State of H.P. & Anr. v. Naresh Kumar Vij

Judgment

1. Whether the Arbitration Award dated 24.6.2004 is beyond the term of the reference and liable to be set aside? OPA

2. Whether the Arbitrator has exceeded his jurisdiction while giving the Award dated 24.6.2004 and as such the Award is liable to be set aside? OPA

3. Whether the award given by the Arbitrator is against the public policy, as alleged and is liable to be set aside? OPA

4. Whether the Arbitrator has wrongly entertained the additional claim and whether the same is beyond the scope of the arbitration agreement and if so whether the Award is liable to be set aside on this ground? OPA.

5. Whether the Arbitrator was not competent to grant interest while passing the award and whether the interest awarded is on the higher side? OPA.

6. Relief. Later the Court found that since the Award was not reasoned, therefore, vide order dated 31.8.2005 directed the Arbitrator to state reasons with respect to the Award passed by him, which was so done by the 4 Arb. Case No. 43 of 2004 Arbitrator in terms of letter dated 24.10.2005 received by the Registry of this Court on 27.10.2005. The same are being considered. The objection that the award is without any reasons has not been raised by the State in view of the fact that this Court had asked the Arbitrator to assign the same and no further objections after the receipt of the reasons have been filed by the State. Learned counsel for the parties agreed that all the aforesaid issues be clubbed together and decided claim-wise. As such, all the issues are clubbed together and decided claim-wise. As per the petition, the objections are on the following grounds:-

1. The Arbitrator has traversed beyond jurisdiction causing substantial injustice to the State, being against the public policy of India.

2. The Contractor having made only four claims allowing the amendment and permitting the additional claim to be adjudicated is against the law.

3. No extra, alternate or additional work was carried out by the Contractor, which is evident from the payment of final bills prepared on the basis of entries of MB received by the contractor without protest. Non-compliance of clause 12(v) by the Contractor disentitled him to the claims, if any.

4. The Arbitrator has arrived at erroneous conclusions as conditions No.2 and 43 of the Notice Inviting Tender was not correctly appreciated.

5. The documents in support of the claim were fabricated and procured in collusion with third parties. 5 Arb. Case No. 43 of 2004

Submissions of Mr. Vivek Thakur, learned Addl. Advocate General have also been dealt with while dealing the objection claimwise. Scope of Judicial Intervention The Arbitration and Conciliation Act, 1996 was enacted, as is evident from the objects and reasons, with a specific Parliamentary objective of minimizing the supervisory role of Courts in the arbitral process. As per Section 5 of the Act no judicial authority shall intervene in matters governing by Part I except where it is so provided. An arbitral award may be set aside by the Court only if one of the grounds set out in Clause (a) or (b) of Section 34(2) is established. The Apex Court in Olympus Superstructures Pvt. Ltd. vs. Meena Vijay Khetan and others, AIR 1999 SC 2102 and in Konkan Railway Corporation Ltd. vs. Mehul Construction Co., 2000(3) Arb.LR 162 (SC), has held that the Act as compared to the Arbitration Act, 1940 had limited the intervention of the Court with the arbitral process to the minimum and that in interpreting the provisions of the Act, it was not open to the Court to ignore the object and purpose of the enactment. Moreover, even though the expression “public policy” is recognized judicially as being an “elusive concept”, difficult to define and capable of interpretation both in narrow as well as in broad terms, that would not be a warrant for the Court to extend judicial intervention in arbitral awards beyond the restricted sphere envisioned by the Parliament. The expression “public policy” is a concept which relates to the public good and to public interest. In Renusagar Power Co. Ltd. vs. General Electric Co., AIR 1994 SC 860, the Supreme Court noted that the doctrine of public policy is somewhat open-textured and flexible and has 6 Arb. Case No. 43 of 2004 comprehended a narrow view and a broad view. The narrow view is that Courts cannot create new heads of policy, while the broader view is that heads are not necessarily closed for judicial interpretation. The position in England was considered where the ground of public policy is held to be capable of being invoked where the enforcement of an award “would affront some moral principle the maintenance of which admits no possible compromise”, such as (i) where the fundamental conceptions of English justice and disregarded; (ii) Where English conceptions or morality are infringed; (iii) Where a transaction prejudices the interest of a nation or its good relations with foreign powers; (iv) where the foreign law or status offends English conception of human liberty and freedom of action. The Apex Court in Smita Conductors Ltd. vs. Euro Alloys Ltd., (2001) 7 SCC 728 and Oil & Natural Gas Corporation Ltd. vs. Saw Pipes Ltd., (2003) 5 SCC 705, held that the expression “public policy of India” would mean that a foreign award cannot be recognized or enforced if it is contrary to (i) the fundamental policy of Indian Law; (ii) the interests of India; (iii) justice or morality. Conscious as the Court must be of the varying content of the doctrine of public policy, it would be appropriate to regard a breach of public policy as involving a conflict with something so fundamental so as to constitute or lie at the root of legal principles in India. Similarly, something which is so unconscionable so as to be contrary to fundamental notions justice or morality may well be regarded as a breach of public policy. But, however, it would not be permissible for the judge to reappreciate the reasons underlying an arbitral award or for that matter to reappreciate the oral or documentary evidence on the record before the Arbitrator. Factual 7 Arb. Case No. 43 of 2004 evaluation of an arbitral award is not permissible. The Court would not be justified in interfering with an arbitral award merely because in a given case, the interpretation which is sought to be placed on the terms of the contract by the Arbitrator does not accord with the interpretation which the Court would have placed. So long as the Arbitrator has acted within jurisdiction in interpreting the provisions of the contract, and has applied the law to his evaluation of the facts, the Court must rest with the decision of the Arbitrator unless the Court is satisfied that the arbitral award is in conflict with the public policy of India. [Municipal Corporation of Greater Mumbai & Ors. Vs. Jyoti Construction Company, 2003(3) Arb.LR 489 (Bombay)]. The arbitrator is a Judge appointed by both the parties after reaching a consensus and once it is found that the view of the Arbitrator is a plausible one, the Court cannot reverse it by interfering with the award. Moreover, the interpretation of a contract is a matter solely within the domain of the arbitrator. In case two views are possible, the Court is not justified in interfering with the award by adopting its own interpretation. Even if it could be proved that the arbitrator has committed some mistake while arriving at his conclusion, such a proof would not invalidate the award. Even if there is an error of construction of the agreement by the arbitrator, the same is not amendable to correction. The reasonableness of an award is not a matter for the Court to consider unless the award is preposterous or absurd. [Heera Singh vs. State of Rajasthan and others, 2008(1) R.A.J. 457 (Raj)] In Bhagwati Oxygen Ltd. vs. Hindustan Copper Ltd., (2005) 6 SCC 462, the Apex Court has held as under:- 8 Arb. Case No. 43 of 2004 “An Arbitrator is a Judge appointed by the parties and as such the award passed by him is not to be lightly interfered with. The court while exercising the power under Section 30, cannot re-appreciate the evidence or examine correctness of the conclusions arrived at by the Arbitrator. The jurisdiction is not appellate in nature and an award passed by an Arbitrator cannot be set aside on the ground that it was erroneous. It is not open to the court to interfere with the award merely because in the opinion of the court, other view is equally possible. It is only when the court is satisfied that the Arbitrator had misconducted himself or the proceedings or the award had been improperly procured or is `otherwise' invalid that the court may set aside such award. In Mcdermott International Inc. vs. Burn Standard Co. Ltd. and another, (2006) 11 SCC 181, the Apex Court has held that “correspondences exchanged by the parties are required to be taken into consideration for the purpose of construction of a contract. Interpretation of a contract is a matter for the arbitrator to determine, even if it gives rise to determination of a question of law. Once it is held that the arbitrator had the jurisdiction, no further question shall be raised and the court will not exercise its jurisdiction unless it is found that there exists any bar on the face of the award”. In Pure Helium India (P) Ltd. vs. Oil & Natural Gas Commission, (2003) 8 SCC 593, the apex Court has approved the ratio of law laid down in its earlier decision in Rajasthan State Mines & Minerals Ltd. v. Eastern Engg. Enterprises, (1999) 9 SCC283, as under:- “35. In Rajasthan State Mines & Minerals Ltd. (supra) whereupon Mr. Rohtagi placed strong reliance, this Court held that the dispute to the arbitrator could not be termed as 9 Arb. Case No. 43 of 2004 without jurisdiction but proceeded to consider the question as to whether he will have authority or jurisdiction to grant damages or compensation in the teeth of the stipulation providing that no escalation would be granted and that the contractor would only be entitled to payment of the composite rate as mentioned and no other or further payment of any kind or item whatsoever shall be due and payable by the Company to the contractor.

36. It was concluded : (SCC pp 309-10, para 44) "44 (a) It is not open to the Court to speculate, where on reasons are given by the arbitrator, as to what impelled the arbitrator to arrive at his conclusion. (b) It is not open to the Court to admit to probe the mental process by which the arbitrator has reached his conclusion where it is not disclosed by the terms of the award. (c) If the arbitrator has committed a mere error of fact or law in reaching his conclusion on the disputed question submitted for his adjudication then the Court cannot interfere. (d) If no specific question of law is referred, the decision of the Arbitrator on that question is not final, however much it may be within his jurisdiction and indeed essential for him to decide the question incidentally. In a case where specific question of law touching upon the jurisdiction of the arbitrator was referred for the decision of the arbitrator by the parties, then the finding of the arbitrator on the said question between the parties may be binding. (e) In a case of non-speaking award, the jurisdiction of the Court is limited. The award can be set aside if the arbitrator acts beyond his jurisdiction. (f) To find out whether the arbitrator has travelled beyond his jurisdiction, it would be necessary to consider the agreement between the parties containing the arbitration clause. Arbitrator acting beyond his jurisdiction is a different ground from the error apparent on the face of the award. 10 Arb. Case No. 43 of 2004 (g) In order to determine whether arbitrator has acted in excess of his jurisdiction what has to be seen is whether the claimant could raise a particular claim before the arbitrator. If there is a specific term in the contract or the law which does not permit or give the arbitrator the power to decide the dispute raised by the claimant or there is a specific bar in the contract to the raising of the particular claim then the award passed by the arbitrator in respect thereof would be in excess of jurisdiction." Public Policy in the eyes of the Supreme Court. In Centrotrade Minerals & Metals Inc. vs. Hindustan Cooper Ltd., (2006) 11 SCC 245, Section 34 which refers to "challenge to arbitral award" strives to balance between the party autonomy and judicial control of the arbitral result with the object of speed and efficiency. The balance has to come down strongly in favour of finality, and against judicial review, except in few circumstances. So, the main object of the provision is to determine whether the award has become final and binding or not. Thus, the section depicts a position whereby an arbitral award can be challenged for the purpose of setting aside of the same at the first instance without much delay. The Court would set aside the award only on certain circumstances. Thereby, it is the legislative intention that such a matter is settled without much delay or much intervention of court. So, the finality of the challenged award would be decided by Court under section 34 of the 1996 Act and appeals are allowed against certain orders of courts or tribunals on certain grounds under Section 37 of the Act.” “The expression “public policy” in India has been used for three different situations, namely, under Sections 34(2)(b), 48 (2)(b) and 57(10(b). In the 1940 Act, there was no specific provision for setting aside the arbitration award 11 Arb. Case No. 43 of 2004 on the ground that the same was in conflict with the public policy in India. Section 30(c) was held to be wide enough to cover the heads generally comprehended by the expression “public policy”.” “The expression” public policy” will have the same connotation in respect of an arbitration agreement or an award. The judicial intervention in such matters has never been free from difficulty. Whereas refusing enforcement of an arbitral award has been viewed with much scepticism, the English courts have more often than not refused to enforce a foreign award on public policy ground holding that common law recognizes that English public policy is paramount. In some jurisdictions even serious procedural defects in the arbitral proceedings had been held to provide for enough justification for refusal to afford foreign award. There is no reason as to why the Indian law should be held to be different.” “The doctrine of public policy must be held to be a ground for setting aside an arbitration agreement and consequently an award. Such patent illegality, however, must go to the root of the matter. The public policy, indisputably, should be so unfair and unreasonable so as to shock the conscience of the court. In the context of the 1996 Act, an arbitration agreement which would be contrary to the provisions of the laws governing the contract between the parties would be void being opposed to public policy. Further, where the arbitrator, has gone contrary to or beyond the expressed law of the contract or granted relief in the matter not in dispute would come within the purview of Section 34 of the Act.” In Oil & Natural Gas Corporation Ltd. (supra), it has been held as under:- 12 Arb. Case No. 43 of 2004 “Therefore, if the award is contrary to the substantive provisions of law or the provisions of the Act or against the terms of the contract, it would be patently illegal, which could be interfered under Section 34. However, such failure of procedure should be patent affecting the rights of the parties. The phrase 'Public Policy of India' occurring in Section 34(2)(b) is not defined in the Act. The concept of “public policy” is concerned to be vague, susceptible to narrow or wider meaning depending upon the context in which it is used. Hence, it should be given meaning in the context and also considering the purpose of the section and scheme of the Act. In a case where the validity of award is challenged there is no necessity of giving a narrower meaning to the term 'public policy of India'. On the contrary, wider meaning is required to be given so that the 'patently illegal award' passed by the arbitral tribunal could be set aside. If narrow meaning is given, some of the provisions of the Arbitration Act would become nugatory. Section 28(2), 28(3) and 24 may be taken as illustrations of such provisions. Again, it is true that Legislature has not incorporated exhaustive grounds for challenging the award passed by the arbitral tribunal or the ground on which appeal against the order of the Court would be maintainable. But in Section 34(2)(b) the phrase “public policy of India” is not required to be given a narrower meaning. Hence, the award which is passed in contravention of Sections 24, 28 or 31 could be set aside. Moreover, Sections 13(5) and 16 enable a party to challenge the constitution of the Arbitral Tribunal or the arbitral award under Section 34. In any case, it is for Parliament to provide for limited or wider jurisdiction to the court in case where award is challenged. But in such cases, 13 Arb. Case No. 43 of 2004 there is no reason to give narrower meaning to the term “public policy of India”. Giving a limited jurisdiction to the Court for having finality to the award and resolving the dispute by speedier method would be much more frustrated by permitting patently illegal award to operate. Patently illegal award is required to be set at naught, otherwise it would promote injustice. Therefore, the phrase 'Public Policy of India' used in Section 34 in context is required to be given a wider meaning. The concept of public policy connotes some matter which concerns public good and the public interest. What is for public good or in public interest or what would be injurious or harmful to the public good or public interest has varied from time to time. However, the award which is, on the face of it, patently in violation of statutory provisions cannot be to be in public interest. Such award/judgment/decision is likely to adversely affect the administration of justice. Hence, in addition to narrower meaning given to the term 'public policy' in Renusagar's case 1994 Supp (1) SCC 644, it has to be held that the award could be set aside if it is patently illegal. Result would be - award could be set aside if it is contrary to: (a) (b) (c) (d) fundamental policy of Indian law; or the interest of India; or justice or morality, or in addition, if it is patently illegal. Illegality must go to the root of the matter and if the illegality is of trivial nature it cannot be held that award is against the public policy. Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the Court. Such award is opposed to public policy and is required to be adjudged void.” 14 Arb. Case No. 43 of 2004 To the same effect is decisions of the Supreme Court in Hindustan Zinc Ltd. vs. Friends Coal Carbonisation, (2006) 4 SCC 445 and State of Rajasthan and others vs. Basant Nahata, (2005) 12 SCC 77 Jurisdictional error In Bharat Coking Coal Ltd. vs. Annapurna Construction, (2003) 8 SCC 154, it has been held as under:- “There lies a clear distinction between an error within the jurisdiction and error in excess of jurisdiction. Thus, the role of the arbitrator is to arbitrate within the terms of the contract. He has no power apart from what the parties have given him under the contract. If he has travelled beyond the contract, he would be acting without jurisdiction, whereas if he has remained inside the parameter of the contract, his award cannot be questioned on the ground that it contains an error apparent on the face of the record.” Objections to the Award The Arbitrator has dealt with the claims of the Contractor itemwise, therefore, as requested by the learned counsel for the parties, I propose to deal in the same manner. The issues have been answered claimwise. Claim –A : Amount of loss incurred by the claimant due to idle stacking of machinery and idle sitting of labour. As against the claim of Rs.15,60,000/- a sum of Rs.11,70,000/- has been awarded by the Arbitrator. Mr. Thakur, learned Addl. Advocate General, has argued that (i) no specified Schedule was fixed in the agreement with regard to supply of the notified material, therefore, it was open for the State to supply the 15 Arb. Case No. 43 of 2004 material at any time during the duration of the contract and early completion of work only signifies that there was no breach of the contract; (ii) In the absence of any documentary evidence to support the claim that the labour/machinery was lying idle the same could not have been awarded; (iii) Since the availability of the specified machines was a pre- condition for fulfilling the eligibility criteria, therefore, there was no question of the machines lying idle; (iv) Relevant documents being Annexure R-1 and Annexure R-3 filed by the State indicating the supply of material were ignored by the Arbitrator; and (v) the Arbitrator has failed to take into account the provisions Sections 46, 52, 55 and 73 of the Indian Contract Act, 1872 and, the award could be faulted as per Sections 28(i)(a), 28(iii) and 34(2)(a)(iv) & (v) of the Act. He has seriously erred in awarding the claims, in derogation of the substantive law (the provisions of the Contract Act) and also the terms of the contract, more so, by ignoring the usages of the trade applicable to the transactions.. The Arbitrator has taken pains in examining the entire material placed on record by the parties. The contract was to be completed within a time bound period. Vide letter dated 31.3.2001 (Annexure C-1) the Contractor put the State to notice that at least 50 labourers had been deployed at site and vide letter dated 23.5.2001 (Annexure C-3), the Contractor had informed the State that the arrangement for labour and machinery for starting the tarring work had been made. A request was made by the Contractor vide letter dated 30.6.2001 for supply of bitumen as sufficient number of labour and machinery had been deployed for carrying out the awarded work. It appears that vide letter dated 22.6.2001 the State had asked the Contractor to deploy more labour, which was duly replied by 16 Arb. Case No. 43 of 2004 the Contractor in terms of its letter dated 30.6.2001 informing the progress made at the site and requesting the State to supply the material in order to execute its work effectively and efficiently. The Contractor’s letters dated

8.8.2001 and 29.8.2001 were considered by the Arbitrator to highlight that the Contractor had been making requests for supply of the contracted material. The Arbitrator came to the conclusion that in spite of various requests made by the Contractor, the material i.e. Bitumen was not supplied in time and since the Contractor could not keep the labour idle he was entitled to compensation to the extent of 45 days as against a claim of 2 months and, therefore, 75% of the claimed idle time was awarded to the claimant. I have gone through the letters. Vide letter dated 31.5.2001 the claimant had clearly stated that at number of places huge debris was lying; from numerous stone quarries, run by different persons, stones were being extracted; and the work allotted to other contractors for the construction of retaining walls was going on and not completed. A request was made to get the site cleared by getting the debris removed, the illegal quarries closed and the retaining walls completed. A request for identifying the dumping site for dumping the excavated material was also made. Vide letter dated 23.5.2001 the Contractor informed that he was ready to execute the work of tarring, but, however, there are large number of undulations and humps on the road where the tarring was to be done and in order to make the road smooth for tarring extra material to the extent of 25% to 30% was to be provided. It was notified that all 17 Arb. Case No. 43 of 2004 arrangements for labour, material and machinery had been made and in this context an engineer be deputed to inspect the site. Vide letter dated 22.6.2001 the Executive Engineer of the concerned Division wrote to the contractor as under:- “The above work was awarded to you vide this office letter No. SD-II-(sic)/Tender/2K-01-070-72 dt. 12.3.2001 for Rs.47,87,345/- with stipulated time period of six months for completion. But it is regretted to point out that the work is far from completion. You are therefore requested to speed up the work and expedite the progress of work by deploying sufficient labourer on the site and complete the same within stipulated time.” In response thereto in terms of its letter dated 30.6.2001, the Contractor wrote as under:- “With reference letter No. SD-II-A-6- to your Cont./2001-02-2140-42 dated 22.6.2001, I am to inform you that soiling and wearing work has already been completed a month ago on the site which was available to me to do the needful. As for us tarring work is concerned, I have written many letters to your department and have already visited your office many times but without any avail. It is pertinent to mention here that necessary quantity of Bitumen has not been supplied despite the fact that this fact has already been brought to your notice vide my earlier correspondence from time to time. Work relating to parapets and drain is in full swing wherever clear site has been given. Keeping aforesaid in view circumstances, it is wrong to suggest that sufficient number of labourers have not been deployed at the site. On the other hand, it is only due to negligence and carelessness on the part of the department, many hindrances and obstructions have been found which are yet to be cleared and expedited by the department. It may be made clear that sufficient number of labourers and machinery has already been deployed but because of the facts narrated above, the same is lying idle. This is for your kind information and necessary action, please.” It is important to record that “soling and wearing work” stood already completed on the sites made available to the Contractor and in 18 Arb. Case No. 43 of 2004 satisfaction of the work so done, the State also released payments for the same amounting to Rs. 16 lacs (approximately) in May, 2001 itself. Vide letter dated 8.8.2001 the Contractor again made a request for making available full quantity of Bitumen for speedy and timely execution of work. Even on 12.9.2001 the Contractor wrote as under:- “It is also brought to your kind notice that I have deputed more than 100 Nos. of labourers, two nos static rollers and 1 No. computerized hot mix plaint to complete the work before 20/9/01. these circumstances you are hereby requested to kindly arrange to supply balanced quantity of bitumen so that my men and machinery may not remain idlel and the work may be completed within time.” Under Therefore, it cannot be said that there is no evidence on record to substantiate the Contractor’s claims. In view of Mcdermott International Inc. (supra), correspondence exchanged between the parties has to be taken into account. The next plea is that Annexure R-1 being the statement of material issued to the Contractor and Annexure R-3 letter dated 20.7.2001 issued by the Executive Engineer have been ignored by the Arbitrator causing prejudice to the State. Annexure R-1 shows that cement was supplied on different dates between May and August, 2001 and, therefore, Contractor had enough work to execute and hence it could not be said that the Contractor’s labour was sitting idle. The Arbitrator has taken note of Letter dated 20.7.2001 (Annexure R-3) at page 4 of the reasons furnished by him. In so far as Annexure R-1, statement of material is concerned, in my view, it has no bearing for the reason that the skilled labour is engaged for carrying out the specialised work of soling and tarring. They are different from casual 19 Arb. Case No. 43 of 2004 labour and in any case the entire labour could not be said to have been used for executing the other works. The contract did not fix any priority or time for carrying out any specific item of work. Nor did the contract envisage the work to be completed in any particular manner. As early as 31.3.2001 and

23.5.2001, the Contractor had informed the State to supply the Bitumen as he had already deployed sufficient machinery and labour for the same. Importantly, the State has no grievance with regard to the performance of the Contractor or the quality of the work executed. It is not disputed that the work is as per the specifications and is of good quality. Importantly, the Contractor completed the work well within time. As per the contract free hand had been given to the contractor for executing the work. The contractor had wanted to complete the work well within time and, therefore, had been repeatedly asking the State to supply the Bitumen and carry out its obligation under the contract. The contractor had shown his efficiency and thus cannot be penalized for the faults of the State. No doubt the total duration of the contract was fixed as six months but that by itself would not mean that the State was to supply the Bitumen at the end of the 6th month, nearing the period envisaged for completion of the work. No doubt, the contract of a specified nature envisaged the contractor’s eligibility to possess machinery in terms of Clause 504.3.4 of M.O.S.T. Specifications (3rd Edn. 1975), but the fact of the matter is that the Contractor kept his machines available at site which remained idle due to non-supply of Bitumen. These machines could have been utilized by the Contractor somewhere else or he could have saved the additional costs of operation and maintenance of the said machines. 20 Arb. Case No. 43 of 2004 Mr. Thakur has referred to Section 37 of the Contract Act to contend that since the agreement did not stipulate any Schedule, therefore, it could not be contended that there was breach of the terms of the agreement. He has also submitted that the Schedule required to be submitted by the Contractor was also not done and, therefore, the State was under no obligation to immediately supply the Bitumen. Simply because the Contractor did not submit the Schedule that fact alone would not make the award vulnerable. Submission of the work schedule was not a condition precedent. On the contrary, from the evidence it is evident that the Contractor had always disclosed its readiness and preparedness to execute all of the contracted works. By commencing the work the Contractor had made its intention clear of executing the works in accordance with the covenants agreed upon. The State never objected to the same. The relevant provisions of the Indian Contract Act referred to by the learned counsel for the State do not come to their rescue. Section 52 only provides that where the order in which the reciprocal promises are to be performed are expressly fixed by the contract, they shall be performed in that order and in absence thereof they are to be performed in that order which the nature of transaction requires. Section 73 only provides for compensation for loss or damaged caused by breach of contract. The provisions of these sections cannot be pressed to prove that the State had not committed any breaches and that the contractor was not entitled for damages suffered. In my view, there is no infraction of either Section 28 or 32 of the Act making the award vulnerable. All the provisions of the contract 21 Arb. Case No. 43 of 2004 including Clause 1 of the General Conditions of Contract have been taken into account by the Arbitrator. The contention of the State that since the Contract did not envisage any time schedule for supply of raw material, therefore, it could not be said that the State had defaulted in performing its reciprocal promises entitling the contractor to claim damages needs to be rejected. Section 46 of the Contract Act provides that where no time for performance is specified, the agreement must be performed within a reasonable time, which in each particular case is a question of fact. In the present case, the demand for supply of Bitumen was made in May, 2001 itself and it was not until September 2001 that the first consignment of material was supplied. It took four months for the State to supply the Bitumen whereas the contract was for a total duration of six months. The contract period commenced in March/April. Had the material been supplied to the Contractor within the reasonable time, the work of at least the tarring portion of the road, which by itself formed 3/4th (items No.5,6,7,8, and 9 of schedule of Work) of the work to be executed under the Contractor could have been completed in the months of April, May and June, prior to onset of the monsoons. Due to the delay, totally attributable to the State the Contractor had to deploy extra labour to complete the work in time. Both efficiency and performance is a rare combination which is exceptionally noticeable in the present case. The State has materially committed breaches of the contract. It ought to have made sufficient arrangements for early and regular supply of the material. Section 28(3) of the Act has been pressed to contend that the Award has not been “decided in accordance with the terms of the contract” 22 Arb. Case No. 43 of 2004 and without taking into account “usages of trade applicable to the transactions”. In my view, there is nothing on record to show that the State had pleaded or proved the usages of the trade applicable to the transactions. I have already held that had the State supplied the Bitumen to the Contractor the work would have been completed some time in May or June, 2001 itself, before the onset of the monsoon. The Apex Court in Krishna Bhagya Jala Nigam Ltd. vs. G.Harischandra Reddy and another, (2007) 2 SCC 720 has upheld the idling charges awarded by the Arbitrator where due to the delay on account of non supply of drawings and designs the Contractor’s establishment had to be kept idle. So has the High Court of Bombay held in Municipal Corporation of Greater Mumbai and ors. Vs. Jyoti Construction Company, 2003 (3) Arb. LR 489 (Bombay). In Tarapore & Co. vs. State of M.P., (1994) 3 SCC 521, the Apex Court held that the Award could not be faulted because there was no provision in the contract granting compensation for delayed work. In my view the record is replete with letters written by the Contractor asking the State to supply the bitumen and in view of the fact that he had “deployed labour, machinery and all resources” for early completion of the contract, therefore, the contention of the State needs to be rejected. The Award cannot be faulted for the reason that the same is in conflict with the provisions of Part-I of the Act or any of the terms of the contract. Claim-B : Claim for extra material used by the claimant at the site before executing the work. 23 Arb. Case No. 43 of 2004 As against a claim of Rs.11,07,760/- a sum of Rs.6,60,000/- has been awarded by the Arbitrator under this claim. The objection of the State is that (i) no bill was submitted for extra work, therefore, there was no question of either verification or payment of the said amount; (ii) the quarry was made available to the Contractor at site for the purpose of soling and for metalling no quarry was to be made available at site as no stones were required to be provided by the State. Before any objection was raised by any department, the Contractor had already executed the work for which the quarry was to be allotted; (iii) Clause 1 of the General Specifications and Conditions of the contract required the Contractor to inspect the site before tendering. The Arbitrator has held that under the contract the Contractor was to execute the work of soling, wearing and laying of MSS (Mixed Seal Surfacing) in the extended portion of the road. The claim comprised of two parts; (i) claim for cost of extra quantity of soling and wearing materials purchased from the open market for meeting the excess requirement (ii) claim for cost of excess consumption of MSS due to presence of hump/dumps and undulations in the road surface prior to execution of the work. The Arbitrator referred to and relied upon letters dated 23.5.2001 (Annexure C-3), 8.8.2001 (Annexure C-4), 12.9.2001 (Annexure C-12),

15.9.2001 (Annexure C-13), 17.9.2001 (Annexure C-14), 29.8.2001 (Annexure C-10) and also video recording of the site in the form of Compact Disc (C.D.) and came to the conclusion that the Contractor vide its first letter had claimed that extra material to the extent of 25% to 30% would be consumed during tarring of road by laying 2 cm premixed seal surfacing because of humps/dumps on the road. A request was made by the 24 Arb. Case No. 43 of 2004 Contractor to visit the site for verification of the extra material being consumed at the site and also to take cross-sections of the road surface. The Arbitrator found that total quantity of 2785.0 cum material was required for executing the contract but since the State had failed to identify and allot a quarry within a radius of 10 kms. as envisaged under the contract and since there were objections by the Forest Department and Contractor was not allowed to extract stones from the earlier allotted site, therefore, the Contractor had to procure 700 cum of soling material @ Rs.300/- per cum and 800 cum of wearing material @ Rs.350/- per cum from open market. The Contractor was found to have obtained 1500 cum of material from open market and therefore, a total sum of Rs.1,52,500/- was considered to be payable to the Contractor on this account. Further in order to fill in undulations hump/dumps and in the absence of any action on the part of the State to fill the same the Contractor had to procure and use extra material to the extent of 25% to 30% to the extent of 280.8 cum @ Rs.590 per 10 cum. The Contractor was awarded Rs.5,08,230/- on this count. I have examined the record. The Arbitrator has minutely examined the same while determining the amount, which I feel is just and legally payable. Vide letters dated 31.3.2001, 23.5.2001, 8.8.2001 Contractor had informed the State that extra material to the extent of 25% to 30% would be required as there were undulations and humps on the road and in order to ensure smooth surfacing for tarring the road the same was absolutely necessary. Vide letter dated 12.9.2001 the contractor specifically wrote as under:- 25 Arb. Case No. 43 of 2004 “Type-‘B’ using paving Bitumen 80/100 and as per directions of the Engineer incharge when a few quantity of bitumen was issued to me on 6.9.2001. During the execution of the work it is found at site of work that existing road is not levelled and the road is humpy and dumpy. It is also a fact which is also in your goodselfs knowledge that this road is being tarred first time with paver finisher and it is found at site that 30% extra material is being consumed at site of work, which fact is brought to the knowledge of the concerned J.E. who remains at site for full day and he has checked this difference by adopting different methods at site of work. It is also brought to your kind notice that as soon as the undersigned come to know about the extra material i.e. of work the concerned assistant engineer was contacted on his office telephone No.237276 and was requested to visit the site of work to verify the facts. Your goodself was also contacted on the telephone and undersigned was informed that your good self is visiting the site on 12.9.01 at 10 A.M. Your goodself is once again requested that kindly visit and verify the actual facts stated above so that their (sic) may arise no dispute at the later stage and also direct your field-staff to verify the same at site of work. It is also brought to your kind notice that I have deputed more than 100 Nos. of labourers, two nos static rollers and 1 No. computerized hot mix plaint to complete the work before 20/9/01. Under these circumstances you are hereby requested to kindly arrange to supply balanced quantity of bitumen so that my men and machinery may not remain idle and the work may be completed within time. It is also brought to your kind notice that the R/walls already constructed by the Deptt and when the soling and wearing work was completed before rainy season has been settled down, because of improper completion of earth filling done by the deptt and extra layer is being laid on already laid soling and wearing so as to compete the tarring work. It is therefore, requested that extra material consumed at site/laid by the undersigned may kindly be paid extra. This is for your kind information please.” Vide letter 15.9.2001 the Contractor specifically asked the Executive Engineer to verify the variations mentioned in the said letter by inspecting the site where M.S.S. carpeting work was being done and vide letter dated 17.9.2001 it was so recorded that the Assistant Engineer had inspected the site and verified the excess quantity of material. Letters are galore on record from which it is evident that the Contractor had been 26 Arb. Case No. 43 of 2004 informing the authorities including the Secretary (PWD) and the Chief Engineer (South) (Letter dated 28.8.2001) about the progress of the work and requesting for the supply of material. From the correspondence it is evident that the excess material was required, had been utilized and request for verification was made repeatedly. The Contractor, as required under Clause 12 of the Conditions of Contract did take steps. On the contrary, it was the State which did not take effective steps of filling in holes on the road. Filling up of undulations and bumps was not a contracted item or scope of the agreement. The State did not either stop or object to the execution of the additional work of additional quantity. The contention that no details of the claims were submitted for the excess work carried out by the Contractor is neither correct not acceptable. The Arbitrator satisfied himself by seeing the C.D. The Contractor used excess material, whether he purchased the same from the open market or used it from his stores is immaterial. Therefore, the documents in support of the claim, being falsely procured would be immaterial. With regard to quarry being made available at site, Mr. Thakur has referred to clauses 2 and 43 of the Notice Inviting Tender and Clause 1 of the Additional Conditions of General Specifications to contend that the Contractor was under obligation to have informed about his working programme which was not done so by him. In my view the submission needs to be rejected for the simple reason that the Contractor had all along kept the State duly informed and apprised the progress of the work from time to time. The Arbitrator has fully applied its mind and after considering 27 Arb. Case No. 43 of 2004 the material in its entirety decided this claim. There is nothing illegal about the same. It is neither erroneous nor perverse. It is a matter of record that quarry was not made available to the Contractor for getting the work executed. It is, however, true that the Forest Department had objected to quarrying of stones from the quarry subsequently allotted by the State. The stones were initially required for carrying out of all the specified works and for this purpose stones had to be procured from outside. I do not find any reason to interfere with the finding of fact arrived at by the Arbitrator that for completion of work quarry was required to be made available to the Contractor. It is evident from letter dated 31.3.2001 that since the inception of the contract, the Contractor had been requesting the State for identifying the site. It was obligatory on the part of the State to provide the site free from any obstruction for execution of the awarded work. As such, this Court is satisfied that the claim under this head is in accordance with law and as per the terms of the contract. The extra work done by the contractor was not gratuitous. The work was carried out in the presence of the officials of the State after due intimation under their supervision and control without any demur or objection. The State has benefited out of the same and, therefore, in view of Section 70 of the Contract Act the State is bound to compensate the Contractor for the same. In State of Punjab vs. Amar Nath Aggarwal Const. and others, 2001(3) Arb. LR 142 (SC), the Apex Court has held as under:- “The Arbitrator has gone into this question in detail and has found that there was correspondence between the appellant 28 Arb. Case No. 43 of 2004 and the respondents in this connection and there is material to show that such work is really done and as to what quantum of Award should be granted is a matter which must be left to the Arbitrator’s discretion.” Where an Arbitrator, a retired Superintending Engineer appointed by the Court, who was well conversant with the functioning of the department arrived at its own conclusion, the Apex Court in Himachal Pradesh State Electricity Board vs. R.J.Shah & Company, (1994) 4 SCC 214, has held as under:- “In this case the arbitration clause is widely worded. The dispute which was referred to the Arbitrators, inter alia, related to the construction of the contract. The contract did visualize the contractor raising a claim for revision of rates. The dispute was as to when such a claim could be raised. According to the appellant herein this being an item rate contract the revision of rates could take place only in accordance with Clause 12-A when there was a deviation of more than 20 per cent with regard to individual items. On the other hand the terms of the contract, according to the claimant, permitted a claim being made of revision in rates if there was an increase of 20 per cent of the total value of the contract. The dispute before the Arbitrators, therefore, clearly related to the interpretation of the terms of the contract. The said contract was being read by the parties differently. The Arbitrators were, therefore, clearly called upon to construe or interpret the terms of the contract. The decision thereon, even if it be erroneous, cannot be said to be without jurisdiction. It cannot be said that the award showed that there was an error of jurisdiction even though there may have been an error in the exercise of jurisdiction by the Arbitrators.” Claim-C: Claim for engaging the services of a Junior Engineer. 29 Arb. Case No. 43 of 2004 This claim was rejected by the Arbitrator. Claim AC: (Additional Claim): Claim for extra lead and mechanical haulage of the excavated muck. As against the claim of Rs.7,29,780-00, a sum of Rs.5,27,300-00 was awarded on account of payment of extra lead and mechanical haulage of the excavated muck. Mr. Thakur has objected to this part of the award on the ground that (i) this claim was never referred to by the Court and, therefore, could not have been adjudicated by the Arbitrator; (ii) in view of clause 12 of the conditions of contract, the Contractor was supposed to submit its claim, which was not done so in the present case; and (iii) in any event the claim is not supported by any documentary proof and even the figure submitted is vague with regard to quantity. While dealing with this claim the Arbitrator has referred to and relied upon the correspondence exchanged between the parties i.e. letter dated 31.3.2001 (Annexure C-1) and analysis of rates dated 4.4.2001. The Arbitrator held that the State could not counter the contents of the letter. The Contractor had dumped the excavated muck at a distance of 15 km. by mechanical transport along the Shogi-Mehli road because there was no suitable dumping site as most of the road stretch along the work site had properties of private persons on valley side and the road passed through the bazaar. The Arbitrator not only viewed the C.D. but also jointly inspected the site and observed that no specific spots were found where large quantity of muck alongside the road side could be adjusted. Even small quantity of 30 Arb. Case No. 43 of 2004 muck was not visible along the valley side. The Contractor’s claim, based on the HP PWD Schedule of Rates, was allowed accordingly. This Court on 26.12.2002 appointed the Arbitrator “to adjudicate upon the disputes raised by the petitioner-contractor accordance with law”. Importantly, no reply was filed by the State despite opportunities granted. The dispute pertaining to the “disposal of excavated muck at the lead of 15 kms” arises out of and in relation to the works required to be executed under the Contract. It is true that the said dispute did not form part of the disputes mentioned in the application under Section 11 of the Act, but, however, this Court did not refer any specific disputes for adjudication before the Arbitrator. As on the date of the reference the dispute was already in existence which is evident from the correspondences. Section 23(3) of the Act entitles the parties to amend or supplement their claims. The claim was not time barred and, therefore, in my view it would not be right to contend that the Arbitrator could not have adjudicated the disputes or that the award could be faulted for “not having been fallen within the terms of submission to arbitration,” or “contains the decisions on matters beyond the scope of submission to arbitration”, as stipulated under Section 34(2)(a)(iv) of the Act. On merits, I have already noticed as to how the Arbitrator has decided the said claim. From the Schedule of Quantity forming part of the contract, it is evident that excavated soil from the road was to be transported to the approved dumping site. From the material on record, there is nothing to show that the department had allocated any such site. The Arbitrator has taken pains to go through the record and hold that even on physical verification, it could not be noticed that any excavated material/debris had 31 Arb. Case No. 43 of 2004 been thrown downside the road. This was for the reason that the road passed through the market and the lands belonging to private parties. The Contractor’s letter dated 4.4.2001 evidences the fact that the Contractor had informed the State that they had failed to identify the stacking/dumping site and as such he was forced to stack/dump the debris at Shoghi- Mehali road, which is more than 15 kms. from the site of work. The analysis of rate charged was appended alongwith the said letter. Therefore, it would not be correct to contend that the Contractor had failed to comply with the terms of Clause 12(v) of the Conditions of Contract and the Arbitrator erred in awarding the claim or/and that the award is “not in accordance with the substantive law for the time being in force in India” and can be faulted for the reason that the same was “not in accordance with the agreement of the parties” or was “not in accordance with Part-I of the Act”. If the matter is referred to the Arbitrator, party invoking the same proceeds on the basis that the other party has denied or disputed his claim or otherwise not interested in referring the dispute to the Arbitrator, the necessity of denial of claims for raising of disputes is not required in every case and it cannot be said that the claim must be followed by denial. In State of Orissa vs. Asis Ranjan Mohanty, (1999) 9 SCC 249, the Apex Court upheld the Arbitrator’s award passed in relation to new disputes raised before the Arbitrator on the ground that the disputes were already in existence at the time of invocation of the Arbitration clause and, therefore, within the scope of the arbitration clause and reference. In K.N.Sathyapalan (dead) by Lrs. Vs. State of Kerala and another, 2007(2) Apex Court Judgments 466, it has been held as under:- 32 Arb. Case No. 43 of 2004 “33. Ordinarily, the parties would be bound by the terms agreed upon in the contract, but in the event one of the parties to the contract is unable to fulfill its obligations under the contract which has a direct bearing on the work to be executed by the other party, the Arbitrator is vested with the authority to compensate the second party for the extra costs incurred by him as a result of the failure of the first party to live up to its obligations. That is the distinguishing feature of cases of this nature and M/s. Alopi Parshad's case (supra) and also Patel Engg.'s case (supra). As was pointed out by Mr. Dave, the said principle was recognized by this Court in P.M. Paul's (supra) , where a reference was made to a retired Judge of this Court to fix responsibility for the delay in construction of the building and the repercussions of such delay. Based on the findings of the learned Judge, this Court gave its approval to the excess amount awarded by the arbitrator on account of increase in price of materials and costs of labour and transport during the extended period of the contract, even in the absence of any escalation clause.” “35. We have intentionally set out the background in which the Arbitrator made his award in order to examine the genuineness and/or validity of the appellant's claim under those heads which had been allowed by the Arbitrator. It is quite apparent that the appellant was prevented by unforeseen circumstances from completing the work within stipulated period of eleven months and that such delay could have been prevented had the State Government stepped in to maintain the law and order problem which had been created at the work site. It is also clear that the rubble and metal, which should have been available at the departmental quarry at Mannady, had to be obtained from quarries which were situated at double the distance, and even more, resulting in doubling of the transportation charges. Even the 33 Arb. Case No. 43 of 2004 space for dumping of excess earth was not provided by the respondents which compelled the appellant to dump the excess earth at a place which was far away from the work site entailing extra costs for the same.” At the very initial stage the Contractor had submitted rates for mechanical haulage and thus made a claim for extra lead and mechanical haulage of the excavated muck as part and parcel of the claim. The State was not taken by surprise and full opportunity to negate the claim was afforded and only after proper adjudication it was determined. Mr. Thakur has referred to decisions in Union of India v. Ashok Tshering Lama, AIR 1983 Sikkim 19, Indian Aluminum Cables Ltd. vs. Haryana State Electricity Board and others, 1996 (5) Scale 708 and Orissa Mining Corporation Ltd. vs. Prannath Vishwanath Rawlley, (1977) 3 SCC 535, to contend that when an order of reference is made by the Court then the claim as a result of order of reference is limited to a particular relief and the Arbitrator cannot enlarge the scope of reference and entertain the claim without any further order or reference from the Court. In Ashok Tshering Lama (supra) the dispute with regard to interest was not referred to by the Chief Engineer, who himself had referred certain disputes. In Prannath Vishwanath Rawlley (supra), the dispute was identified and the amount also specified in the petition filed under Section 20 of the Arbitration Act, 1940 seeking reference to arbitration. In this background, the Court held that when the reference was confined to the claims the Arbitrator could not have expanded the scope. The Court found that adjudication of the claims in excess of the reference had resulted into 34 Arb. Case No. 43 of 2004 the Arbitrator exceeding its jurisdiction amounting to an error on the face of the record. In Indian Aluminum Cables Ltd. (supra) the scope and the ambit of the enquiry by the Arbitrator had been restricted and was inconsistent with the notice issued prior to the appointment of the Arbitrator. All the aforesaid judgments referred by Mr. Thakur are distinguishable on facts and not applicable. Claim: D : Interest payable on all claims @ 24%. The interest has been awarded by the Arbitrator @ 10% per annum on the awarded amounts as against the claim @ 24%. Mr. Thakur has objected to the award of interest on the ground that since no claims were submitted, therefore, the question of payment of interest does not arise. The Arbitrator, considering the provisions of Section 31(7)(a)(b) of the Act awarded interest @ 10% per annum w.e.f. 1.5.2002 till the date of payment. The Apex Court has examined the powers of the Arbitrator for awarding interest who has the authority to award interest for pre- reference period, interest from the period after entering upon reference till award namely pendente lite interest and interest from the date of award till payment. [Secretary Irrigation Department, Government of Orissa and others vs. G.C.Roy and T.P.George vs. State of Kerala and others (2001) 2 SCC 758]. 35 Arb. Case No. 43 of 2004 The Apex Court in Krishna Bhagya Jala Nigam Ltd. vs. G.Harischandra Reddy and another, (2007) 2 SCC 720 has granted interest @ 9% per annum. The parties were engaged in a commercial transaction and I see no reason as to why the interest be not granted on the adjudicated claims and determined amounts. Since details/particulars of the claims were submitted, therefore, the interest is to be paid. As has been noticed hereinabove the Contractor had been appraising the State about all the developments at the site from time to time. The Arbitrator has rightly awarded interest @ 10% per annum from 1.5.2002 till payment of awarded amount which is a reasonable rate against 24% so claimed by the Contractor. However, at this stage, I may record the concession made by Mr. Sharma, learned counsel for the Contractor. He, under instructions of his client, present at the time of hearing conceded that his client would agree to the reduction of the rate of interest from 10% to 8%. Ordered accordingly. Reference and Arbitral award not void. Mr. Thakur has also argued that reference made by this Court and the arbitral proceedings and the award are void as no reference could have been made beyond the period of 90 days as stipulated under Clause 25 of the agreement. No doubt, Clause 25 of the agreement restricts the party to invoke the arbitration within a period of 90 days from the dispute, but, however, in the present case the Contractor even after the stipulated period 36 Arb. Case No. 43 of 2004 had called upon the State to appoint the Arbitrator and refer the disputes, but the same was not objected to on this ground. Even at the time of making reference by this Court no such objection was taken by the State. Reference having made by this Court, it would not be open to the State to challenge the same at this stage, particularly, when no objection with regard thereto was even raised either before the Arbitrator or in the present objection petition. This objection is taken only at the stage of hearing of the matter. In Krishna Bhagya Jala Nigam Ltd. vs. G.Harischandra Reddy and another, (2007) 2 SCC 720, the Apex Court has held that when both the parties had accepted that the arbitration clause existed in the agreement and they proceeded on that basis, it would not be open for either party to raise the plea that there was no arbitration clause for the first time in an appeal before the High Court under Section 37(1)(b) of the Act. In the present case also, the plea is sought to be raised at the time of hearing without any foundation or proof at any stage thereto. The objection is, therefore, rejected. Applicability of Section 63 of the Indian Contract Act. The submission of Mr. Thakur that the payment had been received by the claimant to his satisfaction and accord and in the absence of any pending claim the same could not have been either adjudicated or allowed also needs to be rejected for the reason that there is nothing on record to show that the payments were made or received in full and final satisfaction of all claims. That apart, the disputes with regard to the claims adjudicated by the Arbitrator were made with the State during the subsistence of the contract and, therefore, it cannot be said that the claims could not have been adjudicated by the Arbitrator. It is not the case of the 37 Arb. Case No. 43 of 2004 State that while accepting the final bill the respondent had unequivocally stated that he (i) would not raise any further claims (ii) he has no claims whatsoever (iii) he had given up his claims. In the absence of any such declaration, the respondent, in law cannot be held to be estopped or precluded from raising any claims arising out of the contract. In Bharat Coking Coal Ltd. vs. Annapurna Construction, (2003) 8 SCC 154, it has also been held as under:- “Only because the respondent has accepted the final bill, the same would not mean that it was not entitled to raise any claim. It is not the case of the appellant that while accepting the final bill, the respondent had unequivocally stated that he would not raise any further claim. In absence of such a declaration, the respondent cannot be held to be estopped or precluded from raising any claim.” Whenever waiver is pleaded it is for the party pleading the same to show that an agreement waiving of some compromise came into being. [Krishna Bahadur v. Purna Theatre and others, (2004) 8 SCC 229]. Waiver is the abandonment of a right which normally, everybody is at liberty to waive. A waiver is nothing unless it amounts to a release. It signifies nothing more than an intention not to insist upon the right. It may be deduced from acquiescence or may be implied. [Waman Shriniwas Kini vs. Ratilal Bhagwandas and Co. AIR 1959 SC 689] In Sikkim Subba Associates vs. State of Sikkim, (2001) 5 SCC 629, it has been held as under:- “Waiver involves a conscious, voluntary and intentional relinquishment or abandonment of a known, existing legal right, advantage, benefit, claim or privilege, which except for 38 Arb. Case No. 43 of 2004 such a waiver, the party would have enjoyed. The agreement between parties in this case is such that its fulfilment depends upon the mutual performance of reciprocal promises constituting the consideration for one another and the reciprocity envisaged and engrafted is such that one party who fails to perform his own reciprocal promise cannot assert a claim for performance of the other party and go to the extent of claiming even damages for non- performance by the other party. He who seeks equity must do equity and when the condonation or acceptance of belated performance was conditional upon the future good conduct and adherence to the promises of the defaulter, the so-called waiver cannot be considered to be forever and complete in itself so as to deprive the State, in this case, of its power to legitimately repudiate and refuse to perform its part on the admitted fact that the default of the appellants continued till even the passing of the Award. So far as the defaults and consequent entitlement or right of the State to have had the lotteries either foreclosed or stopped further, the State in order to safeguard its own stakes and reputation has continued the operation of lotteries even undergoing the miseries arising out of the persistent defaults of the appellants. The same cannot be availed of by the appellants or used as a ground by the Arbitrator to claim any immunity permanently for being pardoned, condoned and waived of their subsequent recurring and persistent defaults so as to deny or denude forever the power of the State as other party to the contract to put an end to the agreement. The conclusion to the contrary that the State has committed breach of the contract is nothing but sheer perversity and contradiction in terms. Moreover, the principles enshrined in Section 54 in adjudicating the question of breach and Section 73 of the Contract Act incorporating the principles for the 39 Arb. Case No. 43 of 2004 determination of the damages, are found to have been observed more in their breach.” In the present case, there is no such material from which it could be deduced that the claimant had acquiesced impliedly or directly for waiving his right. In Damodar Valley Corporation v. K.K.Kar, AIR 1974 SC 158, it is held that : “The question whether there had been a full and final settlement of a claim under the contract was itself a dispute arising ‘upon’ or ‘in relation to’ or ‘in connection with’ the contract. A claim for damages was a dispute or difference which arose between the respondent and the appellant and was ‘upon’ or ‘in relation to’ or ‘in connection with’ the contract, and the reference to the arbitrator by the respondent was not barred. The question whether the termination was valid or not and whether damages were recoverable for such wrongful termination did not affect the arbitration clause, or the right the respondent to invoke it for appointment of an arbitrator. (1942) AC 356 and AIR 1959 SC 1362, rel. on: ILR (1972) 1 Cal 28, Affirmed. A repudiation by one party alone does not terminate the contract. As the contract subsists for the determination of the rights and obligations of the parties, the arbitration clause also survives. This is not a case where the plea is that the contract is void, illegal or fraudulent etc., in which case, the entire contract along with the arbitration clause is non est, or voidable. Where the dispute between the parties is that the contract itself does not subsist either as a result of its being substituted by a new contract or by rescission or alteration 40 Arb. Case No. 43 of 2004 that dispute cannot be referred to the arbitration as the arbitration clause itself would perish if the averment is found to be valid.” To the same effect is ratio of law in Jayesh Engineering Works vs. New India Assurance Co. Ltd. (2000) 10 SCC 178 and Union of India and another vs. M/s L.K.Ahuja and Co. (1988) 3 SCC 76. Mr. Thakur has referred to and relied upon the decision of the Apex Court in Lala Kapurchand Godha and others v. Mir Nawab Himayatalikhan Azamjah, AIR 1963 SC 250 and Jagad Bandhu Chatterjee vs. Smt. Nilima Rani and others, 1969 (3) SCC 445, to contend that keeping in view the provisions of Section 63 of the Contract Act and more particularly Illustration ‘B’ since the payment was received by the Contractor without protest and no claims were made by the Contractor with the department so, therefore, there was no question of breach of the contract or any damages having been suffered by the contractor entitling him to further payments. That [Lala Kapurchand Godha (supra)]was a case where the Prince of Berar, had executed a promissory note in favour of the plaintiff for a sum of Rs.13 lacs and after the Military occupation of State of Hyderabad, the Princes Debt Settlement Committee set up by the Military Governor decided that the plaintiff be paid a sum of Rs.20 lacs in full settlement of his claim of Rs. 27 lacs. The plaintiff protested but the Government insisted that unless and until full satisfaction was recorded payment would not be made. The plaintiff after some initial protest agreed to the same in full satisfaction of his claim and duly discharged the promissory note by endorsement of full satisfaction and received the 41 Arb. Case No. 43 of 2004 payment as such. It was in these circumstances the plaintiff’s subsequent suit claiming a sum of Rs.7 lacs was dismissed in view of the provisions of Section 63 and 41 of the Contract Act. In the present case, however, the position is entirely different as has already been discussed earlier. Conclusion: In my view the most of the objections which are now sought to be raised are neither pleaded nor proved on record. It cannot be said that the Award is in conflict with public policy of India or any one of the principles laid down by the Apex Court in its decisions. The claims and the amounts awarded are all questions of fact which the Arbitrator has gone into after taking pains of considering the material in its entirety. The claims are not barred in law or the agreement or in conflict with the public policy of India, therefore, I see no reason to interfere with the impugned award. The Award is made fairly after giving adequate opportunity to the parties to place their grievance in any manner as provided in the Arbitration agreement. The award is not amenable to correction by this Court. The Court is not to examine the correctness or otherwise of the conclusions reached by the Arbitrator as it is a matter of interpretation of the contract referred to by the parties to the Arbitration. The Award is liable to be set aside only if it deals with the dispute not contemplated by or not falling within the terms of submission to arbitration or it contains decisions on matters beyond the scope of submission to arbitration. The Arbitrator has remained within the parameters prescribed by the contract and in my view rightly construed the provisions thereof. 42 Arb. Case No. 43 of 2004 It is not the case of the State that the Arbitrator has misconducted himself or that no adequate opportunity was afforded to the State during arbitral proceedings. Whether or not the State had committed any default in handing over the work site incomplete or delayed the handing over of the material, thus not discharging the contractual obligations and whether or not the objector had suffered any loss on that account and to what extent, were all questions of fact on which the Arbitrator was entitled to take a view as has been done in the present case. Whether the Contractor was entitled to the cost of extra material used and to what extent are matters which depend upon appreciation of evidence and the material placed on record. I do not find any clause of the agreement whereby the claims made by the Contractor could be described as barred by any law or awarding of the claims cannot be held to be tentamounting to unjust enrichment of the contractor or granting undue advantage to it so as to be in conflict with public policy of India. It is neither perverse nor erroneous. The Arbitrator has given reasons based on clear, cogent, reliable and undisputed material. Some guess work allowed Assuming that the Arbitrator has determined the amount on the basis of some guess work, still, in my view, it would not be a ground to interfere particularly when it is evident from the record that the Arbitrator had applied its mind and considered the material in its entirety. In Mohd. Salamatullah and others v. Government of Andhra Pradesh, AIR 1977 SC 1481, the Apex Court has held as under:- “We are not able to discern any tangible material on the strength of which the High Court reduced the damages from 43 Arb. Case No. 43 of 2004 15% of the contract price to 10% of the contract price. If the first was a guess, it was at least a better guess than the second one. We see no justification for the appellate court to interfere with a finding of fact given by the trial court unless some reason, based on some fact, is traceable on the record. There being none we are constrained to set aside the judgment of the High Court in regard to the assessment of damages for breach of contract.” All the issues are answered accordingly. During the beginning of hearing, taking cue from the decision of the Apex Court in Krishna Bhagya Jala Nigam Ltd. (supra), it was suggested to Mr. Sharma, learned counsel for the Contractor as to whether his client would be willing to arrive at an out of court settlement by foregoing certain amounts and accept lesser payments. The matter was discussed by the learned counsel with his client, who was present in the Court and after consultations and based on the instructions given by his client, Mr. Sharma made a statement at the Bar that without prejudice to the rights and contentions, his client was ready and willing to accept lesser payments, if the State was not to contest the award and make payment within three months. The Contractor agreed to accept the payments as under:- Claim Awarded by the Arbitrator Amount acceptable A B AC Total: Rs.11,70,000-00 Rs.08,00,000-00 Rs.06,60,000-00 Rs.05,27,300-00 Rs.23,57,300-00 Rs.05,00,000-00 Rs.03,00,000-00 Rs.16,00,000-00 44 Arb. Case No. 43 of 2004 Inspite of my persuasion, with an endeavour to amicably settle the matter, learned counsel for the State, however, expressed his reservation and pressed the objection petition, when Mr. Sharma again reiterated his offer and further stated that in the event of this Court upholding the award on merits, if the State were not to further contest the matter and make payment within three months from the date of the decision, his client would still be willing to accept lesser amounts, in terms of his offer. This was to ensure early payments and put an end to the protracted litigation. Even though I have upheld the award, but, however the statement of Mr. Sharma is taken on record and it is ordered that if the State were to make payment to the Contractor within three months from today, the Contractor in terms of his consent shall be entitled to the following payments:- Claim A Claim B Claim AC Interest : : : : Rs.8,00,000-00 Rs.5,00,000-00 Rs.3,00,000-00 @ 8% from the dates determined by the Arbitrator In view of the foregoing reasons and subject to the aforesaid, the present objections under Section 34 of the Arbitration and Conciliation Act, 1996 are dismissed. However, there shall be no order as to costs. 15th September, 2008 (C) (Sanjay Karol) Judge