J.G. ENGINEER'S PVT. LTD. versus CALCUTTA IMPROVEMENT TRUST AND ANR.

Citation: [2002] 1 S.C.R. 599 · Decided: 25-01-2002 · Supreme Court of India · Bench: G.B. PATTANAIK · Disposal: Appeal(s) allowed
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Judgment (excerpt)

y 
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J.G. ENGINEER'S PVT. LTD. 
A 
v. 
CALCUTT A IMPROVEMENT TRUST AND ANR. 
JANUARY 25, 2002 
(G.B. PATTANAIK AND Y.K. SABHARWAL, JJ.) 
B 
Arbitration: 
Termination of contract-Termination for non-completion of work on 
basis of engineer's certificate-Reference of the dispute of termination to C 
arbitration-Arbitrator holding wrongful termination-High Court holding 
arbitrator has no jurisdiction to decide the issue of termination of contract, 
being an excepted matter-Validity of-Held, on facts, the arbitrator has 
jurisdiction to decide the issue of the validity of termination of contract-
Arbitration Act, 1940-Sections 30 & 33. 
D 
Respondent-Trust terminated the contract given to appellant-
contractor for non-completion of the contracted work on the basis of an 
Engineer's certificate. The dispute of the termination of contract was 
referred to arbitration. The arbitrator held in favour of the appellant on 
the ground of wrongful termination of contract by the respondent. The 
respondent filed an application before High Court challenging the award 
on the ground of non-arbitrability of the issue of termination of the 
contract by the arbitrator. The Single Judge dismissed the application of 
the respondent. The Division Bench of the High Court set aside the award 
of the arbitrator on two grounds-(i) that the question of wrongful 
termination of the contract was an excepted matter and hence not 
arbitrable; and (ii) that tht arbitrator has failed to exercise the jurisdiction 
in not considering the counter claim of the respondent. 
E 
F 
In appeal, the appellant contended that the respondent never 
objected to the arbitrability of the issue of the validity of the termination G 
of the contract during arbitration proceedings; that the Engineer could 
only certify the quality or measurement of the work done; and that the 
arbitrator and not the Engineer can adjudicate as to who caused the 
breach of the contract. 
The respondent contended that the arbitrator had no jurisdiction H 
599 
600 
SUPREME COURT REPORTS 
[2002] I S.C.R. 
A to adjudicate the issue of the validity of the termination of the contract 
as per the clauses of the Information and Instruction to Tenders; that the 
issue is an excepted matter and therefore not arbitrable; and that the 
contract was terminated on the basis of the Engineer's certificate stating 
non-completion of the work by the appellant. 
B 
Allowing the appeal, the Court 
HELD : 1.1. On facts, it cannot be held that the arbitrator per se 
had no jurisdiction to decide the issue of the validity of the termination 
of the contract. The issue of termination of the contract does not relate to 
C the jurisdiction of the arbitrator. Specific plea had. to be taken by the 
respondent that the certificate of the Engineer was issued and, therefore, 
the aspect of termination of the contract was not arbitrable. No such fact 
was pleaded nor contended by the respondent. Hence, it is not necessary 
to decide whether the issue of termination of the contract could be brought 
within the ambit of the excepted matter or not or that the Engineer's 
D certificate could be conclusive only as to the quality or measurement of 
the work done. The Division Bench of the High Court was not correct in 
coming to the conclusion that the fundamental terms of the agreement 
between the parties prohibited the arbitrability of the excepted matters. 
(603-H; 604-A-D) 
E 
Union of India v. Popular Builders, Calcutta, (2000) 8 SCC 1; Steel 
Authority of India Ltd v. J.C. Budharaja, Government and Mining Contractor, 
(1999] 8 SCC 122 and UP. Rajkiya Nirman Ltd. v. lndure Pvt. Ltd. & Ors., 
(1996) 2 sec 667, referred to. 
1.2. A perusal of the non-speaking award shows that the arbitrator 
F has considered the claims and counter claims of the parties. In this view, 
the conclusion of the Division Bench, that the arbitrator has not considered 
the counter claim of the respondent, is contrary to the record. (604-E-F) 
G 
H 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 689 of 
2002. 
From the Judgment and Order dated 7.3.2001 of the Kolkata High 
Court in A.P.O. No. 267/2000 in A. No. 362/99 in Award Case No. 51 of 
1999. 
B.P. Gupta and Pranab Kumar Mullick for the Appellants. 
Biswajit Bhattacharjee, N.R. Choudhury, Somnath Mukherjee and Ms. 
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l.G. ENGINEER'S PVT. LTD. v. CALCUTTA IMPROVEMENT TRUST [Y.K. SABHARWAL, l.J 60 J 
Puja Khattar for the Respondent. 
A 
The Judgment of the Court was delivered by 
Y.
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