UNION OF INDIA versus M/S. VARINDERA CONSTRUCTIONS LTD. ETC.

Citation: [2018] 5 S.C.R. 587 · Decided: 19-04-2018 · Supreme Court of India · Bench: R.K. AGRAWAL · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A
B
C
D
E
F
G
H
587
    UNION OF INDIA
   v.
M/S. VARINDERA CONSTRUCTIONS LTD. ETC.
(Civil Appeal Nos. 3994-3995 of 2018)
APRIL 19, 2018
[R. K. AGRAWAL  AND ASHOK BHUSHAN, JJ.]
Contract – Clause therein, putting bar on reimbursement of
certain payments on account of escalation – Interpretation of –
Contract between appellant and respondent-Contractor– During
the subsistence of contract, notification issued by which minimum
wages of the labour was increased– Along with the final bill, the
respondent also claimed reimbursement of wages in view of such
increase in wages of labour – Claim of additional amount rejected
by appellant– Dispute referred to arbitration – Award passed by
arbitrator in favour of the respondent – Challenge by appellant,
rejected by High Court – On appeal, held: Parties are free to decide
their own terms and conditions in case of a contract and the same
are to be construed by the courts after having regard to the intention
of the parties – In the instant case, in view of Cl.19 no reimbursement
regarding any escalation whatsoever was to be made to the
contractor if any such escalation took place during the subsistence
of the contract – The word “whatsoever” as used in Cl.19 suggests
that any escalation taking place even due to the action of the
government was also not to be reimbursed – Further, on reading of
Cl.6.3 which also deals with the issue in question, it is evident that
no escalation was to be reimbursed – Hence, in the presence of
such clauses, which respondent voluntarily agreed before accepting
the contract, any departure cannot be allowed – Respondent cannot
claim reimbursement of excess of minimum wages on account of
hike due to the Notification as it would be against Cl.19 r/w. Cl.6.3–
Arbitration and Conciliation Act, 1996 – ss.5, 34.
Arbitration – Proceedings under – Object of – Discussed –
Arbitration and Conciliation Act, 1996.
   [2018] 5 S.C.R. 587
    587
A
B
C
D
E
F
G
H
588
SUPREME COURT REPORTS
[2018] 5 S.C.R.
Allowing the appeals, the Court
HELD: 1.1 The primary object of the arbitration is to reach
a final disposition in a speedy, effective, inexpensive and
expeditious manner. In order to regulate the law regarding
arbitration, legislature came up with legislation which is known
as Arbitration and Conciliation Act, 1996. In order to make
arbitration process more effective, legislature restricted the role
of courts in case where matter is subject to the arbitration. Section
5 of the 1996 Act specifically restricted the interference of the
courts to some extent. In other words, it is only in exceptional
circumstances, as provided by this Act, the court is entitled to
intervene in the dispute which is subject matter of arbitration.
Such intervention may be before, at or after the arbitration
proceeding, as the case may be. In short, court shall not intervene
with the subject matter of arbitration unless injustice is caused
to either of the parties. [Para 8] [592-A-C]
1.2  It is well-settled cannon of law that parties are free to
decide their own terms and conditions in case of a contract. In
the instant case, Clause 19 of the special conditions deal with
issue of bar on reimbursement of certain payments on account of
escalation. On a plain reading of said clause, prima facie, it appears
that the appellant made it clear that the contractor shall quote
their rate after having regard to this clause that no reimbursement
regarding any escalation whatsoever be made to the contractor if
any such escalation takes place during the subsistence of the
contract which the respondent with open eyes had agreed. The
word “whatsoever” as used in Clause 19 suggests that even any
escalation takes place due to the action of the government would
also not be reimbursed. [Para 9] [592-D, F-G]
1.3 Further, Clause 6.3 of special conditions, particularly,
deals with the present issue. On a plain reading of Clause 6.3
read with Clause 19, it is evident that it was particularly made
clear that no escalation would be reimbursed even in the case of
a regulation. Hence, in the presence of such clauses, which
respondent voluntarily agreed before accepting the contract, any
departure cannot be allowed. In other words, now the respondent
cannot claim reimbursement of excess of minimum wages on
account of hike due to the Notification of the Government of
A
B
C
D
E
F
G
H
589
Haryana. If any departure would be allowed from the terms and
conditions of the contract, then it would destroy the basic purpose
of the 

Excerpt shown. Read the full judgment & AI analysis in Lexace.