STATE OE ORISSA & ANOTHER versus KALINGA CONSTRUCTION CO. (P) LTD

Citation: [1971] 2 S.C.R. 184 · Decided: 11-09-1970 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Appeal(s) allowed

Judgment (excerpt)

184 
STATE OE ORIS.SA & ANOIBER 
v. 
., 
KALINGA CONSTRUCTION to: (P) LTD • 
. September 11, 1970 
[J. C. SHAH, K. S. H1m(>E AND A. N. GROVER, JJ.] 
. 
I 
' 
~rbitratio~A. ward b,v arbitrator after considering, and believing ce,.-· 
taf.n evidence-If ppen to coutt to sit in appeal over such au1ard-Arhi-
tration Act. 1940. Ss. 30 and. 33. · 
· 
A 
B 
lb& responde':'t Company's tender for the movement and deprisitiag 
c 
of e;uth on the nght d:[ke o,f the Hirakud Dam was provisionally accept-
ed by the Gove'rnment m December 1951. The work started in February 
1952 and a formal contract was ..,xecuted in March 1953. 
The 
eartb 
work was done by maIJual labour foi a-year in the beginning and there-
after it was done to a large extent by maChinet:Y. 
The vertical move-
ment was styled as "lift" and the horizontal movem'ent as 
11lead". 
When 
the company started employing the heavy machine'ry from the beginning 
of 1953. onwards a number of ,ramps had to be con>tructcd to· enable 
n· 
the machinery· to go up from the borrow pits to the dyke.• After the 
work was completed, the respondent Company \Vas pai<l a certain amount 
on the basis of a 'Scale set out in the contlract; but it claimed an addi.:. 
tional subst;lntial sum ir.. respect of lifts and extra lf!ads and certain other 
items together- with the interest on ·the amounts due. 
It was provided 
in the contract that if the average J.;ad mentioned had to be exceded, 
the orders of the Chief Engineer in writing had to be obtained by the 
:contractor. 
The respopdcnt Company cloimed that it had ·~dght the 
E 
orders o.f the Chief Engineer in writing for the extra leads rcsu1iing from 
the' conYersion of lifts into lea<ls and that although the Chief Engineer 
did not himself make any such order, the 'Superintending ~ngineer with 
whom the Company had been dealing Jid sign an order for the Chief 
Engineer. 
The contract provided for arbitration of disputes and differ~ 
encos. 
After the matter was t.:.iken up fo:r arbitration, issues were framed 
by the arbitrator· and considerable oral and documentary evidence was 
F 
led by bath the parties before him. 
On the basis of this evidence the 
arbitrator found that the tender must be taken to have been made arid 
accepted on the basis that the whole work was to be done by mapual 
lahour; he believed the evidence of. the Chief Engineer that he passed 
no order allowing any extra leads and eventually held that no further 
amount \Vas payable by the Government to the Company. 
The respon· 
dent thereafter filed n plaint under Sections 30 and 33 of th1.: Indian 
Arbitration Act, 1940, challenging the award on variou·s grounds· and 
G 
praying for it to be set aside. 
The subordinate Judge \Vho ~eard the 
case set aside the tnvard ih March 1962. In an appeal to the High Court 
thC t\\'o Judges \Yho constituted the Division Bench gave dissenting: judg-
ments, i.e. one of them holding that the a\vnrd could, not h~ suhstained 
and the other one being of the vic\v that the a\vard \V:t!' not liable to be 
set asic!c. 
The appeal \Vas the'rl heard by a third judge \Vho held that 
the award was linhlc to be set aside on f\\'O of the ... issues: 
as hi.! held 
these issues to be ..severable. he proceeded to set aside the a\\'ard in res-
H 
peel of them. 
On appl:al to this Court. 
•
r
I 
I 
~
A 
B 
c 
D 
ORlSSA i·. KALINGA CONSTRUCTION ((Trover, J.) 
185 
HELD : The appeal must be alluwed and the order of the Htgh 
Court setting aside the award in part must be reversed. The proceedings 
ir.stituted by the respondent under Sections 30 and 33 of the Arbitration 
Act must be dismissed. 
A bare perusal of the judgment of the thiid learned Judge of the High 
Court clearly showed that he decided the matter as if he was entertaining 
an appeal against the award. 
He re-examined and' reappraised 
the evi-
dence which.had been considered and believed by the arbitrator. 
It· was 
not open to the High Court to sit in appeal on the arbitrator's award. 
[189 CJ 
Once it was found that under the terms of the contract the Order of 
the Chief Engineer in writing had to. be obtained before the work involv-
ing additional leads was executed, in the absence of any such written 
order it was not open to the court to hold that the appellant was liable 
for payment of extra leads by applying some principle or rule analogous 
to estoppel. Although it was true that the company had been writing to 
the Engineering Department in the matter and that the latter 

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