THE STATE OF J & K AND ANR. versus DEV DUTT PANDIT

Citation: [1999] SUPP. 2 S.C.R. 1 · Decided: 27-08-1999 · Supreme Court of India · Bench: D.P. WADHWA · Disposal: Case Partly allowed

Judgment (excerpt)

. ...., 
.. 
THE STATE OF J & KAND ANR. 
A 
v. 
DEV DUTT PANDIT 
AUGUST 27, 1999 
[D.P. WADHWA AND M.B. SHAH. JJ.] 
B 
Arbitration Act, I 940 : 
Sections 30 and 33-Measurable item rate contract-Final Bill based 
on measurements of work by local Commissioner-No objection to such C 
measurements-Claim based on final bill allowed by the arbitrator-Whether 
award against the terms of the contract-Held, under the facts and 
circumstances, claim based on final bill not outside the terms of the contract. 
Arbitration-Object of-Held, it is an important Alternative Disputes D 
Redressal process which should be encouraged-Situations which bring bad 
name to the arbitration process should be avoided. 
Interest Act, 1978-Sections 2(b) and 5-Arbitration Award-Interest 
at the rate of I 0% awarded-Challenged-Commercial transaction-Held, 
under the facts and circumstances, interest at the higher rate than 6% can E 
be awarded-Code of Civil Procedure, 1908-Section 34. 
Words and Phrases- 'Idle labour'-Meaning of 
Appellant-State accepted tender and allotted work of Rs. 12,23,500 to 
respondent-contractor which was to be completed within a stipulated time. F 
When contractor failed to complete the work within the stipulated time, 
contract was terminated by the State and by that time the contractor had 
executed less then 50% of the work and had been paid a sum of Rs. 
5, 71,900. The contractor filed petition under Section 20 of the Arbitration 
Act claiming a sum of Rs. 39,47,000 which was allowed and the dispute was G 
referred to an arbitrator. In the proceedings under Section 20 the court 
appointed a Local CommissiOner, to take meas11rements of the work done at 
the site by the contractor and on the basis of the report of the Local 
Commissioner, the contractor prepared a final bill for Rs. 14,32,436.62. 
The contractor filed a claim of Rs. 63,61,000 before the arbitrator which 
H 
2 
SUPREME COURT REPORTS [1999) SUPP. 2 S.C.R. 
A included cla~ms on account of final bill, idle labour, damage due to mansoon, 
deviation or alteration in work, interest, etc. The arbitrator gave a non-
speaking award for a sum of Rs. 20,08,000 in favour of the contractor with 
interest at the rate of 10% per annum from the date of application for 
appointment of the arbitrator upto the date of payment. 
B 
State filed objections to the award under Sections 30 and 33 of the 
Arbitration Act and alleged misconduct by the arbitrator on the grounds that 
the award was against the terms of the contract and that the arbitrator had 
travelled beyond the terms of reference in passing the impugned award and 
contended that as per the order of reference, new claims based on 
C measurements recorded by the Local Commissioner and not mentioned in 
the summary of claims filed with the Section 20 petition could not be advanced. 
Single Judge of the High Court dismissed the objections but reduced the 
rate of interest to 6% per annum from the date of award till payment. 
Aggrieved by the order of the Single Judge, the contractor and the State both 
filed appeals. Divi~ion Bench partly allowed the appeal of the State by deleting 
D the two claims under items 13 and 14 which amounted to Rs. 8,08,250 but 
dismissed the appeal of the contractor against reducti~n in the rate of 
interest. Against the order of the Division Bench, the contractor and the 
State have both appealed to this Court. 
E 
The State reiterated the contentions advanced in the High Court. The 
F 
contractor contended that it is a non-speaking award and court cannot go 
info the mental process of the. arbitrator in making the award on various 
claims; and that "idle employees" as mentioned in clause 69 of the contract 
is not the same thing as "'idle labour" and it would only mean regular 
employees on the roll of the contractor like engineers etc. 
Partly allowing the appeals, the Court 
HELD : 1. Court has certain limitations while examining a non-speaking 
award but there is no complete bar in examining if the award is in terms of 
G the reference or the terms of the contract. [13-D) 
2. Under the terms of the contract, the contractor could not claim any 
loss done to him on account of early onset of monsoon or otherwise; any 
claim towards idle labour; and claim for any work done on account of 
deviation or alteration without the previous permission in writing of the 
H Engineer. When there is no writing for any alteration or deviation the claim 
... 
STATEv.D.D. PANDIT 
3 
could not have been a

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