Order Sheet Serial No G.A. No. 2421 of 2002 A.C. No.2 of 2002 IN THE HIGH COURT AT CALCUTTA ORDINARY ORIGINAL CIVIL JURISDICTION ORIGINAL SIDE In the matter of : DIPAK KUMAR PRAMANIK Vs KOLKATA IMPROVEMENT TRUST Before: The Hon'ble Justice INDIRA BANERJEE Date: 19.02.2009 JUDGMENT
This application under [SECTION] and [SECTION] of the [ACT] is for setting aside an award dated [SECTION]th January, 2002, made and published by the learned Arbitrator.
The petitioner issued a notice inviting tenders for the balance civil work, sanitary plumbing and fire fighting work for the theatrical Auditorium at No.2, Gariahat Road (South), Kolkata, which is known as Madhusudan Mancha.
Pursuant to the aforesaid tender notice, the respondent submitted its rate. The rate quoted by the respondent being the lowest, the offer of the respondent was accepted by the Advisory Committee of the petitioner at its meeting held on 22 nd December, 1989.
A formal works contract in writing dated 28 th May, 1990 was executed by and between the petitioner and the respondent which inter alia contained an arbitration clause, which is extracted hereinbelow for convenience:
"All disputes between the parties to the contract, arising out of relating to the contract, other than those for which the decision of the Engineer is by contract expressed to be final and binding and conclusive, shall be referred to the sole arbitrator, who shall be the Chairman of the Trust, and the arbitration proceeding shall be subject to provisions of [ACT] with subsequent amendments.
The decision of the Arbitrator and the award thereof shall be final, conclusive and binding on both the parties.
Unless the parties agree otherwise, such reference shall not take place until after completion, alleged completion or abandonment of works of determination of contract.
The venue of such arbitration will be fixed by the arbitrator at his sole discretion."
Disputes arose in connection with the aforesaid works contract and the respondent invoked the arbitration clause. On an application under [SECTION], [SECTION] and [SECTION] of the [ACT], this Court passed an order dated 25 th March, 1998 whereby Sri [ENTITY], a retired Judge of this Court, was appointed Arbitrator.
The learned arbitrator made and published an award which is impugned in this application. The award is only partly reasoned. The learned Arbitrator has very briefly recorded the facts of the case, and the submissions of the respective parties and has made his award.
The reasons contained in the award are cryptic. The award, is 'hybrid', that is, an award which is partly speaking and partly non- speaking.
Mr. [ENTITY] appearing on behalf of the petitioner submitted that the arbitrator was obliged to first decide the question of arbitrability of the disputes raised before him.
Referring to the minutes of the 5 th sitting of the arbitration, held on 29 th July, 1998, Mr. [ENTITY] pointed out that the petitioner had, at the outset, raised a preliminary point with regard to the maintainability and/or arbitrability of the claims and requested that the preliminary point should first be decided.
The learned arbitrator was, however, of the view that it was not possible to decide the question of arbitrability without entering into evidence. The arbitrator was thus decided to take up the issue of arbitrability along with adjudication of the claims on merits.
Mr. [ENTITY] submitted that the learned arbitrator had not adjudicated the question of arbitrability of the claims and had thereby misconducted himself. In any case, the arbitrator did not give any reasons for his decision with regard to arbitrability of the claims, which he was bound to do in view of the representation made by him at the 5 th sitting.
The arbitration clause, that is, Clause 1.44 of the General Conditions of contract, which provides for arbitration, is a wide clause that empowers the arbitrator to decide all disputes between the parties to the contract, arising out of, or in relation to the contract other than those for which the contract has expressly made, the decision of the engineer expressly to be final, binding and conclusive.
There is no restriction on the power of the arbitrator to decide disputes arising out of and/or in connection with the contract except for only those disputes in respect of which the decision of the arbitrator had been made final, binding and conclusive under the contract. There is not a whisper in the petition of the provisions of the contract, in terms of which, the claims decided by the arbitrator were conclusively to be decided by the engineer.
Mr. [ENTITY] referred to [SECTION], [SECTION], [SECTION] and [SECTION] of the General Conditions of contract. The aforesaid clauses are set out hereinbelow for convenience:
"1.27. ESCALATION:
The rates quoted shall be firm and shall remain applicable during the entire period of execution of work upto the completion and no escalation in rates will be permitted due to increase in prices of materials, labour wages, Railway freight or due to any other reason.
1.32. CEMENT AND STEEL:
Cement and reinforcement required for the works shall be issued by the Trust, as per conditions mentioned hereunder and as per issue rates specified.
Trust materials shall be issued to the contractor to the extent of requirement as assessed and in small instalments as decided by the Engineer.
d) The Trust does not assume any responsibility to supply materials strictly according to the Indent as may be submitted by the contractor and no compensation will be paid for delay in issuing any materials to the contractor; but reasonable extension of time will be allowed for such delay, in accordance with clause 3 of the Conditions of Contract in the printed works contract.
[SECTION]. SUPPLY OF DRAWINGS :
The tenderer should clearly note and understand that all the drawings cannot be given or handed over at a time. However, Trust will make every effort to supply detailed drawings in time so that no work is hampered for want of the same. But the failure of such supplies in time shall not entitle the contractor for any claim whatsoever on any ground.
[SECTION]. IDLE LABOUR :
Whatever the reasons may be, no claim for idle labour, additional establishment, cost of hire and labour, additional establishment, cost of hire and labour charges of Tools and Plants would be entertained under any circumstances."
None of the aforesaid clauses place any restriction on the authority of the arbitrator to decide the disputes. It cannot be said that any of the claims were not arbitrable at all. There is a difference between an award without jurisdiction and an error within jurisdiction. While the arbitrator has no jurisdiction and/or authority to decide an excepted matter, the interpretation of the various clauses of the contract is within the legitimate domain of the learned arbitrator.
The arbitrator undoubtedly had the authority to decide the disputes. It is essentially the case of the petitioner that the arbitrator erroneously allowed claims that ought not to have been allowed, having regard to the various provisions of the contract referred to above.
It is, however, not for this Court to probe the mental process by which the arbitrator allowed the claims. Interpretation of contractual provisions was within the domain of the learned arbitrator. The award is to a great extent non-speaking. Moreover, this Court deciding an application under [SECTION] and [SECTION] of the [ACT] does not sit in appeal over the award.
It is true, that even a non-speaking award can be interfered with in case of patent error. For example, if there is an item-wise break-up of the claims and some of the claims are not arbitrable, the award in respect of those claims might be set aside.
Similarly, even if the award is a composite award, but non-speaking, the same might be set aside if on the face of the award it is apparent that the award includes claims which are not arbitrable, for example, where the amount could never have been awarded, unless some excluded claims had been taken into account.
Mr. [ENTITY] cited the following judgments of the Supreme Court in support of his submissions:
i) [PRECEDENT].
ii) Steel Authority of India Ltd. vs. J.C. Budharaja reported in (1999) 8 SCC [SECTION]2 and
iii) [PRECEDENT].
There can be no doubt that an arbitrator cannot adjudicate excepted matters and that when a question of arbitrability is raised that question must first be decided.
On a perusal of the award, it appears that the issue of arbitrability has been decided. The learned arbitrator took the view that the petitioner could not show why the claims were not arbitrable. It cannot, therefore, be said that the learned arbitrator did not at all apply his mind to the issue of arbitrability. The learned Arbitrator was not obliged to give reasons for his award. Inadequacy of reasons is no ground for setting aside an award, particularly since there was no obligation on the part of the arbitrator to give any detailed reasons.
The propositions of law laid down by the judgments, referred to above, are established. There can be no doubt that an arbitrator must have jurisdiction to adjudicate claims referred to him and an award without jurisdiction is liable to be set aside.
There can also be no dispute that the arbitrator, as creature of the contract, is bound by the terms and conditions of the contract. The arbitrator cannot deliberately ignore the terms and conditions of the contract. An award which is patently contrary to any contractual provision and in particular to a contractual bar, is liable to be set aside.
However, as observed above, the arbitration clause is wide in its terms and confers power on the arbitrator to decide all disputes except those which have expressly been excluded. None of the claims adjudicated by the arbitrator, constitute excepted matters. It cannot be said that the arbitrator lacked jurisdiction to entertain the claims.
The claims are not patently barred under any provision of the contract. It was for the arbitrator to interpret the contract which the arbitrator has done. Unfortunately, reasons are lacking. In the absence of any obligation on the arbitrator to give reasons for his award, the award cannot be interfered with.
In [PRECEDENT]. on which much emphasis has been placed by Mr. [ENTITY], the Supreme Court held that when a specific reference is made to the arbitrator and the parties have raised the dispute of arbitrability, with the leave of the Court, by a direction of the Court, the arbitrator is to decide the arbitrability of the dispute and make a decision, giving reasons in support thereof.
The judgment is distinguishable on facts. There was no direction to Court on the arbitrator to decide the question of arbitrability. Even assuming that there was an obligation on the part of the arbitrator to give reasons, on the issue of arbitrability, that in itself cannot be ground for setting aside the award, if on the face of the pleadings and documents, it appears to this Court that the claims were in fact arbitrable, as in the instant case.
There are apparently no grounds for interference with the award. This application is accordingly dismissed.
([ENTITY], J.)