This appeal is filed against the judgment and order dated 11.07.2000 of
the High Court of Gujarat at Ahmedabad in First Appeal No.418 of 1986 whereby
the High Court set aside the award dated 03.05.1985 passed by the Arbitrator. The
High Court set aside the aforesaid award on the following reasonings :
(a) that an arbitrator or umpire has misconducted himself in the
proceedings;
(b) that there appears to be an error on the face of the record
inasmuch as the Umpire has overlooked clauses 14 & 18 of the Arbitration
Agreement;
(c) that the Umpire has traveled beyond the scope of the contract
between the parties on certain items and claims and
(d) that he has rendered lump sum award making it totally
On the aforesaid premises the award was set aside.
In the present case the contractor claimed Rs.30,425/- for abandonment
of contract. This was the first claim. The second claim was for Rs.30,213/- for illegal
deductions made by ONGC. The third claim was for Rs.2,00,000/- for not supplying
the material in time by the ONGC. The fourth claim was loss occasioned by the
contractor for keeping his establishment alive and on this head the claim was for
Rs.3,50,000/-. The fifth claim was loss of profit at the rate of 20 percent amounting
Rs.1,80,000/-. Last claim was interest at the rate of 18% p.a.
As already pointed out that the Arbitrator awarded Rs.5,98,438/- as
lump sum, we agree with the reasoning of the High Court that the award is
Clause 14 of the Arbitration Agreement reads as under :
"DELAY IN CONSTRUCTION (COMMISSION’S DEFAULTS);
The Commission will make every reasonable affect to furnish the materials
under the contract and the right of user including the permits required to be
furnished by the Commission under the contract in due time so as not to
delay the construction related work of reconditioning. In case of any hold up
to site work of the CONTRACTOR on account of non-availability of any one
of these terms, no compensation by way of claims is admissible but only
corresponding extension of time limit would be granted."
Under the aforesaid clause no claim for compensation is admissible
even that foul of the Commission. Clause 18 of the Arbitration Agreement reads :
"INTEREST ON AMOUNTS
No interest will be payable on the security deposit or any other amount
payable to the CONTRACTOR under the contract."
The Arbitrator has awarded the interest at the rate of 12% on the
amount with effect from 09.02.1984 to 03.05.1985 (pendente lite). He has also
awarded interest from the date at the rate of 12% on the amount as shown in 1 & 3
above till the date of decree or actual date of payment, whichever is earlier.
In view of the aforesaid premises, the Arbitrator has not at all
considered clause 14 of the Arbitration Agreement. The interest has been awarded
in violation of clause 14 of the Agreement. Apart from others these two legal aspects
have not been considered by the Arbitrator. We are, therefore, in full agreement with
the reasoning given by the High Court. The Arbitrator may now proceed with the
arbitration but in the light of the judgment of the High Court. We direct the
Arbitrator to consider the matter afresh in the light of the reasoning of the High
Court.
Subject to the aforesaid, the appeal is dismissed.
( H.K. SEMA )