Delhi Development Authority v. Alkaram

Leila Seth, J.

1. This is a first appeal directed against the decision of the learned Single Judge dated 24th September of 1979, passed in suit No. 343-A of 1978 and I.A. No. 2459 of 1978. The appellant herein is challenging the reasoned award of the Arbitrator dated 29th March, 1978 which as modified was made a rule of the Court.

2. Before dealing with the appeal, it is necessary to dispose of an application under Section 5 of the Limitation Act, being C.M. No. 308 of 1981 which was ordered to be heard along with the appeal. It appears that along with the grounds of appeal an application, being C.M. No. 2529 of 1979, for exemption from filing the certified copy of the judgment and decree-sheet, was also filed. It was asserted therein that though the certified copy had been applied for on 24th September, 1979, the same had not been prepared and would be filed as soon as it was available. However, when the appeal was admitted on 3rd December, 1979 no orders were passed on this application.

3. Subsequently on 28th January, 1981 an application under Section 5 of the Limitation Act read with Section 151 of the Code of Civil Procedure was filed by the appellant for condoning the delay of a month and two days in filing the certified copy.

4. The brief facts pertaining to this application are as follows: The judgment was delivered on 24th September, 1979. A certified copy of the judgment and decree was applied for on the same date. The certified copy was ready for delivery on 1 7th October, 1980. However, in the meantime; the Counsel for the appellant Miss Usha Mehra had been appointed an Additional District Judge at Delhi and she had returned the papers to the appellant. The certified copy was collected by one Inder Singh, a clerk in the Delhi Development Authority on 5th November, 1980. It was forwarded to the Senior Law Officer (A) who sent it to the Chief Legal Adviser who in turn deposited it to the Engineering Officer to Engineer Member. It was received by him on 12th November, 1980. Thereafter the Engineering Officer sent the papers to the Executive Engineer on 25th November, 1980. The Executive Engineer who received the papers the very next day sent them on to the legal department where they were received on 28th November, 1980. It was then noted on the file on 9th December, 1980 that the Counsel conducting the matter was Mr. R.K. Khanna. As such the certified copy and the file were sent to him which he received on 16th December, 1980. A pertinent fact mentioned in the application is that there was no indication on the file that the appeal had been filed without the certified copy of the judgment and decree and the same was required to be filed in the High Court.

5. However, when Mr. R.K. Khanna examined the main file, he became aware that an application for exemption had been filed. He, therefore, realised that despite the admission of the appeal, the certified copy was required to be filed. He, therefore, did so immediately on 17th December, 1980. Subsequently, he filed the application for condonation of delay on 28th January, 1981. This delay was due to the intervening holidays as also an injury to his right hand. All these facts are gleaned and garnered from the abovementioned application, as also the affidavits of Mr. Inder Singh and Mr. R.K. Khanna and the record.

6. Mr. Lakhanpal, learned Counsel for the respondent vehemently contended that this was a clear case of negligence and sufficient cause for not filing the certified copy in time had not been made out.

7. However, I do not agree with him. I feel that in the facts and circumstances of the case the delay was inadvertent and bona fide. It is not in dispute that limitation expired on 15th November, 1980 and the certified copy was filed on 17th December, 1980. It is this period with which I am concerned. At this stage the papers had reached the Engineering Officer. Due, to the fact that the earlier Counsel had become an Additional District Judge, Delhi as also that there was no noting on the file to indicate that the certified copy was required to be filed in Court, there was no sense of urgency in the movement of the papers. They moved along at the- usual bureaucratic pace oblivious of time running out. But once the certified copy reached counsel, Mr. R.K. Khanna on 16th December, 1980 and he examined the main appeal file and became aware of the situation, he took immediate action. In these circumstances, I am of the opinion that the applicant cannot be said to be guilty of negligence; and that there is sufficient cause for condoning the delay, which we accordingly do.

8. Returning to the appeal, the facts of the case are: the respondent M/s. Al Karma in consequence of a contract with the Delhi Development Authority fixed certain aluminium windows in the multi-storeyed building at Indraprastha Estate, New Delhi. This contract, being No. 28-CDIII-72-73, was made on acceptance of the tender vide letter dated 29th January, 1973 and execution of the contract agreement on 16th February, 1973. Since certain disputes arose between the parties the matter was referred to arbitration under clause 25 of the abovementioned agreement.

9. Mr. Balbir Singh, Superintending Engineer of the Delhi Development Authority was appointed the sole Arbitrator in terms of Clause 25. The said clause also provided for the Arbitrator giving a reasoned award when the claim in dispute was for a sum of Rs. 50,000 or above. As such, the Arbitrator dealt with the fourteen claims of M/s, Al Karma and indicated his reasons while awarding a sum of Rs. 2,93,906.94. He also awarded interest at the rate of 6 per cent per annum from the date of the award till payment or decree whichever was earlier.

10. Thereafter M/s. Al Karma moved an application under Sections 14 and 17 of the Arbitration Act, 1940 to have the award made a rule of the Court. Accordingly the award was filed in Court; and the Delhi Development Authority filed its objections. They contended, inter alia, that the Arbitrator had misconducted himself and the proceedings and acted in excess of jurisdiction and committed errors apparent on the face of the award; also that the award was not a reasoned award and/or that the reasons were vague, and was in any case contrary to Clause 12(v) of the agreement and based on no evidence. The objections related to claim Nos. 1 (c), 1(a), 5, 6, 10, 11(a), 11(b), 11(c), 11(d) and 14. The award with respect to other claims was not challenged.

11. The learned Single Judge on the agreement of parties modified the award with regard to claim No. 1 (c) and 11 (a) and these are not the subject matter of the appeal. Further claims No. 14 which pertained to interest till the date of the decree or payment whichever is earlier was not pressed. This was in view of the fact that the words "whichever is earlier" did not require any interest to be given after the date of the decree.

12. With regard to the remaining claims l(a), 5, 6, 10 and 11(b), (c), (d) the repetitive refrain of Dr. Singhvi, learned Counsel for the appellant was that the reasons indicated were no reasons in law and were based on no evidence and were not reasonable.

13. That it is mandatory for the Arbitrator to give reasons for the award as the claim in dispute is for more than Rs. 50,000 is not disputed. The fact that the Arbitrator indicated his reasons is apparent from the award. As such, the main point in issue is the extent and scope of examination by the Court of the reasons given by the Arbitrator. Is the Court to go into "the reasonableness of the reasons", combing through them and examining them meticulously, as Counsel for the appellant would like us to do Or is it to limit itself to see whether there is an error of law apparent on the face of the award and/or misconduct by the Arbitrator

14. Most of the principles pertaining to arbitration are well settled. There is a decisive difference between a non-speaking and a speaking/reasoned award. The former cannot be vitiated on the ground that no reasons are recorded, whereas, in the latter the reasons indicated can be examined to find out if they are contrary to law. [Bungo Steel Furniture (Pvt.) Ltd. v. Union of India, AIR 1967 SC 378 [LQ/SC/1966/220] and N. Chellappan v. Secretary, Kerala State Electricity Board and another, AIR 1975 SC 230 [LQ/SC/1974/381] ].

15. However, under Section 30 of the Arbitration Act, 1940 an award can be set aside only on the grounds contained therein. These pertain to improper procurement or invalidity of the award and misconduct of the proceedings or the Arbitrator. The decision of the Arbitrator, who is the chosen judge of the parties, is normally final both on facts and law and should not be lightly set aside.

16. But an Arbitrator is not a conciliator and cannot ignore the law or misapply it in order to do what he considers just and reasonable. He is selected by the parties to decide their disputes according to law and is bound to follow and apply it. If he does not, he will be set right by the Court provided the error appears on the face of the award. As such, facts must be based either on evidence or on admission, they cannot be found to exist from a mere contention by one side especially when they are expressly denied by the other. (Thawardas Pherumal and another v. Union of India, AIR 1955 SC 468 [LQ/SC/1955/30] ).

17. Where the Arbitrator indicates his reasons for coming to a conclusion and the award is challenged on the basis of its not being supported by evidence, the party so doing must in the words of Lord Tomlin, "show that it is patent upon the face of the award that there was no evidence at all on which the Arbitrator could have come to his conclusion.". (Nana Kwaku Amosh and another v. Nana Sir Ofgri Atta, AIR 1933 PC 46.

18. However, sufficiency and quality of evidence is a matter for the Arbitrator. The Court is not permitted to reappraise the evidence and sit as a Court of appeal over the Arbitrators award. P. B. Mukharji, J. (as he then was) has expressed this very succinctly in "Hati Ebrahim Kassam Cochinwalla v. Northern Indian Oil Industries Ltd., AIR 1951 Calcutta 230 at page 233, paragraph 8, as follows:

"In my opinion appraisement of evidence by the Arbitrator is ordinarily never a matter which this Court questions and considers. The parties have selected their own forum and the deciding forum must be conceded the power of appraisement of evidence. It is not a question here in this case of any violation of natural principles of justice in refusing to give a hearing to any party or in refusing to have the evidence of a particular party. The Arbitrator in my opinion is the only judge of the quality or the quantity of evidence and it will not be for this Court to take upon itself the task of being a judge of the evidence before the Arbitrator. It may be possible that on the same evidence the Court might have arrived at a different conclusion than the Arbitrator but that by itself is no ground in my view of setting aside an award of an Arbitrator. It is familiar learning but requires emphasis that by Section 1, Evidence Act the Evidence Act in its rigour is not intended to apply to proceedings before an Arbitrator."

Though the Arbitrator is not bound by the technical rules of evidence, he has a duty to act fairly; and his procedure cannot be opposed to natural justice or else he misconducts himself. The expression misconduct is of wide import and does not necessarily imply moral turpitude. The expression "include on the one hand that which is misconduct by any standard, such as being bribed or corrupted, and on the other hand mere technical misconduct, such as making a mere mistake as to the scope of the authority conferred by the agreement of reference". (Halsbury 4th Edition, Volume 2 para 622).

19. Therefore, what emerges, for the purpose of the present case, is that it is only if the Arbitrators decision is based on no evidence and this is patent from the award, then it would be an error apparent on the face of the award and/or misconduct by him. Therefore, it is not for the Court to go into the sufficiency or weight of the evidence but the existence of it. So, it appears to me that what I have to examine is whether there is any evidence to support the reasoned conclusions of the Arbitrator.

20. With this background, let me see the claims and the reasons for the award, one by one. Claim No. 1 (e) is as follows:

"Extra for providing and fixing aluminium angle to hide the gap between the aluminium window frame and the soffit of the beam (Rs. 64, 177.42P)."

The Arbitrators award and reasons pertaining to this claim are as follows:

"Award:

"The claim is justified to the extent of Rs. 30,033.15P."

Rensons:

"During the discussion it became clear that there were irregular gaps between the top of the window frames and bottom of the concrete beams. In order to hide these gaps aluminium angles both inside and outside the window frames were fixed. As per nomenclature of the item in the agreement this operation is not provided for in the execution. However, payment of this gap has been made while taking the measurements of the area from outer to outer of the frames. Under these circumstances the net rate works out to be Rs. 9.57p per metre length. The total length of the gaps involved in the claim works out to be 3138.26 metres and therefore the total value of the claim works out to be Rs. 30,033.15p.".

21. The contention of learned Counsel for the appellant with respect to this claim is three fold:

(i) this extra work was not part of the contract and as such could not be the subject matter of dispute nor paid for under it;

(ii) alternatively, this work had already been paid for as the payment was made by measurement; and

(iii) the rate of Rs. 9.57 per metre was arbitrary, and arrived at without any evidence and the claim could not be so treated.

According to his, each of these aspects amounted to an error apparent on the face of the award and vitiated it; or at least this part of the award if the award was severable.

22. The Arbitrator held, as is apparent from his reasons, that this item of filling the gap was not provided for in the contract; but became necessary to execute due to the irregularity of the concrete beams. Measurements had been taken of the outer extremities and so payment had to be made in the ordinary fashion. But the farther expense involved in filling up the gap between the aluminium window frames and the concrete soffits had to be calculated. The length of the gaps involved worked out to 3138.26 metres. It was the rate of payment of filling the gaps that was worked out at Rs. 9.57 per metre.

23. The dispute mainly pertained to the rate applicable; and this is what was raised before the learned Single Judge. An analysis of the rate based on the weight and cost of the aluminium angles as also of polishing, anodizing and fixing them was worked out by the Delhi Development Authority at Rs. 2.75 per metre (Ex. R8). A similar analysis was worked out by M/s. Al Karma which indicates the rate at Rs. 20.54 per metre (Ex. C. 93). The difference was in the cost of aluminium, labour, polishing, anodizing, sales tax etc.

24. This work had admittedly not been provided for in the original contract. It became necessary to execute, as is apparent, during the progress of the work. As such the delay in execution of the work was not attributable to M/s. A1 Karma. The price of material and labour had admittedly been substantially increased during this period. It would, therefore, appear that M/s. Al Karma was entitled to a variation in the amount.

25. In this connection, contemporaneous correspondence as contained in Exhibit C-69 dated 18th February, 1974 is relevant. It is a letter written by M/s. Al Karma to the Executive Engineer of the Delhi Development Authority. It pertains to, inter alia, the work of fixing angles on the window frames due to the "window soffits being very much out of level and not having been levelled in spite of our repeated requests". It also refers to the supply position of M/s. Indian Aluminium Co. being extremely unsatisfactory and the necessary angles having to be made out of aluminium sheets purchased at a very high cost from the market which entailed unnecessary labour cost, "which was approved to avoid delay".

26. The Arbitrator went into the matter in some detail on the 7th hearing on 31st August, 1977. He referred to exhibits C17, C42 and R6. These are letters dated 23rd July, 1975, 20th February, 1975 and 3rd February, 1975 respectively. The first two are by M/s. Al Karma and refer to non payment of, inter alia, the extra item of work of providing and fixing anodized aluminium angles between the soffits and the beams at the rate of Rs. 20.45 as agreed to; and the last letter which is written by the Executive Engineer to the Chief Engineer, Delhi Development Authority mentions that the contractor is entitled to an extra payment for extra items.

27. The Arbitrator feeling satisfied, that the contractor was entitled to extra payment, worked out the extent of the variation at Rs. 9.57 per metre.

28. There was material before him to establish that the price had risen substantially. He was justified in not accepting the calculations of either party and arriving at his own figure in accordance with the facts ascertained by him. He has not based his decision only on the claim of the contractor, as contended by learned Counsel for the appellant.

29. In these circumstances I feel that the Arbitrator was well within his jurisdiction to come to this conclusion. The question whether I would have come to the same conclusion or arrived at the same figures is not material. Once there is evidence, there is no apparent error and/or misconduct. I cannot go into the sufficiency of the evidence; nor is it necessary for the Arbitrator to set out the actual calculation figures as worked out by him; his reasons, as mentioned are adequate and clear; it is not essential for him to give a detailed reasoned decision indicating each minute step of his mental meanderings.

30. Coming next to claim No. 5, I propose to set out, first the claim and then the award and the reasons of the Arbitrator.

Claim:

"Extra cost due to non-vacation of first four floors for

(a) Alluminium mullion

(b) Idle Labour and establishment (Rs. 61,307.28 P.)"

Award:

The claim is justified to the extent of Rs. 43,918.12 P."

Reasons:

"During the proceedings both the parties agreed that there was delay of about 3 to 4 months due to non-vacation of first four floors for completing the remaining aluminium work, with the result that the claimants had to incur extra expenditure on account of purchase of fresh aluminium materials from the market and also due to idle labour and establishment. If there would have been no delay in the execution of the work, the cost of the materials purchased would have been Rs. 7842.63 P. being the cost of 1095.07 kgs. of aluminium Section (INDAL Sections being Nos. 2778, 2779 and 9758). Due to sharp increase in the cost of aluminium sections the contractor had to incur a sum of Rs. 56,393.68, being the cost of 2014 06 Kg. of aluminium materials. Since all the materials could not be used and unused materials could only be disposed of in the market as scrap materials, the amount thus realised works out to be Rs. 6,432.93 being the cost of 918.99 Kgs. of aluminium materials. Under these circumstance the contractor had to incur extra expenditure amounting to Rs. 42,118.12 P.

The contractor had also to incur wasteful expenditure on account of idle labour etc. The reasonable amount of idle labour etc. works out to Rs. 1800. Thus the total value of the claim due to non-vacation of first four floors works out to Rs. 43,918.12 P."

31. The petitioner claimed the extra cost due to the delayed vacation of the first four floors. That there was a delay by the Delhi Development Authority in not making the site available is not in dispute. Clause 2-A of of the notice inviting tenders dated 15th September, 1972, which is part of the contract, provided that the site for the work was immediately available. The date of starting the work was 2nd February, 1973. The due date for completion of contract was 1st October, 1973. But the first four floors were only vacated in August, 1974. As a result the required work could not be carried out at the start and the prices of material and labour escalated in the meanwhile.

32. Dr. L. M. Singhvis main contention with regard to this claim was, that the Arbitrator had directed the contractor on 29th September, 1977 at the 8th hearing, to produce vouchers with regard to the enhanced price of the aluminium and as the contractor failed to do so, the Arbitrator was not entitled to make an award in his favour on this aspect; he went so far as to say that in fact this amounted to a misconduct on the part of the Arbitrator. Learned Counsel relied on certain decisions of this Court and in particular M/s. Mehta Teja Singh and Co. v. Union of India and another, AIR 1977 Delhi 231 and M/s. Bhai Sardar Singh and Sons v. New Delhi Municipal Committee and another, A.I.R. 1981 Delhi 374.

33. The first is a decision by one of us (Avadh Behari Rohatgi, J.) wherein the Arbitrators award was set aside because the Arbitrator did not order production of the technical examiners report. This was because it was a vital document, the basis of the claim and without it the Arbitrator could not have reached a proper decision on the respective contentions of the parties; and in the circumstances of the case this had resulted in a miscarriage of justice. This case was relied on in M/s. Bhai Sardar Singh and Sons (supra). In the latter case also, relying on the decision of the Supreme Court in K. P. Pouloss v. State of Kerala and another A.I.R. 1975 SC 1259, [LQ/SC/1975/169] wherein it was held that it was the duty of the Arbitrator to get hold of all relevant documents for the purpose of a just decision, the Court set aside the award; as the Arbitrator had admittedly passed the award without perusing the contract/ agreement which was the material document and thus committed judicial misconduct. I have no quarrel with these decisions and propositions of law. But what is a material or vital document has to be seen in the facts and circumstances of each case.

34. The contemporaneous correspondence chronologically collected clearly confirms that the Delhi Development Authority did not make these first four floors available till August, 1974, though the work was to be started on 2nd February, 1973 and completed on 1st October, 1973. In fact this aspect of the matter is admitted. Exhibit C-77, C-73, C-69 are letters dated 19th September, 1973, 14th December, 1973, 18th February, 1974, respectively by the contractor M/s. Al Karma repeatedly requesting for vacation of the site. Exhibit C-68 dated 25th March, 1974 is a reply by the Executive Engineer, Delhi Development Authority indicating that the premises will be available for work on 15th April, 1974.

35. The next letter dated 17th July, 1974, Exhibit C-66 by M/s. Al Karma to the Executive Engineer is relevant. It is clearly indicated therein that despite the fact that 9 months have elapsed since the due date of completion of the contract, the first four floors have not been made available. The work on the other floors had been completed much earlier. As such, the prevailing market rates of the material required for the aluminium glazing had increased three to four times as compared to the tender price. Heavy expenditure on idle establishment and labour had been incurred. Thus, it would not be possible to carry out the work. The same position is reiterated in a letter dated 25th July, 1974, Ext. C-64. It is also mentioned there in that in these circumstances it would not be possible to carry out the work at the old rates. The Superintending Engineer noted this position in his memorandum dated 27th July, 1974 Ext. C-101 and observed that the firm would be justified in not continuing the work if the floors were not made available.

36. On 9th August, 1974, M/s. Al Karma again wrote to the Executive Engineer and informed him that the site was not yet available and after setting out all its difficulties stated that it was unable to provide and fix the aluminium glazing on the first four floors at the old rates and requested him to close the contract and make final payment within a week.

37. However, the site was vacated in August, 1974 and measurements taken. It was only thereafter that an order could be placed and on 2nd September, 1974 (Ext. C-53), M/s. Al Karma wrote to M/s. Indian Aluminium Company requesting immediate delivery of the specified aluminium extruded sections required for the window glazing of these first four floors. A cheque of Rs. 15.000 was also enclosed as an advance payment. The Executive Engineer by his letter dated 5th September, 1974 (Ext. C-52) also wrote to M/s. Indian Aluminium Co. indicating the urgency for the completion of the job and requesting it be given top priority and indal Section No. 2778, 2779, 9758 be supplied. However, on 6th September, 1974 (Ext. C-51) M/s. Indian Aluminium Co. made it quite clear that it would not be possible to even start executing the order before the first quarter of 1975. The Chief Engineer then made a request to M/s. Indian Aluminium Co. on 9th September, 1974 (Ext. C-50) to comply with the order, but without success. As a result M/s. Al Karma had to purchase the material from the market and completed the work by 30th November, 1974, as requested by the Delhi Development Authority.

38. That the rate had gone up during this period is apparent. On 17th July, 1974, (Ext. C-66) it had been clearly indicated that the market rate had risen to three to four times, from the time prevailing when the work had been tendered for. On 18th November, 1974, there is a clear admission by the Superintending Engineer to the Chief Engineer (Ext. C-95) that the rate of aluminium has almost doubled and that the quantity required is almost 1.7 times per sq. metre. Based on the note of V. Ramakumar, Executive Engineer, CD-III (Ext. R-13) and its enclosures on the above subject, he observed that "the quoted rate could have been as much as 4 times". He also notes that the cost of glazing, as per the proposals of HHF, were at least Rs. 1 lakh more than that of M/s. Al Karma. Though the note of V. Ramakumar (Ext R-13) is a comparative study of the rates of the work done on a restaurant floor and a typical floor and does not pertain directly to this work, yet what is relevant is the material cost and labour escalation involved. The cost of extruded aluminium is indicated therein at Rs. 20.50 per Kg. as compared to Rs. 7.80 earlier, as per enquiries from Hindustan Aluminium Corporation/Indian Aluminium Co. Ltd. The cost of fabrication and anodizing is Rs. 80 as compared to Rs. 60 and the cost of glass at Rs. 105 per sq. metre as compared to Rs. 52 per sq. metre. The increase in the cost of per sq. metre is based on four factors: (1) increase in the quantity of aluminium required per sq. metre of glazing, (2) increase in the cost of aluminium extrusion, (3) increase in the cost of glass, and (4) increase in the cost of labour etc. It is worked out at Rs. 510 per sq. metre as opposed to Rs. 198 per sq. metre earlier.

39. Ext. C-96 indicates that the Indian Aluminium Co. Ltd.s rate on 7th August, 1974 was Rs. 14.758 per tonne ex. Delhi godown including excise duty but exclusive of sales tax. Ext. C-93 indicates the Indian Aluminium Co. Ltd.s price on 17th October, 1973 for Sections 2778 and 2779, weight 1.648 and 0.988 respectively. This was Rs. 6.71 and Rs. 6.77 respectively per kg. ex. Delhi godown subject to other taxes. The invoice dated 8th August, 1974 (Ext. C-99) of M/s. Indian Aluminium Co. Ltd. indicates the price of Section No. 3212 at Rs. 11.21. The price of this material earlier on 25th July, 1973 was Rs. 6.95. The price was ex. Delhi godown though central excise duty at 30 per cent basic price and auxiliary duty at 10 per cent ad valorem were to be charged extra.

40. All this material is clearly indicative of the steep rise in the prices of aluminium and labour. Further, though the claim had been made on the basis of the aluminium being Rs. 28 per kg., the Arbitrator awarded a sum which would indicate a rate of about 2/3rd of the rate as the claim was for Rs. 61,307.28 and the award was for Rs. 43,918.12.

41. On the 8th hearing of the case on 27th September, 1977 this claim was fully discussed. It is true that M/s. Al Karma were asked to produce the vouchers or photostat copies indicating the rate at Rs. 28 per kg. of aluminium. This was admittedly not produced. It would have been proper for the contractor to have produced the vouchers or photostat copies as directed. But can the non-production of such vouchers/photostats nullify all the other material and admissions on record I think not. It is quite clear that the purchase had been made from the market as M/s. Indian Aluminium Co. Ltd. could not supply the goods and the price increase was almost four fold since tendering. As above indicated there was ample material for the Arbitrator to come to the conclusion about the price rise and idle labour, and in the circumstances he cannot be said to have misconducted himself.

42. Dr. Singhvis further submission with regard to this claim was that the Arbitrator has committed an error apparent on the face of the award because he ignored Clause 10C of the contract while granting the increase in the price of the material.

43. It would appear that Clause 10G is not applicable in such a case and we are reinforced in our view by the decision of this Court in M/s. Metro Electric Co. v. Delhi Development Authority, New Delhi, 20 DLT (1981) 64 (DB) (SN). The identical clause was under consideration and the facts were similar. This Court held that, "Clause 10C presumes that the contract is completed during the agreed period of the contract and is applicable only during the progress of the work within that period". In the present case it is not in dispute that it was not the contractor who asked for an extension of time but the Delhi Development Authority which did not make the site available for execution of the work, during the period of the contract. So they must be responsible for the delay which occurred and the resultant expenditure/damages.

44. I come next to claims 6, 10 and 1 l(b), (c) and (d) which pertain to the 7th, 13th, 20th floors and the ground floor of the multistoreyed building. The claims, the award, and the reasons for the award are as follows:

"Claim Nos. 6 and 10:

"Short payment for providing and fixing partly openable and partly fixed aluminium glazing on the 7th, 13th and 20th floors (Rs. 2,41,589.05)."

Award:

"The claim is justified to the extent of Rs. 1,23,166.55 P".

Reasons:

"During the proceedings both the parties agreed that the contractor was required to execute the work of providing and fixing partly openable and partly fixed aluminium glazing on 7th, 13th and 20th floors as an extra item payable under Clause 12 of the agreement. In first instance the contractor quoted a rate of Rs. 480 per sq. m. for the work which was later on revised to Rs. 510 per sq. m. The contractor has been insisting upon the Department for communicating the rate payable to him. Later on the Department communicated the approval on 15th February, 1975 for carrying out the work @ Rs. 510 per sq. m. which was demanded by the contractor after revising the rate from Rs. 480 to Rs. 510 per sq. m. In the meantime the contractor was unable to execute the work at the rate of Rs. 510 due to increase in cost of materials and labour etc. However, the contractor executed the work under protest as he was demanding a rate of Rs. 1000 per sq. m. The Deptt. while justifying the rate of Rs. 510 adopted the cost of aluminium sections varying from Rs. 20 per Kg, to Rs. 26 per Kg. whereas the cost of aluminium Sections prevailing in the market was available at the rate of Rs. 33 per Kg. Taking into account the increase in the cost of aluminium, glass, labour and other factors the reasonable rate works out to Rs. 750 per sq. m.

The contractor has also been protesting against the wrong mode of measurements for the work. As per terms of the contract the mode of measurements as recorded by the department is found to be in order.

While making the payment, the contractor has been paid Rs. 503per sq. m.

Under these circumstances the extra rate payable works out to Rs. 247 per sq. m. Since the area involved is 498.65 sq. m. and therefore the claim of the contractor works out to Rs. 1,23,166.55p."

Claim No. 11 (b):

"Providing and fixing anodized aluminium glazed doors on the ground floor. (Rs. 7,958.73p)."

Award:

"The claim is justified to the extent of Rs. 4,485."

Reasons:

"From the last running bill it is seen that Department has made a part payment @ Rs. 460 per sq. m. Considering the market rate of aluminium at Rs. 33 per Kg., the justified rate works out to Rs. 835per sq. m. The area involved is 11.96 sq. m. and therefore the total value of the claim works out to Rs. 4,485."

Claim No. 11 (c):

"Providing and fixing aluminium glazed doors on the 7th, 13th and 20th floors. (Rs. 16,023.93)."

Award:

"The claim is justified to the extent of Rs. ll,154.78p."

Reasons:

"From the last running bill it is seen that the Department had made a part payment @ Rs. 457 per sq. m. against the quoted rate of the contractor of Rs. 1010 per sq. m. The reasonable rate under Clause 12 of the agreement works out to Rs. 845 per sq. m. The area involved is 29.51 sq. m and therefore the total value of the claim works out to Rs. 11,154.78P."

Claim No. 11 (d):

"Providing and fixing aluminium sliding windows on the mezzanine floor. (Rs. 2.294.40P)."

Award:

"The claim is justified to the extent of Rs. 1.996.80P."

Reasons:

From the last running bill it is seen that the department has made part payment @ Rs. 473 per sq. m. whereas the reasonable rate under Clause 12 of the agreement works out to Rs. 857 per sq. m. Since the area involved is 5.2 sq. maters and therefore the value of the claim works out to Rs. 1,996.80P."

45. These are claims for providing and fixing aluminium glazing and aluminium glazed doors on the 7th, 13th and 20th floors; as also providing and fixing aluminium sliding doors/windows on the ground/mezzanine floor. It was agreed, as it appears, before the Arbitrator by the parties that the item of work under these claims were payable under Clause 12(v) of the agreement.

46. In terms of this clause as additional work was required to be done by the contractor he had to submit an analysis of the rate which he intended to charge for such work based on the prevailing market rates. The Engineer-in-charge could either determine the rates and pay the contractor accordingly or cancel the order; but the contractor was not entitled to suspend the work on the plea of non-settlement of rate of the items.

47. Admittedly the work was not cancelled by the Engineer-in-charge and though the contractor submitted his analysis of rate no decision was taken with regard to the price for some time; nor were the final corrected drawings made available by the Delhi Development Authority till 15th February, 1975 and sample work approved till July, 1975.

48. Learned Counsel for the appellant, however, contends that the contractor M/s. Al Karma could not have suspended the work while the price was being negotiated as this would be a breach of Clause 12(v); and in any case it cannot take advantage of the delay, and as such the Arbitrator had no jurisdiction to grant relief.

49. In this context, it is necessary to examine facts and circumstances of the matter. On 7th August, 1974 M/s. Al Karma wrote to the Delhi Development Authority (Ext. C61) as desired by the Executive Engineer quoting its rates for aluminium glazing for the three floors (13th, 17th and 20th). The cost was indicated as Rs. 480 per sq. meter as the aluminium was in stock and the work could be completed within three months from they date work was ordered to be started. The offer was open for fifteen days only. On 4th October, 1974 the Executive Engineer (Ext. C47) replied to this letter stating therein that the offer had been considered but as the drawings had been modified a revised offer was required to process the case further. On 19th October, 1974 M/s. Al Karma replied (Ext. C46) to the Executive Engineer and informed him that as per the modified drawings and the increase of cost, the price would be Rs. 510 per sq. meter. The offer being valid for a month only. On 4th December, 1974 (Ext. C45) M/s. Al Karma reiterated that it would not accept a rate less than Rs. 510 and requested for a set of drawings so as to enable it to start the work. On 9th January, 1975 (Ext. C44), not having heard anything from the Delhi Development Authority, it once again requested for a direction to start the work but also mentioned that though the rate of aluminium had been recently increased by the Government, it was willing to do the work at Rs. 510 per sq. meter because of past contracts. However, this was a last offer and open only for seven days. It was also clarified that no rebate would be given. The Executive Engineer failed to accept the offer as abovementioned. But on 15th February, 1975, a month later, he wrote to M/s. Al Karma indicating that the rate of Rs. 510 was acceptable and requesting it to proceed with the execution of the work as per the drawings enclosed. A copy of an extra item statement was also annexed.

50. Thereafter on 3rd March, 1975 (Ext. C41), M/s. Al Karma wrote to the Executive Engineer that the offer had lapsed on 16th January, 1975; since then there had been an increase of Rs. 2,000 per tonne in the excise duty of aluminium ingots and one per cent in the central sales tax. The excise duty on glass and furnace oil had also been increased, so that the cost of glass had gone up by about 10 per cent. Further, the joint had been dis-mentled as there had been no reply till 16th January, 19,75 aad fresh arrangements would have to be made for lifting the material to the 20th floor. It offered to submit a revised question if the authorities so required.

51. Two months later, on 12th May, 1975, (Ext. C39), the Executive Engineer wrote to the contractor requesting him to put up a sample piece at the site before fabrication of the window; and to proceed with production only after obtaining the approval. The sample was to be completed by 19th May, 1975.

52. On 26th May, 1975 (Ext. C38), M/s. Al Karma wrote that the sample of glazing was put up at site, as a matter of goodwill, but that the original rate of Rs. 510 per sq. meter did not include the provision of "Glazing clipa, neoprone airtight lining including weather proofing strips, handles and self-locking arrangements "which were now being required and not indicated in the earlier drawings. The supplying and fixing of fibre board shutters was also not included. Even excluding this last item, the cost would be about Rs. 1,000 per sq meter "at the present market rates, which are continually increasing".

53. On 5th June, 1975 and 20th June, 1975 (Exts. C37 and C35 respectively), the Executive Engineer wrote to M/s. Al Karma to start work as agreed in the meeting as per the sanctioned rate of Rs. 510 and the description as per letter of 15th February, 1975. On 28th June, 1975 M/s. Al Karma (Ext. C33) replied to these two letters. It was indicated therein that in the meeting held on 2nd June, 1975 in the Superintending Engineers Office, the Executive Engineer had assured the firm that they would be entitled to put up their claim for "increase in prices". As such, the work was being carried on at the said rate under protest reserving their right to claim payment at the market rate i.e. at Rs. 1,000 per sq. metre; an analysis of which was enclosed. Further, the sample glazing had been put up at site on 15th May, 1975 and written approval should be accorded. It was also indicated therein that M/s. Indian Aluminium Co. Ltd. was not in a position to supply the material urgently and so the materials were being purchased from the market because of the urgency; certain clarifications were also sought regarding details of the work.

54. On 4th July, 1975 (Ext. C31), M/s. Al Karma informed the Executive Engineer that the work was being continued and would be completed within the stipulated period but without prejudice to their contentions with regard to the price. The work was executed in July/August, 1975. However, on 18th July, 1975, the Executive Engineer informed M/s. Al Karma (Ext. C-18) that nothing beyond the sanctioned rate of Rs. 510 per eq. metre would be payable. But, only a day earlier on 17th July, 1975 (Ext. C21), M/s Al Karma had once again reiterated to the Executive Engineer that they had never agreed to do the work for Rs. 510 and a clear counter offer of Rs. 1,000 had been indicated. Further, the fact that they had been asked to expedite the work on 9th July, 1975 indicated that the counter offer contained in the letter dated 28th June, 1975 had been accepted. On 18th July, 1975 and 18th August, 1975 (Exts. C20 and C15 respectively), M/s. Al Karma replied to the Executive Engineers letter of 18th July, 1975 and categorically contested that they had agreed to execute the work at Rs. 510; in fact what transpired at the meeting on 2nd June, 1975 in the office of the Superintending Engineer was indicated; that is, that there was an assurance that the rate of Rs 1,000 per sq. metre was fully justified.

55. A note dated 23rd April, 1975 (Ext. C97) by the Superintending Engineer, Delhi Development Authority to the Chief Engineer is relevant revealing. It contained the following passage:-

"Contractor has flatly refused to do the work exact at Rs. 510 per sqm. net, i.e. without any rebates Subsequently he had even refused to do the work at this rate also when rates of aluminium increased substantially after 1975-76 budget. Thus it will be clear that if the rebate is not waived, contractor M/s. Alkarma would not do this work and fresh tenders will have to be called and the expected rate would be in the neighbourhood of Rs. 700 per sqm. It would mean in other words extra expenditure of Rs. 1 lac."

56. In this connection, Ext. R-12 and Ext. R-15 are pertinent. Ext. R-12 indicates the price as per M/s. Indian Aluminium Co. Ltd. as on 26th September, 1975 of aluminium at Rs. 13.62 to Rs. 14.02, F.O.R. Kalamassary exclusive of excise duty, sales tax and other taxes Ext. C-105 is the working out of the price on the basis of the Indal section being Rs. 13.72, at Rs. 28.49 per kg. After adding excise duty at 40 per cent to the basic rate as also sales tax, bank charges, insurance charges, cartage from the works to Delhi, loading, unloading, cartage from transportation to the factory, the total works out to Rs. 28.49 per kg. Ext. R-15 indicates the current price of aluminium as per Indian Aluminium Co. Ltd. as on 31st October, 1975. It varies between 15.45 and 17.49 per kg. F.O.R. Kalamassery; excise duty, sales tax and other taxes to be added. Excise duty is 40 per cent ad valorem plus Rs. 2,000 per tonne and central sales tax is charged at 4 per cent if Forms C and D are provided or else at 10 per cent. After making the additions for transportation etc. it works out to Rs. 33 per kg.

57. The entire aspect of these claims were dealt with by the Arbitrator on the 9th, 10th and 11th hearing of the case. The contractor claimed a rate of Rs. l.000 per sq. metre with regard to claims 6,10 and 11(b). The Delhi Development Authority felt the contractor should be entitled to Rs. 510 only but the Arbitrator allowed Rs. 750. for claims 6 and 10 and Rs. 835 for 11(b). Similarly with regard to claim 11(c) for aluminium glazed doors M/s. Al Karma asked for Rs. 1010 per sq. m. and the Arbitrator awarded Rs. 845 per sq. m. The rate claimed with regard to claim 11(d) was Rs. 1045 per sq. metre. This pertained to aluminium sliding windows on mazzanine floor. The Arbitrator made the award at the rate of Rs. 857per sq. metre. Is this arbitrary and/or based on no evidence I hardly think so. The entire correspondence as above indicated shows that the matter of rate was fluid. Different analysis of price costing were available before the Arbitrator. As is apparent from the facts abovementioned, he had material to enable him to come to a conclusion as to what amount he should award.

58. It also appears to me that M/s. Al Karma was not guilty of any breach in terms of Clause 12(v), thus ousting the jurisdiction of the Arbitrator from granting it any relief, as contended by Counsel for the appellant. The correspondence which has been set out in some detail indicates that it was for the first time that the drawings were made available for this work in February, 1975; and the sample was approved only sometime in July, 1975. The work was started and completed thereafter in July-August, 1975; the contractor had no alternative but to do so. However, M/s. Al Karma did threaten to stop work even after the aluminium sections and joints had been made, and polished and anodized and holes drilled. This was on 17/18th July, 1975 when the work was in full swing. Though, it appears, that the work was stopped for a very short while, it was completed within the stipulated period. In these circumstances the contractor is not taking advantage of any delay, nor is he guilty of any breach.

59. For the reasons outlined above, it would appear to me that there is no error apparent on the face of the award nor has the Arbitrator misconducted himself and there was material for him to come to his conclusions. In my opinion when an Arbitrator gives a reasoned award he is not required to write a detailed judgment setting out each logical step of his reasoning but it is sufficient if he indicates the trend of his theme of process, so that errors can be eliminated and arbitrariness avoided. But the Courts function remains restricted. It does not permit reviewability of the reason, nor a combing through as an appellate forum would be advised to do, as this would amount to an impeachment of the award which is not permissible; the purpose of arbitration being speed, cheapness and certainty a necessary requirement for commercial conduct of business. However, the Court can set aside the award if it is apparent therefrom that the reasons referred to therein are based on no evidence and/or on an errorness proposition of law. Neither is true in the present case.

60. I, therefore, dismiss the appeal with costs and confirm the order of the learned Single Judge.

Avadh Behari Rohatgi, J.

1. I have had the advantage of reading the main Judgment which Ms. Justice Leila Seth is going to deliver in this case. I entirely agree with her reasoning and conclusion. But I will like to say a few words as a post script in deference to the Counsels long arguments he addressed to us on the Arbitrators award. The main slay of his case was that since the award in this case is a reasoned award the Court can examine the "reasonableness of the reasons" (to use his phrase) given by the Arbitrator in support of his findings. We were invited to hold that the award was unreasonable in some parts of it and that on that ground we should set it aside. We cannot accept this argument.

2. By reason of the submission clause the Arbitrator is bound to give reasons if the claim in dispute is of Rs. 50,000 and above. So the Arbitrator has to give reasons for the award. If he does not it will be a case of misconduct. But the question is what are the limits of judicial reviewability once the Court has reasons before it. All that it means is that the award is a speaking award. But the law remains unchanged. The Arbitrators award on both fact and law is final. There is no appeal from his verdict. The Court cannot review his award and correct any mistake in his adjudication, unless an objection is apparent on the face of it. (Firm Madan Lal v. Hukam Chand Mills, AIR 1967 S.C. 1080). These principles were laid down as long as 1923 by the Privy Council in the leading case of Ohampsey Bhara Co. v. Jivraj Balloo Spinning and Weaving Co. Ltd., AIR 1923 P.C. 66 and since then that decision has passed into the folklore of arbitration law.

3. If the Arbitrator gives reasons it does not mean that the losing party can quarrel with his reasoning and convert the Court hearing objections to the award into an appellate forum. All through the hearing of this case which lasted several days we were oppressed with the thought as if we were hearing an appeal from the Arbitrators decision. Under Section 30, Arbitration Act the Court exercises a limited jurisdiction and can only deal with matters within a limited scope. When the Arbitrator gives reason for his award this does not open the door to the Court to see what the contention of each party was and what was the evidence given by the parties on it, and then examine the evidence to see whether the disputed findings of fact are sufficiently supported by the evidence. The theory propounded before us that the Court can see the reasonableness of the reasons, if accepted,

"would cut at the root of the whole purpose of arbitration, the basic idea of which is that the Arbitrators decision shall be final." [per Wilmer L J in Tersons Ltd. v. Stevenage Development Corporation (1963) 3 All ER 863(867)].

4. As a sole tribunal, the Arbitrator is entitled to decide rightly and wrongly. Where an Arbitrator makes a mistake either in law or in fact in determining the matters referred, but such mistake does not appear on the face of the award, the award is good notwithstanding the mistake, and will not be remitted or set aside. (Russell on Arbitration 19th Ed. p. 447). The general rule is that, as the parties choose their own Arbitrator to be the judge in the dispute between them, they cannot, when the award is good on its face, object to his decision, either upon the law or the facts. (Russell p. 448). His decision may be right or wrong. But it is not misconduct on the part of an Arbitrator to come to an erroneous decision, whether his error is one of fact or law, and whether or not his findings of fact are supported by evidence. (Russell p. 475). It is well to remember the words of Lord Justice Atkin:

"It is no ground for coming to a conclusion on an award that the facts are wrongly found. The facts have got to be treated as found;Nor is it a ground for setting aside an award that there is no evidence on which the facts could be found, because that would be mere error in law, and it is not misconduct to come to a wrong conclusion in law and would be no ground for ruling aside the award unless the error in law appeared on the face of it."

[Gillespie Bros. and Co. Thompson Bros. and Co. (1922)13 Lloyd Law Rep. 519 (524)].

Lord Denning MR has said:

"The weight of evidence and the inferences from it are essentially matters for the Arbitrator. I do not think that the awards of Arbitrators should be challenged or upset on the ground that there was not sufficient evidence or that it was too tenuous or the like. One of the very reasons for going to arbitration is to get rid of technical rules of evidence and so forth.Questions of evidence are essentially matters for the Arbitrator and not matters for the Court."

[G.K.N. v. Matbro (1966) 2 Lloyds Rep. 555 (575].

5. It is never possible to set aside the award merely because there was no evidence supporting a particular finding, unless it appears from the award itself that there was no evidence to support the finding; subject there to the findings of the Arbitrator are final and it is of no avail to state on the grounds for setting aside the award that the findings were erroneous. The difficulty cannot be got over by dressing the matter up under the heading "perversity". Nor is it a misconduct for the Arbitrator to make a mistake of law. (Russell p. 476). The general rule therefore is that the award is final as to both fact and law. An exception to this general rule is the doctrine that error of law, if it appears on the face of the award, is a ground for setting aside. (See Jivrajbhai v. Chintamanrao, AIR 1965 S.C. 214; Bungo Steel v. Union of India, AIR 19S7 SC 378 [LQ/SC/2000/428] ; M/s Alien Berry and Go. v. Union of India, AIR 1971 SC 696 [LQ/SC/1971/6] ). If these principles were had in mind much of the challenge which was taken to the award before us is beside the mark altogether.

6. It will be right to point out here that though the Arbitrator by the terms of the arbitration clause is required to give reasons for the award he is not to write a detailed judgment as we judges do in Courts. The requirement of reasons meets the elementary demand of the parties to be told "the reason why" for a particular conclusion arrived at by the Arbitrator. For the Arbitrator it is an act of self discipline. But to say that the Court will be entitled to examine the reasonableness of the reasons is to allow the concept of reasons to run wild. The theory is a disguised attempt to turn questions of fact into questions of law with a view to having them retried by the Court, with the result that all the objects sought to be attained by means of arbitration-decision by the tribunal chosen by the parties, and finality and quickness and cheapness would be defeated by protracted proceedings in the Courts, as has happened in this case before the single Judge and before us. There is a danger of attempts being made to reopen issues of fact which arc concluded by the Arbitrators findings.

7. What reasons are sufficient in any particular case must, of course, depend upon facts of the case. I approach the matter in this way; that reasons are not deficient merely because every process of reasoning is not set out. I further think that reasons are not insufficient merely because they fail to deal with every point raised before the Arbitrator at the hearing. No universal generalisation can be made. Everything depends on the subject-matter. In deciding a controversy the Arbitrator works in an environment which is quite different from that of the judge. He is not bound by the technical rules of evidence. The ropes and pulleys" that he uses in the arbitral process are different from the foot rules and set squares that we use in the judicial process. From the Arbitrator what is wanted is "a practical decision on the disputed issues" [F. R. Absalom v. Great Western (London) Garden Village Society, 1933 A.C. 592 (616) per Lord Wright]. He knows that businessmen want to do business and not to argue about it. He gives not judicial justice, but rough justice of the world. Because he is not bound by the "codeless myriad of precedents". Many have found salvation in the faith they reposed in this private domestic forum for the settlement of their disputes.

8. It will be unfair to charge the Arbitrator with misconduct in this case. He fully heard the parties. He held a number of sittings day after day. He kept detailed minutes of the discussions held at those meetings. To say that he misconducted himself or the proceedings is to misuse the term. It is not misconduct to make a mistake of fact. It is not misconduct to go wrong in law so long as any mistake of law does not appear on the face of the award. The term misconduct properly applies to what has been aptly called "procedural mishaps" which result in injustice. So Court control is confined to specific matters, such as misconduct of the, Arbitrator in denying a party the full presentation of its claim or not granting a postponement of the hearing for good cause. A review of the award by a Court generally will not deal with the Arbitrators decision as to facts or with his application of the law. The competence of the Courts is restricted in order not to make the arbitration process the beginning of litigation instead of its end.

9. Commercial arbitration is a substitute for adjudication by the tribunals established by the Government. That commercial arbitration is a useful instrumentality of justice cannot be denied. In recent times the exigencies of business have brought an increasing demand for commercial arbitration. Long delays due to congested dockets of the Courts in metropolitan commercial centres led increasingly for demand for a speedy and inexpensive method of settling disputes. Arbitration is now definitely established as an extra judicial remedy in commercial cases. It is a method of determination of controversies by persons chosen for the particular case by the parties to the controversy or by those they have designated. The main advantage of arbitration is that parties can have their disputes decided by a tribunal of their own choosing, and they can choose as their Arbitrator a person with special knowledge and experience of the class of business concerned. This is what happened in this arbitration. The appellant D.D.A. appointed its own superintending engineer to decide the disputes it had with the contractor. It was hoped that the disputes would be settled cheaply and quickly. But in this Court it was strongly urged upon us that we examine the reasonableness of the Arbitrators reasons. We cannot accept this theory. Because its acceptance would mark the beginning and not the end of this litigation. The Arbitrators award will then cease to be final.

10. My conclusion in this case is that the Arbitrator was the final judge of fact. The Court is bound by the Arbitrators findings of fact and cannot review them unless they are unsupported by evidence and unless it appears from the award itself that there was no evidence to support the finding. It is not open to the Court to examine the adequacy of evidence which led the Arbitrator to his findings of fact. His findings are final.

11. Nor do we find in this award any legal proposition which is the basis of the award and which is erroneous. It is not possible to say from the award that the Arbitrator was under a misconception of law. There is no error in point of law on the face of the award. We cannot say that his reasons are good or bad unless on the face of the award it appears that he has tied himself down to some special legal proposition which is unsound. [Champsey Bhara (supra) page 69].

12. I agree that we uphold the order of the learned Judge and dismiss the appeal with costs.