JUDGMENT
R.C. Lahoti, J.
1. An award is not required to be supported by reasons given by the Arbitrator. If the contract or the Court requires the award to be supported by reasons, the absence of reasons would vitiate the award.
2. What are the reasons?
3. Reason is a faculty of mind by which it distinguishes truth from falsehood, good from evil and which enable the possessor to deduce inferences from facts or from propositions (Black’s Law Dictionary, Sixth Edition, p.1265).
4. In Gujarat Water Supply and Sewerage Board v. Unique Rector Gujarat(P) Ltd., , their Lordships of the Supreme Court have held reasons does not mean detailed judgment. Reasons in the context of arbitration award are short intelligible indications of the grounds discernible to find out the mind of the Arbitrator for his action.’ Even if, when the award is reasoned, the Court would not sit in appeal over the award and review the reasons. The Court can set aside the award only if it is apparent from the award that there is no evidence to support the conclusions or if the award is based upon any legal proposition which is erroneous.
5. In Indian Oil Corporation v. Indian Carbon Ltd., AIR 1985 SC 1340, their Lordships have held the requirement of reasons to be stated in the award to be satisfied if the Arbitrator has ‘made his mind known on the basis of which he has acted.’ Reason is short intelligible indication of the grounds to find out the mind of the Arbitrator for his action.
6. A Division Bench of this Court in College of Vocational Studies v. S. S. Jaitely, AIR 1987 Delhi 134 has held, “Reasons are links to the particular conclusion.”
7. To my mind, any expression or statement contained in an award which provides a brief but intelligible indication of what was working in the mind of Arbitrator while adjudicating upon a dispute, satisfies the requirement of giving reasons.
8. That being the position of law, the learned Counsel for the Delhi Development Authority faced with an award dated 27th January, 1989 adjudicating upon disputes arising out of agreement No. 9/PDII/ISAG/A/82-83 has raised the first and foremost contention that the impugned award was vitiated for want of reasons having been assigned by the petitioner. This contention seeks to get rid of the award made on extra items Nos. 2 to 10. Invariably under each item the Arbitrator has stated that both the parties had filed rate analysis which were examined by him. Thereafter the Arbitrator has proceeded to record the rates found acceptable by him. Learned Counsel for the petitioner has carried this Court through the record of proceedings item by item. He has pointed out that in respect of all these items there was disputes as to the rates applicable. Both the parties had filed their respective analysis of rates on different items. The Arbitrator had compared and discussed the two sets of analysis. After discussing with the parties he had made corrections on the analysis charts themselves. What has been recorded by the Arbitrator in the award is the net result of such detailed process. It appears that the disputes ran over several items and the Arbitrator had took up each item seriatim and arrived at decisions then and there as the discussion with the parties had proceeded. The Arbitrator is a retired Engineer and well conversant with the preparations of such bills and rate-analysis as were in dispute in the case at hand. It cannot, therefore, be successfully contended that the award on these items was vitiated for want of reasons. In the facts of the case, the final award read with the proceedings and the rate analysis charts satisfied the test of giving reasons.
9. Award on claim No. 2 was also challenged as vitiated for want of reasons. However, it is clear that this claim relates to release of security deposit. The amount of security deposit available with the respondent was admitted. As disputes relating to all the recoveries made in the final bill by the respondent were decided by the Arbitrator in favor of the contractor, he has held that for that reason, the respond had no jurisdiction to withhold the amounts. This is a sufficient reason.
10. Claim No. 5 has also been seriously disputed by the learned Counsel for the respondent. It is a claim on account of rise in the rates of labour for an amount of Rs. 1.00 lacs. The Arbitrator has awarded an amount of Rs.12,289/-. Clause 10(c) of the Contract reads as under :–
Clause
If during the progress of the works, the price of any material incorporated in the works, (not being a material supplied from the Engineer-in Charge’s stores in accordance with Clause 10 thereof) and/or wages of labour increases as a direct result of the coming into force of any fresh law, or statutory rule or order (but not due to any changes in sales tax) and such increase exceed ten percent of the price and/or wages prevailing at the time of receipt of the tender for the work, and contractor thereupon necessarily and property pays in respect of the material (incorporated in the work) such increased price and/or in respect of labour engaged on the execution of the work such increased wages, then the amount of the contract shall accordingly be varied provided always that any increase so payable is not, in the opinion of the Senior Project Engineer (whose decision shall be final and binding) attributable to delay in the execution of the contract within the control of the contractor. Provided, however, no reimbursements shall be made if the
increase is not more than 10% of the said prices/wages and if so the reimbursements shall be made only on the excess over 10% and provided further that any such increase shall not be payable if such increase has become operative after the contract or extended date of completion of the work in question.”
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The contractor shall for the purpose of this condition keep such books of account and other documents as are necessary to show the amount of any increase claimed or reduction available and shall allow inspection of the same by a duly authorised representative of Delhi Development Authority and further shall, at the request of the Engineer-in-Charge may require any document so kept and such other information as Engineer-in-Charge may require.
The contractor shall, within a reasonable time of his becoming aware of any alteration in the prices of any such materials and/or wages of labour, give notice thereof to the Engineer-in-Charge stating that the same is given in pursuant to this condition together with all informations relating thereof which he may be in position to supply.”
11. Learned Counsel for the respondent has submitted that to attract the applicability of this Clause; (i) the contractor must maintained the necessary accounts and documents, (ii) must allow inspection of the same necessarily to the DDA, and (iii) should have given the notice of increase in wages of labour to the Engineer-in-Charge; failing any of these neither the contract would be entitled to make claim nor the Arbitrator would be justified in awarding the same.
12. Learned Counsel for the petitioner has been right to the extent to which he has pointed out that the muster rolls maintained by the petitioner showing payment of increased wages of labour were filed before the Arbitrator; it was not necessary for the contractor to produce the same before the Engineer in charge during the execution of work; it would suffice if they were kept available and produced for inspection, if demanded. The core of controversy lies around the question whether the contractor had given a notice within reasonable time from his having become aware of increase in wages of the labour to the Engineer in charge.
13. The respondent’s case before the Arbitrator was that the claimant had not informed the increase in wages to the Engineer In-charge nor produced the accounts and documents relevent to that claim before the Engineer In-charge and so the dispute was not liable to be entertained and upheld by the Arbitrator. The Arbitrator has noted this contention of the respondent in his award under claim No. 5, but has not met with the same. He has not assigned any reason why the plea of the respondent was not entertainable.
14. It is well settled that jurisdiction of the Arbitrator to make an award is governed by the contract between the parties. He cannot make an award beyond the contract or in derogation of the contract. (See Associated Engineering Co. v. Govt. of Andhra Pradesh, ; Continental Construction Co. v. State of Madhya Pradesh, ). It is no argument that the Engineer in charge was also aware of the increase in wages of labour. It was obligatory on the
part of the contractor as per terms of the contract to have given notice of increase to the Engineer in charge which having not been done, the contractor was not entitled to any claim under this head. The award given by the Arbitrator deserves to be set-aside for want of reasons.
15. Learned Counsel for the petitioner is not right in submitting that the claim was not disputed before the Arbitrator. What was agreed to by respondent was only this much that if liable, the quantum under this head would be Rs. 12,189/–This does not mean that entertainability or legitimacy of the claim was conceded to by the respondent. The respondent has never conceded to its liability.
16. Though the learned Counsel for the respondent raised a few other contentions laying challenge to the award made by the Arbitrator on other heads as well but they need not be dealt — with as none of them falls within the scope of
Sections 17 and 30 of the Act
17. For the foregoing reasons, this petition is partly allowed. The award of Rs. 12,289/- under claim No.5 is set-aside. The award need not be remitted to Arbitrator as such remission would not serve any purpose. It is not the case of petitioner, nor any material available on record showing/that notice of increase within the meaning of Clause 10-C of contract was given to Engineer-in-Charge.
18. The award in respect of rest of the claims is maintained and is made a rule
of the Court, The petitioner is also held entitled to interest @ 12% p.a. from the date
of the decree till realisation. Let a decree be drawn accordingly. The award shall
form part of the decree.