M/S. J.G. ENGINEERS PVT. LTD. versus UNION OF INDIA AND ANR.

Citation: [2011] 8 S.C.R. 486 · Decided: 28-04-2011 · Supreme Court of India · Bench: R.V. RAVEENDRAN · Disposal: Appeal(s) allowed
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Judgment (excerpt)

A 
B 
[2011) 8 S.C.R. 486 
M/S. J.G. ENGINEERS PVT. LTD. 
v. 
UNION OF INDIA AND ANR. 
(Civil Appeal No. 3349 of 2005) 
APRIL 28, 2011 
[R.V. RAVEENDRAN AND MARKANDEY KAT JU, JJ.] 
Arbitration and Conciliation Act, 1996 - ss.34 and 28 -
Respondents had awarded works contract to the appellant -
C On ground of slow progress of the appellant-contractor, the 
respondents terminated the contract - Dispute -Appointment 
of sole arbitrator as per arbitration agreement contained in 
contract - Appellant filed statement of claims before the 
arbitrator - Respondents filed reply and also filed counter 
D claims - Arbitrator awarded sum with interest and costs in 
favour of the appellant and rejected the counter claims of the 
respondents - Respondents filed application u/s.34 for setting 
aside the award - District Judge affirmed the award - Order 
reversed by the High Court in arbitration appeal filed by the 
E respondents - The respondents' contention that the arbitrator 
had considered and allowed some claims which were 
'excepted matters' and therefore, inarbitrable, that grant of 
some other claims by the arbitrator violated the express 
provisions of clause 1 O(cc) of the contract, and that the 
F counter-claims of respondents were erroneously rejected, 
found favour with the High Court - Held: On facts, the 
Arbitrator had the jurisdiction to try and decide all the claims 
of the appellant-contractor as also the claims of the 
respondents - Award of the Arbitrator on claims 1, 3 and 11 
of the appellant-contractor has to be upheld and the 
G conclusion of the High Court that award in respect of those 
claims had to be set aside as they related to excepted matters, 
cannot be sustained - Judgment of the High Court setting 
aside the award in regard to claims 2,4,6, 7,8 and 9 of the 
H 
486 
J.G. ENGINEERS PVT. LTD. v. UNION OF INDIA AND 487 
ANR. 
appellant also cannot be sustained since the award on those 
A 
claims was upheld by the civil court and the High Court in 
appeal did not find any infirmity in regard thereto - Claim No. 5 
was for payment of escalation under clause 10(cc) of the 
contract - The High Court erred in setting aside the award in 
regard to claim No.5 a/so - Once the Arbitrator recorded the 
B 
finding that the contractor was not responsible for the delay 
and that the termination was wrongful and that the respondents 
were liable for the consequences arising out of the wrongful 
termination of contract, the question of respondents claiming 
any of the counter-claims from the contractor does not arise c 
- Award of the Arbitrator rejecting the counter claims, 
therefore, upheld - Government Contract - Works Contract. 
Arbitration and Conciliation Act, 1996 - ss. 34 and 28 -
Arbitral award - Interference with - Jurisdiction of civil court 
to examine. validity of arbitra/ award - Held: A Civil Court D 
examining the validity of an arbitral award uls. 34 exercises 
supervisory and not appellate jurisdiction - A court can set 
aside an arbitral award, only if any of the grounds mentioned 
in ss.34(2)(a)(i) to (v) or s.34(2)(b)(i) and (ii), or s.28(1)(a) or 
28(3) read with s.34(2)(b)(ii), are made out - An award· E 
adjudicating claims which are 'excepted matters' excluded 
from the scope of arbitration, would violate s.34(2)(a)(iv) and 
34(2)(b) - Making an award allowing or granting a claim, 
contrary to any provision of the contract, would violate 
s.34(2)(b)(ii) read with s.28(3). 
F 
Arbitration - Arbitra/ award dealing with and deciding 
several claims - Challenge to - Held: If an award deals with 
and decides several claims separately and distinctly, even .if 
the court finds that the award in regard to some items is bad, 
the court will segregate the award on items which did not suffer G 
from any infirmity and uphold the award to that extent. 
Contract - Breach of a condition of contract - Right to 
adjudication - Held: The question whether the other party 
committed breach cannot be decided by the party alleging 
H 
488 
SUPREME COURT REPORTS 
[2011] 8 S.C.R. 
A breach - A contract cannot provide that one party will be the 
arbiter to decide whether he committed breach or the other 
party committed breach - That question can only be decided 
by an adjudicatory forum, that is, a court or an Arbitral 
Tribunal - Arbitration. 
8 
The respondents had awarded the works contract of 
"extension of terminal building" at Guwahati airport to the 
appellant. On ground of slow progress of the appellant-
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