D.D. SHARMA versus UNION OF INDIA

Citation: [2004] SUPP. 1 S.C.R. 767 · Decided: 27-04-2004 · Supreme Court of India · Bench: V.N. KHARE

Judgment (excerpt)

D.D. SHARMA 
A 
v. 
UNION OF INDIA 
APRIL 27, 2004 
[V.N. KHARE, CJ., S.B. SINHA AND S.H. KAPADIA, JJ.] 
Arbitration Act, 1940-Section 30-Conditional offer of rebates made 
by bidder in response to the Notice Inviting tenders-Bid accepted-Bidder 
referring disputed claims to arbitration-Arbitrator, by a non-speaking award, C 
partially allowed the claims of the bidder-High Court reversing on the 
ground that the Arbitrator has not considered some documents-Correctness 
of-Held, a Court can interfere with the award of the Arbitrator only if he 
exceeds his jurisdiction or misconducted himself or the proceedings-On 
facts, the Arbitrator has considered all documents before granting the Award-
Hence, the Interference of the Court in the Award was uncalled for. 
D 
Respondent-Union of India issued a notice inviting tenders for 
construction of six bridges with an arbitration clause. The appellant-contractor 
submitted his tender stipulating certain terms and conditions. In response to 
the alternative design proposed by the respondent, the appellant offered a 
suitable rebate if the work is allotted within 60 days of opening of the tender. E 
On the request by the respondent for withdrawal of various terms and 
conditions specified in the tender, the appellant made another conditional offer 
of withdrawing all terms and conditions and granting a specified amount of 
rebate per bridge subject to the payment of interest free 10% advance over 
the tendered amount against bank guarantee. The appellant made a further F 
conditional offer of granting further rebates of specified amount for each 
bridge subject to the condition that the work is allotted as a whole within a 
specified date and payment of the 10% advance to be adjusted proportionately 
along with the interim payment. The respondent accepted the offer and 
conveyed to the appellant stating that the advance would be adjusted fully by 
the time 50% of the work is completed. 
G 
The respondent could not hand over the site to the contractor within 
the stipulated period. The period of contract was extended from time to time. 
The appellant referred four claims for arbitration. The Arbitrator, by a 
767 
H 
768 
SUPREME COURT REPORTS [2004] SUPP. I S.C.R. 
A non-speaking Award, rejected one of the claims and partially allowed the 
remaining three claims. The appellant filed a suit before trial court for 
direction upon the Arbitrator to file a copy of the Award and to make the same · 
rule of the Court. The respondent filed an objection before the trial court 
under Section 30 of the Arbitration Act, 1940 for settin~ aside the Award of 
B the Arbitrator. The trial court rejected the objection of the respondent and 
made the Award rule of the Court The High Court partly allowed the appeal 
of the respondent on the ground that the Arbitrator had not considered two 
offers of rebate made by the appellant The appellant and the respondent filed 
cross appeals before this Court 
C 
The appellant contended that the Award of the Arbitrator is a non-
speaking Award and that Arbitrator had stated in his Award that he had 
considered all documents before granting the A ward; and that the respondent 
is not entitled for rebates as it has failed to fulfil the conditions stipulated in 
the two conditional offers of rebates. 
D 
The respondent contended that the appellant is not entitled to any further 
E 
claim since the appellant had already claimed a huge amount by way of 
escalation cost. 
Allowing the appeal of the ~ppellant and dismis~ing the appeal of the 
respondent, the Court 
HELD:l.1. A Court can. set aside an award if the arbitrator has 
misconducted himsel~ or the rroceedings. The jurisdiction of the Court in 
interfering with a non-speaking award is very limited. It is also trite that 
correspondence 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 oflaw. [774-G-H; 775-A-B) 
1.2. The arbitrator was required to consider as to whether the contractor· 
·can substantiate his claim relying on or on the basis of non-compliance of 
G the conditions precedent in relation to the offer of rebate made by it in his · 
letters. The said contention evidently was a subject matter of determination 
by the Arbitrator. An Arbitrator being a judge chosen by the parties, his 
decision would ordin

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