STATE OF U.P. versus MIS RAM NATH INTERNATIONAL CONSTRUCTION PVT. LTD.

Citation: [1995] SUPP. 5 S.C.R. 99 · Decided: 10-11-1995 · Supreme Court of India · Bench: S.C. AGRAWAL, G.B. PATTANAIK · Disposal: Appeal(s) allowed

Judgment (excerpt)

-
STATE OF U.P. 
v. 
MIS RAM NATH INTERNATIONAL CONSTRUCTION PVT. LTD. 
NOVEMBER 10, 1995 
fS.C. AGRAWAL AND G.B. PATTANAIK, JJ.) 
Arbitration Act, 1940-Section 30-Arbitration Award-Jurisdiction of 
Court to inteifere-Arbitrator cannot entertain and decide any dispute not 
ref e"ed to it. 
A 
B 
c 
The Respondent-contractor entered into an agreement with the ap-
pellant for construction of non overflow and overflow sections with bridge 
spillway and other appurtenant works. The agreement was entered into on 
26.8.1985 and work commenced from 1.9.1985. The period stipulated for 
completion of the work was 42 months. Disputes having arisen between the D 
parties in respect of the quantity of work in excess of the estimated 
quantity in the agreement, the parties invoked the arbitration clause. The 
dispute was referred to the sole arbitrator. The contractor claimed higher 
rate than what was agreed to in the agreement while the State refused to 
accede to the contractor's demand. According to the contractor, on account E 
of substantial change in designs and drawings there had been abnormal 
increase in the quantities of work compared to the estimated quantity of 
work in the original agreement and in respect of such additional quantity 
of work he was not bound to be paid at the agreed rate but at an enhanced 
rate on the basis of the analysis of rate submitted by him. The appellant 
State while denying its liability to pay at the revised rate as claimed by 
the contractor, admitted that there had been a change in the drawings and 
designs and on account of such change, the quantity of work had increased 
but the claimant was not entitled to any enhanced rate. 
The arbitrator came to the conclusion that the contractor could not 
have refused the work in accordance with the alterations and modifications 
in the drawing and design; that there had been a fundamental change in 
the drawings and designs which abnormally increased the quantum of 
work than the estimated quantum indicated in the agreement and under 
F 
G 
the agreement though the contractor could not claim any excess rate for 
work upto the excess of 10%, but beyond the same the contractor would be H 
99 
100 
SUPREME COURT REPORTS (1995) SUPP. 5 S.C.R. 
A 
entitled to claim a higher rate. In respect of the quantity of work executed 
after the date of the completion of the work indicated in the agreement, 
the arbitrator granted as per the rate claimed by the contractor and in 
respect of works executed after 30th April, 1990, the claimant would be 
paid at the same rate. 
B 
c 
D 
E 
F 
G 
The contractor filed _an application for making the award a rule of 
Court. The appellant State filed his objections challenging the legality of 
the award. The Trial Court being of the opinion that the Court has no 
jurisdiction to interfere with an award of the arbitrator since the ar-
. bitrator had decided all the issues properly with detailed analysis as well 
as after perusing all the necessary documents, made the award a rule of 
the Court. The Court held that the arbitrator was fully within his powers 
to accept the analysis of rate submitted ·by the contractor which was in fact 
not disputed by the State and therefore there was no error in the award 
which could be interferred with by the Court and the objection filed by the 
State could not be entertained and perused as the same was filed beyond 
the period of 30 days. The award having been madt: a rule of Court and 
the objection of the State having been rejected, the State preferred an 
appeal u/s 39 of the Arbitration Act. The High Court set aside the con-
clusion of the Trial Judge with regard to the entertainability of the objec-
tion filed by the State and held that taking into account the magnitude of 
the claim of Rs. 1 crore and that the objection could not be filed on 
23.3.1991 on account of Lawyers' strike and 24.3.1991 being a Sunday, the 
objection filed on 25.3.1991 had to be considered on condoning the delay, 
in the interest of justice. On merits the High Court refused to interfere 
with the decision of the Trial Judge on the ground that the arbitrator had 
not committed any error in allowing the claim of the contractor as per the 
analysis of rates given by it in respect of the extra quantity of work and it 
was not permissible for the Court within the parameter for exercise of its 
jurisdiction to interfere with the award. Appeal having been dismissed, the 
State had filed this appeal against 

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