LexRAJASTHAN STATE MINES AND MINERALS LTD. versus EASTERN ENGINEERING ENTERPRISES AND ANR.
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A RAJASTHAN STATE MINES AND MINERALS LTD. v. EASTERN ENGINEERING ENTERPRISES AND ANR. SEPTEMBER 20, 1999 B [D.P. WADHWA AND M.B. SHAH, JJ.] Arbitration Act, 1940: Ss. 30 and 33. Jurisdiction of Arbitrator-Determination of-Works contract- C Agreement clauses stipulating fzxed payment-Claim for additional payments and compensation-Dispute-Arbitration-Arbitrator appointed solely on the basis of agreement between the parties-Arbitrator allowing the claim in a non-speaking award-Validity of-Held, arbitrator has travelled beyond his jurisdiction by passing an award against the stipulations and prohibitions D contained in the contract-Arbitrator cannot act arbitrarily, irrationally, capriciously or independently of the contract-Deliberate departure or conscious disregard of the contract tantamount to malafide action-Award quashed and set aside. Arbitration~Non-speaking order-Inte1ference by courts-Scope and E extent of-Held, courts cannot speculate or probe the mental process by which arbitrator has reached his conclusion. Award can be set aside if arbitrator acts beyond his jurisdiction. F Arbitration-Award-lnte1ference by courts-Arbitrator committing mere error of fact or la~Held, courts cannot interfere. Arbitration-Award-Arbitrator exc;eding his jurisdiction- Determination of-Held, in order to find out whether arbitrator exceeded his jurisdiction, refere_nce to terms of award necessary .. Appellant-company entered into an agreement with respondent No. 1 G contractor on turn-key basis for carrying out certain work. The agreement clauses 17 and 18, clearly and unambiguously stipulated that the contractor shall be paid fixed rates and shall not be entitled to claim any extra payment or Increase in cost. However, respondent No. 1 contractor claimed additional , payments and compensation on account of escalation of cost of work, which H was refuted by the appellant. Thus, a dispute arose between the parties which 710 .. __ - RAJASTHAN STATE MINES AND MINERALS LTD. v. EASTERN ENG. ENTERPRISES 711 was referred to the arbitrator for adjudication. The arbitrator by a non- A speaking award allowed the claims of the contractor along with interest. Appellant unsuccessfully challenged the said award before the trial court and High Court Hence the present appeal. On behalf of the appellant it was contended that the claims made by respondent No.I were not entertainable in view of clauses 17 and 18 of the B agreement and therefore the arbitrator travelled beyond his jurisdiction in awarding the compensation for the said claims. On behalf of respondent No. 1 contractor it was submitted that arbitration clause was of widest amplitude and it provides that "all disputes C and differences arising out of or in any way touching or concerning the contract whatsoever shall be referred to the sole arbitration". Hence the award passed by the arbitrator cannot be held to be without jurisdiction or it cannot be held that arbitrator has travelled beyond jurisdiction; award was a non-speaking one and therefore, also .the Court cannot go behind the said award for finding out the mental process of the arbitrator for awarding the D said sum; jurisdictional question was not raised properly before the arbitrator or before the District Court and the appellant allowed the arbitrator to proceed with the proceeding without raising its objection of jurisdiction or competence. Allowing the appeal, the Court. HELD: 1.1. Arbitrator has travelled beyond his jurisdiction by passing an award against the stipulations and prohibitions contained in the contract between the parties. Hence the award passed by the arbitrator is quashed and set aside. (740-G; 741-A] E F 1.2. Arbitrator is a creature of the contract between the parties and hence if he ignores the specific terms of the contract, it would amount to jurisdictional error. In the instant case, the appointment of arbitrator was solely on the basis of the agreement entered into between the parties. It was nowhere indicated that the arbitrator was empowered to adjudicate any other G claims beyond the agreement between the parties. Even the arbitrator in his interim award has specifically stated that he was appointed to adjudicate the disputes between the parties arising out of the agreement. The award made by the arbitrator disregarding the terms of the reference or the arbitration agreement or the terms of the contract would be a jurisdictio
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