IN THE HIGH COURT OF HIMACHAL PRADESH SHIMLA FAO No.80 of 1997 Date of decision 29.7.2008 The Executive Engineer Appellant Versus M/s Himachal Construction Corpn. Respondent Coram: The Hon’ble Mr. Justice R.B.Misra, Judge. The Hon’ble Mr. Justice Surjit Singh, Judge. Whether approved for reporting?1 Yes. For the appellant : Mr.P.K.Sharma, Additional Advocate, General, with Mr.P.M.Negi, Dy. Advocate General. For the respondent: Mr. Raman Sethi, Advocate. Per Surjit Singh (oral). This appeal by the Executive Engineer, B&R Division is directed against the judgment dated 19th December, 1996 of learned Single Judge, passed in Civil Suit No.44 of 1994, whereby rejecting the objections filed by the appellant against the Award dated 9th February, 1994 of the arbitrator (Sh.R.K.Kaura), the said award has been upheld and made rule of the court. Facts relevant for disposal of the appeal may be noticed. The state of Himachal Pradesh through Executive Engineer, B&R Division, Karcham entered into an agreement with M/s Himachal Construction Corporation, respondent herein, for construction of a bridge at a cost of 1 Whether reporter of local papers are allowed to see the judgment ? 2 Rs.30, 35,708/-, vide agreement No.21 of 1985-86. Work was awarded to the respondent on 27th January, 1986. One of the clauses of the agreement provided that the time was the essence of the agreement and the work was to be executed within 18 months, to be reckoned from the 15th day of the month, next following the month of the execution of the agreement. It appears that the respondent brought on the spot some material, but did not execute the work. Various letters were issued to the respondent calling upon him to complete the work within the time limit stipulated in the agreement, but to no avail. Invoking the penalty provision in the agreement (contained in clause 2), the Executive Engineer imposed penalty equivalent to 1% of the amount of the award but despite that no progress was made by the respondent. The Executive Engineer then awarded the work to another contractor for a sum of Rs.38,60,000/-. Thereafter a reference was made to the arbitrator, in terms of clause 25 of the agreement, by the Executive Engineer. The appellant claimed Rs.3,03,570/- on account of penalty under clause 2, another sum of Rs.3,03,570/- on account of forfeiture of security deposit in accordance with the provisions of clause 3(a) of the agreement and Rs.8,24,292/- on account of direct monetary loss. The respondent filed reply before the arbitrator and claimed that a sum of Rs.46,648.63 was due to it on account of the balance price of the material brought at the site by it, which had been utilized by the appellant. It also claimed Rs.20,000/- on account of refund of security. Arbitrator rejected the claim of appellant, holding that penalty had been imposed by the Executive Engineer, purportedly under clause 2 of the agreement, but the said clause provided for imposition of such penalty 3 by the Superintending Engineer and hence the appellant was not entitled to recover anything on account of penalty. Nothing was awarded on account of loss sustained by the appellant, on account of difference between the amount for which the work was awarded to the respondent and the amount at which the said work was re-awarded to another contractor, though a claim was made on this count to the tune of Rs.8,24,292/-. Objections were filed by the appellant in this court. Matter was heard by the learned Single Judge, who dismissed the objections and made the award rule of the court. We have heard the learned Deputy Advocate General as also the learned counsel for the respondent. It is true that clause 2 of the agreement provides for levy of penalty on account of delay in execution of work by the Superintending Engineer and in the present case the order of levy of penalty was passed by the Executive Engineer, but that by itself could not have been a ground for the rejection of the claim of the appellant on account of penalty under the aforesaid clause 2 of the agreement. The Arbitrator did not have any jurisdiction to adjudicate upon the question of levy of penalty and, therefore, even if the order of Executive Engineer regarding levy of penalty was nonest, being without jurisdiction, he ought to have left the question open to be determined by the competent authority, i.e. the Superintending Engineer, if approached by the appellant. Therefore the finding of the arbitrator that nothing is payable to the appellant on account of penalty is without jurisdiction, because he had the jurisdiction to adjudicate upon only such matters as are specified in 4 clause 25 of the agreement. The matter covered by clause 2, being beyond the jurisdiction of the arbitrator, he ought not to have even commented upon the same, leave alone giving a definite finding qua the same. Appellant had made a claim of Rs.8,24,292/- on account of actual loss sustained by him because of the award of work to another person after the failure of the respondent to execute the same. Arbitrator has rejected this claim with the observation that on perusal of the record he has come to the conclusion that respondent was not at fault for delay in execution of the work and, therefore, nothing was awardable to the appellant. Arbitration clause (clause 25) specifically provides that where the claim is for an amount of Rs.50,000/- or above, the arbitrator has to give reasons in support of the award. The arbitrator did not give any reason for rejecting the aforesaid claim of the appellant. Also we find that though the arbitrator awarded the claim of the respondent to the tune of Rs.66,649/-, i.e. more than Rs.50,000/-, but again he did not give any reason for the award of the aforesaid amount of money in favour of the respondent. He simply stated that after going through the record he had come to the conclusion that respondent was not to be blamed for delay in execution of the work and, therefore, it was entitled to claim the entire amount of the material brought by it at the site and not only an amount equivalent to 60%, as paid to it by the appellant. This again is not a reason, but only a finding. For the foregoing reasons, we allow this appeal, set aside the judgment of the learned Single Judge as also the award of the arbitrator and remit the matter to the arbitrator to pass an award, giving reasons in 5 support of his findings. We give six months time to the arbitrator to make the award afresh. Time shall be counted from the date of the receipt of the copy of this judgment as also the record of the case. Of course, the arbitrator shall decide the matter, after affording opportunity of being heard to the parties. ( R.B. Misra ),J. July 29,2008(g) ( Surjit Singh ), J.