Case: D.D. Sharma Vs. Union Of India

The parties hereto admittedly entered into a contract for construction of six permanent major bridges on Lekhabali Basar-Along Road in State of Arunachal Pradesh wherefor a notice inviting tender was issued by the Chief Engineer, Project Vartak, Director General (Border Roads). Shri D.D. Sharma, appellant in Civil Appeal No. 6678 of 1999, (hereinafter referred to as the contractor) pursuant thereto and in furtherance thereof made an offer. Negotiations admittedly took place between the parties in relation thereto3. The notice inviting tender, inter alia, stipulated that the entire work was to be completed within 36 months from the date of handing over the site which would be within one month from the date of issue of acceptance letter. It was further stipulated that the notice of tender shall form part of the contract4. It appears that the Union of India proposed an alternative design and in response thereto the contractor by his letter dated 25.8.1983 made an offer on the terms and conditions stipulated therein, clause 6 whereof reads as under:All other terms and conditions will be as per NIT except that the tender is valid for all the 6 bridges and cannot be divided. To avail the coming working season if the work is allotted within 60 days of opening of the tender, we are ready to offer suitable rebate5. The Union of India in response thereto showed its inclination but requested the contractor to withdraw various stipulations/conditions specified in his tender in terms of a letter dated 30.09.1983 stating:You are requested to withdraw various stipulations/conditions specified by you in your tender as brought out above. In case you consider that the withdrawal of the stipulation/conditions involve financial effect you are requested to indicate the same for each withdrawal/modification of conditions separate itemwise6. The contractor replied thereto stating:We are pleased to withdraw all our terms and conditions besides our condition no. 4 for design assumption and the interim payment schedule as the same has been prepared keeping conformity with the estimate. As such the same will form a part of contract. We are also pleased to inform you that if the work is allotted to us, we will offer a rebate of Rs. 90,000.00 only per bridge. For withdrawal of the above stated conditions and for offering rebate, the Department will have to give us 10% advance over our L.S. tendered amount against H.G. Bond of Industrial Cooperative Bank Ltd. Gauhati. This 10% advance will have to be adjusted proportionately along with the interim payment and the B.G. Bond for the adjusted amount will have to be released from time to time7. From a perusal of the said counter offer made by the contractor it will appear that one of the conditions laid down therein was to the effect that all withdrawal of conditions and rebate would be made subject to the conditions stated therein. It was, therefore, a conditional offer8. By another letter dated 22.11.1983, the contractor offered further rebate on 10% mobilization advance, stating:The Central Government by a letter dated 1.3.1984 addressed to the Director General Border Roads, conveyed the sanction of the President to the variation fro the standard and special conditions of the contract, inter alia, stating:After acceptance of the tender and at the time of placing the work order on the contractor he shall be paid on demand 10% interest free mobilization advance of the contract value against the bank guarantee bond from a Scheduled BankThe loan advance shall be recovered proportionately from his on account payment made to him under the contract and in such a way that by the time 50% of the work is completed the entire advance would be recovered. The first intallment commencing from the first on account payment and Bank Guarantee Bond will be released for the adjusted amount. If the advance thus made is utilized by the firm for purpose other than for which it was provided the entire advance together with interest at 12% p.m. would be recovered from the firm in one installment11. It is not in dispute that the Union of India could not hand over the site to the contractor within the stipulated period. The period of contract, however, was extended from time to time12. Admittedly, the notice inviting tender contained an arbitration agreement. Disputes and differences having arisen between the parties, the matter was referred to the arbitration of Brig. S.B. Joshi, Chief Engineer13. Before the learned Arbitrator, inter alia, four claims were raisedThe learned Arbitrator rejected the claim of the contractor in respect of Claim No. 1(c) but partially allowed claim Nos. 1(a), 1(b) and 2 to the extent of Rs. 90,000/-, Rs. 6,48,000/- and Rs. 5,00,000/- respectively15. The contractor filed an application before the Court of the Assistant District Judge, Tezpur which was marked as Money Suit (Arbitration) Case No. 12 of 1990, purported to be under Sections 14(2) and 17 of the Arbitration Act, 1940 praying therein for a direction upon the Arbitrator to file a copy of the award and to make the same rule of the court16. The Union of India filed an objection thereto purported to be under Section 30 thereof. By reason of a judgment and order dated 26.8.1992, the learned Assistant District Judge at Tezpur : Sonitpur, rejected the application filed by the Union of India for setting aside the award and made the same rule of the Court17. Aggrieved by and dissatisfied therewith, an appeal was filed by the Union of India before the Gauhati High Court which was marked as F.A. No. 8 of 199318. The High Court allowed the appeal in part holding, inter alia, that having regard to the delay in handing over the site for Cane Nallah Bridge, the award of Rs. 5,00,000/- for the damages caused to the contractor although justified but as the contractor made two offers of rebate in terms of its letters dated 25.8.1983 and 22.11.1983 which had not been considered by the learned Arbitrator, the award in respect thereof was not sustainable, and a part of the award could be served, it set aside the award for a sum of Rs. 7,38,000/-

Court's reasoning:
27. The arbitrator was, thus, required to consider as to whether the contractor can substantiate his claim relying on or on the basis of non-compliance of the conditions precedent in relation to the offer of rebate made by it in his letters dated 25.8.1983 and 22.11.1983. The said contention evidently was, thus, a subject matter of determination by the Arbitrator. An Arbitrator being a judge chosen by the parties, his decision would ordinarily be final unless one or the other condition contained in Section 30 of the Arbitration Act is satisfied for the purpose of setting aside his award. Once it is held that the construction of an agreement fell for consideration of the Arbitration, the determination thereupon shall not ordinarily be interfered with28. The courts jurisdiction in this behalf is merely to see whether the Arbitrator has exceeded his jurisdiction or not. The High Court did not point out any material on the basis whereof it could be said to have been established that the two documents in question had not been considered by the learned Arbitrator. Such a conclusion could be arrived at if the award was a speaking one. The award being not a speaking one, the averments made therein should be accepted at their face value unless contrary is proved by the party questioning the validity of the award29. The learned counsel appearing on behalf of the Union of India has failed to point out that any material was brought on records on the basis whereof the findings of the High Court could be justified34. It has not been shown before us on behalf of the Union of India that there exists any provision in the contract which precluded the arbitrator from deciding the dispute or there existed any specific bar in the contract precluding the contractor to raise such a claim. Once it is held that the Arbitrator had the jurisdiction, no further question shall be raised and the court will not exercise its jurisdiction unless it is found that there exists any bar on the face of the award. [See Pure Helium India (P) Ltd. vs. Oil & Natural Gas Commission (2003) 8 SCC 593] 36. Furthermore, as we do not find that there existed any material on records to show that the Arbitrator while making an award ignored any material documents, the impugned judgment cannot be sustained, which is set aside accordingly.