Case: M/S. Asian Techs Ltd Vs. Union Of India

the High Court ignored a long line of decisions of this Court declaring that it is not open to the Court to examine the correctness of a non-speaking award on a reappraisal of evidence, nor for that purpose was it permissible to interpret the contract. It is alleged that the High Court did not refer to the memorandum of appeal filed by the respondents. It is alleged that the High Court without stating any reason rejected the contention of the petitioner that the Commander Works Engineer (CWE) was not the competent authority to fix the rates for extra, deviated and additional items under the contract entered into with Respondent No. 2 and beyond the period of contract and that his pecuniary jurisdiction was only up to Rs. 20,000/-, stipulated in MES Regulation, 1968 and that no final decision on the objections of the petitioner against erroneous fixation of rates was ever communicated by the Chief Engineer, who is the accepting officer. It is alleged that the High Court erroneously assumed that extensions of time granted by Respondent No. 2 from time to time, deprived the petitioner of its right for due payment at the then prevailing rates for delayed works at the instance of the respondents.  9. The High Court by the impugned order allowed the appeal and revision making the following observations:"We therefore, hold that the award passed by the arbitrator in respect of claim Nos. 1 to 3, 5, 9, 17, 19, 21, 23, 24, 26, 30, 33, 35, 37, 38, 40, 41, 44 and 46 is against the conditions agreed to by the contracting parties and in conscious disregard of the terms of the contract and also the arbitration clause from which the arbitrator derives his authority. We are, however, not interfering with the award in respect of claim No. 12 alone, which in our view is binding on the appellants. We hold that he arbitration clause 70 was conditional one giving finality to the decisions of CWE as per the various provisions, clauses 62(G) and 11(C) of the contract. The award of the arbitrator and the orders of the court below in Arbitration O.P. Nos. 4 and 18 of 1994 to the Extent to which they are covered by clauses 62(G) and 11(C) except claim No. 12 are set aside and the Arbitration O.P. No. 18 of 1994 filed by Union of India is allowed as above. The appeal and the revision are allowed as above. In the facts and circumstances of this case, we are not awarding costs."10. It can be seen that the High Court has set aside the arbitrators award holding that under the finality clause under clauses 11(C) and 62(G), the decision of the Commander Works Engineer (CWE) is final and binding and has been exempted from the purview of the arbitration clause, which is clause 70 of the contract. Thus the High Court held that the arbitrator travelled beyond the terms of reference.

Court's reasoning:
13. The letter dated 24.11.1988 makes it clear that the appellant was not ready to carry out the work beyond the contracted period otherwise than on separate work orders, and the subsequent correspondence like the letter dated 11.10.1989 makes it clear that it was on the specific assurance given by the respondent to the appellant to continue the work and that the rates would be decided across the table that the appellant went ahead with the work. Hence, in our opinion it is now not open to the respondent to contend that no claim for further amount can be made due to clause 11(C) and that the arbitrator would have no jurisdiction to award the same14. Clause 62(G) read with clause 7 make it clear that the finality provided under clause 62(G) applies only to cases of deviation and not in a case when there is a material alteration and addition in the work done, as is clear from the correspondence between the parties in the present case15. Moreover, Regulation 439 of the MES Regulations 1968 fixes the pecuniary jurisdiction of the CWE at Rs. 20,000/only. It is evident that the CWE has no jurisdiction to decide the dispute where the valuation is above Rs., as in the present case. The finality of the decision of the CWE applies only where the dispute is not exceeding Rs.. Hence, in our opinion, the arbitrator was within his jurisdiction to decide the matter in question16. It isd that in the case ofg awards under the Arbitration Act, 1940 the Court has very little scope of interference vide State of Rajasthan vs. Nav Bharat Construction Co. (2006) 1 SCC 86 , Raipur Development Authority vs. Chokhamal Constructions (1989) 2 SCC 721 , Arosan Enterprises Ltd. vs. Union of India (1999) 9 SCC 449 , Ispat Engineering vs. Steel Authority of India (2001) 6 SCC 347 , D.D. Sharma vs. Union of India (2004) 5 SCC 325 17. It has been held by this Court in National Insurance Company Ltd. vs. Boghara Polyfab Pvt. Ltd. (2009) 1 SCC 267  that even in the case of issuance of full and final discharge/settlements certificate the arbitrator or Court can go into the question whether the liability has been satisfied or not. This decision has followed the view taken in Chairman and Managing Director, NTPD Ltd. vs. Reshmi Constructions, Builders and Contractors (2004) 2 SCC 663 (vide paragraphs 27 and 28)18. Apart from the above, it has been held by this Court in Board of Trustees, Port of Calcutta vs.e (1996) 1 SCC 516 , that a clause like clause 11 only prohibits the department from entertaining the claim, but it did not prohibit the arbitrator from entertaining it. This view has been followed by another Bench of this Court in Bharat Drilling & treatment Pvt. Ltd. vs. State of Jharkhand & others in Civil Appeal No. 10216 of 2003 decided on 20th August, 2009.