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Board of Trustees of The Port of Kandla v/s Patel Engineering Works

    First Appeal Nos. 1369 of 1988 & 1370 of 1988

    Decided On, 11 June 2015

    At, High Court of Gujarat At Ahmedabad

    By, THE HONOURABLE MR. JUSTICE K.S. JHAVERI & THE HONOURABLE MR. JUSTICE G.B. SHAH

    For the Appellant: A.S. Vakil, Dhaval D. Vyas, Advocates. For the Respondent: S.B. Vakil, Advocate.



Judgment Text

K.S. Jhaveri, J. (Oral)

1. Both these appeals arise out of the common judgment and order passed by the Court below and therefore, they are decided by this common judgment.

2. Challenge in these appeals is to the common impugned judgment and order dated 29.06.1988 passed by the learned Civil Judge (S.D.), Bhuj - Kutch in Special Civil Suit No. 220 of 1986 and Civil Misc. Application No. 98 of 1986.

Both First Appeals No. 1369/1988 and 1370/1988 have been preferred by appellant-Kandla Port Trust. F.A. No. 1369/1988 has been filed against the judgment and decree rendered in respect of Special Civil Suit No. 220 of 1986 whereas, F.A. No. 1370/1988 has been filed against the final order passed in Civil Misc. Application No. 98 of 1986.

3. The facts in brief giving rise to the filing of the present appeals are as under;

In 1980 the appellant invited Tenders for carrying out special repair works on 21 electric Wharf Cranes at the Cargo Jetty and Port area. Respondent no.1 herein and others filled-in the Tender for the above work. The Bid submitted by respondent no.1 was accepted by appellant and accordingly, a Contract for the above work was executed by and between the appellant and respondent no.1 herein.

4. On 22.07.1981 work order was issued in favour of respondent no.1. It appears that some dispute arose between the appellant and respondent no.1 in respect of the terms of contract, which led to the exchange of written communications between both the sides. Respondent no.1 demanded payment of higher amount of costs on account of escalation of prices and other reasons, which was declined by the appellant. According to the terms of Contract, respondent no.1 addressed communication dated 15.11.1984 to the appellant seeking appointment of an Arbitrator for resolution of the dispute. The Chairman of appellant sought willingness of one of its employees, viz. B.S. Sood, respondent no.2 herein, for appointment as Arbitrator, which was accepted vide letter dated 06.02.1985. Thereafter, vide communication dated 27.03.1986, the Chairman appointed respondent no.2 herein as the Arbitrator.

5. It is the case of the appellant that respondent no.2-Arbitrator was acting in a manner contrary to the provisions of the Arbitration Act, 1940. On 25.10.1986 respondent no.2-Arbitrator passed an award directing the appellant to make payment of Rs. 38.00 Lacs to respondent no.1 in respect of 16 Cranes and further directed payment of corresponding increase in respect of the remaining Cranes. It appears that the appellant was unaware about the passing of the aforesaid award and on 29.10.1986 filed an application being Civil Misc. Application No. 87 of 1986 under section 5 & 11 of the Act before the Court of learned Civil Judge (S.D.), Kachchh at Bhuj seeking leave to revoke the authority of the Arbitrator. On the said application, the trial Court passed an interim order directing status quo.

6. On 20.11.1986 respondent no.2-Arbitrator filed an Affidavit in the aforesaid application along with certain annexures. It appears that the Arbitrator produced the award dated 25.10.1986 along with the annexures on record of Civil Misc. Application No. 87 of 1986. The appellant, subsequently, withdrew Civil Misc. Application No. 87 of 1986.

7. In the meanwhile, respondent no.2 forwarded the award to the trial Court for passing appropriate decree in terms of the award under section 14 of the Act. The award came to be registered as Special Civil Suit No. 220 of 1986. Being aggrieved by the award, the appellant filed application being Civil Misc. Application No. 98/1986 under section 33 of the Act before the trial Court. The trial Court heard both the matters together and vide common judgment and order dated 29.06.1988, allowed Special Civil Suit No. 220 of 1986 and rejected Civil Misc. Application No. 98 of 1986. Being aggrieved by and dissatisfied with the impugned common judgment, the appellant has preferred the present appeals.

8. Mr. Dhaval Vyas, learned counsel appearing on behalf of the appellant, contended that Rule 3 of the First Schedule to the Arbitration Act, 1940 provides for alternative periods within which arbitrators have to make their award. Under the second alternative, an award could be made within 04 months from the date of notice issued by a party calling upon the arbitrators to act, however, in the present case, the award was not made within the said period. Learned counsel placed reliance upon a decision of the Apex Court in the case of Hari Shanker Lal v. Shambhu Nath and others reported in AIR 1962 SC 78 and more particularly, on the observations made in Para-11 of the judgment, which reads thus;

"11. It is said that this construction also may start off a chain of notices which may lead to the same result sought to be avoided by it. The argument is that if one of the parties gives a notice to act, it gives the arbitrators 4 months from that date to act and if before the expiry of the 4 months from that date of notice another notice is given, they will get another lease of life and so on indefinitely. Though there is some plausibility in the criticism, it is answered by our confining the right to give notice by a party to the period of four months from the date the arbitrators entered upon the reference. Nor the apprehension that a party may go on giving number of notices to act within the said 4 months from the date of the arbitrators entering upon the reference, each notice giving a fresh period of 4 months, has any basis. A notice to act can only be given when an arbitrator is not acting, i.e. he has refused or neglected to discharge his duty. Therefore, every notice cannot give a fresh period unless in fact the arbitrators refused or neglected to act before such notice is given. The legal position may be formulated thus : (a) A notice to act may be given before or after the arbitrators entered upon the reference, (b) If notice to act is given before they entered upon the reference, the four months would be computed from the date they entered upon the reference, (c) If a party gives notice to act within 4 months after the arbitrators entered upon the reference, the arbitrators can make an award within 4 months from the date of such notice, And (d) In that event, after the expiry of the said 4 months the arbitrators become functus officio, unless the period is extended by court under section 28 of the Act; such period may also be extended by the court, though the award has been factually made."

8.1 Learned counsel Mr. Vyas contended that the work of riveting was a part and parcel of the conditions of Contract and that the respondent-Contractor had, in his Tender, initially, specified that renewed steel will have bolted/welded joints, which was decided in consultation with the Engineer In-charge. However, subsequently, the respondent-Contractor withdrew the previous conditions in the Tender document, which resulted into deviations from the terms and conditions of the Tender document. Thus, though there was no agreement between the parties with regard to the claim of riveting, the learned Arbitrator gave a contrary finding with regard to the said claim, which is legally erroneous and amounts to legal misconduct.

8.2 Learned counsel Mr. Vyas further contended that the learned Arbitrator failed to appreciate the provisions of Clause 10(c) of the terms and conditions of Contractor. It was submitted that under Clause 10(c), the fulfilment of two conditions is mandatory for the purpose of claiming escalation on account of increase in price of raw materials and wages of labour. However, the said two conditions were not fulfilled by the respondent-Contractor and the trial Court also seriously erred in ignoring that the learned Arbitrator had absolutely no jurisdiction in awarding a huge amount of more than Rs. 24.00 Lacs in respect of this claim. Further, the learned Arbitrator passed the award in respect of Items, which were outside the terms of reference, namely, Nylock nuts and bolts and increased costs on account of IRS inspection. Hence, the award of the learned Arbitrator is beyond the scope of reference and amounts to serious legal misconduct.

8.3 Learned counsel Mr. Vyas contended that the private meetings by the learned Arbitrator with the representatives of the respondent-Contractor resulted into gross violation of the principles of natural justice since it deprived the appellant of an opportunity to defend the case properly and effectively. The trial Court erred in ignoring the fact that the learned Arbitrator had not only held private inquiries with the respondent-Contractor directly but had also not communicated or recorded in the form of minutes as to what had transpired at these meetings held by him at Mumbai, which has resulted into serious prejudice to the appellant. It was, therefore, submitted that the learned Arbitrator passed the award in gross violation of the principles of natural justice and deserves to be quashed and set aside.

9. Mr. A.S. Vakil, learned counsel appearing on behalf of the respondents, drew our attention to different communications addressed to by and between the appellant and learned Arbitrator. He drew our specific attention to the communication dated 03.04.1986 addressed by the learned Arbitrator to the Chairman of appellant-Kandla Port Trust wherein, over and above other things, the learned Arbitrator informed in clear terms that he shall not give reasons in support of his conclusion. The terms and conditions of Arbitration put forth by the learned Arbitrator were accepted by the Chairman of the appellant vide communication dated 21.05.1986.

9.1 In support of his submissions, learned counsel Mr. Vakil placed reliance upon the following decisions;

(I) In M/s. Mulchand Laxmichand Shah, a Partnership firm v. Sheth Bhikhchand Trilokchand and Others reported in 16 GLR 283, the learned single Judge of this Court held that when the Arbitrator files his award, he is not making any application to the Court and therefore, Article 119 of the Indian Limitation Act, 1963 (Old Article 178 of the Act of 1908) does not apply to the filing of an award by the arbitrator. The act of filing of an award under section 14 (2) of the Arbitration Act done by the arbitrators in the performance of their statutory duties, Article 119 of the Limitation Act, 1963, could have no application. That article will apply only in case the party to an arbitrator's award or any person interested in an award moves the Court for directing the arbitrators to file such an award in the Court.

(II) In Champalal v. Mst. Samrathbai reported in AIR 1960 SC 629, the Apex Court held that Article 178 of the Limitation Act of 1908 applies to applications made by the parties and not to the filing of the award by the arbitrators and that under section 14 of the Arbitration Act, 1940, Court having jurisdiction to entertain application for filing of award, has jurisdiction to grant extension of time for making award.

(III) In Balwant Singh and another v. Partap Singh Jawala Singh and others reported in AIR 1968 Punjab & Haryana 265, the High Court held that under section 14 (2) and 39 (1) of the Arbitration Act, 1940, the Arbitrator need not make application for permission to file award and that he can just file award without making application. Such application is mere surplusage and hence, no question of dismissing it as barred by limitation could arise.

(IV) In Durga Prasad Chamria and another v. Sewkishendas Bhattar and others reported in AIR (36) 1949 Privy Council 334, it was held that where under the agreed terms of reference, the Arbitrator dispensed from observing the legal rules of evidence and of conduct of trial at law and that the award cannot be set aside on the ground of error of law appearing on the face of award.

(V) In Mathulla v. Thomas George and another reported in AIR 1962 Kerala 320, it was held that an Arbitrator must ordinarily follow the principles of natural justice but where the parties agree that the proceedings may be conducted in any particular way, the contract prevails over what are called the principles of natural justice.

(VI) In D.L. Miller and Co. Ltd. v. Goganmull reported in 1956 Calcutta 361, it was held by the learned single Judge of Calcutta High Court that when the parties agree to go to arbitration, they stipulate not so much for vague principles of natural justice as for concrete principles of contractual justice according to the contracts of the parties and their specific stipulations. Where the contract of arbitration itself prescribes a private procedure of its own, then so long as such agreed private procedure is not against the laws and the statutes of the land, then such agreed procedure must prevail over the notions and principles of natural justice.

(VII) In Debi Das and others v. Keshava Deo reported in AIR (32) 1945 Allahabad 423, it has been held that where minors are parties to dispute and the terms of reference give full power to arbitrator to decide the case to best of his judgment in any manner he deemed proper, then the award cannot be challenged on the ground that minors were not properly represented.

(VIII) In Union of India v. Virani Construction Co. & Another reported in 2007 (3) GLH 446, the learned single Judge of this Court held that where the terms of agreement does not provide for grant of reasons, then the contention that the arbitrator was bound to give reasons in support of his award is without any basis and the non-speaking award cannot be termed to be illegal or invalid. Similar principle has been laid down in Gujarat Industrial Development Corporation v. M/s. S. R. Parmar & Co. & Others reported in (1994) 2 GLR 1140.

(IX) In Union of India v. M/s. Karsandas Jethabhai & Co. reported in AIR 1977 Gujarat 183, the Division Bench of this Court held that where a party to the contract took part in the arbitration proceedings without raising any objection to the further proceedings without the appointment of an Umpire and have come forth with the technical grievance only after the contractor found that the award was not to their liking, then this conduct on the part of the contractor would amount to waiver of the condition and the contractor cannot be permitted to raise this question for the first time before the Court.

(X) In Rashtriya Chemicals and Fertilizers Limited v. M/s. Mohindersingh & Co. and another reported in AIR 1985 Bombay 381, it was held that adjudication of each claim separately is not obligatory on the arbitrator and that it is enough, if he gives lump sum award, without disclosing how he arrived at the amount, unless parties require him to do so by terms of reference. It was also held that award is liable to be set aside if there is total denial of hearing but, the technical rules of evidence do not apply to arbitration proceedings.

(XI) In George and others v. M. Mathew reported in AIR 1973 Kerala 17, it was held that Arbitrators can be said to have entered on the reference when they have applied their mind and done some act in further hence of the arbitration and further that it could not be said that arbitrators had become functus officio by reason of the expiry of over four months from the date of notice to them by the parties to the arbitration proceedings.

(XII) In M/s. Jolly Steel Industries Pvt. Ltd, Poona v. Union of India and another reported in AIR 1979 Bombay 214, it has been held that arbitrator cannot be said to have entered on the reference unless he enters into effective adjudicative acts in furtherance of the work of arbitration.

(XIII) In State of Orissa v. Purusottam Pradhan reported in AIR 1983 Orissa 287, the legality and validity of the appointment of arbitrator was under challenge. It was held by the learned single Judge of Orissa High Court that since the appointment of arbitrator was not challenged at the time of appointment and question as to validity of reference was agitated only after submission of award, no misconduct on the part of the arbitrator can be alleged and the reference was held to be valid. It was further held that arbitrator has powers to award interest unless the awarding of interest is prohibited by agreement.

(XIV) In State of Gujarat and Another v. Nitin Construction Co. reported in 2013 (3) GCD 2112 (Guj) (DB), the misconduct alleged against the arbitrator was regarding acceptance of total fees for the work from respondent. The material on record showed that direction regarding payment of fees and expenses were given to both parties and in spite of that the appellant failed to deposit its share of fees and expenses, as a result of which, when the respondent deposited the requisite amount of their share, they also deposited the amount towards the share of appellant. On these facts, it was held that direction to the appellant in the final award to pay to respondent an amount paid by him as fees towards arbitration cannot be termed as misconduct on the part of the arbitrator.

10. We have heard learned counsel for both the sides and perused the documents on record. The issue is in a very narrow compass. But, before we embark upon the merits, it would be beneficial to discuss certain facts, so as to get a clear insight into different facets of the case.

11. Respondent no.1 herein was awarded the contract for carrying out repair work of 21 Wharf Cranes. It appears that after carrying out repair work of 09 Cranes and chipping and painting work over 04 Cranes, some dispute arose between the appellant and respondent no.1 on certain issues. When the dispute could not be resolved through mutual discussion, vide letter dated 15.11.1984 addressed to the Chairman of appellant-KPT, respondent no.1 sought invocation of arbitration under Clause 25 of the General Conditions of Contract, in respect of the following three issues;

(i) Riveting;

(ii) Price escalation of raw materials and wage increase; and

(iii) Fees of inspecting agency (IRS).

12. Under Clause 25 of the Contract, the Chairman of appellant KPT was authorised to arbitrate the dispute on his own or by any Officer appointed by him. In exercise of the said powers, the Chairman chose to appoint an ex-employee of appellant-KPT, respondent no.2 herein, as the Arbitrator. Therefore, letter dated 28.06.1985 was addressed to respondent no.2 herein seeking his willingness to work as an Arbitrator. Respondent no.2 herein accepted the assignment vide communication dated 03.07.1985 and sought response of the appellant on the amount of remuneration that shall be paid to him. Vide letter dated 22.11.1985, appellant-KPT informed respondent no.2 that the points raised in the letter dated 03.07.1985 are acceptable to both the appellant and respondent no.1. In the said letter, the appellant also clarified issues relating to accommodation and other amenities that shall be provided to respondent no.2. It was specifically clarified in the letter that respondent no.2 will make two vists to Kandla and that the remaining work will be done by respondent no.2 at Bombay, for which the appellant and respondent no.1 shall send their representatives at Bombay. In response to the aforesaid communication dated 22.11.1985, respondent no.2 informed the appellant vide letter dated 06.12.1985 that he would ask respondent no.1-Contractor to submit his claim for extra payment. He also made it clear that he shall not hold more than two meetings at Bombay with the representatives of the appellant and respondent no.1, either individually and/or jointly and that a single visit to Kandla would be adequate. Respondent no.2 cited a fees of Rs. 15,000/- for his assignment.

13. On acceptance of the terms of assignment, the Chairman of appellant-KPT passed formal order dated 27.03.1986 under Clause 25 of the Contract appointing respondent no.2 herein as the Arbitrator.

13.1 While acknowledging his assignment vide communication dated 03.04.1986, respondent no.2-Arbitrator made it clear that his award will be based entirely on the strength of arguments, supported by documents, where necessary and on clarifications asked for verbally or in writing, as may be advanced by the Contractor and the representative of the appellant. It was also clarified that his personal views on the cause of dispute, steps which should have been taken to avoid some of them, authenticity of some claim, not refuted by the Officer of appellant but necessitating further probe, will not be allowed to come in the way of his conclusion.

13.2 It was also stated by respondent no.2-Arbitrator in unequivocal terms that he will not assign any reasons to support his conclusion. The appellant accepted the terms mentioned by the Arbitrator in his letter dated 03.04.1986, vide communication dated 21.05.1986.

14. It transpires from the record that on or about 08.06.1986 respondent no.1 attempted to submit their statement of claim in respect of both types of items, viz. contractual and non-contractual items, before respondent no.2-Arbitrator. However, the Arbitrator refused to accept it straight-away and instead directed respondent no.1 to submit it to the appellant, who, after going through the same, would forward it to the Arbitrator, along with their comments. Accordingly, respondent no.1 submitted its statement of claim with the appellant. Thereafter, vide communication dated 19.07.1986, appellant informed the Arbitrator about the submission of claim by respondent no.1. Ultimately, respondent no.1 submitted its statement of claim to the Arbitrator on 25.07.1986.

15. The appellant alleged that the award dated 25.10.1986 made by the Arbitrator is without jurisdiction inasmuch as the same has not been made within four months from the date of entering upon the reference by the Arbitrator. However, in our opinion, the submission canvassed by learned counsel Mr. Vyas is devoid of merits for the simple reason that the period of four months from the date of entering upon the reference has not elapsed when the award dated 25.10.1986 was made.

15.1 It is a matter of fact that respondent no.1 submitted its statement of claim dated 02.06.1986 to the appellant, which is evident from the communication dated 19.07.1986 addressed to the Arbitrator by the appellant. Thereafter, it was submitted before the Arbitrator on 25.07.1986. It is well settled that an Arbitrator does not enter on the reference as soon as he assumes Office of an Arbitrator. An Arbitrator does not necessarily enter on the reference when he actually commences the decision of the matter in the presence of both parties or ex-parte. An Arbitrator enters on a reference when he first applies his mind to the dispute or controversy before him depending on the facts and circumstances of each case.

15.2 In the present case, the date of entering upon the reference would be 25.07.1986, which is the date on which respondent no.1, for the very first time, raised its claim before the Arbitrator. Therefore, if 25.07.1986 is taken as the date on which the Arbitrator entered upon the reference, then the award dated 25.10.1986 could not be classified as non est, for being without jurisdiction as the period of four months would not have elapsed by that period. Hence, the contention regarding jurisdiction raised by the appellant, being devoid of any merits, deserves to be rejected. Our view is fructified by the principle rendered in the cases of George and others v. Raju Mathew and M/s. Jolly Steel Industries Pvt. Ltd. v. Union of India (supra).

16. It transpires that after holding discussions with the representatives of both the sides, the Arbitrator submitted his preliminary findings on four different issues and invited comments of the appellant, vide letter dated 07.10.1986. The findings are as under;

(a) In respect of the first issue of Riveting, the Arbitrator found that clear-cut instructions on such major item was not given in the original tender document but, when an agreement of the appellant's liability to pay extra at the 13th/14th January, 1982, Meeting was agreed upon, the controversy ought not to have been allowed to drag on for so many years.

(b) The Arbitrator sought observations of the appellant on the issue of price escalation since respondent no.1 had submitted the relevant bills to the appellant as and when it became due.

(c) Insofar as IRS Inspection is concerned, the Arbitrator found that though inspection by IRS was found necessary on account of their expertise in the field, they were introduced only after the work had commenced, which created complications. Further, when the IRS carried out inspections, by using the set-up of respondent no.1, the respondent no.1- Contractor was at a disadvantage, for not being in a position to conduct negotiations. Had it been that respondent no.1 had disagreed for IRS inspection and to share the fees, then the work could not have been completed even at 50% of the satisfactorily level, however, the involvement, incidentally, has put respondent no.1-Contractor to additional expenditure.

(d) In respect of Nylock bolts and nuts, the Arbitrator found that respondent no.1-Contractor had continued to submit bills even after the prescribed limit was exceeded through over-sight, which cannot be a ground for writing-off the dues.

17. When the Arbitrator sought response of the appellant on the demands raised by respondent no.1 vide communication dated 07.10.1986, the appellant preferred application under section 5 & 11 of the Act before the trial Court seeking leave to revoke the authority of the Arbitrator on different grounds. The main ground agitated by the appellant was that the Arbitrator committed gross misconduct in not following the provisions of the Arbitration Act, 1940 while adjudicating the issue and has also exceeded his authority by referring to items, which are extraneous to the terms of reference. The appellant also alleged that the Arbitrator violated the principles of natural justice by holding unilateral meetings.

18. Before us also, the contention as regards misconduct on the part of the Arbitrator has been raised very vociferously. To appreciate the same, a reference to the communications dated 06.12.1985 and 03.04.1986, by and between the appellant and respondent no.2-Arbitrator, is apposite. The first communication dated 06.12.1985 is addressed to the appellant by the Arbitrator and it pertains to the actions/steps proposed to be undertaken by the Arbitrator during the arbitration proceedings. In the said communication dated 03.04.1986, the Arbitrator stated in clear terms that he shall hold not more than two meetings with the representatives of the appellant and respondent no.1-Contractor at Bombay, either individually and/or jointly, at mutual convenience and also that a single visit to Kandla would be adequate. In the communication dated 03.04.1986 addressed to the appellant by the Arbitrator, it has been stated in clear terms that the Arbitrator shall not assign any reasons in support of his conclusion.

19. At this juncture, it would be relevant to note that the terms put forth by respondent no.2-Arbitrator for conducting the arbitration proceedings were expressly accepted by the appellant vide communication dated 21.05.1986. The only condition laid down by the appellant for doing so was that the award should be "clear and claim-wise". No other condition or stipulation was laid down by the appellant. Therefore, if the appellant desired that the Arbitrator should conduct the proceedings in a particular manner or that the Arbitrator should observe certain checks and balances, then it should have clarified all such things in black and white, before the proceedings had commenced.

19.1 However, we find that except the requirement that the award should be "clear and claim-wise", the appellant sought the observance of no other stipulation/s or checks and balances at the end of the Arbitrator. The appellant even accepted the say of the Arbitrator that no reasons would be assigned in the award in support of his conclusion.

19.2 As informed by the Arbitrator in his communication dated 06.12.1985, he held meeting with the representative of respondent no.1-Contractor at Bombay and also held meeting with the representative of the appellant at Kandla. The Arbitrator also made a visit of the site at Kandla. There is nothing on record to prove that the Arbitrator conducted himself in a manner, which was not agreed upon earlier or for that matter, contrary to the terms agreed upon for the arbitration proceedings. We also find nothing on record from which it could be inferred that the Arbitrator acted in a manner favourable to respondent no. 1.

19.3 It was spelt out in the arbitration agreement that the Arbitrator would not assign any reasons in support of his conclusion, which was expressly accepted by the appellant, vide communication dated 21.05.1986. Therefore, after having agreed that the Arbitrator may pass an unreasoned order, it does not lie in the mouth of the appellant to say that the award passed by the Arbitrator is a non-speaking order and is, therefore, violative of the principles of natural justice.

20. Arbitrators are not accepted to deal with the problem assigned to them in the manner in which the judicial or quasi-judicial authorities do. The award does not stand vitiated merely because the Arbitrator has not assigned his reasons for his findings. In our opinion, the terms of contract, which are in pari materia with Clause 2 of the First Schedule of the Arbitration Act, 1940, cannot be interpreted in such a way that its non-compliance would set at naught the award given by the Arbitrator.

21. Considering the facts of the case, we believe that the Arbitrator was dispensed from observing legal rules of evidence and of conduct of trial at law since the agreed terms of reference do not require the observance of any such rules or procedure. Our view is fructified by the principles rendered in the cases of Durga Prasad Chamria v. Sewkishendas Bhattar, Mathulla v. Thomas George, D.L. Miller and Company Ltd. v. Daluram Goganmull, Union of India v. Virani Construction Company, GIDC v. M/s. S.R. Parmar and Company, Union of India v. M/s. Karsandas Jethabhai and Company and Rashtriya Chemicals and Fertilizers Limited v. M/s. Mohindersingh and Company (supra).

22. The appellant also raised the contention that the award passed by the Arbitrator is beyond the scope of reference. We disagree with the above submission made on behalf of the appellant. It is now a well settled position of law that as the parties chose their own arbitrator, they cannot, when the award is good on the face of it, object to the decision, either upon law or on facts. In this case, the Arbitrator has been chosen by the Chairman of appellant-KPT itself and not by the parties jointly. Therefore, even if the Arbitrator had committed a mistake, either in law or on fact in determining matters referred to him but, such mistake does not appear on the face of the award or in a document appended to or incorporated in it so as to form part of it, the award would not be liable to be set aside notwithstanding the mistake.

23. In the present case, the conclusion arrived at by the Arbitrator is based on the documents on record. It is true that the work of riveting did not form part of the original tender document. However, when the appellant agreed at the Meetings held on 13th & 14th January, 1982 to make good its liability to make extra payment to respondent no.1 on account of the additional work of riveting, it is now not open for the appellant to claim that the Arbitrator has acted beyond the terms of reference by directing to make payment towards riveting.

24. In respect of inspection work carried out by the private agency (IRS) is concer

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ned, similar is the situation. Though it was well within the knowledge of the appellant that utilisation of the expertise and facilities of IRS agency would be beneficial, the same was not included in the original tender document. Their subsequent introduction, after the commencement of work, created unavoidable complications. For executing the work, the Inspecting agency used the set-up and structure of respondent no.1, which placed respondent no.1 in a disadvantageous position, as it was clipped of its power to get a good deal through negotiations. Had it been provided in the tender document that some private agency would be carrying out inspection, respondent no.1 would have been in a position to bargain for a better price. However, the introduction of inspecting agency after the commencement of work, made respondent no.1 to accept a price with which it had to remain content with and not a competitive price. 25. With regard to price escalation, though it formed a part of the contract, the mistake committed by respondent no.1 was that it did not submit the relevant bills as and when it became due. In our view, respondent no.1 could not be penalised for a bona fide mistake, particularly, when the claim is supported by relevant Bills. 26. Insofar as claim towards items, viz. Nylock Bolts and nuts, is concerned, it appears that respondent no.1 continued to submit bills as per the original quotation, even after the prescribed limit was over, which was an act of over-sight on the part of respondent no.1. The Arbitrator was of the view that payment due to respondent no.1 cannot be written-off because of this slip by respondent no.1 and we completely agree with the view taken by the Arbitrator. 27. Taking into consideration the settled position of law as stated above and having gone through the entire materials on record, we are of the view that the Court below duly scrutinised the evidence and has justifiably made the award of the Arbitrator the rule of the Court. With regard to the claims and question, the Arbitrator has given reasons. Therefore, the findings recorded by the Arbitrator cannot be said to be either perverse or based on no evidence. We also believe that an award cannot be interfered with even in the case where on an interpretation of any contract or documents, two views are plausible and the Arbitrator accepts one view while the other view is more appealing to the Court. Considering the facts of the case and documents on record, it would not be appropriate for us to substitute the view of the Court below with our own opinion. We are in complete agreement with the reasonings given by and the findings arrived at by the Court below in the impugned judgment and order and hence, find no reasons to entertain these appeals. 28. In view of the above discussion, we find no merits in the present appeals. Hence, both the appeals are dismissed. Interim relief stands vacated. 29. At this stage, learned counsel Mr. Vyas appearing on behalf of the appellant requested to extend the bank guarantee for a further period of Ten Weeks. Learned counsel Mr. Vakil appearing for respondent no.1 assured the Court that the bank guarantee would remain as such for a further period of Ten Weeks from today and that he shall file an Undertaking to that effect with the Registry of this Court within a period of Three Weeks from today. Order accordingly. In view of the assurance given by learned counsel Mr. Vakil, no orders are required to be passed insofar as extension of bank guarantee is concerned.
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