ORDER
P. Shanmugam, J.
1. Both the above appeals arise out of an Arbitration Award and judgments seeking for a direction to file the original award and pass the decree in terms thereof (O.P.No.1 of 1992) and an order to set aside the order of award dated 12.3.1992 (O.P.No.2 of 1992) under Sections 17 and 14(2) and under Section 30 of the Arbitration Act, 1940 (hereinafter referred to as the Act) respectively. The Subordinate Judge directed the Arbitrator to file the original award and passed a decree in terms of the said award. He has also, in
O.P.No.2 of 1998, dismissed the application under Section 30 to set aside the award. The State of Tamilnadu, aggrieved by the allowing of the application under Section 17 and 14(2) of the Act and dismissing the application under Section 30 of the Act, filed the above two appeals.
2. The facts of the case are as follows:
The first respondent is a Contractor and a successful tenderer for undertaking the work of formation of Pugalur Byepass Road. An agreement dated 8.2.1988 was entered into. The agreement, inter alia, provided that the work must be executed within a period of 18 months from the date of handing over of the site. The site was handed over on 3.6.1988. After completion of the work, a claim was made on 7.6.1990 before the Superintending Engineer, National Highways for an additional sum of Rs.28,98,213.70 as against the original award amount of Rs.59,79,909. The Arbitrator, by his Award dated 12.3.1992, entertained the various claims of the first respondent and an award of Rs.27,95,215 was ordered in favour of the first respondent. The appellant herein filed O.P.No.2/92 to set aside the award of the second respondent and O.P.No.1/92 was filed by the first respondent herein to pass a decree in terms of the award. The learned Judge allowed the application of the respondent and dismissed the petition of the appellant. The appeal is against these orders.
3. There were five claims in reference to this contract. Of these, claim No.1 relates to extra rate for the increase in the length of carting of earth (gravel). No serious arguments were raised or submitted in reference to claim Nos.2 to 5. Since claim No.1 is of substantial amount to the tune of Rs.22,55,575.70, the appellant resisted the claim and has filed the above appeals. Therefore, the main controversy is in reference to the eligibility of the first respondent to seek for an additional claim for the alleged expenses incurred by him towards carting gravel. The case of the appellant-Government is that it is for the first respondent to locate the source of the gravel and that they are not bound to provide extra cost incurred for carting the gravel. Whereas, the case of the first respondent is that it is the duty of the Government to provide the source of the gravel and since it was found that the source originally located was impossible of being quarried and therefore, he had to go to a different source, which is away from the place of work and hence, he had to make good the extra expenses incurred by him.
4. Some of the clauses of the tender notice relating to the work are relevant for the purpose of our case. Clauses 18, 20 and 25, which are relevant, are given below:
“18. Every tenderer is expected before quoting the rate to inspect the site of the proposed work. He should also inspect the quarries and other sources of materials and satisfy himself about the quality and availability of materials. The name of quarries, kilns, etc., where from certain materials are to be obtained will be given in the Schedule ‘C’ samples of materials kept in the office of the Divisional Engineer (NH) No.I Division, Madurai shall be inspected by the tenderer before tendering for the work. The materials supplied should be as per the above samples and conforming to the SRBW and MDSS for items not covered by SSRB.”
The tenderers shall examine in their own interest the drawings, condition of contract and specification of work. They shall also inspect the site and satisfy themselves on their own as to hydrological climate and physical conditions prevailing at site the nature and extent and practicability of the works, all existing and required roads and other means of communications and access to the site whether by water or land the availability of different materials and their adequacy labour and probable site for labour charges stores and godowns etc.
They shall obtain themselves all necessary informations as to risks contingencies and other circumstances which may affect as influence their lender. No extra charges consequent on any misunderstanding or otherwise shall be allowed by the department.
20. The Government will not however after acceptance of contract pay any extra charges for lead or for any other reasons in case the contractor is found later on to have misjudged the quality or quantity of materials available. Attention of the contractor is directed to standard preliminary specifications regarding payment of seniorages, tools etc.
The tenderer’s particular attention is drawn to the sections and clauses on the standard preliminary specifications dealing with:
1. Test, inspection and rejection of defective materials of work,
2. Carriages.
3. Construction plants.
4. Water and lighting,
5. Clearing up during progress and for delivery.
6. Accidents.
7. Delays.
8. Particulars of payment.
The tenderer should closely pursue all specifications clauses which govern the rates for which he is tendering.
25. The price at which and the source from which certain particulars materials should be obtained by the contractor are given at the end of the schedule accompanying the tender forms. Tenderers must accept the materials at those prices and shall quote their price for finished work accordingly. Notwithstanding any subsequent charges in the market value for these materials the charges by the contractor will remain as originally entered in the written contract. No cartage or incidental charges will be borne by the Government in connection with this supply.”
A reading of the above clauses makes it clear that it is for the first respondent to inspect the site of the proposed work, including the quarries and other sources of materials and satisfy himself about the availability of materials. It is his duty to find out the physical conditions prevailing at the site, the nature, extent and practicability of the work, all existing main roads and other means
of communication and access to the site, availability of different materials and their adequacy. They shall also take into account the risk, contingencies and circumstances that may affect their tender. It is specifically stated that no extra charges consequent on any misunderstanding or otherwise shall be allowed by the department. Clause 20 has specifically provided that the Government will not, after acceptance of the contract, pay extra charges for lead or any other reasons, in case the contractor is found to have later misjudged the quality or quantity of material available. Under clause 25, it is specifically stated that no cartage or incidental charges will be borne by the Government in connection with the supply. However, according to the first respondent, the source of earth (gravel) is located in Chainage 1750-2000 of the proposed alignment and accordingly, the leads for items of work involving carted earth (gravel have been mentioned in Schedule ‘A’ as 1KM, 2KM and 4KM). According to him, based on the above guidelines, the contractor tendered for the work believing that the source for gravel mentioned in the agreement will be made available as specified in the document, since a massive quantity of 97,868 Cubic Meter of gravel had to be carted for the work of formation of road with leads varying from 1KM to 4KM, It is his further case that when the work of formation was in progress in early stages, it was found that no land had been acquired or taken on lease temporarily by the department for locating the pits for excavating earth work for carting the earth as required. According to him, the source of quarry of earth failed due to the default on the part of the department.
5. The appellants, in their counter to the claim, have stated that according to the condition in Clause 18 of the tender notice, every tenderer is expected, before quoting the rate, to inspect the site of the proposed work and inspect the quarries and other sources of materials and satisfy himself about their availability. It is me duty of the contractor to inspect the proposed site of work and quarries. It is further pointed out in their counter that if the sources approved are found to be unacceptable at any point of time, the contractor will not be reimbursed for the expenses in developing the new source, but allowance for reduction will be made, as the case may be, for the increase or decrease in cost due to the increase or decrease in length of haul. Change of new source initiated by the contractor shall not be a ground for demanding any compensation.
6. However, the Arbitrator found that the first respondent was constrained to go in for a different quarry and that there was change of location of the quarry with an average distance of 12 kilometres from the site and therefore he had incurred extra expenses for carting of the gravel. The specific case of the Government is that it is the duty of the contractor to locate the quarry and when it was found that the particular quarry is not available, he located another quarry and the department officials have made joint inspection and given the required support to the contractor to take the materials from that quarry. However, they add that they cannot be saddled with extra amount for the alternative site for the extra lead.
7. The Subordinate Judge has rejected the application of the appellant without going into the details of the claim and the counter claim. In O.P.No.1/92 (Application to pass a decree in terms of the Award), he has held that the respondent had to go to a different source of quarry because the quarry suggested initially was not suitable and because of that, there was a delay in execution of the work. It was further held that there was no allegation against the Arbitrator and hence, the award passed by him cannot be sustained. In O.P.No.2/92, he has held that inasmuch as there is no allegation against the Arbitrator, he has not committed any misconduct and that the error, if any, in the Award has not been established.
8. After going through the tender clauses, the claim and the counter claim, we find that claim No. 1 of the respondent for extra rate increased length of carting is totally outside the scope of the tender and the contract. There is no scope for providing extra cartage charges. On the other hand, clauses 18, 20 and 25 make it clear that the responsibility is fully on the tenderer and the contractor to find out the source of availability of the materials. If they were constrained to go to an alternative source for the non-availability of the material for any reason whatsoever, it is the responsibility of the contractor. The Arbitrator has proceeded as though that it is the duty of the Government to meet the additional expenses, if any, for the cartage. If the source suggested and inspected by the respondent is within one to four kilometres of the site and if it is later on found that he cannot get the gravel from that particular source and that he had to go to a different source, incurring extra expenses for carting upto 12 kilometres average, the appellant cannot be held liable. However, the Superintending Engineer has sanctioned a sum of Rs.5,41,527 towards the increase in quantity, cost and conveyance of the gravel. The Arbitrator, not being satisfied with the above sanctioning of the additional expenses, though outside the scope of the tender notice and contract, has granted an additional amount of Rs.24,03,452 plus 18% interest on the said sum, amounting to Rs.3,91,763.
9. The scope of interfering with an Award of the Arbitrator is limited. Under Section 30 of the Arbitration Act, 1940, the Court can interfere only in case the Arbitrator his misconducted himself or the proceedings or that the Award has been improperly procured otherwise invalid. The Supreme Court, in Associated Engineering Company v. Government of Andhra Pradesh, , has held that the Arbitrator cannot act arbitrarily, irrationally, capriciously or independently of the contract. His sole function is to arbitrate in terms of the contract. He has no power apart from what the parties have given him under the contract. If he has travelled outside the bounds of the contract, he has acted without jurisdiction. Conscious disregard of the law or provisions of the contract from which he has derived his authority vitiates the award. In State of Uttar Pradesh v. Ramnath International Construction (P) Ltd, , the Supreme Court held that the Court can interfere with the Award only on the ground set out under Section 30 of the Act. It cannot re-appreciate the evidence to examine the
correctness of the conclusions of the Arbitrator. But, it can examine the clauses of the agreement to determine the correctness of the conclusion with reference to the clauses. The Arbitrator is a creature of the agreement itself and therefore, he is duty bound to enforce the terms of the agreement and cannot adjudicate the matter beyond the agreement itself. In State of Rajasthan v. Puri Construction Co. Ltd, , the Supreme Court held that an erroneous application of law constituting the very basis of the Award and improper and incorrect findings of fact without closer and intrinsic scrutiny demonstrable on the face of the material on the record amounts to misconduct. In S. Harcharan Singh v. Union of India, , the Supreme Court held that the jurisdiction of the Arbitrator is limited by the reference and if the Arbitrator has assumed jurisdiction not possessed by him, the Award, to that extent, is beyond the Arbitrator’s jurisdiction would be invalid and liable to be set aside. In Food Corporation of India v. Joginder Pal Mohinder Pal , the Supreme Court held that in case of errors apparent on the face of the Award, it can be set aside. In P.M. Paul v. Union of India, 1989 Supp.(1) SCC 368, the Supreme Court held that if the claim was outside the purview of the contract, then it will be an adjudication in excess of jurisdiction, which may constitute legal misconduct. In Tarapore & Co.v. State of Madhya Pradesh, , it was held by the Supreme Court that an Arbitrator cannot travel beyond the contract and if an Arbitrator acts so, it would be misconduct.
10. Applying the principles set out above, we find that there is no provision or scope for admitting the claim of the respondents for the extra expenses incurred for carting. It is the sole responsibility of the first respondent to locate his quarry and find out the availability of the materials. If the quarry initially located could not be operated, he should have anticipated the availability and found out other alternative sources before making the tender. Inspite of such a clear stipulation and the clauses of the notice and the said fact having been pointed out, the Arbitrator did not apply the clauses against the first respondent, but has gone into the claims and accepted them. We are not going into the admissibility or acceptance of such a claim on its merits. We cannot go into the various details given for the expenses incurred for carting of the materials from a different source, which according to us, is not necessary for the purposes of these appeals. Therefore, we are of the clear view that the Arbitrator has gone beyond the scope of the contract and hence, the Award passed by him is liable to be set aside. The learned Subordinate Judge has not applied his mind and considered the questions raised by the appellants herein. The order has simply reproduced the provisions and the statement of law without going into the contentions raised on behalf of the appellants.
11. The contention of the first respondent that as per Clause 106.02 of the preliminary specifications contained in Tamilnadu Highways Manual, if sources previously approved are found to be unacceptable, no contractor will be reimbursed for developing a new source, but allowance or reductions will
be made, as the case may be, for the increase or decrease in the cost due to the increase or decrease in the length of the haul. This clause cannot be taken advantage of by the first respondent since it will arise only in case the sources previously approved are found to be unacceptable. In this case, the Government has not disapproved any of the sources. Because of his inability to get the materials from the approved sources, the first respondent could not cart the materials from the initial source. That will not come under this clause.
12. Even though it is found that the first respondent is not entitled to seek for the extra amount, inasmuch as his request was conceded by the Superintending Engineer himself, we are not inclined to interfere with the amount conceded by the Superintending Engineer.
13. For the above reasons, the appeals are allowed insofar as claim No.1 of the respondent in excess of Rs.5,41,527 is concerned. The appeals allowed to the extended indicated above. No costs. Consequently, the connected C.M.Ps. are closed.