JUDGMENT
S.M. Jhunjhunuwala, J.
1. By these petitions, the petitioners seek to challenge the Awards all dated 6th August, 1992 filed in this Court and respectively numbered as ‘Award No. 128 of 1992’, ‘Award No. 129 of 1992’ and ‘Award No. 130 of 1992’.
2. The 1st petitioner in all these petitions is Municipal Corporation of Greater Bombay, a Corporation constituted under the provisions of the Bombay Municipal Corporation Act, 1888 (for short, ‘the Municipal Corporation’) and the 2nd petitioner is the Municipal Commissioner of Municipal Corporation. The 1st respondent in all these petitions are the Contractors registered with the Municipal Corporation and the 2nd respondent is the Arbitrator who was appointed as the Sole Arbitrator in connection with the disputes which had arisen by and between the Municipal Corporation and the 1st respondents in respect of the work of reconstruction of Barrister Nathpai Marg in cement concrete which was divided into three sections i.e. Part I, Part II and Part III. The 2nd respondent, hereinafter referred to as ‘the Arbitrator’, after considering the claims raised by the 1st respondents and the Counter-Claim of the Municipal Corporation, made three different Awards in three different references filed before him. The Award dated 6th August, 1992 filed in this Court and numbered as ‘Award No. 128 of 1992’ is in respect of the disputes which had arisen between the Municipal Corporation and the 1st respondents for carrying out the work of reconstruction of Barrister Nathpai Marg from Kaklij Chowk to Mathar Pakhadi Road in C.C. Part I and providing and laying S.W.D. across Barrister Nathpai Marg and partly along Mallet Bander Road (hereinafter referred to as ‘the said Work No. 1’). This Award is challenged by the Municipal Corporation by Arbitration Petition No. 184 of 1992. Similarly, the Award dated 6th August, 1992 filed in this Court and numbered as ‘Award No. 129 of 1992’ is in respect of the disputes which had arisen between the Municipal Corporation and the 1st respondents for carrying out the work of reconstruction of Barrister Nathpai Marg from Ghodapdeo Cross Road No. 1 to Junction of Jackeria Bunder Road and Tanaji Malsure Road (hereinafter referred to as ‘the said Work No. 2’). This Award is challenged by the Municipal Corporation by the Arbitration Petition No. 185 of 1992. The Award also dated 6th August 1992 filed in this Court and numbered as ‘Award No. 130 of 1992’ is in respect of the disputes which had arisen between the Municipal Corporation and the 1st respondents for carrying out the work of reconstruction of Barrister Nath Pai Marg from Mathar Pakhadi Road upto Ghodapdeo Cross Road No. 1 (hereinafter referred to as ‘the said Work No. 3’). This Award is challenged by the Municipal Corporation by the Arbitration Petition No. 186 of 1992. Since the controversy involved in all these petitions is of a similar nature and the said Awards made by the common arbitrator viz., the 2nd respondent have been challenged by the Municipal Corporation on the same and/or similar grounds and as the parties of these petitions are same, all these petitions are disposed of by this common Judgment.
3. The Municipal Corporation had proposed to carry out the work of reconstruction of Barrister Nath Pai Marg in cement concrete which was divided into three sections, i.e. Part I, Part II and Part III. The tenders for carrying out the said work in three parts were separately invited sometimes in the month of November 1985. In response to the tender invitation, the 1st respondents submitted their percentage rate tender along with their letter dated 5th December, 1985. The negotiations took place and the format contracts were executed between the Municipal Corporation and the 1st respondents. The Contracts were approved by the Standing Committee Resolutions of the Municipal Corporation and three separate Work Orders all dated 11th February, 1986 were issued. The Contract value for Part I was mentioned at Rs. 1,37,49,417/-. The Contract Value for Part II was mentioned at Rs. 1,23,38,120/-. The Contract Value for Part III was mentioned at Rs. 96,94,436/-. Since the Municipal Corporation awarded all the three parts of reconstruction of Barrister Nath Pai Marg to the 1st respondents, there were three disputes described as Part I, II and III which were referred for adjudication by way of arbitration before the Arbitrator, the 2nd respondent, who is common in all these petitions. After fully examining and considering the pleadings, exhibits, annexures including the voluminous documents presented to the Arbitrator by the 1st respondents and the Municipal Corporation, oral evidence, arguments advanced and submissions made as also written arguments/submissions filed and the case law cited before him, the Arbitrator gave three separate awards in respect of three parts of disputes which have been challenged by the Municipal Corporation on the following grounds :—
(i) that the claims made by the 1st respondents against the Municipal Corporation in the arbitration references were beyond the scope of the terms of the Contracts and as such, the Arbitrator had no jurisdiction to arbitrate in respect thereof;
(ii) that the claims made by the 1st respondents against the Municipal Corporation were inconsistent with each other and as such, the same could not have been awarded to the 1st respondents;
(iii) that the claims awarded to the 1st respondents have been awarded in contravention or breach of the contractual stipulations and as such, the awards made by the Arbitrator are bad in law; and
(iv) that the claims had been wrongly awarded by the Arbitrator in favour of the 1st respondents.
4. Before I deal with the Municipal Corporation’s challenges to the Awards in question, it is desirable to state that the ambit and scope of challenge to an award under section 30 of The Arbitration Act, 1940 (for short, ‘the Act’) has now been circumscribed by the catena of decisions of the Supreme Court, our Court and other High Courts. An award is not vulnerable to any challenge thereto. Needless to state that when an arbitrator is made the final arbiter of the disputes between the parties, the award is not open to challenge on the ground that the arbitrator reached a wrong conclusion or failed to appreciate the facts. The reasonableness of the reasons given by the arbitrator cannot be challenged and the appreciation of evidence by the arbitrator is never a matter which the Court calls upon and considers. The arbitrator is the sole Judge of the quality as well as the quantity of the evidence and it will not be for the Court to take upon itself the task of being a Judge on the evidence before the arbitrator. Once there is no dispute as to the contract, what is interpretation of that contract is a matter for the arbitrator on which the Court cannot substitute its own decision. If on the view taken of a contract the decision of arbitrator on certain amounts awarded is a possible view though perhaps not the only correct view, the award cannot be examined by the Court. However, an award can be set aside if the arbitrator misconducts himself or the proceedings before him or proceeds beyond his jurisdiction. There is a distinction between the dispute as to the jurisdiction of the arbitrator and the dispute as to in what way that jurisdiction should be exercised. A distinction has to be drawn between an error within the jurisdiction and an error in excess of jurisdiction. An award may be remitted or set aside on the ground that the arbitrator in making it had exceeded his jurisdiction. An award can also be set aside where there is error apparent on the face thereof. All award is not invalid merely because by a process of inference and arguments it may be demonstrated that the arbitrator has committed some mistake in arriving at his conclusion. The Court in dealing with an application to set aside an award is not to consider whether the view of the arbitrator on the evidence is justified. The arbitrator’s adjudication is generally considered binding between the parties for he is a Tribunal selected by the parties and the power of the Court to set aside the award is restricted to the cases set out in section 30 of the Act. Needless to say that the Court has no Appellate Jurisdiction in deciding the petition to set aside an award under section 30 of the Act.
5. Mr. Sathe, learned Counsel for the Municipal Corporation, has submitted that under Clause 96 of the General Conditions of Contract for Civil Works, any doubt, dispute or difference arising between an Engineer or any other Officer of the Municipal Corporation on the one hand and the 1st respondents on the other hand touching or concerning the said works was first required to be referred to the Municipal Commissioner and only after following the procedure as laid down in the said Clause 96, reference to arbitration in accordance with Clause 97 thereof could be made and since certain claims made by the 1st respondents against the Municipal Corporation before the Arbitrator were not referred to the Municipal Commissioner under the said Clause 96, reference of such claims to the Arbitrator for arbitration was beyond the scope of the terms of the said Contracts and as such, the Arbitrator had no jurisdiction to arbitrate in respect thereof. Mr. Thakker, learned Counsel for the 1st respondents, has submitted that reference of claims of the 1st respondents against the Municipal Corporation first to the Municipal Commissioner under Clause 96 was not a condition precedent to 1st respondents invoking arbitration under Clause 97. In the submission of Mr. Thakker, the phraseology of Clause 97 is different and reference of claim to arbitration as per Clause 97 was not dependent upon Clause 96 and as such independently of Clause 96, the 1st respondents’ claims could be referred to arbitration under Clause 97. Mr. Thakker has further submitted that as recorded by the Arbitrator in the Awards, factually even such reference to the Municipal Commissioner was made and as such, the 1st respondents’ claims referred to arbitration were not beyond the scope of the terms of the Contracts and the Arbitrator had the jurisdiction to arbitrate.
6. As per Clause 96, if any doubt, dispute or difference arises or happens between the Engineer or any other officer of the Municipal Corporation on the one hand and the Contractor on the other hand, touching or concerning the concerned work or relating to the quantities, qualities, description or manner of work done and executed by the Contractor or the quantity or quality of the materials to be employed therein or in respect of any additions deductions, alterations or deviation made into or from the concerned work or touching or concerning the meaning or intention of the contract or of any plans, drawing, instructions or directions referred to therein or which may be furnished or given during the progress of the work or touching or concerning any certificate, order or reward which has been made or in anyway whatsoever relating to the interests of the Municipal Corporation or of the Contractor, every such doubt, dispute and difference is to be referred to the Municipal Commissioner who shall give his decision within a period of 90 days and if the Contractor is not satisfied with the decision of the Municipal Commissioner or the Municipal Commissioner fails to give the decision within a period of 90 days, such dispute may be referred to arbitration as per Clause 97. The language of Clause 97 which incorporates arbitration agreement between the parties is of widest amplitude. As per Clause 97, all disputes or differences whatsoever arising at any time between the parties to the contract, touching or concerning the work or the execution or maintenance thereof or the contract or the construction, execution or maintenance thereof or the consideration, meaning, operation or effect thereof or of the rights or liabilities of the parties or arising out of or in relation thereto whether during or after completion of the contract or whether before or after termination, foreclosure or breach of the contract (other than those in respect of which, decision of any person is by the contract, expressed to be final and binding) are after written notice by either party to the contract to the other of them to be referred to arbitration. Clause 97 also provides the manner and mode in which the arbitrator is to be appointed.
7. Except in ‘excepted matters’ and that too subject to limitation mentioned in Clause 96, reference to arbitration under Clause 97 in respect of all claims, disputes or differences arising out of or in relation to the contract between the parties as provided therein can be made. Such reference to arbitration is not dependent upon Clause 96. The claims in respect whereof the references to the Arbitrator for arbitration were made were not of the nature in respect where of decision of any person by the contract expressed to be final and binding and as such, the references in respect of 1st respondents’ claims against the Municipal Corporation were not made beyond the terms of the contracts. The Arbitrator had the jurisdiction to arbitration in respect of the 1st respondents’ claims against the Municipal Corporation.
8. Even otherwise also, on the contention raised by the Municipal Corporation before the Arbitrator in the arbitration proceedings to the effect that all the claims referred to arbitration were not earlier referred to the Municipal Commissioner in terms of Clause 96, the Arbitrator after careful examination of the documentary evidence on record rejected the said contention of the Municipal Corporation and held that the claims raised by the 1st respondents before him were referred to the Municipal Commissioner. This finding of the Arbitrator based on facts and evidence on record cannot be interfered with in the present proceedings since the Court is not sitting in appeal over the said Awards. Moreover, Mr. Thakker has drawn my attention to letters dated 24th September, 1991 addressed by the 1st respondents to the Municipal Commissioner in respect of each of the said works which in terms record that the disputes and differences which arose by and between the parties were in fact referred to the Municipal Commissioner under Clause 96 on 17th September, 1990 and no decision in respect thereof was given by the Municipal Commissioner although a period of more than 90 days had elapsed. The said letters were addressed by the 1st respondents for reference of all the disputes and differences arising out of the contracts to arbitration of a Sole Arbitrator appointed in terms of Clause 97. In reply to the said letters, the Chief Engineer (Roads & S.W.D.) of the Municipal Corporation addressed a letter dated 28th January, 1992 under the directions of the Municipal Commissioner whereby the appointment of the 2nd respondent as Sole Arbitrator was made in the dispute which had arisen by and between the 1st respondents and the Municipal Corporation in connection with the said Works Nos. I, II and III. In view of the said correspondence on record before the Arbitrator, the submission now made by Mr. Sathe that the claims made by the 1st respondents against the Municipal Corporation were beyond the scope of the terms of the Contracts, being devoid of any merit is rejected.
9. Though Mr. Sathe has submitted that the reference of certain claims of the 1st respondents to arbitration of the Arbitrator was without jurisdiction on the ground that reference to Municipal Commissioner in terms of Clause 96 was not made, it may be mentioned that in the petitions filed by the Municipal Corporation, no such ground had been specifically taken by the Municipal Corporation.
In support of his submission that the claims made by the 1st respondents were inconsistent with each other and as such, the Arbitrator could not have awarded the same, Mr. Sathe has put reliance on the decision of the Supreme Court in the case of Union of India v. Jain Associates & another, . In that case, different amounts were awarded in respect of the claims founded on the same allegation of damages and loss of profit for breach of contract covered by section 73 of The Contract Act. The award was held as vitiated for umpire’s failure to apply judicious mind. In the facts of the instant case, the claims for idling machines and loss of profit were founded on different heads and independent of each other. Both the Claims Nos. 3 and 4 before the Arbitrator were not claims for loss of profit but were raised under different heads independent to each other. As justifiably held by the Arbitrator, heads of losses due to delay are (i) overheads, (ii) profit, and (iii) extra expenses due to price rise during the extended period (over and above the sum allowable under agreed escalation) in respect of (a) materials, (b) labour, (c) machinery, equipment, spares, P.O.L. etc. The Arbitrator has further held that the analysis of heads of losses due to delay when applied to the compensation claimed by the 1st respondents in Claims Nos. 3 and 4 revealed that the 1st respondents were claiming loss of profitability during the extended period after having claimed the loss of profit on the Full Value during the stipulated period which was logical. However, the Arbitrator has awarded overheads which were actual out of pocket expenses incurred extra to the full extent and expected profit lost within the stipulated period but not the profitability during the extended period. Since the 1st respondents proved with documentary evidence for major items the rise in prices of materials and labour to the extent of 79%, the Arbitrator, while considering Claim No. 4 of the 1st respondents justifiably held that credit had to be given on account of (i) material supplied by the Municipal Corporation to the 1st respondents at the fixed agreed rates, (ii) escalation due and payable under the agreed formula, and (iii) compensation awarded under Claim No. 3 of the 1st respondents and after giving this credit, Claim No. 4 was partly awarded. I find no merit in the submission made on behalf of the Municipal Corporation that the Arbitrator has awarded claims to the 1st respondents made inconsistent with each other.
10. No claim contrary to contractual stipulations has been awarded by the Arbitrator to the 1st respondents. The Arbitrator has interpreted the relevant terms of the contracts for deciding the disputes between the parties and on interpretation of the terms of the contracts, the view taken by the Arbitrator being a possible view, the same cannot be substituted by the view of the Court even if the Court takes a different view on interpretation thereof. Mr. Sathe has submitted that road divider work was deleted from the scope of the contracts and the Engineer of the Municipal Corporation had express power to do so and as such, no claim could have been awarded by the Arbitrator in respect thereof. The material clauses for consideration by the Arbitrator in this respect were Clauses 14 and 94 of the General Conditions of the Contract for Civil Works. Clause 14 empowers the Engineer to alter or vary the levels or position of any of the works contemplated by the specifications, or to order any of the works contemplated thereby to be committed with or without substitution of any other works in lieu thereof. However, as provided in Clause 14 itself, in the event of any deviation being ordered by the Engineer which in the opinion of the contractor changes the original nature of contract, the contractor shall nevertheless carry it out and disagreement as to the nature of the work and the rate to be paid therefor, shall be resolved in accordance with Clause 97. Clause 94 empowers the Municipal Commissioner to foreclose the contract in full or in part. However, this power is not to be exercised arbitrarily. On the facts before him, the Arbitrator found that the Municipal Corporation not only modified the design but got the work done through other agency and that the substantial reduction in the scope of work resulted in loss of overheads and profits, reduced productivity from machinery and equipment besides direct expenses incurred so far as the 1st respondents were concerned. By allowing partly this claim, the Arbitrator has not acted in contravention of any of the terms of the contracts. On the facts and evidence on record and while appreciating the same, it has been partly allowed and it is not permissible for the Court to reappreciate or reappraise the evidence on record. On interpretation of Clauses 14 and 94, the Arbitrator has come to the conclusion that the claim was permissible in arbitration. There is no error of law on the face of the said Awards and the reasons given by the Arbitrator in partly allowing the claim do not disclose an erroneous proposition of law as the basis thereof. Since the Arbitrator has not travelled outside the bounds of the contracts, he has not acted without jurisdiction. He has remained inside the parameters of the contracts and has construed the provisions thereof. As there is no conscious disregard of the law or the provisions of the contracts, the judgment of the Supreme Court in the case of Associated Engineering Co. v. Government of Andhra Pradesh, , on which reliance has been placed by Mr. Sathe, on the facts of the instant case, has no applicability.
11. In the said Awards, the Arbitrator has stated that the award of interest pendente lite and future in the facts was justified. The Arbitrator has awarded interest at the rate of 18% per annum on the awarded sums under the provisions of the Interest Act. Mr. Sathe has submitted that in the facts of the case, the Arbitrator misconducted proceedings before him by awarding the interest since reconstruction of roads was not a commercial transaction and the proviso to section 34 of the Code of Civil Procedure, 1908 was not applicable. In support of his submission, Mr. Sathe has put reliance on the judgment of this Court in the case of State of Maharashtra & others v. Saifuddin Mazzaferali Saifee, . In that case the Division Bench of our Court has observed that construction of bridge is not trade or industry or business. This observation by the Division Bench has been in the context and the facts of the case before the Division Bench as clarified by the Division Bench itself and with reference to section 34 of the Code of Civil Procedure, 1908 held that the State of Maharashtra could be made to pay only 6% interest from the date of the suit till payment. In the facts of the instant case, it is required to be considered as to whether the Arbitrator had jurisdiction to award pendente lite interest. It is not in dispute that the claim for interest was made before the Arbitrator and the Arbitrator was called upon to adjudicate the claim in respect of the interest made by the parties against each other. In the case of Secretary, Irrigation Department, Government of Orissa & others v. G.C. Roy, the Supreme Court has set at rest the controversy regarding the jurisdiction of the arbitrator to award pendente lite interest in the given circumstances. The earlier view of the Supreme Court in the case of Executive Engineer (Irrigation) v. Abhudula Jona, has been over-ruled by the Supreme Court in G.C. Roy’s case and as such, the Arbitrator had the jurisdiction to award pendente lite interest. When the Arbitrator had the jurisdiction to award interest; the demand for interest was specifically made by the 1st respondent on the Municipal Corporation vide the letter dated 27th October, 1989; the contracts between the parties did not prohibit grant of interest; the controversy pertaining to claim for interest made by the parties against each other was in fact referred to arbitration; and the Arbitrator was factually satisfied that the Canara Bank had charged interest on the basis of which the claim for interest was made by the 1st respondents, it cannot be said that the said Awards pertaining to interest as awarded by the Arbitrator are bad in law or liable to be set aside. A person deprived of the use of money to which he is legitimately entitled has a right to be compensated for the deprivation, call it by any name. It may be called interest, compensation or damages. As held by the Supreme Court in G.C. Roy’s case, this basic consideration is as valid for the period the dispute is pending before the arbitrator as it is for the period prior to the arbitrator entering upon the reference. This is the principle of section 34 of the Code of Civil Procedure, 1908 and there is no reason or principle to hold otherwise in the case of arbitrator. For doing complete justice between the parties, the Arbitrator has rightly and justly awarded interest at the rate of 18% per annum.
12. In the circumstances, I find no merit in any of the challenges to either of the said Awards. Each of the petitions being devoid of any merit, is liable to be dismissed with costs. Accordingly, each of the petitions is dismissed with costs.
13. In view of dismissal of each of the petitions and this Court refusing to set aside the said Awards, Mr. Thakker, has applied for passing of decrees in terms of each of the said Awards. Since as per Rule 787(5) of the Rules of this Court as applicable on its Original Side, Mr. Thakker is justified in making the application, further order as under is passed :—
(i) Judgment is pronounced and decree in terms of the Award dated 6th August, 1992 filed in this Court and numbered as Award No. 128 of 1992 is passed. The 1st petitioner is also ordered and decreed to pay further interest on the principal amount awarded at the rate of 18% per annum from the date hereof till payment;
(ii) Judgment is pronounced and decree in terms of the Award dated 6th August, 1992 filed in this Court and numbered as Award No. 129 is passed. The 1st petitioner is also ordered and to pay further interest on the principal amount awarded at the rate of 18% per annum from the date hereof till payment;
(iii) Judgment is pronounced and decree in terms of the Award dated 6th August, 1992 filed in this Court and numbered as Award No. 130 of 1992 is passed. The 1st petitioner is also ordered and decreed to pay further interest on the principal amount awarded at the rate of 18% per annum from the date hereof till payment.
Petitions dismissed.