G. RAMACHANDRA REDDY & CO. versus UNION OF INDIA & ANR.

Citation: [2009] 7 S.C.R. 917 · Decided: 15-04-2009 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Disposed off

Judgment (excerpt)

[2009] 7 S.C.R. 917 
G. RAMACHANDRA REDDY & CO. 
A 
v. 
,. 
UNION OF INDIA & ANR. 
Civil Appeal No. 2479 of 2009 
APRIL 15, 2009 
8 
[S.B. SINHA AND CYRIAC JOSEPH, JJ.] 
Arbitration -Award of arbitrator- Interference by court-
Scope - Held: The Court while dealing with an award would 
not re-appreciate the evidence - Interpretation of a contract 
may fall within the realm of the Arbitrator - Award containing c 
reasons also may not be interfered with unless they are found 
to be perverse or based on a wrong proposition of law - If two 
views are possible, -Court should refrain itself from interfering. 
An advertisement was issued for the work of D 
construction. Appellant submitted its tender on 9/ 
17.7.1988. In its forwarding letter, appellant stated thatthe 
total labour component involved in the work was 40% of 
the scope of the contract. A post script was added thereto 
stating that Item 1 of the schedule quoted percentage to E 
be read out over (+ 2.25% ) and the total value to be 
considered accordingly. 
1 
Respondent by letter dated 19.7.1988, stated that the 
tender should be considered with the reduction of 
.... 
minimum 2.25% over quoted percentage for schedule 'A' 
F 
Part I. Dispute arose between the parties and arbitration 
clause was invoked. Before the Arbitrator, appellant put 
forth claims regarding additional payment of 2.25% over 
the quoted rates; dispute regarding percentage of labour 
component in the work with reference to the escalation G 
in labour rates and for consequential in labour rates and 
.... ~-
for consequential payments to the plaintiff; dispute 
regarding escalation with reference to the extra payment 
of labour involved in construction of high rise building; 
917 
H 
918 
SUPREME COURT REPORTS 
[2009] 7 S.C.R. 
A dispute regarding legality of the termination of the 
plaintiff's contract and for consequential damages. 
B 
c 
-
D 
E 
Arbitrator allowed some of the claim while rejecting 
others. Counter claim of the first respondent was rejected. 
First respondent filed an application under s.30 of 
Arbitration Act, 1940. Single Judge of High Court held that 
award did not warrant interference. The Division Bench 
of the High Court allowed the appeal in part in respect of 
three items of claim. Both the parties filed appeals. 
Dismissing the appeal of the Respondent Union of 
India and allowing the appeal of appellants, the Court 
HELD: 1.1. Interpretation of a contract may fall within 
the realm of the Arbitrator. The Court while dealing with 
an award would not re-appreciate the evidence. An award 
containing reasons also may not be interfered with unless 
they are found to be perverse or based on a wrong 
proposition of law. If two views are possible, the Court 
should refrain itself from interfering. [Para 18) [931-D-E] 
State of UP v. Allied Constructions (2003) 7 SCC 396; 
Pure Helium India (P) Ltd. v. Oil & Natural Gas Commission 
(2003) 8 SCC 593; K.R. Raveendranathan v. State of Kera/a 
(1998) 9 sec 41 o; H.P Seb v. R.J. Shah & co. (1999) 4 sec 
214; Rajasthan State Mines & Minerals Ltd. v. Eastern Engg. 
F 
Enterprises (1999) 9 SCC 283; Food Corporation of India v. 
Surendra, Devendra & Mahendra Transport Co. (2003) 4 SCC 
80; Shyama Charan Agarwala & Sons v. Union of India (2002) 
6 sec 201 - relied on. 
1.2. Jurisdiction of the Court to interfere with an award 
G made by an Arbitrator is limited. One of the grounds 
therefor is the error apparent on the face of the award. 
[Para 19) [933-A-B] 
State of Rajasthan v. Pure Construction Co. Ltd. & Ors. 
H (1994) 6 SCC 485; Trustees of the Port of Madras v. 
r 
-
G. RAMACHANDRA REDDY & CO. V. 
919 
UNION OF INDIA & ANR. 
' 
Engineering Constructions CorporationLtd. (1995) 5 SCC 531; A 
Food Corporation of India v. Joginderpal Mohinderpal & Anr 
(1989) 2 SCC 34 7; Numaligarh Refinery Ltd. v. Daelim 
Industrial Company Ltd. JT 2007 (11) SC 73 - relied on. 
2. A contract would warrant construction, if the terms 
thereof are vague and ambiguous. The letter exhibiting B 
the offer of the appellant refers to four different documents 
including the letter dated 9117.07.1988. Whether in the said 
letter, the appellant had asked for increase of 2.5% over 
the base value or deducted 2.5% therefrom is a matter of 
construction. The Arbitrator took the ultimate contract into c 
consideration. He did take the same into consideration. 
He, however, was of the opinion that the four letters which 
were said to be the sole repository of th

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