TAMIL NADU ELECTRICITY BOARD versus M/S. BRIDGE TUNNEL CONSTRUCTIONS AND ORS.

Citation: [1997] 2 S.C.R. 132 · Decided: 18-02-1997 · Supreme Court of India · Bench: K. RAMASWAMY, S. SAGHIR AHMAD · Disposal: Appeal(s) allowed
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Judgment (excerpt)

A 
TAMIL NADU ELECTRICITY BOARD 
v. 
MIS. BRIDGE TUNNEL CONSTRUCTIONS AND ORS. 
FEBRUARY 18, 1997 
B 
[K. RAMASWAMY ANDS. SAGHIR AHMAD, JJ.) 
Arbitratio11 Act, 1940/A1bitratio11 a11d Co11ciliatio11 Act, 1996. 
S. 33/s. 31(3)-Arbitrability of claims-Arbitrator asked by this Court 
C to decide arbitrability of claims-171e Umpire without goi11g i11to the details, 
awarded a co11solidated amount by a 11011- speaki11g award--Held, the Ar-
bitrator, having bee11 i11vested with the jurisdictio11 to decide the arbitrability 
of certain claims, has committed error of jurisdiction i11 not considering the 
arbitrability of the claims and passed a 11on-speaki11g ordel"-lt cannot be 
ascertained as to what extent he has awarded the claims withi11 the co11tract 
D ·or the claims outside the contract-!11 the circumstances the award cannot be 
accepted-A11 illegal award cwmot be upheld to be valid or withi11 jurisdic-
tio'n-The award of the Arbitrator is set aside. 
Raipur Development Authority v. Chokhamal Contractors, (1989) 2 
E sec 121, held inapplicable. 
Tarapore and Co v. Cochin Shipyard Ltd. Cochi11, [1984) 2 SCC 680; 
Managing Director, J & K Handicraft v. Good Luck Carpets, (1990) 4 SCC 
740; U.P. Rajkiya Ninna11 Nigam Ltd. v. llldure Pvt. Ltd., (1996) 2 SCC 667; 
U11ion of India v. G.S. Atwal & Co. (Asa11sole), [1996) 3 SCC 568; Champsey 
F Bhara & Co. v. Jivraj Ba/loo Spin11i11g & Weavi11g Co. Ltd., LR (1922) 50 IA 
324 =AIR (1923) PC 66; Hi11dusta11 Co11structio11 Co. Ltd. v. State of J & K, 
(1992) 4 SCC 217; M/s. Sudarsan Trading Co. v. State of Kera/a, [1989) 2 
SCC 38; Gujarat Water Supply and Sewerage Board v. Unique Erectors, 
[1989] 1 SCC 532 and State of A.P. & Ors. v. R. V. Rayanim & Ors., (1990) 
G 1 sec 433, referred to. 
State of A.P.V.R.V. Rayanim, (1990] 1 SCC 433, cited. 
"Russel 011 Arbitration" (Ni11etee11th Edition) by Antho11y Walton, page 
99 and "Law of Arbitration" by R.S. Bachawat (2nd (1987) Edition) referred 
,H to. 
132 
T 
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TAMIL NADU ELECTRICITY BD. v. BRIDGE TUNNEL CONSNS. 133 
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1766-67 A 
of 1997. 
From the Judgment and order dated 20.12.90 of the Madras High 
Court in 0.S.A. Nos. 109-110of1988. 
V.R. Reddy, Additioqal Solicitor General, N.C. Ramesh, V. B 
Ramasubramaniam and V. Krishnamurthy for the Appellant. 
P.S. Poti, Ms. Malini Poduval for the Respondents. 
The following Order of the Court was delivered : 
Leave granted. Substitution allowed. 
These appeals, by special leave, arise from the judgment of the 
Madras High Court, dated December 20, 1990, made in O.S.A..No. 109 
and 110 of 1988. 
The admitted facts are that the respondents had entered into an 
agreement with the appellant to construct inter-connecting tunnels for 
Suruliyar Hydroelectric Project as per specification No 1138 - Schedule-B 
c 
D 
to the agreement. The initial value of the tender to be awarded was Rs. 47 
lakhs and it was revised to Rs. 69 lakhs on January 16, 1975. In the course E 
of execution of the contract, a sum Rs. 92 lakhs was paid to the respondent. 
The contract was to be completed within a period of 24 months from the 
date of taking over of the site, i.e., January 18, 1975; thus, it was completed 
after the expiry of the term, on August 25, 1978. Resultantly, there had 
arisen a dispute as to the entitlement to further amount towards the work 
done by the respondent. 
F 
On a notice issued by respondent for appointment of an arbitrator 
in terms of clause 50 of the contract (arbitration clause), there was a delay 
on the part of the appellant in nomination of the arbitrator. When the 
respondent exercised the power, after expiry of the prescribed in the 
notice, appointing a sole arbitrator, proceedings under Section 33 of the G 
Arbitration Act, 1940 were initiated by the appellant. One of the objections 
raised by the appellant in the proceedings under Section 33 was that under 
the terms of the conti:act the claim sought to be put up in the notice given 
by the respondent was not arbitrable. The. question was gone into and the 
court recorded a finding as under : 
H 
A 
B 
c 
D 
E 
F 
134 
SUPREME COURT REPORTS 
(1997] 2 S.C.R. 
"If the petitioner had come forward to raise dispute and if it is 
outside the scope of clause 50, the first respondent itself would 
come forward with such a reservation. It is not as if all disputes 
would come within the scope of clause 50 and only those that would. 
come within the ambit of clause 50 alone can be decide
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