TRUSTEES OF THE PORT OF MADRAS versus ENGINEERING CONSTRUCTIONS CORPORATION LIMITED

Citation: [1995] SUPP. 2 S.C.R. 672 · Decided: 14-08-1995 · Supreme Court of India · Bench: S.C. AGRAWAL · Disposal: Appeal(s) allowed

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Judgment (excerpt)

A 
TRUSTEES OF THE PORT OF MADRAS 
v. 
ENGINEERING CONSTRUCTIONS CORPORATION LIMITED 
AUGUST 14, 1995 
B 
[S.C. AGRAWAL AND B.P. JEEVAN REDDY, JJ.] 
Arbitration Act, 194(}-S ections 16( 1) C, 30( C rReasoned award-
Error apparent on the face of the award-Held, means "e1mr of law" and not 
"error of fact''-Error must have appeared from the award-Or from document 
C incorporated or appended to it.· 
D 
E 
F 
Contract Act, 1872-Section 46-Explanation-Question of reasonable 
time-Wliere no period is presC1ibed for executing a contract-Held, is a 
question off act and not a question of law. 
Practice and Procedure-Letters Patent Appeal-Interference in 
Award-On question of fact-Not acceptable. 
The Board of Trustees of Madras Port Trust invited tenders for 
certain work at the port in 1957, for which the Respondent submitted its 
tender specifying the entitlment to certain deviations with regard the 
period for completion of work and for importing plant and machinary for 
executing the work compensation on account of delay and also that requi-
site foreign exchange was to be made available by the Board. The Board 
refused to agree to any change iq the draft agreement and an agreemet was 
entered into by the respondent without incorporating the modifications 
suggested by the Respondent. Since there were delays in importing the 
requisite machinery the contract was completed in the extended period 
asked to respondent and granted by the board. After the completion of 
contract the Respondent raised a dispute claiming additional amount on 
account of delay in supplying the machinery and other heads. The respon-
G dent invoking the arbitration clause in the agreement, nominated a retired 
Judge as the arbitrator and the Board nominated another retired judge as 
their nominee. Since the arbitrators could not agree among themselves, 
the;y designated an Umpire. 
The Umpire inter alia found that there was no undertaking by the 
H 
Board to supply to the respondent the imported machinery within a period 
672 
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TRUSTEES PORT OF MADRAS v. ENGG. CONST. CORPN. LTD. 
673 
of six months from the acceptance of the tender, that the Board was not A 
responsible for the dealy and that the contractor was not entitled to 
payment of any compensation. The umpire further held that in case the 
respondent was found entitled to any compensation, a sum of Rs. 5 lakhs 
would represent a fair compensation for the delay in the supply of im-
ported machinery and another one lakh for delay on other grounds. 
B 
The appellant filed a petition for making the award as rule of court 
and the respondent filed a petition for setting aside the award on two 
grounds viz., misconduct and error apparent on the face of the award. The 
Single Judge of Madras High Court made the ·award a rule of court, over 
ruling the objections raised by the respondent. On Appeal the Division C 
Bench inter alia held that the claim of the respondent did not arise from 
the contract but only from other correspondence, that Section 46 of the 
Contract Act, 1872, would govern the situation since there was no time 
stipulated in the contract, that the undertaking given by the Board was an 
implied undertaking and the Board was under a bounden duty to have 
supplied the machinery within a reasonable time, and that the failure of D 
the Board to supply the machinery was a breach of implied promise. The 
Division Bench set aside the judgment of the Single Judge and remanded 
the matter to the Umpire for a fresh consideration. 
In the appeals against the judgment of the Divisin Bench of the High 
Court, it was contended by the respondent that the dela;r. on the part of 
the Board in importing the machinery has caused loss for which the Board 
was bound to compensate. The Appellants denied that they undertook an 
obligation to import machinery within a particular period, that the period 
of six months was only a rough estimate or an expectation, that the extra 
payment of nine percent of the contract price agreed upon by the Board 
and the contractor was not only intended to cover delays caused due to 
suspension of work, failure to supply in time primary material and services 
etc. but also the delays, if any, caused in supplying the imported machinery 
and spares. 
Allowing the Appeals, this Court 
HELD : 1. The concept of error aparent on the face of the award is 
an en"Or of law apparent on the face of the award and not an error of fact. 
The error of law can be discovered from the

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