Case: G. Ramachandra Reddy &amp; Co Vs. Union of India &amp; Another

case where it is found that the arbitrator has acted without jurisdiction and has put an interpretation on the clause of the agreement which is wholly contrary to law then in that case there is no prohibition for the courts to set things right." 21. A contract would warrant construction if the terms thereof are vague and ambiguous. The letter exhibiting the offer of the appellant refers to four different documents including the letter dated 9/17.07.1988 which was marked as Exhibit C-2. Whether in the said letter, the appellant had asked for increase of 2.5% over the base value or deducted 2.5% therefrom is a matter of construction.22. The learned Arbitrator, it is not correct to contend, has not taken into consideration the ultimate contract. He did take the same into consideration. He, however, was of the opinion that the aforementioned four letters which were said to be the sole repository of the contract formed part thereof. He, thus, took into consideration the relevant documents for arriving at a finding as to whether they formed part of the contract. Offer of the appellant was accepted.23. The first claim was in relation to disputes regarding additional payment of 2.25% over the quoted rates under item 1 of Schedule A with an overall effect of 4.5% over what had been paid to the plaintiff. The arbitrator came to the conclusion that the letter dated 9/17.7.1988 (Ex.C.2) does not make out whether the contractor intended to quote the price with +2.25% and therefore, he held that a concluded contract has taken place after taking into consideration the sign (+) mentioned in the above letter. The contract will therefore still be enforced even if it is assumed that there was a mistake on the part of the respondent. The High Court held that it was apparent on the face of record that the contractor intended only to reduce 2.25%, which was seen from Ex.C.5, which was final and concluded, claim no 1 fails for that reason. But as the Arbitrator held that the letter of the contractor dated 9/17.7.1988 formed part of the contract, the claim cannot fail and therefore the award of the Learned Arbitrator, in respect of claim No 1 must be sustained.24. In relation to Claim No.2, the respondent relied on the fact that the claimant received payment only at the rate of 21% towards labour escalation in the several R.A.Rs and therefore, it has to be presumed that the claimant is entitled to only 21%. The Arbitrator opined that the receipt of money at 21% cannot absolve the claimant from claiming at 40% as per the contract, particularly, when it is clearly mentioned in Ex C.2 (R1) that 40% will be the labour component which forms part of the contract, Ex C.5. The High Court held that as the Department themselves gave 21% to the contractor, and only 21% of escalation, which was in consonance with the special conditions, which was apparent on the face of the record, the second claim of escalation of 40% was to be set aside. But, keeping the same principle as applied in relation to Claim No.1, the Arbitrator held that as the covering letter (Ex.C.2) is part of the tender bid, and since the tender bid has been accepted without any modification, the Figure of 21% has to be substituted by 40%. Therefore, in respect of claim No.2, the impugned judgment of the High Court cannot be upheld and the award of the Arbitrator is sustained.25. The matter might have been different had the respondents in categorical terms rejected the offer made by the appellant as amended by its letter dated 19.7.1988. It did not do it. Thus, the contract remained open for construction.26. We have not been able to persuade ourselves to agree with the reasonings of the Division Bench of the High Court. The award of the learned Arbitrator in respect of claim No.1, therefore, must be sustained.27. Keeping in view the fact that the same principle would apply in respect of claim No.2 also, the impugned judgment of the High Court cannot be upheld.28. So far as Claim No.3 is concerned, the claim towards higher minimum wages paid to the workmen is not in dispute. A high rise building is a high rise building, it cannot be divided into two parts.What would constitute a high rise building was defined. A portion of the building cannot be high rise and a portion would fall within the purview of the said definition. The learned Arbitrator, in our opinion, had rightly opined that the same workers may have to work for constructions of the entire building as it will be impossible for any contractor to employ any workmen to work exclusively for the high rise building. Furthermore, the same workmen may have to work in different parts of the same building at different times. It would lead to an absurd situation if the workmen at one point of time are not paid the 20% of the excess amount and then paid the same and yet again denied the same benefit. Interpretation of the High Court, therefore, that high rise building mean portion of the building, in our opinion, keeping in view the beneficent nature of the provisions, cannot be accepted.29. The award of the Arbitrator in respect of claim No.4 has been accepted by the Division Bench. Mr. B.B. Singh has drawn our attention to clause 11(c) of the general conditions of contract to contend that in terms thereof, no damages were payable.The question as to whether damages were payable for illegal termination of contract cannot be a subject matter of contract. The learned Arbitrator has categorically held that not only the termination of contract was illegal, the same was mala fide. Furthermore, the contention raised before us by Mr. Singh has not been raised before the High Court.30. In any event, there is a delay of 411 days in filing the SLP of the respondent, for which no sufficient explanation has been given.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]21. A contract would warrant construction if the terms thereof are vague and ambiguous. The letter exhibiting the offer of the appellant refers to four different documents including the letter dated 9/17.07.1988 which was marked as ExhibitWhether in the said letter, the appellant had asked for increase of 2.5% over the base value or deducted 2.5% therefrom is a matter of construction.22. The learned Arbitrator, it is not correct to contend, has not taken into consideration the ultimate contract. He did take the same into consideration. He, however, was of the opinion that the aforementioned four letters which were said to be the sole repository of the contract formed part thereof. He, thus, took into consideration the relevant documents for arriving at a finding as to whether they formed part of the contract. Offer of the appellant was accepted.23. The first claim was in relation to disputes regarding additional payment of 2.25% over the quoted rates under item 1 of Schedule A with an overall effect of 4.5% over what had been paid to the plaintiff. The arbitrator came to the conclusion that the letter dated 9/17.7.1988 (Ex.C.2) does not make out whether the contractor intended to quote the price with +2.25% and therefore, he held that a concluded contract has taken place after taking into consideration the sign (+) mentioned in the above letter. The contract will therefore still be enforced even if it is assumed that there was a mistake on the part of the respondent. The High Court held that it was apparent on the face of record that the contractor intended only to reduce 2.25%, which was seen from Ex.C.5, which was final and concluded, claim no 1 fails for that reason. But as the Arbitrator held that the letter of the contractor dated 9/17.7.1988 formed part of the contract, the claim cannot fail and therefore the award of the Learned Arbitrator, in respect of claim No 1 must be sustained.24. In relation to Claim No.2, the respondent relied on the fact that the claimant received payment only at the rate of 21% towards labour escalation in the several R.A.Rs and therefore, it has to be presumed that the claimant is entitled to only 21%. The Arbitrator opined that the receipt of money at 21% cannot absolve the claimant from claiming at 40% as per the contract, particularly, when it is clearly mentioned in Ex C.2 (R1) that 40% will be the labour component which forms part of the contract, Ex C.5. The High Court held that as the Department themselves gave 21% to the contractor, and only 21% of escalation, which was in consonance with the special conditions, which was apparent on the face of the record, the second claim of escalation of 40% was to be set aside. But, keeping the same principle as applied in relation to Claim No.1, the Arbitrator held that as the covering letter (Ex.C.2) is part of the tender bid, and since the tender bid has been accepted without any modification, the Figure of 21% has to be substituted by 40%. Therefore, in respect of claim No.2, the impugned judgment of the High Court cannot be upheld and the award of the Arbitrator is sustained.25. The matter might have been different had the respondents in categorical terms rejected the offer made by the appellant as amended by its letter dated 19.7.1988. It did not do it. Thus, the contract remained open for construction.26. We have not been able to persuade ourselves to agree with the reasonings of the Division Bench of the High Court. The award of the learned Arbitrator in respect of claim No.1, therefore, must be sustained.27. Keeping in view the fact that the same principle would apply in respect of claim No.2 also, the impugned judgment of the High Court cannot be upheld.28. So far as Claim No.3 is concerned, the claim towards higher minimum wages paid to the workmen is not in dispute. A high rise building is a high rise building, it cannot be divided into two parts.What would constitute a high rise building was defined. A portion of the building cannot be high rise and a portion would fall within the purview of the said definition. The learned Arbitrator, in our opinion, had rightly opined that the same workers may have to work for constructions of the entire building as it will be impossible for any contractor to employ any workmen to work exclusively for the high rise building. Furthermore, the same workmen may have to work in different parts of the same building at different times. It would lead to an absurd situation if the workmen at one point of time are not paid the 20% of the excess amount and then paid the same and yet again denied the same benefit. Interpretation of the High Court, therefore, that high rise building mean portion of the building, in our opinion, keeping in view the beneficent nature of the provisions, cannot be accepted.29. The award of the Arbitrator in respect of claim No.4 has been accepted by the Division Bench. Mr. B.B. Singh has drawn our attention to clause 11(c) of the general conditions of contract to contend that in terms thereof, no damages were payable.The question as to whether damages were payable for illegal termination of contract cannot be a subject matter of contract. The learned Arbitrator has categorically held that not only the termination of contract was illegal, the same was mala fide. Furthermore, the contention raised before us by Mr. Singh has not been raised before the High Court.30. In any event, there is a delay of 411 days in filing the SLP of the respondent, for which no sufficient explanation has been given.