IN THE HIGH COURT OF HIMACHAL PRADESH SHIMLA Arbitration Appeal No. 5 of 2002. Date of decision: November 28, 2008. Shri Hira Prakash …appellant Versus. Dr. Yashwant Singh Parmar, University & anr …respondents. Coram: The Hon’ble Mr. Justice Deepak Gupta, Judge. The Hon’ble Mr. Justice V.K.Ahuja, Judge. Whether approved for Reporting? For the Appellant (s): Mr. S.D.Gill, Advocate. For the Respondent(s): Mr. B.S.Attri, Advocate. Deepak Gupta, J . This appeal under Section 37 of the Arbitration and Conciliation Act, 1996 ( hereinafter referred to as the Act) is directed against the order of a learned Single Judge of this Court in OMP (M) No. 22 of 1999, decided on 4.6.2002, whereby he has partly allowed the objections filed by the respondent- University. The appellant (hereinafter referred to as the Contractor) entered into a contract with the respondent, (hereinafter referred to as the University), whereby the - 2 - work of ‘strengthening of Regional Horticulture Research Station, Sharboo, C/O Lab. Block (SH: Building portion)’ was awarded to the contractor. Disputes arose between the parties. As per the agreement entered into between them, disputes were referred for arbitration. The arbitrator delivered the award. The university filed objections to the said award. The learned Single Judge only allowed the objection in so far as claim No.5 is concerned. Aggrieved against setting aside of the award in respect of claim No. 5, the Collector filed an appeal before us. Claim No. 5 relates to clause 3 of the contract reads as follows:- “ Clause 3:- The Engineer-in-charge may without prejudice to this right against the contractor in any respect of any delay on inferior workmanship or otherwise or to any claims for damages in respect of any breaches of the contract and without prejudice to any rights or remedies under any of the provisions of this contract or otherwise and whether the date for completion has or has not elapsed by notice in writing absolutely determine the contract in any of the following cases:- (i) If the contractor having been given by the Engineer –in-charge a notice in writing to rectify, reconstruct or replace any defective work or that the work is being performed in any in-efficient or otherwise improper or un-workman like manner shall omit to comply with the requirements of such notice for a period of seven days thereafter or if the contractor - 3 - shall delay or suspend the execution of the work so that either in the judgment of the Engineer-in- charge ( which shall be final and binding ) he will be unable to secure completion of the work by the date for completion or he has already failed to complete the work by that date. (ii) Xxxx xxx xxx xxx (iii) Xxx xxx xxx xxx (iv) Xxxx xxx xxx xxx When the contractor has made himself liable for action under any of the cases aforesaid, the Engineer –in-charge on behalf of the HPKVV shall have powers: (a) to determine or rescind the contract as aforesaid (of which termination or rescission notice in writing to the contractor under the hand of the Engineer-in-charge shall be conclusive evidence. Upon such determination or rescission the security deposit of the contractor shall be liable to be forfeited and shall be absolutely at the disposal of HP Krishi Visva Vidalaya. (b) To employ labour paid by the HPKVV and to supply materials to carry out the works or any part of the work debiting the contractor, with the cost of the labour and the price of the materials (of the amount of which cost and price certified by the Engineer-in-charge shall be final and conclusive against the contractor) and crediting him with the value of the work done in all respects in the same manner and at the same rates as if it had been carried out by the contractor under the terms of his contract. The certificate of the Engineer-in-charge as to the value of the work done shall be final and - 4 - conclusive against the contractor, provided always that action under the sub-clause shall only be taken after giving notice in writing to the contractor; Provided also that if the expenses incurred by the HPKVV are less than the amount payable to the contractor at his agreement rates, the difference should not be paid to the contractor; and (c) After giving notice to the contractor to measure up the work of the contractor and take such part thereof as shall be unexecuted out of his hands and to give it to another contractor to complete in which case any expenses which may be incurred in excess to the sum which would have been paid to the original contractor if the whole work has been executed by him ( of the amount of which excess the certificate in writing of the Engineer –in-charge shall be final and conclusive) shall be borne and paid by the original contractor and may be deducted from any money due to him by HPKVV under this contract on any other account whatsoever or from his security deposit or the proceeds of sales thereof or a sufficient part thereof as the case may be. In the event of any one or more of the above courses being adopted by the Engineer-in-charge the contractor shall have no compensation for any loss sustained by him by reason of his having purchased or procured any materials or entered into any engagements or made advances on account or with a view to the execution of the work or the performance of contract. And in case action is taken under - 5 - any of the provisions aforesaid, the contractor shall not be entitled to recover or be paid any sum for any work thereto for actually performed under the contract unless and until the Engineer-in-charge has certified in writing the performance of such work and the value payable in respect thereof and he shall only be entitled to be paid the value so certified.” A bare perusal of the aforesaid clause makes it apparent that the Engineer-in-charge of the work has been vested with the power to determine the contract if in his judgment the contractor has failed to complete the work within the stipulated period. The decision of the Engineer-in-charge has been made final and binding. Similarly, the decision of the Engineer-in-charge with regard to the rescission of the contract is also deemed to be conclusive evidence thereof. The Engineer-in-charge after rescission of the contract can get the work executed by employing labour or by engaging another contractor. In case the expenses in getting the work done incurred are of in excess to the sum which was to be paid to the original contractor, then the University is entitled to recover this amount from the original contractor. The extra expenses incurred by the university are to be borne and paid by the original contractor and can be - 6 - deducted from the amounts due to him under the contract. The certificate in writing of the Engineer –in- charge about such excess amount is final and conclusive. The aforesaid provisions leave no manner of doubt that the decision of the Engineer-in- charge in determining/rescinding the contract and his certificate with regard to the amount recoverable shall be final and conclusive between the parties. The decision of the Engineer-in-charge being final conclusive cannot be the subject matter of arbitration. The learned single Judge has rightly held that the award of the Arbitrator under claim No.5 which related to determination of the contract under Clause 3 was without jurisdiction. In Vishwanath Sood v. Union of India and another, AIR 1989 Supreme Court 952, the apex Court held as follows:- “…………. But it will be appreciated that in practice the amount of compensation will be initially levied by the Engineer-in- charge and the Superintending Engineer comes into the picture only as some sort of revisional or appellate authority to whom the contractor appeals for redress. As we see, it, clause 2 contains a complete machinery for determination of the compensation which can be claimed by the Government on the ground of delay on the part of the contractor in completing the contract as per the time - 7 - schedule agreed to between the parties. The decision of the Superintending Engineer, it seems to us, is in the nature of a considered decision which he has to arrive at after considering the various mitigating circumstances that may be pleaded by the contractor or his plea that he is not liable to pay compensation at all under this clause. In our opinion the question regarding the amount of compensation leviable under clause, 2 has to be decided only by the Superintending Engineer and no one else.” It is true that the decision in Vishwwanath Sood’s case (supra) was in relation to clause 2 of the Arbitration agreement. However, the language of clause 2 & clause 3 in so far as it makes the determination of the contract final is virtually identical and therefore, this judgment applies to the present case also. In view of the above discussion, we find no merit in this appeal which is accordingly dismissed. No costs. ( Deepak Gupta ), J. November 28, 2008. ( V.K.Ahuja ), J. s.