LexM/S. SHYAMA CHARAN AGARWALA AND SONS versus UNION OF INDIA
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A MIS. SHYAMA CHARAN AGARWALA AND SONS 'v. UNION OF INDIA JULY 15, 2002 B [D.P. MOHAPATRA AND P. VENKATARAMA REDDI, JJ.] ArbitNtitJn Act, 1940-Section 39-Arbitration award-:-Scope of interfere»~ by Court-Parties entering into contract for construction work- C Disputes referred to arbitrator-Arbitrator accepting the claim and passing t~ t:iWord-Award made rule of the court-High Court partly allowing claims- Justification of. Appellant-contractors and respondents entered into contract for tertain construction work. Before the work was completed disputes arose D between the parties. The disputes were referred for arbitration. Appellant- contractors claimed reimbursement of additional cost on account Of the procurement of stone aggregate from crushers of outside sources in lieu of local sources; excavation encountering rock other than soft/disintegrated rock/laterite rock and reimbursement of additional costs for working in restricted area. Arbitrator accepted the claims and passed an award. Civil E Judge made award Rule of the Court. Aggrieved, respondent filed appeals under Section 39 of the Arbitration Act, 1940. High Court partly allowed the appeals. Hence the present appeals. F Appellants-contractors contended that High Court exceeded the limits of the jurisdiction vested under Section 39 of the Act in deciding the appeals filed by respondent and in setting aside the award of the arbitrator in respect of claim nos. 2 and 3. It further contended that even assuming that the High Court found that the arbitrator had mis- interpreted the relevant clauses of the agreement, it was not open to it to interfere with the award since there was no error of law apparent on the · G face of the award and the matter relating to interpretation of the conditions in the agreement was within the jurisdiction of the arbitrator. H Respondent contended that the award of the arbitrator relating to part of claim nos. 1 and claim nos. 2 and 3, was contrary to the specific conditions provided in the agreement, and, therefore, was patently 148 ( , SHY AMA CHARAN AGAR WALA v. U.0.1. 149 erroneous and uncalled for .. It w~~ also contended that the arbitrator being A a creature of the agreemeut cuuld not Ignore the relevant stipulatim1s in the contract and travel beyond the terms of the contract. Disposing of the appeals, the Court HELD: 1.1, High Court did not exceed its jurisdiction in interfering B with the award nor failed to exercise the jurisdiction vested in it to set aside the award. The approach of the High Court cannot be said to be contrary to the well settled prlnclples governing the scope of interference with the award of the arbitrator under the old Act. Regarding the question whether the contract contemplates the use of stone aggregate and stone C metal from the local sources only, the source of supply being silent in the relevant clause, the arbitrator can be said to have taken a reasonably possible view and, therefore, High Court has rightly declined to set aside the award in so far as the quantity of stone aggregate/stone metal brought to site up to the date of filing of claim is concerned. (172-D, E; 173-F, G] 1.2. The award in so far as the future period is concerned, that is subsequent to the date of filing of claim statement, High Court set aside D the award since such a claim did not form part of terms of reference, and that the future claim In respect of stone aggregate would be subject to various factors including market conditions and whether the shortage E continued. It is clear from the arbitration clause that all disputes between the parties to the contract (other than excepted matters) can be referred to arbitration. The eon tractor did make a claim in respect of future period also. The document appointing the arbitrator would show that the arbitrator was required to decide the disputes arising between the parties. It is not possible to hold that claim No.1 in so far as it relates to future F period during which the contract work continued is beyond the scope of reference or outside the ambit of arbitration clause. The aim of arbitration is to settle all the disputes between the parties and to avoid further litigation. There is no legal justification in restricting the scope of arbitration in the manner in which the High Court did. The observations G of High Court that conditions may not be the same for the future and, therefore, the arbitrator was
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