LexM/S. BUILD INDIA CONSTRUCTION SYSTEM versus UNION OF INDIA
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y A M/S. BUILD INDIA CONSTRUCTION SYSTEM v. --<- UNION OF INDIA MAY 7, 2002 •, B [R.C. LAHOTI AND B.N. AGRA WAL, JJ.] Arbitration-Parties entering into contract in I 985-Arbitration / clause providing for reference of dispute to arbitrator but not for reasoned 'I" c award-Subsequent amendment in I 986 in the general conditions of contract that if value of claim exceeds Rs. I lakh arbitrator to give reasoned award- Dispute leading to cancellation of contract-Reference to arbitrator- Award-Held, amendment of 1986 does not apply to general conditions of contract as applicable to parties-Hence, arbitration clause should not be read as amended-Arbitrator not oblige to give reasoned award-Terms of D contract between the parties could not be varied except by mutual agreement-Further amendment to general conditions, coming into effect after the date of amendment, cannot have any relevance for interpreting arbitration clause much before the date of amendment coming into effect. c.. E Practice and procedure-Plea not raised in objection petition, cannot be urged at appellate stage. Appellant entered into a contract with the respondent-Government for construction work in 1985. Contract contained an arbitration clause by which disputes could be referred to an arbitrator. However, arbitration clause did not F provide for a reasoned award or a speaking award by the arbitrator. Subsequently in 1986 Government amended the general conditions of the -....;... contract providing that if the value of the claim exceeds Rs. 1 lakh, arbitrator .... shall pass reasoned award. This amendment was effective on 30th day after the date of amendment. Disputes arose between the parties leading to cancellation of contract by the respondents. Disputes were referred to an - G arbitrator in accordance with the arbitration agreement. Arbitrator passed an award without giving reasons. Single Judge of High Court made award rule of the Court. However, Division Bench directed the award to be set aside and remitted back the award to the arbitrator for proceeding afresh and making a reasoned award. · H 866 _, BUILD INDIA CONSTRUCTION SYSTEM v. U.0.1. 867 The question that arose in appeal before this Court was whether the A amendment of 1986 applies to the general conditions of contract as applicable to the parties, and therefore, the arbitration clause should have been read as amended casting an obligation on the arltitrator to give a reasoned award. In appeal before this Court, appellant submitted that the amendment of 1986 applies only to the contracts entered into on and after that date and in B any case the respondent could not have amended the general conditions of contract all by themselves and without the consent of the appellant and, therefore, the arbitration clause governing the parties was the one as contained in the general conditions of contract which existed and were applicable on the date on which the contract was entered into between the parties. C Respondent submitted that the acceptance letter signed by the appellant should be read and interpreted as the appellant having authorized the respondent to amend the general conditions of contract and also as the appellant having agreed to bind itself by the general conditions of contract as modified from time to time and, therefore, the parties and the arbitrator should all be D held bound by the amendment of 1986 and any award given in breach of the arbitration clause as amended should be held as void. Allowing the appeal, the Court HELD: 1. The letter of acceptance signed by the appellant cannot be so E read as to spell out the appellant having conferred any authority on the respondent to modify or alter the terms of the contract except by mutual agreement and to bind itself by such variations. The arbitration clause is contained in the contract entered into between the parties. Its terms could not have varied except by mutual agreement. Moreover the amendment itself F provides for its coming into effect on 30th day after the date of the amendment That amendment clearly cannot have any relevance for interpreting the arbitration clause contained in the contract entered into between the parties much before the date of amendment coming into effect. J872-F-H; 873-AJ 2. The reference to arbitrator does not suggest an obligation having been G cast on the arbitrator to give reasons for the award. Such a plea urged in this Court
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