Kumar Patel, Ami Typing Institute, Gob Park 8us Stand, Rewa, MadhyG Pradesh v. Present

3. Learned counsel for the appticants would argue that the findin9 recorded in Para 23 of the impugned award is contrary to the conditions of aareement. fteferrina to Ctause 32A of the aareement, it was arGued that in respect of the contracts, which were to be compteted within a period of 12 months, there is specific bar in Clause 32A towards pQyment of escabtion price to the contractor. The controctor himself vide his memo dated 29,8.1987 had giyen an undertaking for non-opplicability of Clause 32A. Even ot+ierwise there is no dispute that period for completion of contract was twelve months ^f M inctudina rkainy season, as is evident from the impugned award as also from the aQreement. Reliance is placed on the judaments of the Hon'ble Supreme Court in the matter of ^ssocioted Engineerjng Co, Vs. ^overnment of Andhra PrQdesh and Qnoth@r reported in (1991) 4 SCC 93; N®w India Cjvsl Erectors (P) Ltd, Vs. Oil and NQtural ©asCorporation reported in AIR 1997 SC 980; State of Orlssa Vs. Sy<ihaNQr Dcss (Dead) by L.Rs. reported in Am 2000 SC 1294.

4.0n the other hand, Mr* Koshta, leamed counse! for the respondent contractor vehemently araued that the State did not take any objection with respect to the appiicabiiity of Clause 32A of contract agreement before the tribunal. The proyisions of Clause 32A were not brought to the notice of the tribunal and in these circumstances only the tribunal has observed that absence of ./ escalation clause will not Drohibit the tribunal from mokina an award towards escalation in oppropriate coses where the State is responsible for defay in execution of work. He also placed reiiance in the matter of P.M. Paul (supr-a).

5. We have heard learned counsel for the parties. We have perused the impugned award GS also the aeneral conditions of the controct.

6. There is no dispute that the time stipulated for completion of work under the aareement is twelve months inciuding rainy season. Work order was issued on 2.11.1987. Work was to be completed by 01.11.1988 and however, the same couid not be compieted within the stipuiated oeriod. First Part of Clause 32A is aDDlicable where the oeriod of completion of work, as per tender document, is not more thcn twelve This Cfause specifically mentions that "no claim for price escalation on account of anv cause whatsoever shall be entertained". rrsonths. ftespondent vide its memo dated 29.8.1987 has given a cate9orical undertaking regarding non-appiicabilit/ of Clause 32A Part-II.

7. The tribunal in Para 23 of the impugned award has observed thus:- ^' ^^ %-:.^ ^ Iv <b "23. It has further been observed by Madhya Prodesh Arbitration Tribunal in case of Satya Narayan Dwarika Prasad Vs. State of Madhva Pradesh, ffteference Case No.94/87 order dated 21/08/1989) thot where severaJ extention were granted but in the bst extention time was not made the essence of the contract, the contract could not be lawfullv rescinded and the work could not be tawfuliv withdrawn. In the circumstances the bepartment was not entitled to costs of debitabie aQency and contractor was entitled to refund of Earnest Money and ^curity Deposit. Regardin9 escalation, where time is not express prohibition to the giving of escalation, but 1+iere is mere absence of escalation clause and where the 9ovemm@nt was at fault \causing delay in the completion of the contract, it was he!d by Apex Court in case of P.M. Paut Vs, Union of India reported in AIK. 1989 SC 1034 that the contractor's cloim for escatation for the period of deby would be permissibie because escalation is a normat incident in inflationary aqe and Qovernment is resoonsible for all the consequences of delay, includina increase in prices,"

8. In P.AA. Paui (supra) the Hon'ble Supreme Court has held that an award can onlv be set oside under Section 30 of the Arbitration Act on the ground when the contractor has misconducted himself or proceedings. Once the Arbitrator has found that there was escabtion and he came to the conclusion that it was reasonabte to aliow 20% of compensation under the claim andaccordingly, dlowed the same, this was within the jurjsdiction of 1fie Arbitrator and GS such, Arbitrator had not misconducted himself in awardjng the amount, as he has done.

9. In the matter of Assocsated EnQ|n?@rsnQ Co. (syDra) it has been held that the arbitrator cannot act arbitrarily, irrationally, capriciously or independently of the contract. His 3ote function is to arbitrate in terms of the contract* His authorstv is derived from the contract and is aoverned bv the Arbitration Act which embodies orinciDies derived from a specialized branch of the law of agency. If he has remained ^•^:^s i ^y-^^ | ::"-i» w> ^ inside the parameters of the contract and has construed the provisions of contract, his award cannot be interfered with uniess he has givers reasons for the award disclosing an error apparent on the face of it.

10.In the matter of N€W India C$vi! Erectors (P) Ltd. (supra), it has been held by the Hon'bSe Supreme Court that where there is express stipulation between the parties as to price being firm and not subject to any ©scabtiontill completion of work, contractor was not entitled for escaiatioiTfor work completed after expiry of period of contract. Award arantina such amount bevond authority of Arbitrator.

11. In the matter of Stat®of Orissa V§. SydhQkar Das (Dead) by L.fts. (supra) Ifie Hon'bie Supreme Court has h©!d that in absence of escGiation clause, an Arbitrator cannot assume ony Jurisdiction to award any amount towards escalation. That part of the award which arants escalation charaes is clearly not sustainable and suffers from a patent error, The decree, insofar, as the award of escatation charaes is concerned, cannot, therefore, be sustained.

12. On the facts of the present case and in view of the specific provisions in Clause 32A Part-1 of the Ggreement, which specifically prohibits Dayment towards escatotion on anv count, the findjna of the tribunoJ that there is no specific prohibition under the agreement against the payment of escalation is contrary to the terms and conditions of the agreement. IS.Therefore, relying upon the principles of law laid down in th©aforesaid Judgments of the Hon'bte Supreme Court, we partly aliow the revision petition preferred by the State and set aside the impugned award dated 5.4.2006 to the extent whereby a sum of fts.74,630/- towards escaiation has been awarded to the respondent contractor.

14. Certified copy as per rules. Ro^han Sd/- Dhirendra Mishra Judge Sd/- R.N. Chandrakar Judge