LexHIMACHAL PRADESH STATE ELECTRICITY BOARD versus R.J. SHAH AND COMPANY
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• HIMACHAL PRADESH ST A TE ELECTRICITY BOARD A · .. v. R.J. SHAH AND COMPANY APRIL 15, 1999 [B.N. KIRPAL AND D.P. MOHAPATRA, JJ.] B Arbitration Act, 1940 Award challenged-Allegation that arbitrator had exceeded his jurisdiction-Dispute related to construction of contract-Arbitrator called C upon to construe or interpret the terms of the contract-Held, award liable to be set aside if there is error of jurisdiction but not if the error is committed in exercise of jurisdiction-Merely because another view was possible it cannot be said that the arbitrator had exceeded the jurisdiction in making the award Jurisdiction of Arbitrator-Construction of-Arbitration clause or a specific term in the contract or law not permitting or giving the arbitrator the power to decide or adjudicate on a dispute or there is a specific bar to the raising of the particular dispute or claim-Held, any decision given by D the arbitrator in respect thereof would be in excess of jurisdiction. E A contract was entered between the parties regarding construction of Giri, Hydel Electric Project in the State of Himachal Pradesh and the terms and conditions, which were binding on the parties, were incorporated in the contract. The contract was awarded to the respondent for a sum of Rs. 504 lacs. The contract provided for price revision when work was done in excess F of the deviation limit of 20 percent. The respondent claimed revision of rates when. work in excess of the contract value by about. Rs. 36 lacs had been unde_r~aken by it. The claim of the respondent was refuted by the appellant on its interpretation of price revision provided in the contract. Dispute arose between the parties regarding construction/interpretation of price revision G provided in the contract and the matter was referred to arbitration. Seven items of dispute were considered by the Arbitrators. The contention of the respondent before the Arbitrators was that revised rates based on market rates would be payable to the respondent when the total value of the work exceeded the deviation limit of20 percent of the total H 643 644 SUPREME COURT REPORTS (1999] 2 S.C.R. .......... A value by placing reliance on clause 3.2(e) (ii) of the contract. The appellant's contention before the Arbitrators was that the contract was an item rate contract and the deviation limit of20 percent was applicable.to individual items only and not to the total value of the contract ; and that the rate of work in excess of deviation limit was required to be determined only in accordance B with the provisions contained in Clause 12A of the contract. The Arbitrators made a non-speaking award. Award regarding disputes 1, 2 and 4 which is .....:.. the subject matter of the present appeal was given by the Arbitrators in favour of the respondents. The appellants filed their objections to the award in the High Court inter alia on the ground that the award was in excess of jurisdiction and that the Arbitrators committed legal misconduct in making c the award. Single Judge.held that except award pertaining to Dispute No. 7 the rest of the award did not suffer from any error apparent on the record. Against the decision of the Single Judge, appellant filed appeal before the Division Bench which upheld the Judgment of the Sin_gle Judge. Hence, this appeal D The appellant contended that on the correct interpretation of the contract and of Clause 12 A in particular the Arbitrators had no jurisdiction to revise the rates of any item merely because the overall value of the contract executed had been exceeded by 20 percent as the contract permitted increase only if there was deviation in individual items. by more than 20 E percent and increase was not permitted if there was an overall increase of 20 percent without there being increase in individual items i.e., the award was in excess of the authority given to the Arbitrators by the express provisions of the contract and was therefore, without jurisdiction ; and that award of interest could not have been passed by the Arbitrators as claim had not been made by the respondents before the Arbitrators for award of interest F The contention of the respondent was that its claim for revised rates was based on the interpretation of the contract and this point was specifically :: referred to the Arbitrators and therefore, the award of the Arbitrators was final and binding and could not be set aside. G Dism
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