In Dakshin Haryana Bijli Vitran Nigam Ltd, the court recollected the
previous holding in Ssangyong Engg. & Construction Co. Ltd. v. NHAI (hereafter, “Ssangyong Engg. & Construction Co. Ltd.”) 2019 [7] SCR 522, wherein the court had set aside the majority award, but issued consequential directions in the peculiar facts of the case:
“In Ssangyong [Ssangyong Engg. & Construction Co.
Ltd. v. NHAI, (2019) 7 SCR 522], this Court upheld the view taken by the dissenting arbitrator in exercise of its powers under Article 142 of the Constitution, in order to do complete justice between the parties. The reason for doing so is mentioned in para 77 i.e. the considerable delay which would be caused if another arbitrationwas to be held. This Court exercised its extraordinary power in Ssangyong [Ssangyong Engg. & Construction Co. Ltd. v. NHAI,] keeping in mind the facts of the case, and the object of expeditious resolution of disputes under the Arbitration Act.”
However, the court did not, in Dakshin Haryana Bijli Vitran Nigam Ltd (supra) direct the dissenting opinion to be treated as an award. In the opinion of this court, that approach is correct, because there appears to be a slight divergence in thinking between Russel and Gary Born. The former, Russel is careful to point out that a dissenting opinion is not per se an award, but “is for the parties' information only and does not form part of the award, but it may be admissible as evidence in relation to the procedural matters in the event of a challenge.” However, Gary Born does not expressly say that the opinion is not a part of the award. That author yet clarifies that “This is an essential aspect of the process by which the parties have an opportunity to both, present their case, and hear the reasons for the Tribunal's decision; not hearing the dissent deprives the parties of an important aspect of this process.” {Para 26}
27. It is, therefore, evident that a dissenting opinion cannot be treated as an award if the majority award is set aside. It might provide useful clues in case there is a procedural issue which becomes critical during the challenge hearings. This court is of the opinion that there is another dimension to the matter. When a majority award is challenged by the aggrieved party, the focus of the court and the aggrieved party is to point out the errors or illegalities in the majority award. The minority award (or dissenting opinion, as the learned authors point out) only embodies the views of the arbitrator disagreeing with the majority. There is no occasion for anyone- such as the party aggrieved by the majority award, or, more crucially, the party who succeeds in the majority award, to challenge the soundness, plausibility, illegality or perversity in the approach or conclusions in the dissenting opinion. That dissenting opinion would not receive the level and standard of scrutiny which the majority award (which is under challenge) is subjected to. Therefore, the so-called conversion of the dissenting opinion, into a tribunal’s findings, [in the event a majority award is set aside] and elevation of that opinion as an award, would, with respect, be inappropriate and improper.
2023INSC768
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO(S). 4658 OF 2023
M/S HINDUSTAN CONSTRUCTION COMPANY LIMITED
Vs M/S NATIONAL HIGHWAYS AUTHORITY OF INDIA
Author: S. RAVINDRA BHAT, J.
Dated: AUGUST 24, 2023.
1. All these appeals involve decision on a common question, with respect to
the interpretation of a contract condition, which required the measurement of
quantities used for payment for embankment construction with soil or with pond
ash. The claimants (hereafter “the contractors”) contended that the measure is one
and the same, which is by taking a composite cross section as a whole of the
embankment and determining the volume by the average end area method.
However, the supervising engineer (hereafter “EE”) adopted a method, whereby
the area of the cross section was bifurcated to account for the area occupied by
soil and pond ash for the determination of quantum of the embankment in two
different items. The contractor urged that this was contrary to the technical
specification (hereafter “TS”) clause 305.8; the National Highways Authority of
India (hereafter “NHAI”) justified the EE’s interpretation. Since there have been
different outcomes in all these appeals, and the impugned judgments in some of
them have relied upon the judgment of the Division Bench of the Delhi High
Court, in CA 4658/20231 (hereafter referred to as “the main judgment”) the facts
and decisions, in that appeal would be alluded to.
2. NHAI awarded, to the contractor the work of construction of the Allahabad
by-pass project in U.P. by agreement dated 02.06.2004. The project was
completed. However, certain disputes arose inter se the parties with reference to
different areas of the contract; these were referred to arbitration. NHAI has an
inbuilt resolution mechanism, i.e., a Dispute Resolution Board (“DRB”)
consisting of technical experts in the field, to which matters are first referred to.
Since the contractor was not satisfied with the opinion of the DRB, in terms of
the agreement, it could and, did invoke the arbitration. The disputes in the present
case culminated in a reference to the arbitration of three technical persons, who
1 Arising out of SLP No. 38162/2012, which was directed against the judgment of the Division Bench of the
Delhi High Court dated 08.11.2012 in FAO (OS) No. 48/ 2012.
3
after considering the rival viewpoints and the materials before them, made the
award2. The award was unanimous on most questions while, on others, there was
a dissenting view of one of the arbitrators.
3. The contractor, aggrieved by both the unanimous view and the majority
view preferred objections under Section 34 of the Arbitration and Conciliation
Act, 1996 (“the Act”). A learned single judge rejected the petition3. The single
judge was of the considered opinion that as far as measurement aspects were
concerned, the tribunal’s majority opinion reflected a plausible and reasonable
view that did not call for interference:
"26. As regards non-payment for, executed work of embankment
which forms the subject matter of Disputes 2 and 4, this is purely a
question of fact based on the measurement. There is no dispute in
relation to the construction of the embankment that is covered under
item 2. 02 (a) of the BOQ. In fact, NHAI has already paid HCC for
the said construction. Clause 305.8 of the MORTHTS provides for
measurement of the cross section of the embankment as one whole
composite section and paid under item No.2.02(b). The decision of
the majority members of the Arbitral Tribunal based on an analysis
of the material before them was a possible view to take. Merely
because another view as evidenced by the dissenting opinion is
possible interference by this Court under Section 34 of the Act is not
warranted. “
4. NHAI appealed to the Division Bench, which set aside the decision of the
learned single judge, and held that the tribunal’s majority view, and award, were
based on an implausible interpretation of the contract. It was held, in the
impugned order that:
2 Award dated 30.03.2010
3 By the order dated 30.11.2011
4
“[..] On a conjoint reading of BOQ item No.2.02 and clause 305.8
of the technical specification, to us, it is clear that the cross sections
have to be taken in respect of the different materials used, i.e. soil
and pond ash. Pertinently, it is not the case of the respondents that
the two are mixed into a mixture and then used. Soil and pond ash
are used separately. Thus, the cross sections are to be taken at
intervals. We cannot permit the respondent to contend that it is not
possible to compute the volumes of the two materials in the cross
section, when for 30 months both the appellant and the respondent
were actually making measurements accordingly. The respondent
itself made the IPCs and submitted for payments which were duly
paid by the appellant. Such measurements were made on the basis
of actual utilization of the two materials. We fail to appreciate how
the arbitral tribunal could have come to a conclusion that the mode
of measurement of the two items separately was not in accordance
with the contract. The majority view, after having noticed the
principles of consensus ad idem, seems to have failed to appreciate
this vital issue.[..]”
Contentions of parties
5. On behalf of the appellant/contractors, Dr. Abhishek Manu Singhvi, Mr.
V. Giri, and Mr. Anil Airi, learned senior counsels, Mr. Sameer Parekh and Mr.
George Thomas learned counsel made submissions. It was argued that the
impugned judgment goes far beyond the scope of the jurisdiction under Section
34 /Section 37 of the Act. The Division Bench while interfering with the award
on the grounds that it did, transgressed the extremely narrow scope of
interference under Section 37 of the Act. It was argued that this court in a
plethora of cases has held that the intent of the Act is to restrict the grounds of
challenge to an arbitral award to the barest minimum. It is submitted that this
court has time and again held that the general approach of the courts should be
to uphold the award and the arbitral award and not to sit with a meticulous
legal eye endeavouring to pick holes, inconsistencies and faults in the award.
5
6. It was argued that contractual conditions relating to a method of
measurement are dependent heavily on technical understanding and cannot be
read and interpreted like the general provision of a contract. They have meanings
developed over time based on the views and the courts should defer to the finding
by the technical experts. It was argued that the specific point of dispute was
whether any outstanding amount “on account of 'construction of embankment'
with pond ash in accordance with BOQ Item No. 2.02 (b) read with clause
305.2.2.3 of the Technical Specifications” was payable to the contractor. This
was a pure question of fact, over which the findings in the award had to be left
alone. Counsel also highlighted that in many appeals, the DRB constituted an
internal mechanism by NHAI, comprised entirely of technical personnel,
nominated by it (NHAI) had also endorsed the opinion, which favoured the
contractors’ interpretation. Given this background and the further like
interpretation given in arbitration, by the tribunal, which again comprised of
experts, there was no scope for interference.
7. Learned counsel submitted that the impugned judgment failed to or
overlooked that there are two kinds of embankments- one with soil and the other,
with fly ash and soil. Therefore, the contractor had quoted rates for these two
kinds of embankment.
6
8. It was highlighted that Clause 305 of MoRTH4 technical specifications
read together with the project specific amendments contained in additional
technical specifications provides the formation of embankment with two types,
viz. embankment with soil and embankment with pond ash, the material
requirements for each of the above two types have been specified in clauses
305.2.2.2 (for soil) and 305.2.2.3 (for pond ash) of additional technical
specifications.
9. Counsel submitted, that furthermore, the impugned judgment overlooked
that the TS clause 305 of MoRTH dealt only with embankment with soil;
therefore a project specific sub-clause 305.2.2.3.2 of the construction operations,
was included in the contract which specifies the various operations (viz., setting
out, stripping and storing of top soil, compacting ground supporting embankment,
spreading material, compaction, finishing, quality control, a measurement for
payment etc) to be followed by the contractor for embankment with pond ash. It
was submitted that clause 305.2.2.3.2 further provides, "the work shall conform
to clause 4.7.l of IRC SP:58 - 2001". It was highlighted that the contract
contemplated payment for 'construction of earth embankment with soil' in BOQ5
item 2.02(a) and 'construction of Pond ash embankment with pond ash' in BOQ
item No. 2.02. It was also contended that BOQ pertains to the execution and
completion of the entire item of work in compliance with the contract
4 Ministry of Road Transport and Highways
5 Bill of Quantities
7
requirements and does not relate only to any individual material/ consumables
used in the execution of the work.
10. It was argued that the contract conditions and stipulations are to be read as
a whole; thus, technical specifications, drawings and other documents form part
of the contract which cannot be considered in isolation. The counsel also
emphasized that the preamble to the BOQ and the technical specifications read
together also mandate that the rates given in BOQ item 2.02 (a) and (b) are for
the construction of embankment i.e., soil embankment and pond ash embankment
and not for the usage of materials in an embankment. It was highlighted that the
applicable test for interference with awards was clearly enunciated in Associate
Builders v Delhi Development Corporation (“hereafter, “Associate Builders”)6
and was ignored by the impugned judgment. Counsel also relied on BOC India
Ltd. vs. Bhagwati Oxygen Ltd7 and urged that since the tribunal had relied on a
plausible view on interpretation of the contract, it was not open to the court to set
aside the award.
11. Ms. Aishwarya Bhati learned Additional Solicitor General (ASG) appeared
for NHAI and urged the court not to interfere with the impugned judgment of the
High Court and other decisions which followed it, which are the subject matter
of all these appeals. She contended that the Division Bench’s interference with
the award was justified and warranted. Learned counsel highlighted the
6 2014 [13] SCR 895
7 2007 [3] SCR 915
8
difference in the stipulations as they existed in the contract as opposed to what
was cited in the majority award which is the subject matter of appeal in the
impugned judgment. It was contended that the clause was wrongly reproduced
and consequently, not only vitiated by incorrect interpretation but rather a case of
rewriting the terms of the contract by the tribunal. This meant that the tribunal
acted beyond the terms of the contract. Learned counsel, emphasized that such
rewriting was sufficient justification for the Division Bench to interfere with the
award. This aspect had been lost sight of – even overlooked by the learned Single
Judge.
12. It was argued next that the interpretation by the contractors and the
tribunal, if accepted, will lead to absurd results so far as the ratio of soil and pond
ash used in an embankment is concerned. These components or materials vary
from case to case. Therefore, it would be illogical and rather unfair to cast a
liability upon the NHAI to pay at one rate regardless of the soil and pond ash used
for the work. Learned counsel highlighted that embankment construction can
involve varied ratios of such materials – ranging from 9:1 to 3:2 at different
locations. Therefore, the Division Bench correctly held that it would not be
justified to cast this liability upon the NHAI.
13. It was also highlighted that the tribunal and the learned Single Judge erred
in improperly analyzing the stipulations and conditions in the contract. Clauses
2.02(a) and (b) reveal that there is only BOQ Item, i.e., embankment. The separate
9
treatment in the stipulation only meant that the embankment could be constructed
one way, where the soil was used and second, where both soil and pond ash was
used. Learned counsel submitted that in terms of clause 305.8 of the technical
specifications, cross-sections had to be quantified proportionately. The ASG
further highlighted that for two years, separate measurements were taken and
consequently it was incorrect to contend that separate measurements for both the
materials were not possible. It was further argued that embankment work with
pond ash and soil is completed by layering wherever concerned materials are
necessary and easily capable of measurement. Further, she argued that separate
quantities were expressly notified and mentioned in the concerned conditions
which the parties at the relevant time intended to give meaning to. This aspect
was highlighted by the dissenting award of one member of the tribunal, who
upheld the EE’s decision to reject the claim based on such interpretation.
Therefore, wherever soil was used it had to be paid as per Clause 2.02(a) and
wherever pond ash was used, payment had to be as per Clause 2.02 (b) read with
TS 305.2.2.3. Lastly, it was contended that the intention of the draftsman was
clear as any reference to technical specification was avoided but a mention was
made of IRC:SP:58.201 and instead it was only TS 305 and TS 305.2.2.3 were
used. These did not deal with or describe embankments to be constructed with fly
ash or even they ought to be designed in a composite manner.
10
14. The ASG relied on Indian Oil Corporation v Shree Ganesh Petroleum
Rajgurunagar8; PSA SICAL Terminals Pvt. Ltd. v. Board of Trustees of V.O.
Chidambranar Port Trust9; South East Asia Marine Engineering and
Constructions Limited (SEAMEC Ltd) v Oil India Ltd10 and other decisions, in
support of NHAI’s argument that if the interpretation adopted by a tribunal is
unsupported by law, or wholly incorrect, in the given facts of a case, the award
can be interfered with. It was submitted that so long as the interpretation of
contractual terms is reasonable and possible, awards should not be interfered
with. However, if awards do not adopt such an interpretation, and adopt one,
which results in unreasonable expansion of any express contractual term, they
can and should be interfered with. Learned counsel submitted that the occasion
for exercise of such discretion was exercised rightly, by the impugned judgment.
Analysis and Conclusions
15. Before dealing with the merits, it is essential to extract the relevant contract
stipulations. The main judgment which involved the contract for works Allahabad
Bypass Project of a road from KM 158 to KM 198 (except Ganga Bridge) was
concerned with the following clauses:
Item Description Unit Est. Qty. Units Rate
(INR)
Amount INR
In words In
figu
res
In words In figures
2.02 Construction of
embankment with
8 2022 (16) SCR 450
9 2021 (5) SCR. 408
10 2020 (4) SCR 254
11
approved material
complete as per
Technical
Specifications
Clause 305 with all
leads and lifts
a) With Soil CuM 1198000 Rs. One
hundred
and two
only.
102 Rupees twelve
crore, twenty
one lakhs ninety
six thousand
only
122,196,000
b) With Pond
Ash
CuM 3252000 Rs. Two
hundred
and fifty
two only
252 Rupees eighty
one crore ninety
five lakhs four
thousand only
819,504,000
16. For pond ash embankment under BOQ item No. 2.02(b), the relevant
stipulation for measurement and payment are Clause 305.8 and Clause
305.2.2.3.3 of additional technical specifications, respectively. The said clauses
are extracted below. The MoRTH specification reads as follows:
“305.8 Measurements of Payment
Earth embankment/subgrade construction shall be measured
separately by taking cross sections at intervals in the original
position before the work starts and after its completion and
computing the volumes of earthworks in cubic metres by the method
of average end areas…….”
Clause 305.2.2.3.3- relatable to Item No. 2.02(b) reads as under:
“Measurement for payment: Same as Clause 305.8 of MoRTH
specifications.”
The relevant stipulation for contract rate units for different items in rate contracts
is clause 114.1; it reads as follows:
“ 114.1. - For item rate contracts, the contract unit rates for
different items of work shall be payment in full for completing the
work to the requirements of the specifications including full
compensation for all the operations detailed in the relevant sections
of these specifications under "Rates". In the absence of any
directions to the contrary, the rates are to be considered as full
inclusive rate for finished work covering all labour, materials,
wastage.... Arising out of General Conditions of Contract.".
12
17. The majority award, in the main judgment (from which CA 4658/2023
arises) listed why the members in the majority found for the contractor:
“i) It is contemplated in the contract to construct two types of
embankments. One with the soil alone, and the second one with the
combination of soil pond ash.
ii) The embankment with pond ash alone cannot be constructed, as
the pond ash is susceptible for erosion. Hence, the soil cover is
provided for protection of the embankment.
iii) The composite cross section of the embankment comprising of
soil and pond ash together is as the collectively termed embankment
construction with pond ash under BOQ item No. 2.02(b)
iv) The method of measurement to be adopted for payment for the
embankment construction with soil or with pond ash is one and the
same, which is by taking composite cross section as a whole of the
embankment and determining the volume by average end area
method.
v) The method of measurement adopted by the Engineer, where in,
the area of the cross section has been bifurcated to account for area
occupied by the soil and pond ash for determination of quantum of
the embankment in two different items if contrary to the technical
specification Clause 305.8.
vi) Clause 114.1 of MORTH specification specifically states that the
rates are for the finished work in all respects. The pond ash
embankment comprising of soil and pond ash is composite and
complete finished item of work. It cannot be separated into two
different items as having been done by the Engineer.
vii) The contention of the claimant that the whole cross section of
the pond ash embankment shall be measured as one cross section
for determination of the work under Item No. 2.02 (b) is fully
supported by the contract conditions.”
The member of the tribunal, who dissented, inter alia, recorded that a reading of
the specifications:
“clearly shows that wherever soil is used it will be measured 2.02
(a) with whenever pond ash is used it will be measured under
2.02(b) with TS 305.2.2.3.
13.3.7 I agree with the view taken by the Engineer while rejecting
claim, as the view of the Engineer is strictly as per contract/BOQ
provision as in this particular Contract embankment with soil and
13
pond ash appear under one item and are · very conspicuously
bifurcated for different materials.
13.3.8 · I analyse that claimant has flawed under and after thought
to claim even soil as fly ash under item No.2.02 (b). of BOQ.
13.3.9 Thus I draw firm conclusion that the provision made in the
BOQ item 2.02 (a) and 2.02 (b) are for different material i.e. 2.02
(a) is for soil and 2.02 (b)is for pond ash and is for type of material
to be used in the respective items.”
18. A reasoning similar to the majority award, which was in issue in the main
judgment, was adopted in awards, rendered by tribunals of other contractors, such
as CEC -HCC(JV)11; Sunway Construction12; Patel KNR JV13; and Oriental
Structural Engineers (P) Ltd (hereafter, “Oriental Structures”)14. In some cases,
the stipulation was for the construction of an “embankment with approved
materials from borrow areas” in terms of TS clause 305, and also the
construction of an embankment “with fly ash obtained from coal or lignite
burning thermal power station” (CA 4659/2023); likewise, fly ash or lignite
burning thermal station as waste material (CA 4660/2020); “all types of soil” and
“with fly ash obtained from coal or lignite burning thermal power station” (CA
4661/2023) and pond ash (CA 4662/2023).
19. In some cases, the DRP (or DRB) set up departmentally, with three experts
(in CA 4659/2023) expressed its view in the following terms:
“4.1.5...The above contract stipulation clearly means that the
Embankment 6 or Subgrade, as the case may be, shall be measured
separately by taking cross sections at intervals before the
Embankment work starts and after its completion. The use of phrase
'taking cross sections ....... before the Embankment work starts and
11 The appellant in CA 4659/2023;
12 Appellant in CA 4660/2023
13 Appellant in CA 4661/2023
14 Appellant in CA 4662/2023
14
after its completion' means nothing but measurement of
embankment as o whole. In other words what is to be measured is
an embankment and such measurement shall be by taking cross
sections at suitable intervals before the start of Embankment work
and after completion of Embankment of work. In other words the
volume of the entire embankment formed by flyash and Soil as per
Additional Technical Specifications Clause A-14 is to be
measured. Had the intention of the contract been measuring soil
separately then it would be necessary to take cross sections
repeatedly of every intermediate layer at the junction of the core fly
ash with soil side cover and also at top of fly ash layer before
covering it with 1m soil layer, which is not stipulated so in the mode
of measurement for payment in the Contract.
[…]
4.1.8 The item is for construction of embankment with fly ash.
The words “with Fly Ash” are the adjective qualifying the type of
Embankment. Thus, if is necessary to measure embankment as a
whole and not the individual materials comprising embankment.
Had the item been described as “Providing fly ash for
embankment” then it would have been appropriate to measure fly
ash material only. The intention of contract is to measure the
embankment. This is also corroborated from the description of
BoQ item no.2.02(a), which is only in one type of material i.e.
approved material; the phrase used in description is “construction
of embankment with approved materials”. Here too embankment as
an item and the words approved material is the adjective qualifying
the type of embankment.”
In other appeals too, the DRP gave similar directions and instructions. In Oriental
Structures’ (supra) appeal (CA 4662/2023), the DRB’s decision, inter alia, was
that:
“The decision of DRB is to measure the soil cover & Pond Ash
together for Pond Ash embankment& be paid under BOQ item 2.02
(b). The final quantity under BOQ item 2.02(b) are with Engineer &
shall be submitted to Employer & to be paid at the rates approved
after the Arbitration in vogue as on the days after allowing the
rebate provided by Contractor in his offer.”
20. It is quite evident that in most cases, the view of DRPs and tribunals, and
in two cases, majority awards of tribunals, favoured the arguments of contractors,
that composite embankment construction took place, as a result of which
15
measurement was to be done in a composite, or unified manner. Dissenting or
minority views, wherever expressed, were premised on separate measurements.
This opinion was of technical experts constituted as arbitrators, who were versed
in contractual interpretation of the type of work involved; they also had first hand
experience as engineers who supervised such contracts. When the predominant
view of these experts pointed to one direction, i.e., a composite measurement, the
question is what really is the role of the court under Section 34 the Act.
21. This court, in M/s. Voestalpine Schienen GmbH v DMRC15 commenting
on the value of having expert personnel as arbitrators, emphasized that “technical
aspects of the dispute are suitably resolved by utilising their expertise when they
act as arbitrators.” Such an approach was commended also in Delhi Airport
Metro Express (P) Ltd v DMRC16 wherein this court held that:
“The members of the Arbitral Tribunal, nominated in accordance
with the agreed procedure between the parties, are engineers and
their award is not meant to be scrutinized in the same manner as
one prepared by legally trained minds. In any event, it cannot be
said that the view of the Tribunal is perverse. Therefore, we do not
concur with the High Court’s opinion that the award of the Tribunal
on the legality of the termination notice is vitiated due to the vice of
perversity.”
22. The prevailing view about the standard of scrutiny- not judicial review, of
an award, by persons of the disputants’ choice being that of their decisions to
stand- and not interfered with, [save a small area where it is established that such
a view is premised on patent illegality or their interpretation of the facts or terms,
15 2017 (1) SCR 798
16 2021 (5) SCR 984
16
perverse, as to qualify for interference, courts have to necessarily chose the path
of least interference, except when absolutely necessary]. By training, inclination
and experience, judges tend to adopt a corrective lens; usually, commended for
appellate review. However, that lens is unavailable when exercising jurisdiction
under Section 34 of the Act. Courts cannot, through process of primary contract
interpretation, thus, create pathways to the kind of review which is forbidden
under Section 34. So viewed, the Division Bench’s approach, of appellate review,
twice removed, so to say [under Section 37], and conclusions drawn by it, resulted
in displacing the majority view of the tribunal, and in many cases, the unanimous
view, of other tribunals, and substitution of another view. As long as the view
adopted by the majority was plausible- and this court finds no reason to hold
otherwise (because concededly the work was completed and the finished
embankment was made of composite, compacted matter, comprising both soil
and fly ash), such a substitution was impermissible.
23. For a long time, it is the settled jurisprudence of the courts in the country
that awards which contain reasons, especially when they interpret contractual
terms, ought not to be interfered with, lightly. The proposition was placed in State
of UP v Allied Constructions17:
“[..] 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.
17 2003 Supp (2) SCR 55
17
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”
24. This enunciation has been endorsed in several cases (Ref McDermott
International Inc. v. Burn Standard Co. Ltd18). In MSK Projects (I) (JV) Ltd v
State of Rajasthan19 it was held that an error in interpretation of a contract by an
arbitrator is “an error within his jurisdiction”. The position was spelt out even
more clearly in Associate Builders (supra), where the court said that:
“[..] if an arbitrator construes a term of the contract in a reasonable
manner, it will not mean that the award can be set aside on this
ground. Construction of the terms of a contract is primarily for an
arbitrator to decide unless the arbitrator construes the contract in
such a way that it could be said to be something that no fair minded
or reasonable person could do.”
25. Before ending the discussion, it would be also necessary to highlight one aspect which is likely to arise in some arbitration proceedings, especially when it involves adjudication by multi-member tribunals. This aspect was highlighted in Russel on Arbitration, where the relevance of a dissenting opinion was explained as follows [as quoted in Dakshin Haryana Bijli Vitran Nigam Ltd. v. Navigant Technologies (P) Ltd (hereafter, “Dakshin Haryana Bijli Vitran Nigam Ltd”) 20]:
18 2006 Suppl. (2) SCR 409
19 2011 (9) SCR 402
20 2021 (1) SCR 1135
“6-058. Dissenting opinions.—Any member of the Tribunal who
does not assent to an award need not sign it but may set out his own
views of the case, either within the award document or in a separate
“dissenting opinion”. The arbitrator should consider carefully
whether there is good reason for expressing his dissent, because a
dissenting opinion may encourage a challenge to the award. This is
for the parties' information only and does not form part of the
award, but it may be admissible as evidence in relation to the
procedural matters in the event of a challenge or may add weight to
the arguments of a party wishing to appeal against the award.”.21
This court also quoted Gary B. Born’s commentary on International Commercial
Arbitration22 opinion:
“Even absent express authorization in national law or applicable
institutional rules (or otherwise), the right to provide a dissenting
or separate opinion is an appropriate concomitant of the
arbitrator's adjudicative function and the Tribunal's related
obligation to make a reasoned award. Although there are legal
systems where dissenting or separate opinions are either not
permitted, or not customary, these domestic rules have little
application in the context of party-nominated co-arbitrators, and
diverse Tribunals. Indeed, the right of an arbitrator to deliver a
dissenting opinion is properly considered as an element of his/her
adjudicative mandate, particularly in circumstances where a
reasoned award is required. Only clear an explicit prohibition
should preclude the making and publication to the parties of a
dissenting opinion, which serves an important role in the
deliberative process, and can provide a valuable check on arbitrary
or indefensible decision making. [.]
[…]
There is nothing objectionable at all about an arbitrator
“systematically drawing up a dissenting opinion, and insisting that
it be communicated to the parties”. If an arbitrator believes that the
Tribunal is making a seriously wrong decision, which cannot fairly
be reconciled with the law and the evidentiary record, then he/she
may express that view. There is nothing wrong — and on the
contrary, much that is right — with such a course as part of the
adjudicatory process in which the Tribunal's conclusion is
expressed in a reasoned manner. And, if the arbitrator considers
that the award's conclusions require a “systematic” discussion, that
is also entirely appropriate; indeed, it is implied in the adjudicative
process, and the requirement of a reasoned award.”
21 David St. John Sutton, Judith Gill and Matthew Gearing QC, Russel on Arbitration, 24th Edn. (Sweet &
Maxwell), p. 313.
22 Gary Born, International Commercial Arbitration, Wolters Kluwer, Edn. 2009, Vol. II, p. 2466 & 2469.
19
[…]
… the very concept of a reasoned award by a multi-member
Tribunal permits a statement of different reasons — if different
members of the Tribunal in fact hold different views. This is an
essential aspect of the process by which the parties have an
opportunity to both, present their case, and hear the reasons for the
Tribunal's decision; not hearing the dissent deprives the parties of
an important aspect of this process.”
26. In Dakshin Haryana Bijli Vitran Nigam Ltd, the court recollected the
previous holding in Ssangyong Engg. & Construction Co. Ltd. v. NHAI
(hereafter, “Ssangyong Engg. & Construction Co. Ltd.”) 2019 [7] SCR 522, wherein the court had
set aside the majority award, but issued consequential directions in the peculiar facts of the case:
“In Ssangyong [Ssangyong Engg. & Construction Co.
Ltd. v. NHAI, (2019) 7 SCR 522], this Court upheld the view taken
by the dissenting arbitrator in exercise of its powers under Article
142 of the Constitution, in order to do complete justice between the
parties. The reason for doing so is mentioned in para 77 i.e. the
considerable delay which would be caused if another arbitration
was to be held. This Court exercised its extraordinary power
in Ssangyong [Ssangyong Engg. & Construction Co. Ltd. v. NHAI,]
keeping in mind the facts of the case, and the object of expeditious
resolution of disputes under the Arbitration Act.”
However, the court did not, in Dakshin Haryana Bijli Vitran Nigam Ltd (supra)
direct the dissenting opinion to be treated as an award. In the opinion of this court,
that approach is correct, because there appears to be a slight divergence in
thinking between Russel and Gary Born. The former, Russel is careful to point
out that a dissenting opinion is not per se an award, but “is for the parties'
information only and does not form part of the award, but it may be admissible as evidence in relation to the procedural matters in the event of a challenge.” However, Gary Born does not expressly say that the opinion is not a part of the award. That author yet clarifies that “This is an essential aspect of the process by which the parties have an opportunity to both, present their case, and hear the reasons for the Tribunal's decision; not hearing the dissent deprives the partiesof an important aspect of this process.”
27. It is, therefore, evident that a dissenting opinion cannot be treated as an
award if the majority award is set aside. It might provide useful clues in case there
is a procedural issue which becomes critical during the challenge hearings. This
court is of the opinion that there is another dimension to the matter. When a
majority award is challenged by the aggrieved party, the focus of the court and
the aggrieved party is to point out the errors or illegalities in the majority award.
The minority award (or dissenting opinion, as the learned authors point out) only
embodies the views of the arbitrator disagreeing with the majority. There is no
occasion for anyone- such as the party aggrieved by the majority award, or, more
crucially, the party who succeeds in the majority award, to challenge the
soundness, plausibility, illegality or perversity in the approach or conclusions in
the dissenting opinion. That dissenting opinion would not receive the level and
standard of scrutiny which the majority award (which is under challenge) is
subjected to. Therefore, the so-called conversion of the dissenting opinion, into a
tribunal’s findings, [in the event a majority award is set aside] and elevation of
that opinion as an award, would, with respect, be inappropriate and improper.
28. In view of the findings recorded earlier, this court is of the opinion that all
the appeals have to succeed. Therefore, C. A. No. 4658/2023, C. A. No.
4659/2023; C. A. No. 4660/2023; C. A. No. 4661/2023 and C. A. No. 4662/2023
are allowed; all judgments of the Delhi High Court, which were the subject matter
of challenge in those appeals are set aside. The awards, which were the subject
matter of challenge, and to the extent they were set aside, are hereby upheld and
restored. The direction in the awards, to the extent they required compounded
monthly interest payments, are modified. Instead, the NHAI shall pay uniform
interest on the amounts due, on the head concerned, i.e., construction of
embankment, to the extent of 12% from the date of award to the date of payment,
within eight weeks from today. All the above appeals are allowed in these terms.
There shall be no direction to pay costs.
............................................J.
[S. RAVINDRA BHAT]
............................................J.
[ARAVIND KUMAR]
NEW DELHI,
AUGUST 24, 2023.
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