M/S. HARSHA CONSTRUCTIONS versus UNION OF INDIA & ORS.

Citation: [2014] 7 S.C.R. 668 · Decided: 05-09-2014 · Supreme Court of India · Bench: ANIL R. DAVE · Disposal: Case Partly allowed

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Judgment (excerpt)

A 
B 
[2014] 7 S.C.R. 668 
M/S. HARSHA CONSTRUCTIONS 
v. 
UNION OF INDIA & ORS. 
(Civil Appeal No. 534 of 2007) 
SEPTEMBER 05, 2014 
[ANIL R. DAVE AND VIKRAMAJIT SEN, JJ.] 
Arbitration and Conciliation Act, 1996 - ss. 34, 7(3) -
Contract of arbitration - Dispute pertaining to the amount 
C payable to the contractor in relation to extra work done by the 
contractor - Amount payable to the contractor not final since 
dispute not decided by the Chief Engineer - Though some 
amount paid but accepted under protest by the contractor -
In terms of the contract clause, said dispute specifically not 
D arbitrable - However, "excepted matter" referred to arbitrator 
- Arbitrator deciding the issue holding that the same were not 
excepted matters but arbitrable - Held: Arbitration arises from 
a contract and unless there is a specific written contract, a 
contract with regard to arbitration cannot be presumed - As 
E per the Contract clause, arbitrator could nof arbitrate upon the· 
excepted disputes - If a non-arbitrable dispute is referred to 
an Arbitrator and an issue is framed by the Arbitrator in 
relation thereto, there cannot be a presumption or a 
conclusion to the effect that the parties had agreed to refer 
F the issue to the Arbitrator - Award regarding non-arbitrable 
dispute quashed and set aside - Liberty granted to the 
contractor to take appropriate legal action for recovery ol 
payment for work done not forming part of the contract. 
G 
Partly allowing the appeal, the Court 
HELD: Arbitration arises from a contract and unless 
there is a specific written contract, a contract with regard 
to arbitration cannot be presumed.:Thus, so far as the 
disputes which have been referred to in Clause 39 of the 
H 
668 
HARSHA CONSTRUCTIONS v. UNION OF INDIA 
669 
contract are concerned, it was not open to the Arbitrator A 
to arbitrate upon the said disputes as there was a specific 
clause whereby the said disputes had been "excepted". 
Moreover, when the law specifically makes a provision · 
with regard to formation of a contract in a particular 
manner, there cannot be any presumption with regard to 
8 
a contract if the contract is not entered into by the mode 
prescribed under the Act.)f a non-arbitrable dispute is 
referred to an Arbitrator and even if an issue is framed 
·by the Arbitrator in relation to such a dispute, there 
cannot be a presumption or a conclusion to the effect that C 
the parties had agreed to refer the issue to the Arbitrator. 
In the instant case, the respondent authorities had raised· 
an objection relating to the arbitrability-of the aforestated 
issue before the Arbitrator and yet the Arbitrator had 
rendered his decision on the said "excepted" dispute. It 0 
was not open to the Arbitrator to decide the issues which 
were not arbitrable and the award, so far as it relates to 
disputes regarding non-arbitrable disputes-determination 
of the rate for extra work done by the contractor is 
concerned, is bad in law and is quashed. The portion of 
the award so far as it pertains to the disputes which were 
E 
arbitrable is upheld. [Para 20-23] [675-F-H; 676-A-F] 
General Manager, Northern Railway and another v. 
Sarvesh Chopra 2002 (2) SCR 156:(2002) 4 SCC 45; 
Madnani Construction Corporation (P) Limited v. Union of F 
India & ors. 2009 (16) SCR 216: (2010) 1 sec 549 - referred· 
to. 
Case Law Reference: 
2002 (2) SCR 156 
2009 (16) SCR 216 
Referred to 
Referred to 
Para 13 
G 
Para 13 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 534 
of 2007. 
H 
670 
SUPREME COURT REPORTS 
[2014] 7 S.C.R. 
A 
From the Judgment and Order dated 09.09.2005 of the 
High Court of Judicature, Andhra Pradesh at Hyderabad in. 
C.M.A. No. 476 of 2005. 
Vemula Prasad Rao, G. Ramakrishna Prasad, Filza 
8 Moonis, Bharat J. Joshi for the Appellant. 
D.S Mahra for the Respondents. 
The Judgment of the Court was delivered by 
ANIL R. DAVE, J. 1. Aggrieved by the judgment dated 9th 
C September, 2005 delivered by the High Court of Judicature, 
Andhra Pradesh at Hyderabad, in CMA No.476 of 2005, this 
appeal has been filed by M/s Harsha Constructions, a 
contractor, against Union of India and its authorities. 
Hereinafter, the appellant has been described as a 'Contractor'. 
D 
2. The Union of India had entered into a contract for 
construction of a road bridge at a level crossing and in the said 
contract there was a clause with regard to arbitration. The issue 
with which we are concerned in the instant case, in a nutshe

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