorsement
made by the postal department about
non-existence of the said Firms is also
Arbitrator has not considered the above facts
and allowed the claims 12, 13 and 17 filed by
the contractor. The Department’s allegation
is that the contractor for the first time raised
claim Nos. 12 to 16 before it vide his letter
No. 102/S.C.C./87 dated 20.9.87 and the
department vide its letter No.
3911/-2/case/647/86, dated 28.11.87 has
rejected the claims. Claim No. 17 was never
raised before the Department and it was
placed before the Arbitrator directly.
18.Now we proceed to scrutinize the claims
awarded by the Arbitrator to the contractor.
19. Claim No. 12 pertains to breaking of
large pieces of hard rock in the filling work
done from Km. No. 9.00 to 9.80. The
Arbitrator has allowed this claim on the
ground that the site is located in the upper
Shivalik ranges of the Himalayan mountains.
These ranges are mostly built of the
sedimentary rocks compressed of the
material flown down the rivers since millions
of years which got compressed under their
own pressure and weights and got very hard
due to the ageing process. This material
could not be dugged out manually by pick
axes or Phawaras. The possible means of
excavation were only by mechanical means
either by mechanical shovels, back hows,
rippers or by blasting. The objections of the
Department is that the Arbitrator has allowed
the claim on imagination. As per the contract
clause 8.05 boulders of 150 mm dimensions
were to be used in the filling reach and of
more than 150 mm were to be staked at the
site. The stones of dimensions of above 150
mm were not to be broken and then filled in
the filling reach. The relevant clause 8.05
clearly indicates “the boulders of more than
150 mm in dimension shall not be permitted
in the embankments unless specifically
approved by the Engineer Incharge and shall
be stacked by the contractor 10 meters away
from the toe of the bank and nothing extra
shall be paid to the contractor for this work”.
There is no mention of breaking of the stones
in the agreement clause. The Arbitrator has
acted beyond the provision of the agreement
in allowing this claim.”
35) The High Court then went on to examine the
case on facts and eventually held that the arbitrator
has travelled beyond clauses 26, 3 (1)(a) and 1.46 of
the agreement and hence committed legal
misconduct requiring the High Court to set aside
the award.
36) With respect, we can neither agree and nor can
uphold the approach and the reasoning of the High
Court. In our considered view, such approach is
wholly against the law laid down by this Court in
the decisions quoted supra.
37) In the first place, the High Court did not apply
the law laid down by this Court while deciding the
appeal and hence committed a jurisdictional error;
Secondly, the High Court acted like an appellate
Court and virtually treated as if the appeal arose
directly against the award and then proceeded to
examine all factual findings of the arbitrator by
appreciating the evidence. It was not permissible
in law; Thirdly, the High Court should have
confined its inquiry to find out as to whether any
legal misconduct was committed by the arbitrator
and, if so, how and in what manner. It was,
however, not done; Fourthly, the High Court went
into the factual question by referring to clause 26 of
the agreement for holding that the arbitrator passed
an award contrary to clause 26 and thereby traveled
beyond the terms of agreement which constituted a
legal misconduct on his part. This finding, in our
view, is, on the face of it, untenable in law for the
reason, inter alia, that this objection was neither
raised before the arbitrator and nor before the Trial
Court in the manner in which it was raised for the
first time in the High Court. In any event, in the
absence of any finding recorded by the arbitrator
and the Trial Court, such issue could not have been
gone into for the first time in appeal by the High
Court. That apart, it has otherwise no substance on
facts for the simple reason that it being a question
of fact, the same could not be examined in appeal;
Fifthly, the High Court failed to see that clause 26
only prohibits the appellant from assigning the
agreement to any third person. Clause 26,
therefore, had nothing to do with the claims filed by
the appellants. It was an admitted fact that the
appellant did not assign the agreement to any third
person. If some work was got done by the appellant
by employing some small contractor then it did not
constitute a case of assignment of a whole
agreement in favour of small contractors within the
meaning of clause 26 so as to empower the State to
cancel the agreement on such ground. The finding
of the High Court that the award is rendered bad
because it was passed in contravention of clause 26
of the agreement is, therefore, not legally
sustainable in law; Sixthly, the High Court further
failed to see that there was no error apparent on the
face of the record in the findings recorded by the
arbitrator; Seventhly, the High Court also failed to
see that the Trial Court had elaborately gone into all
the factual issues and rightly did not find any
substance in the objections raised by the
respondent; and lastly, the award being a reasoned
one (running into 36 pages-Annexure P5 pages
127-163 of the SLP paper book), the reasoning of
the arbitrator could not be said to be perverse to the
extent that no man with ordinary prudence could
take such view and nor any finding of the arbitrator
was against any provision of law or in contravention
of any of the clauses of the agreement so as to
constitute a case of legal misconduct on the part of
the arbitrator within the meaning of Section 30 of
the Act for setting aside an award.
38) We, on perusal of the award, find that the
main claim of the appellant (claimant) against the
State was "claim No. 12" which was in relation to
the work done by the appellant of breaking of large
pieces of hard rock from 9.00 Km to 9.80 Km
distance. Since the respondent (State) disputed the
appellant's claim on various factual grounds and
hence the issue centered around to the questions as
to whether the appellant did this work and, if so,
how and in what manner and to what extent and
lastly, what should be the rate at which the
appellant should be paid, if it is held that the
appellant has done the work.
39) The arbitrator in Paras 19 to 36 of the award
examined these issues on the basis of the evidence
adduced by the parties and held that the appellant
has done the work in question and, therefore, they
were entitled to claim its price for the work done.
Though the appellant, in their claim petition,
claimed the money at the rate of Rs.30 per Cu M
but the arbitrator did not accept the rates claimed
by the appellant and instead awarded the amount to
the appellant at the rate of Rs.12.97 per Cu.M.
40) So far as claim No. 13 was concerned, it
pertained to interest claimed by the appellant on
their some amount whereas the claim No. 17 was in
relation to some deductions already made by the
respondent in the appellant's bills for certain work
done under the agreement.
41) In our considered view, it is clear from the
facts of the case that the claims made by the
appellant were essentially based on facts. They were
accordingly probed on oral and documentary
evidence adduced by the parties, which resulted in
partial success of 3 claims in appellant's favour and
rejection of 3 claims. So far as the State is
concerned, they did not pursue their counter claim
consequent upon its rejection by the arbitrator.
42) We have not been able to notice any kind of
perversity in the arbitrator's reasoning and nor are
we able to notice any kind of apparent error whether
legal or otherwise in the award which may
constitute a case of any legal misconduct on the
part of the arbitrator empowering the Court to set
aside the award by taking recourse to Section 30 of
the Act. The reasoning and the conclusion arrived at
by the arbitrator is one of the possible view which is
capable of being taken by the arbitrator on the
material brought on record and we find no legal
ground to set it aside the same.
43) Learned counsel for the respondent made
sincere attempt to support the reasoning and the
conclusion reached by the High Court but in the
light of what we have discussed above, we can not
accept any of his submissions.
44) In the light of foregoing discussion, we are
unable to concur with the reasoning and the
conclusion arrived at by the High Court.
45) As a result, the appeal succeeds and is
accordingly allowed. Impugned order is set aside
and that of the Trial Court restored.
In Special Leave Petition (c) No. 23950 of 2007
As prayed for, the petitioner is permitted to
withdraw this special leave petition with a liberty
granted to the petitioner to file review petition before
the High Court. In the event of review petition being
dismissed, the petitioner would be at liberty to
challenge the impugned order including the order in
the review petition.
With the aforesaid liberty, the special leave
petition is dismissed as withdrawn.
………...................................J.
[J. CHELAMESWAR]
…...……..................................J.
[ABHAY MANOHAR SAPRE]
New Delhi;
September 08, 2016
29
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