TARAPORE & COMPANY versus COCHIN SHIPYARD LTD. COCHIN & ANR.

Citation: [1984] 3 S.C.R. 118 · Decided: 06-03-1984 · Supreme Court of India · Bench: D.A. DESAI · Disposal: Appeal(s) allowed

Cited by 3 judgment(s) · cites 3 · see the full citation network in Lexace

Judgment (excerpt)

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TARAPORE.& COMPANY 
·. 
. v, 
COCHIN SHIPYARD LTD. COCHIN & ANR. 
March 6, 1984 
. [D.A. DBSAI AND 0. CHINNAPPA REDUY, JJ.J 
Arbitration Act 1940 (Act X of 1940) section 16(/)(c), 30 and 33. 
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Arbitration-Works 
conlract~Construction of BNilding Dock and Repair 
Dock-Reference _of specific question 'of law to arbitrator-Arbitrator framing 
"issue-Parties agreeing to· issue being decided-=-Award 1f could be set aside on 
ground of error. of law on. face of award. 
Interpretation:. 
Agreement-Works contracr ·of large magnitude-Over-Simplification of 
clauses impermissib/e.-Agreement predicated upon and agreed fact silllation-
Situation ceasing to exist-Agreement to that extent rendered irrelevant and 
otiose. 
Words & PhraseJ: 
.'Without prejudice'-Meaning of-' claim arising out of contract'-'Relating 
to the contract'-Meaning of___.;.C/auie 40 General Conditions of Contract. 
The appelJant and the resi;>ondents entered into a contract for the cons-
truction of Building 1)ock; ·CJ a use 40 _of the General Conditions of Contract 
entered into between -the parties, provided that "all questions and dispute\ 
relating to the meaning of the Specifications Estimates Instructions, Designs, 
Drawing-----~nd the quality of the workmenship or materials used in tlte 
work or its to any Other questions, claim, right, matter or thing whatsoever in 
any way <irising out_ of or relating to the" contract or otherwise concerning the 
execution whether arising during the progress of the work or ofter completion-
---shall ·be-referred to the Sole Arbitrator etc~" During the. implefilentation 
of the works contract, disputes arose between the parti~s-in respect of a ~laim 
for compensation on account of the increase in the cost of imported pile-d~iving 
equipment and teclmic31 know-how fees. Correspondence was exchanged 'bet· 
ween the Appellant and Respondent No. 1 and the dispute was referred to the 
Sole Arbitrator. The polnt referred were: (1) Whether the c1airn of compen· 
sation for increase in the cqst of im-portcd pile driving equipinent and technical 
know-bow fees would fall within the purview of the first para of clause 40 of the 
General .Conditions of COntract ; and (2), if it does, the quantum of con1pen-
sati~n. if aQy~ to which the appeUallt would be ·entitled to. The arbitrator 
entered upon the reference and after· hearing the parties. gave bis award. The 
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TARAPORE CO. JI. COCHIN SHIPYARD 
119 
arbitrator hel,d that the appellant was entitled to compensation for the increase 
in the cost of in1ported pile drawing equipment and technical know-how fees by 
a sum of Rs. 99 lakhs which amount shall be payable with interest@ 9'J/2% 
The award was typed orl stamp paper of the value of Rs. 150/-. The arbitratC!r 
forwarded the award to both the parties . 
. The appellant moved 3. petition under' sections 14 and 17 of the Arbitration 
Act, in the Court.Of the Sub.orCinate Judge for filing the award and for making 
it a rule of the Court, while the respondent moved a petition ,under sections 30 
and 33 for setting aside the award contending that: (-1) the aw"ard was insuffi-
ciently stamped, and (2) the arbjtrator had exceeded his jurisdiction by miscon .. 
struing clause 40. The s'ubordinate Judge negatived both the coil.tentions. Jt. 
was held that the respondent having submitted the question ,..,hether the dispute 
raised by the appellant was covered by the arbitration clituse ; could not con-
trovert the jurisdiction of the Arbitrator to decide the dispute ; and the aw~rd of 
the arbitrator was modified in the matter of interest frOm 9'1 /2 per "cent as awar-
ded by the ar'Qitrator to 6 per cent, and the award was made a fuie of the 
Court. 
The respondent preferred an appeal to the Rish Court, and a Division 
Bench, agreed· with the Subordinate Judge on the question of insufficiency of 
stamp. It however held that the question ·whether th~ dispute was arbitrable or 
not could not be finally decided ~Y the arbitrator because it was a matter relating 
to-his jurisdiction, and that the arbitrator cannot by an erroneous interpretation 
or construction of the ~clau:e confer jurisdiction on himself and that the court 
can go into the qµestion whether the matter in dispute between the parties was 
covered by the arbitration clause_. It finally held tha,t even though the arbitration 
clause was very wide, the dispute as to compensation for increase in the cost of 
impo_rted pile d

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