{"id":56495,"date":"2004-04-27T00:00:00","date_gmt":"2004-04-26T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/d-d-sharma-vs-union-of-india-on-27-april-2004"},"modified":"2016-07-19T05:55:26","modified_gmt":"2016-07-19T00:25:26","slug":"d-d-sharma-vs-union-of-india-on-27-april-2004","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/d-d-sharma-vs-union-of-india-on-27-april-2004","title":{"rendered":"D.D. Sharma vs Union Of India on 27 April, 2004"},"content":{"rendered":"
Supreme Court of India<\/div>\n
D.D. Sharma vs Union Of India on 27 April, 2004<\/div>\n
Author: S.B. Sinha<\/div>\n
Bench: Cji, S.B. Sinha, S.H. Kapadia.<\/div>\n
           CASE NO.:\nAppeal (civil)  6678 of 1999\n\nPETITIONER:\nD.D. Sharma\n\nRESPONDENT:\nUnion of India\n\nDATE OF JUDGMENT: 27\/04\/2004\n\nBENCH:\nCJI, S.B. Sinha & S.H. Kapadia.\n\nJUDGMENT:\n<\/pre>\n
J U D G M E N T<\/p>\n
W I T H<\/p>\n
CIVIL APPEAL NO.1984 OF 2000<\/p>\n
S.B. SINHA, J :\n<\/p>\n
\tThese appeals arise out of a common judgment and order
\ndated 15.09.1998 .passed by a Division Bench of the Gauhati
\nHigh Court in FA No. 8 of 1993 whereby and whereunder an
\nobjection filed by the Union of India purported to be in
\nterms of  Section 30 of the Arbitration Act, 1940 was
\nallowed in part.\n<\/p>\n
\tThe parties hereto admittedly entered into a contract
\nfor construction of six permanent major bridges on Lekhabali
\nBasar-Along Road in State of Arunachal Pradesh wherefor a
\nnotice inviting tender was issued by the Chief Engineer,
\nProject Vartak, Director General (Border Roads).  Shri D.D.
\nSharma, appellant in Civil Appeal No. 6678 of 1999,
\n(hereinafter referred to as ‘the contractor’) pursuant
\nthereto and in furtherance thereof made an offer.
\nNegotiations admittedly took place between the parties in
\nrelation thereto.\n<\/p>\n
The notice inviting tender, inter alia, stipulated that
\nthe entire work was to be completed within 36 months from
\nthe date of  handing over the site which would be within one
\nmonth from the date of issue of acceptance letter.    It was
\nfurther stipulated that the notice of tender shall form part
\nof the contract.\n<\/p>\n
It appears that the Union of India proposed an
\nalternative design and in response thereto the contractor by
\nhis letter dated 25.8.1983 made an offer on the terms and
\nconditions stipulated therein, clause 6 whereof reads as
\nunder :\n<\/p>\n
“All other terms and conditions will be
\nas per NIT except that the tender is
\nvalid for all the 6 bridges and cannot be
\ndivided.  To avail the coming working
\nseason if the work is allotted within 60
\ndays of opening of the tender, we are
\nready to offer suitable rebate.”\n<\/p>\n
The Union of India in response thereto showed its
\ninclination but requested the contractor to withdraw various
\nstipulations\/conditions specified in his tender in terms of
\na letter dated 30.09.1983 stating:\n<\/p>\n
“You are requested to withdraw various
\nstipulations\/conditions specified by you
\nin your tender as brought out above.  In
\ncase you consider that the withdrawal of
\nthe stipulation\/conditions involve
\nfinancial effect you are requested to
\nindicate the same for each
\nwithdrawal\/modification of condition
\nseparate itemwise.”\n<\/p>\n
\tThe contractor replied thereto stating  :\n<\/p>\n
“We are pleased to withdraw all our
\nterms and conditions besides our
\ncondition no.4 for design assumption and
\nthe interim payment schedule as the same
\nhas been prepared keeping conformity
\nwith the estimate.  As such the same
\nwill form a part of contract.  We are
\nalso pleased to inform you that if the
\nwork is allotted to us, we will offer a
\nrebate of Rs.90,000.00 only per bridge.
\nFor withdrawal of the above stated
\nconditions and for offering rebate, the
\nDepartment will have to give us 10%
\nadvance over our L.S. tendered amount
\nagainst H.G. Bond of Industrial
\nCooperative Bank Ltd. Gauhati.  This 10%
\nadvance will have to be adjusted
\nproportionately along  with the interim
\npayment and the B.G. Bond for the
\nadjusted amount will have to be released
\nfrom time to time.”\n<\/p>\n
\tFrom a perusal of the said counter offer made by the
\ncontractor  it will appear that one of the conditions laid
\ndown therein was to the effect that all withdrawal of
\nconditions and rebate would be made subject to the
\nconditions stated therein.  It was, therefore, a conditional
\noffer.\n<\/p>\n
By another letter dated 22.11.1983, the contractor
\noffered  further  rebate on 10% mobilization advance,
\nstating :\n<\/p>\n
“In partial modification to our rebate
\noffered by us vide our letter under
\nreference at serial (2) we are pleased
\nto offer the following final rebate if
\nthe department gives interest free 10%
\nover our L.S. tendered amount against
\nB.G. bond of Industrial Cooperative Bank
\nLtd., Gauhati.  This 10% advance will
\nhave to be adjusted proportionately
\nalong with the interim payment and the
\nB.G. bond for the adjusted amount will
\nhave to be released  from time to time.\n<\/p>\n
The Rebates of the Bridges are as
\nfollows :  These rebates are over and
\nabove the rebates mentioned in our
\nletter at Serial (2) under reference.\n<\/p>\n
1.\tNallah at 15.5 m\tRs.9,18,000.00\n<\/p>\n
2.\tLaiko at 20.442 km\tRs.6,21,000.00\n<\/p>\n
3.\tCane at 25.841 km\tRs.6,48,000.00\n<\/p>\n
4.\tSaiki at 63.88 km\tRs.9,18,000.00\n<\/p>\n
5.\tKiddi at 96.542 km\tRs.9,18,000.00\n<\/p>\n
6.\tSipu at 148.3 km\tRs.6,66,000.00\n<\/p>\n
\t\t\t\t\t—————\n<\/p>\n
\t\t\t         Rs.46,89,000.00<\/p>\n
Rupees forty six lakhs eighty nine
\nthousand only.,<\/p>\n
This rebate has been offered subject to
\nour condition that the work is allotted
\nto us by 31st December 1983 and if the
\nwork is allotted to us as a whole,
\nwithout breaking up the same partwise as
\nreferred to in para 5 of your letter
\nno.27537\/DGBRE\/VTK\/72\/E8 dt. 30th Sep.
\n1983.\n<\/p>\n
Hope this clarified all the points
\nraised by you.”\n<\/p>\n
\tThe said offer was, thus, again a conditional one.\n<\/p>\n
The Central Government by a letter dated 1.3.1984
\naddressed to the Director General Border Roads, conveyed the
\nsanction of the President to the variation from the standard
\nand  special  conditions of the contract, inter alia,
\nstating :\n<\/p>\n
“Mobilisation Advance <\/p>\n
After acceptance of the tender and at
\nthe time of placing the work order on
\nthe contractor he shall be paid on
\ndemand 10% interest free mobilization
\nadvance of the contract value against
\nthe bank guarantee bond from a Scheduled
\nBank.\n<\/p>\n
The loan advance shall be recovered
\nproportionately from his ‘on account’
\npayment made to him under the contract
\nand in such a way that by the time 50%
\nof the work is completed the entire
\nadvance would be recovered.  The first
\ninstallment commencing from the first on
\naccount payment and Bank Guarantee Bond
\nwill be released for the adjusted
\namount.  If the advance thus made is
\nutilized by the firm for purpose other
\nthan for which it was provided the
\nentire advance together with interest at
\n12% p.m would be recovered from the firm
\nin one installment.”\n<\/p>\n
\tIt is not in dispute that the Union of India could not
\nhand over the site to the contractor within the stipulated
\nperiod.  The period of contract, however, was extended from
\ntime to time.\n<\/p>\n
Admittedly, the notice inviting tender contained an
\narbitration agreement. Disputes and differences having
\narisen between the parties, the matter was referred to the
\narbitration of Brig. S.B. Joshi, Chief Engineer.\n<\/p>\n
Before the learned Arbitrator, inter alia, four claims
\nwere raised by the contractor which are:\n<\/p>\n
“Claim No. 1(a) <\/p>\n
Refund of payment of sum offered as
\nrebate on account of placing Work Order
\nfor all the six bridges as a whole
\nRs.5,40,000.00.\n<\/p>\n
Claim No.1(b)<\/p>\n
Refund of rebate offered subject to the
\ncondition that 10% interest free
\nmobilization advance is paid in one lump
\nsum and the work is allotted as a whole
\nRs.46,89,000.00<\/p>\n
Claim No.1 (c)<\/p>\n
Escalation as per terms of contract on
\nclaim 1(a) and (b) considering these as
\npart of quoted lump sum as calculation
\nRs.60,591.00 & Rs.5,21,131.00<\/p>\n
Claim No.2 <\/p>\n
Extra infructuous\/Uncompleted expenses,
\nexpenses and loss of profit due to
\nenlargement of period of performance
\nRs.10,00,000.00<\/p>\n
The learned  Arbitrator  rejected the claim of the
\ncontractor in respect of Claim No. 1(c) but partially
\nallowed Claim Nos.1(a), 1(b) and 2 to the extent of
\nRs.90,000\/-, Rs.6,48,000\/- and Rs.5,00,000\/- respectively.\n<\/p>\n
The contractor filed an application before the Court of
\nthe Assistant District Judge, Tezpur which was marked as
\nMoney Suit (Arbitration) Case No. 12 of 1990, purported to
\nbe under Sections 14(2) and 17 of the Arbitration Act, 1940
\npraying therein for a direction upon the Arbitrator to file
\na copy of the award and to make the same rule of the court.\n<\/p>\n
The Union of India filed an objection thereto purported
\nto be under Section 30 thereof.  By reason of  a judgment
\nand order dated 26.8.1992, the learned Assistant District
\nJudge at Tezpur : Sonitpur, rejected the application filed
\nby the Union of India for setting aside the award and made
\nthe same rule of the Court.\n<\/p>\n
Aggrieved by and dissatisfied therewith, an appeal was
\nfiled by the Union of India before the Gauhati High Court
\nwhich was marked as F.A. No. 8 of 1993.\n<\/p>\n
The High Court allowed the appeal in part holding,
\ninter alia,, that having regard to the delay in handing over
\nthe site for Cane Nallah Bridge, the award of Rs.5,00,000\/-
\nfor the damages caused  to the contractor although justified
\nbut as the contractor made two offers of  rebate in terms of
\nits letters dated 25.8.1983 and 22.11.1983 which had not
\nbeen considered by the learned Arbitrator, the award in
\nrespect thereof was not sustainable, and a part of the award
\ncould be served, it set aside the award for a sum of
\nRs.7,38,000\/-.\n<\/p>\n
The parties are in appeals before us against the said
\njudgment.\n<\/p>\n
Mr. K.K. Rohtagi, learned counsel appearing on behalf
\nof the appellant, would, inter alia, submit that the award
\nbeing a non-speaking one and having regard to the fact that
\nthe learned Arbitrator in his award categorically stated
\nthat he had taken into consideration all the documents, the
\nHigh Court must be held to have committed a manifest error
\nin interfering therewith.  The learned counsel would contend
\nthat the two offers of rebate referred to by the High Court
\nin the impugned judgment being conditional ones and the
\nconditions precedent therefor having not been fulfilled, the
\ncontractor was entitled to make his claim on rebate.
\nAccording to the learned counsel, one of the rebates was
\noffered if the amount of 10% mobilization advance is given
\nat a time which admittedly was not done, as has been noticed
\nby the High Court itself in the impugned judgment.  It was
\nfurther contended that the second rebate was offered by the
\ncontractor on the condition that the mobilization advance of
\n10% should be proportionately deducted from the bills for
\nthe entire period of 36 months whereas the Union of India
\ndirected recover of the said amount within a period of 18
\nmonths.\n<\/p>\n
Handing over of possession of site within the
\nstipulated period, Mr. Rohtagi would contend, had a direct
\nrelationship with the requirement of deployment of heavy
\nmachinery and staff and as a result of non-compliance of the
\nsaid condition of contract on the part of the Union of
\nIndia, the contractor had suffered a huge loss as it had to
\nkeep machinery idle for a long time and bear other cost of
\nestablishment unnecessarily.\n<\/p>\n
Mrs. Anil Katiyar, learned counsel appearing on behalf
\nof the respondent, on the other hand, would submit that as
\nthe contractor had claimed a sum of more than Rs.6,00,000\/-
\nas escalation cost and the same having been duly granted, no
\nfurther claim by the contractor was admissible.\n<\/p>\n
The jurisdiction of the court to set aside an
\narbitration is well-settled.  The court, inter alia, can set
\naside an award  if the arbitrator has misconducted himself
\nor the proceedings. The jurisdiction of the court in
\ninterfering with a non-speaking award is very limited.\n<\/p>\n
It is also trite that correspondences exchanged by the
\nparties are required to be taken into consideration for the
\npurpose of construction of a contract.  Interpretation of a
\ncontract is a matter for the Arbitrator to determine, even
\nif it gives rise to determination of a question of law.
\nThe Arbitrator in his award dated 5.10.1990
\ncategorically stated that “he had examined and considered
\nthe pleadings submitted by and on behalf of the parties and
\ndocumentary and oral evidences were produced before him by
\nthe parties”.\n<\/p>\n
It has not been disputed that the documents in question
\nreferred to in para 17 of the judgment of the High Court
\nwere filed before the learned Arbitrator.\n<\/p>\n
The arbitrator was, thus, required to consider as to
\nwhether the contractor can substantiate his claim relying on
\nor on the basis of non-compliance of the conditions
\nprecedent in relation to the offer of rebate made by it in
\nhis letters dated 25.8.1983 and 22.11.1983. The said
\ncontention evidently was, thus, a subject matter of
\ndetermination by the Arbitrator.   An Arbitrator being a
\njudge chosen by the parties, his decision would ordinarily
\nbe final unless one or the other condition contained in
\nSection 30 of the Arbitration Act is satisfied for the
\npurpose of setting aside his award.  Once it is held that
\nthe construction of an agreement fell for consideration of
\nthe Arbitrator, the determination thereupon shall not
\nordinarily be interfered with.\n<\/p>\n
The court’s jurisdiction in this behalf is merely to
\nsee whether the Arbitrator has exceeded his jurisdiction or
\nnot.  The High Court did not point out any material on the
\nbasis whereof it could be said to have been established that
\nthe two documents in question had not been considered by the
\nlearned Arbitrator.  Such a conclusion could be arrived at
\nif the award was a speaking one.  The award being not a
\nspeaking one, the averments made therein should be accepted
\nat their face value unless contrary is proved by the party
\nquestioning the validity of the award.\n<\/p>\n
The learned counsel appearing on behalf of the Union of
\nIndia has failed to point out that any material was brought
\non records on the basis whereof the findings of the High
\nCourt could be justified.\n<\/p>\n
In Continental Construction Ltd. vs. State of U.P.<\/a>
\n[(2003) 8 SCC 4], it was, inter alia, held :\n<\/p>\n
“16.The award is a non-speaking one.
\nIt is trite that the court while
\nexercising its jurisdiction under
\nSection 30 of the Arbitration Act, 1940
\ncan interfere with the award only in the
\nevent the arbitrator has misconducted
\nhimself or the proceeding or there
\nexists an error apparent on the face of
\nthe award.\n<\/p>\n
17.The learned Civil Judge and the High
\nCourt have not found that the umpire
\nacted arbitrarily, irrationally,
\ncapriciously or independent of the
\ncontract.  No finding has been arrived
\nat that the umpire has made conscious
\ndisregard of the contract which was
\nmanifest on the fact of the award.”\n<\/p>\n
This Court in State of U.P. vs. Allied Constructions<\/a>
\n[(2003) 7 SCC 396], observed :\n<\/p>\n
“…Interpretation of a contract, it is
\ntrite, is a matter for arbitrator to
\ndetermine (see M\/s Sudarsan Trading Co.
\nvs. The Government of Kerala, AIR<\/a> 1989
\nSC 890).  Section 30 of the Arbitration
\nAct, 1940 providing for setting aside an
\naward is restrictive in its operation.
\nUnless one or the other condition
\ncontained in Section 30 is satisfied, an
\naward cannot be set aside.  The
\narbitrator is a Judge chosen by the
\nparties and his decision is final.  The
\nCourt is precluded from reappraising the
\nevidence.  Even in a case where the
\naward contains reasons, the interference
\ntherewith would still be not available
\nwithin the jurisdiction of the Court
\nunless, of course, the reasons are
\ntotally perverse or the judgment is
\nbased on a wrong proposition of law.  As
\nerror apparent on the face of the
\nrecords would not imply closer scrutiny
\nof the merits of documents and materials
\non record.  One it is found that the
\nview of the arbitrator is a plausible
\none, the Court will refrain itself from
\ninterfering…”\n<\/p>\n
Yet again in H.P. State Electricity Board vs. R.J. Shah
\nand Company<\/a> [(1999) 4 SCC 214], it was held :\n<\/p>\n
“26. In order to determine whether the
\narbitrator has acted in excess of
\njurisdiction what has to be seen is
\nwhether the claimant could raise a
\nparticular dispute or claim before an
\narbitrator. If the answer is in the
\naffirmative then it is clear that the
\narbitrator would have the jurisdiction
\nto deal with such a claim. On the other
\nhand if the arbitration clause or a
\nspecific term in the contract or the law
\ndoes not permit or give the arbitrator
\nthe power to decide or to adjudicate on
\na dispute raised by the claimant or
\nthere is a specific bar to the raising
\nof a particular dispute or claim then
\nany decision given by the arbitrator in
\nrespect thereof would clearly be in
\nexcess of jurisdiction. In order to find
\nwhether the arbitrator has acted in
\nexcess of jurisdiction the court may
\nhave to look into some documents
\nincluding the contract as well as the
\nreference of the dispute made to the
\narbitrators limited for the purpose of
\nseeing whether the arbitrator has the
\njurisdiction to decide the claim made in
\nthe arbitration proceedings.”\n<\/p>\n
In Rajasthan State Mines & Minerals Ltd. vs. Eastern
\nEngineering Enterprises and Another<\/a>  [(1999) 9 SCC 283],
\nthis Court, opined  :\n<\/p>\n
“44. (a) It is not open to the Court to
\nspeculate, where on reasons are given by
\nthe arbitrator, as to what impelled the
\narbitrator to arrive at his conclusion.\n<\/p>\n
(b) It is not open to the Court to admit
\nto probe the mental process by which the
\narbitrator has reached his conclusion
\nwhere it is not disclosed by the terms
\nof the award.\n<\/p>\n
(c) If the arbitrator has committed a
\nmere error of fact or law in reaching
\nhis conclusion on the disputed question
\nsubmitted for his adjudication then the
\nCourt cannot interfere.\n<\/p>\n
(e) In a case of non-speaking award, the
\njurisdiction of the Court is limited.
\nThe award can be set aside if the
\narbitrator acts beyond his jurisdiction.\n<\/p>\n
(f) To find out whether the arbitrator
\nhas travelled beyond his jurisdiction,
\nit would be necessary to consider the
\nagreement between the parties containing
\nthe arbitration clause. Arbitrator
\nacting beyond his jurisdiction is a
\ndifferent ground from the error apparent
\non the face of the award.\n<\/p>\n
(g) In order to determine whether
\narbitrator has acted in excess of his
\njurisdiction what has to be seen is
\nwhether the claimant could raise a
\nparticular claim before the arbitrator.
\nIf there is a specific term in the
\ncontract or the law which does not
\npermit or give the arbitrator the power
\nto decide the dispute raised by the
\nclaimant or there is a specific bar in
\nthe contract to the raising of the
\nparticular claim then the award passed
\nby the arbitrator in respect thereof
\nwould be in excess of jurisdiction.”\n<\/p>\n
It has not been shown before us on behalf of the Union
\nof India that there exists any provision in the contract
\nwhich precluded the arbitrator from deciding the dispute or
\nthere existed any specific bar in the contract precluding
\nthe contractor to raise such a claim.  Once it is held that
\nthe Arbitrator had the jurisdiction, no further question
\nshall be raised and the court will not exercise its
\njurisdiction unless it is found that there exists any bar on
\nthe face of the award. [See Pure Helium India (P) Ltd. vs.
\nOil & Natural Gas Commission<\/a>  (2003) 8 SCC 593].\n<\/p>\n
While considering a speaking award this court has,
\nhowever, albeit in a different context in  Union of India v.
\nM\/s Banwari Lal & Sons (P) Ltd.<\/a>  [2004 (4) Scale 443]
\nnoticed :\n<\/p>\n
“17. It is now well settled that when a question
\nof law is referred to the arbitrator the award
\ncannot be set aside only if a different view is
\npossible.  However, it is also trite that if no
\nspecific question of law is referred, the decision
\nof the Arbitrator on that question would not be
\nfinal, however, much it may be within his
\njurisdiction and indeed essential for him to
\ndecide the question incidentally.  Only in a case
\nwhere specific question of law touching upon the
\njurisdiction of the arbitrator was referred for
\ndetermining his jurisdiction by the parties, then
\nthe finding of the arbitrator on the said question
\nbetween the parties may be binding.\n<\/p>\n
18. It is also trite that where the award contains
\nreasons, the same may be interfered, inter alia,
\nwhen it is based on a wrong proposition of law.
\nHowever, when the view of the arbitrator is a
\nplausible one, the Court would not normally
\ninterfere.”\n<\/p>\n
Furthermore, as we do not find that there existed any
\nmaterial on records to show that the Arbitrator while making
\nan award ignored any material documents, the impugned
\njudgment cannot be sustained, which is set aside
\naccordingly.\n<\/p>\n
In the result Civil Appeal No.6678 of 1999 filed by the
\ncontractor is, therefore, allowed and Civil Appeal No.1984
\nof 2000 filed by the Union of India is dismissed.  No costs.<\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India D.D. Sharma vs Union Of India on 27 April, 2004 Author: S.B. Sinha Bench: Cji, S.B. Sinha, S.H. Kapadia. CASE NO.: Appeal (civil) 6678 of 1999 PETITIONER: D.D. Sharma RESPONDENT: Union of India DATE OF JUDGMENT: 27\/04\/2004 BENCH: CJI, S.B. Sinha & S.H. Kapadia. JUDGMENT: J U D G M E […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-56495","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nD.D. 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