S.J Vazifdar, J.:— This is a petition under section 34 of the Arbitration and Conciliation Act, 1996 to set aside an award dated 5-5-2005 passed by a learned sole arbitrator.

2. The petitioner had been issued a contract by the Maharashtra State Road Development Corporation Ltd. (MSRDC) inter-alia for constructing a Rail Over Bridge (ROB). The petitioner in turn floated a tender for the construction of foundations sub-structure and approach road for the ROB. The respondent was awarded the contract by a letter of acceptance dated 19-1-1999. A contract dated 29-1-1999 was executed by the parties which incorporated several other documents. The work under the contract was of the value of about Rs. 5,00,00,000/-. The stipulated date for completion was 18-11-1999. The work was completed after considerable delay on 27-1-2002.

3. Disputes and differences arose between the parties. One of the main questions was as to which of the parties was responsible for the delay. The respondent by a letter dated 2-8-2002 made a claim in the sum of Rs. 6,15,87,131 with interest and called upon the petitioner to treat the same as a notice under condition 67.1 of the conditions of contract and requested the petitioner for an amicable settlement under condition 67.2 of the General Conditions of Contract. The petitioner by its letter dated 9-9-2002 rejected the claims. In the circumstances, the respondent invoked Clause 29 of the Special Conditions of Contract. Disputes and differences having arisen between the parties, the respondent by a letter dated 4-10-2002 invoked the arbitration clause. In accordance with the provisions of the contract, the petitioner's Managing Director by his letter dated 20-12-2002 appointed the learned arbitrator.

4. The respondent filed a statement of claim raising 32 claims. The petitioner filed its statement of defence and raised a counter-claim.

5. By the said award, the learned arbitrator allowed in part fifteen claims and the claim for interest thereon to a limited extent and rejected the remaining claims and the petitioner's counter-claim.

6. I have upheld the award in respect of ten claims, the claim for interest and insofar as it rejects the petitioners counter-claim. I have set aside the award in respect of five claims. I would however have exercised powers under section 34 in respect of the award in respect of three of these five claims. But for the reason that the award is liable to be set aside as a whole in view of the judgments of this Court I will refer to at the end.

7. Mrs. Srikrishna, the learned counsel appearing on behalf of the petitioner challenged the entire award on various grounds. The challenge to two aspects of the award have an effect on the award in respect of several though not all the claims awarded.

8. The first pertains to the finding inter-alia in paragraph 4 of the award to the effect that the delay in completion of the work was due to reasons attributable to the petitioner and not the respondent.

9. The next is that even if this finding is sustained, the award in respect of some of the claims viz. Claim Nos. 7.2, 7.3, 10, 11 and 12 must be set aside as under the contract the reasons or grounds on which the finding is based do not permit the respondent to any claim or compensation. In this regard, she referred to Clauses 23.1.1 and 23.3.1 of the Special Conditions of Contract which read as under:—

“23.0.0 Accommodation Works

23.1.1 For the accommodation works such as Electrical/Telephone lines, roads, canals water courses if crossing the alignment, the contractor should plan the execution of works in such a way, with the permission of the concerned authorities, that these facilities do not get disturbed during the execution. Non-shifting of these utilities or delay in getting the permission for execution, shall not entitle the contractor for any claim or compensation whatsoever. The owner shall, however assist the contractor in obtaining the permission from the owning Departments as far as possible.”

23.3.1 Land : The contractor should note that land for the execution of work shall be made available to him in full or part as and when the same is taken over by the client and handed over to the IRCON. The contractor should plan his works to commensurate with the handing over of the land. No claim compensation on account of the delay in handing over of land in parts shall be paid.”

10. If the challenge to these two aspects of the award are upheld, the award in respect of some though not all the claims would have to be set aside. It is convenient therefore to deal with them before considering the challenge to the award in respect of each claim awarded separately.

11. I will first deal with the finding that the delay caused to the work was on account of breaches on the petitioner's part. The letter of intent was issued on 19-1-1999 and the work was expected to be completed within ten months by 18-11-1999. The work however was actually completed only on 27-1-2002.

12. Twenty six meetings were held by the learned arbitrator. The arbitrator also inspected the site in the presence of both the parties. The arbitrator has after considering the voluminous record, the submissions of both sides and on the basis of the site visit, come to the conclusion that the petitioner was responsible for the delay in the completion of the work.

13(A)(i). The arbitrator held that the ROB and its approaches were to be built on the existing highway and the existing level crossing. The scheme of working as contemplated in the contract envisaged construction of diversion roads on both sides of the approaches of the ROB on both sides of the railway lines. The diversion roads were to converge and meet on the existing road before the ROB on each side of the railway lines. The traffic was expected to use the diversion roads and the existing level crossing during the period of construction. The arbitrator however held that the diversion roads could not be constructed at one go due to the existence of hindrances viz. “trees, poles, wires, availability of land on one side, etc.”. The work had to be done piecemeal for nearly 14 months after the issuance of the Letter of Intent. The diversion roads could not be completed and the work had to be done as much as possible with traffic plying on the same road or only on one side. The overhead wire had not been removed till as late as 23 months after the work order and there were other obstructions such as the existence of telephone poles. All this, it was held, prevented the unhindered execution of the work.

(ii). These breaches, it was contended by Mrs. Srikrishna, would not entitle the respondent to claim compensation in view of clause 23 of the Special Conditions of Contract.

(B)(i). It is vital however to note that the arbitrator also found other breaches on the petitioner's part the existence of which do not bar a claim for compensation under clause 23 of the Special Conditions of Contract.

(ii). The Arbitrator held that hard rock was also found at a much shallower depth than envisaged in the tender document; that the span length in the approach viaduct was reduced to 10.5 mtrs. from 20 mtrs. as provided in the tender documents which lead to a revision of drawings. The same also resulted in delay in the supply of drawings and revising the initial drawings. Though the hard rock was found at a much higher level, the founding level was kept the same as provided in the tender which entailed greater depth of boring through hard rock involving longer working period. The petitioner did not produce the report of the consultants in this regard though called upon to do so. The arbitrator also further held that there were several extra items the combined value whereof was 12.4% of the contract sum. The sanction to the rates of extra items came much later. The extra items, it was held, required extra time for the execution of the work.

14. The arbitrator concluded that in view of all these facts, the delay in completion of the work was due to reasons attributable to the petitioner and not the respondents.

15. The above findings of fact warrant no interference. The arbitrator has analysed the evidence in considerable detail. He heard the parties at length and even visited the site. There is nothing to suggest that the arbitrator did not consider the relevant evidence or that the arbitrator considered any irrelevant evidence.

16. Mrs. Srikrishna next submitted that of the above reasons, there were some which even if established as a question of fact, dis-entitled the respondent to any claim or compensation. These grounds included the hindrances on account of poles, wires, availability of land on one side and obstructions like telephone poles. Mrs. Srikrishna submitted that any claim on these grounds would be barred.

17. The submission based on clause 23 of the Special Conditions of Contract is well founded only to a certain extent but does not affect the award.

18. Clause 23.1.1 bars any claim or compensation whatsoever on the ground of the petitioner not shifting electrical/telephone lines. Whether this is so or not would not, in the facts of this case, make a difference as I will indicate later.

19. Clause 23.3.1 bars any compensation on account of delay in handing over of land in parts. It is however important to note that under Clause 23.3.1 the petitioner was to make available the land in full or in part “as and when the same is taken over by the client and handed over to the IRCON (petitioner)”. The respondent was required to plan the work commensurate to the handing over of the land. The last sentence of Clause 23.3.1 bars any claim for compensation on account of delay in handing over of land in parts. The bar however would not operate in a situation where the petitioner's client had in fact handed over the land to the petitioner but there was a delay on the part of the petitioner in handing over the same in turn to the respondent. The onus was obviously on the petitioner to establish that the land was not handed over to it by its client and it was for that reason that the petitioner in turn, did not hand over the same to the respondent. It was not even contended before me that any attempt was made to discharge this burden.

20. Mr. Thakkar however submitted that clause 42.2 of the General Conditions of Contract provides that if the contractor i.e the respondent suffers delay and/or increased costs for failure of the petitioner to give possession in accordance with the terms of sub-clause 42.1, the engineer shall after due consultation with the employer and the contractor/respondent determine the extension of time to be granted to the contractor and the amount of such costs which would be added to the contract price and would notify the contractor accordingly.

21. Clause 42.2 however cannot come to the respondent's aid. It is obviously in conflict with clauses 23.1.1 and 23.3.1 The contract itself specifies the manner in which such conflicts are to be resolved. The parent contract dated 29-1-1999 which incorporates various other documents is relevant. Clause 2 thereof states that the eleven documents listed thereunder at Serial Nos. (i) to (xi) shall be deemed to form and be read and construed as an integrated part of the agreement. Clause 3 reads as under :—

“3) The aforesaid documents shall be taken as complementary and mutually explanatory to one another, but in the case of ambiguities or discrepancies subject to the provisions of special Conditions of contract take precedence in the order set out above.”

(Emphasis supplied)

22. Clause 23 is a part of the Special Conditions of Contract which is at Serial No. (vi) of clause 2, whereas, clause 42.2 is a part of the General Conditions of Contract of IRCON (petitioner), which is at Serial No. (vii) of clause 2. Thus, Clause 23 of the Special Conditions of Contract, takes precedence over Clause 42.2 of the General Conditions of Contract.

23. This brings me back to Mrs. Srikrishna's submission that the award of Claim Nos. 7.2, 7.3, 10, 11 and 12 was based on the findings of the above breaches together; that there is nothing in the award that bifurcates the extent of these claims qua the breaches; that the claims were therefore also awarded on the basis of those breaches the existence of which did not permit any compensation in view of clause 23 of the Special Conditions of Contract. She therefore submitted that the award with respect to these claims is liable to be set aside.

24. The above observations of the arbitrator regarding the petitioner's breaches are in paragraph 4 of the award. Paragraph 4 of the award, it is important to note, is not related to any specific claim. It contains in general the findings and the decision of the arbitrator on the question as to which of the parties was responsible for the delay. I will assume that the arbitrator considered all the reasons stated in paragraph 4 to be the basis not merely for the finding regarding the petitioner being responsible for the delay in the completion of the work but that he also considered them as constituting the basis for awarding the claims.

25. While it is true that factors such as the existence of poles, wires and the non-availability of land in time were some of the factors referred to in paragraph 4, and while dealing with some of the claims, they were by no means the only factors on the basis whereof the claims were awarded in the facts of this case, that by itself, would not warrant the award being set aside.

26. Where a claim is awarded on the ground that there were several breaches but no claims are maintainable with respect to some of the breaches the award is not necessarily bad. The validity of such an award would depend on the facts of the case.

27. If the conclusion is that even if the breaches which do not permit a claim for compensation, are not considered and the other breaches would by themselves have resulted in loss, the award must be upheld.

28. For instance, the breaches which do not permit a claim for compensation may be minimal or insignificant whereas the other breaches may be significant, leading to a conclusion that they would by themselves sustain a claim for compensation even in the absence or irrespective of the breaches which do not permit a claim for compensation or damages.

29. Or where, as in the present case, the claim is awarded on account of the delay in the execution of the work caused by several breaches some of which do not permit a claim, the award of the claim would be upheld if it is found that the other breaches span the period of the delay and are significant enough by themselves to sustain a claim for compensation even in the absence or irrespective of the breaches which do not permit a claim for compensation or damages.

30. In the present case, although paragraph 4 of the award refers to certain breaches on the part of the petitioner in respect whereof a claim for compensation is not permissible, it also refers to various breaches which would entitle the respondent to claim compensation. For instance, the arbitrator has found the existence of trees at site which hindered the work. The arbitrator has also found that hard rock was found at a much higher level i.e at a shallower depth, than indicated in the plans which also form a part of the contract. Mrs. Srikrishna submitted in respect of claim No. 4.1 that a different rate cannot be awarded for the work of chiselling in the rock as it was an item covered by the BOQ. That is an altogether different aspect which I will deal with while considering the award in respect of Claim No. 4.1 What is important to note is that the same does not bar a claim for compensation or damages on that account. The arbitrator also found that the span length in the approach via duct was reduced, leading to a revision of drawings and a consequent delay in the supply of drawings and revision of initial drawings. Further, the arbitrator found that the combined value of the extra items was 12.4% of the contract sum, the sanction for which came much later and that the extra items required extra time for the execution of the work.

31. I have held earlier that the handing over of the land in parts cannot be discounted under clause 23.3.1 as the petitioner has not discharged its burden of establishing that this was due to delay on the part of its client.

32. Thus in fact only two minor items were barred from consideration under clause 23. Even assuming that the hindrance caused on account of the existence of the poles and wires as well as on account of the non-availability of the land, is to be ignored, the existence of the other breaches would by itself entitle the respondent to make a claim for damages. These breaches themselves are significant enough to sustain a claim for damages even in the absence of the other breaches and they clearly spanned the length of the period by which the contract was delayed.

Re : Petitioner's counter-claim

33. Before dealing with the claims which have been awarded, it would be convenient to deal with the challenge to the award insofar as it rejects the counter-claim made by the petitioner. The award in this respect cannot be faulted at all. Even assuming that the respondent could not found a claim on the basis of the petitioner's breaches in view of clause 23, the same would not be of any assistance to the petitioner so far as its counter-claim is concerned. If the petitioner was responsible for the breaches even in respect of such items, the petitioner obviously would not be entitled to damages from the respondent. In other words, a defence on this basis could always be maintained. The findings regarding the breaches on the petitioner's part are based essentially on facts. There is nothing in the award which even remotely suggests that the arbitrator did not consider the record or any other fact.

34. Thus, the award insofar as it rejects the petitioner's counter-claim is upheld.

35. This brings me to the challenge to the various claims awarded in favour of the respondent. The respondent has not challenged the award rejecting some of the claims.

Re : Claim No. 4.1

36. As against the respondent's claim for Rs. 27,40,000/- the arbitrator awarded a sum of Rs. 7,55,272/- for extra expenditure involved due to chiselling the rock.

37. The respondent contended that the drawing attached to the tender documents showed that hard rock at the site of work lay between 5.1 to 8.0 mtrs. below the ground level under a much softer overburden whereas actually it was met at a depth of 2 mtrs.; that despite the advice of the consultant the petitioner insisted on resting the pile foundation at the same level as was shown in the drawings. The same necessitated boring through much greater depth of hard rock than contemplated when quoting for the work.

38. The arbitrator held that the work of chiselling was included in the following item in the BOQ :—

“1.03 Making bore hole of 1200mm diameter for bored case in situ Rmt. 560 1350 Rs. 756000 RCC piles in all type of strata with all labour, materials, tools and tackles, all leads and lifts complete in all respects”.

39. The arbitrator came to the conclusion that the work of chiselling was included in the above item in the BOQ. He however went on to hold that the reference to all types of strata is to be understood in the light of information about subsoil strata given on the drawing, give or take some reasonable variation. Otherwise, he held that the contract would be vague and theoretically a contractor can be forced to drill only in hard rock for an indefinite depth and held that the respondent is entitled to extra payment for chiselling in hard rock for depths in excess of the depth contemplated in the tender + 25% variation.

40. The arbitrator has clearly re-written the contract between the parties. The item in the BOQ is clear. It required no interpretation. It required merely to be applied. Having come to the conclusion that chiselling work was included in the above item, it was not open to the arbitrator to change/vary the rate agreed to between the parties.

41. Added to this is the fact that Clause 34 of the Special Conditions of Contract makes it abundantly clear that the rates quoted in the BOQ will form the basis of payment and that the rates embraced all operations necessary for the satisfactory completion of the work to finish and include all charges and expenses. (Clause 34.2.1).

42. It is important to note that Clause 34.4.1 prescribes the mode and the method of determining payment in any item of work not included in the BOQ. The arbitrator however came to the conclusion that the work of chiselling to which the claim pertains was included in the above item in the BOQ. Having come to that conclusion, it was not open to the arbitrator to vary or fix the rate contrary to the provisions of the contract.

43. In the circumstances, the challenge to the award in respect of Claim No. 4.1 is upheld.

Re : Claim Nos. 4.5 and 4.6

44. The arbitrator dealt with these two claims together. Claim No. 4.5 was for Rs. 1,47,150/- against which the arbitrator awarded a sum of Rs. 1,45,768/-. Claim No. 4.6 was for Rs. 39,453/- which was awarded in full. Claim No. 4.5 was for payment of liner for ground level and Claim No. 4.6 was for payment from ground level.

45. The respondent's case was that the road was not diverted entirely as a result whereof the work space was restricted in the portion near the railway crossing. Consequently, excavation upto the cut-off level before starting the pile boring was not allowed in this portion and the respondent was asked to start the boring from the ground level. The respondent further contended that the petitioner had agreed to pay for the entire depth of boring. In fact, the petitioner paid for the 22 piles close to the railway track but did not pay for the remaining 18 piles.

46. The arbitrator found that the item in the BOQ provided a 4mm thick MS liner which was not operated by the petitioner and instead the work executed was of 6 mm depth liner which was an extra item. It is further held that there is no dispute about the respondent having carried out the work as contended. Nor was there any dispute about the reasons stated by the respondent for the same. This was also established during the arbitrator's site visit. The claim was quantified on the basis of the rates paid for the 22 piles. Had the respondent not started from ground level, the respondent would have carried out excavation and would have received payment for the same. However, as thing stood, the respondent received payment for neither.

47. In these circumstances, the award cannot be faulted for having allowed the claim. The award in this regard is based essentially on facts. There is nothing therein which warrants interference with the finding of the arbitrator.

48. The challenge to the award insofar as Claim Nos. 4.5 and 4.6 is therefore rejected.

Re : Claim No. 5.1

49. As against the respondent's claim of Rs. 54,59,525/-, the arbitrator awarded a sum of Rs. 21,14,143/- in respect of the claim for payment for M-35 Grade concrete.

50. Mrs. Srikrishna submitted that Item No. 2.24 of the BOQ stipulated the amount payable for providing and laying controlled 14-20 Grade cement concrete in RCC cast-in-situ base and vertical post and pre-cast hand rails. She submitted that the arbitrator furnished no reasons for his conclusions. Mrs. Srikrishna further submitted that the award in this respect was also contrary to the provisions of Item Nos. 1.09 and 2.24 of the BOQ.

51. The submission is not well founded. The arbitrator upon a consideration of the items in the BOQ, the quantities of M-35 concrete actually used in the execution of the work, the nature of the work and the rate analysis furnished by the respondent, came to the conclusion that the work of counterfort retaining wall and hand railing was not contemplated when the contract was entered into.

52. There is nothing to indicate that this finding of fact is absurd and that it could not have been arrived at. It is important to note that the fact that the work was done, is not seriously disputed. That the nature/design of the work actually earned out, was different from the one provided in the contract documents is found to be established as a question of fact.

53. In the grounds of challenge in the petition, it is however contended that the petitioner did not instruct the respondent to carry out the work with concrete of M-35 specification. This however is a question of fact. Mrs. Srikrishna submitted that there were no reasons in support of the arbitrator's decision that the petitioner had instructed the respondent to use M-35 concrete.

54. I do not agree. The arbitrator has based his decision also on the fact that the respondent did the work after forwarding the quotation for the extra cost. He has also noted in the award that the work was actually executed. In these circumstances, it is not possible to hold that there were no reasons furnished in support of the award. The fact that the work was actually executed using M-35 concrete after forwarding the quotation for the extra cost, leads to a reasonable inference that the petitioner had instructed the respondent to do the same. In any event, it would at least amount to the petitioner having consented to or acquiesced in the work being carried out with M-35 concrete.

55. In the circumstances, the challenge to the award in respect of Claim No. 5.1 is rejected.

Re : Claim No. 7.2

56. The respondent claimed an amount of Rs. 18,01,800/- on account of expenditure incurred on the maintenance of the diversion road. The arbitrator awarded a sum of Rs. 16,28,550/- in respect of this claim.

57. The respondent's contention was that the rates specified in the BOQ for the maintenance of the diversion road was only for the period of 10 months whereas the work was prolonged for a period of 26 months due to the breaches by the petitioner. It is also alleged that the specifications for the diversion road were not fit to take heavy traffic of the State Highway with the result that the maintenance became costlier as the time progressed.

58. While it is true that some of the breaches considered by the arbitrator did not entitle the respondent to claim compensation on account thereof, such breaches were not the only basis for the claim being awarded in part. I have dealt with this aspect in detail earlier. The award with respect to the period during which the work was delayed cannot be faulted.

59. In the circumstances, the challenge to the award insofar as it relates to Claim No. 7.2, is rejected.

Re : Claim No. 7.3

60. As against the respondent's claim of an amount of Rs. 10,80,000/-, the arbitrator awarded an amount of Rs. 5,80,000/- towards extra expenditure involved due to the use of a crane for the re-concreting.

61. The respondent's case was that the diversion roads could not be completed in time and the said obstructions were not removed and, as a result thereof, the respondent had to use a crane to place concrete instead of erecting scaffolding at each place; this method was not contemplated when submitting the tender. The extra expense on account of the use of cranes was claimed.

62. Mrs. Srikrishna in the first instance submitted that this claim ought to be disallowed on the ground that it was also based inter-alia on the alleged breaches for which compensation was barred under Clause 23 of the Special Conditions of Contract. I have already dealt with this submission and rejected the same.

63. Mrs. Srikrishna further submitted that the award was contrary to the terms of the agreement. She relied upon Clauses 1.6.9 and 3.6.1 of the Instructions to Tenderers and Clause 3.1 of the Special Conditions of Contract and Clause 1.1 (i) of the General Conditions of Contract. The same read as under:—

“1.6.9 The quoted rates for the work mentioned in Scope of work are all inclusive of Tenderer's own, Plant and Equipment, Material and Labour etc.

3.6.0 Tender Prices/Price Variation

3.6.1 Unless stated otherwise in the tender documents, the rates quoted shall be for the complete job inclusive of materials, labour equipment etc., and nothing more than the quoted rates shall be payable to the tenderers.

3.0.0 PLANT AND MACHINERY AND OTHER FACILITE

3.1.1 The tenderer shall make his own arrangement for all plant and machinery and other facilities, equipment, tools, spare parts, fuel consumable stores and all labour required to ensure efficient and methodical and safe execution of the works assigned. The percentages quoted and accepted shall be deemed to be inclusive of all charges for such items.

1.1(i) “Constructional Plant” means all appliances or things of whatsoever nature required in or about the execution or maintenance of the works but does not include materials or other things intended to form or forming part of the permanent works.”

64. Mrs. Srikrishha's submission is well founded. The above clauses read together, make it amply clear that there was no question of the respondent being permitted to seek a variation in the rates on account of the use of the crane. Even assuming that the petitioner was responsible for the delay in the completion of the work, by awarding the said amount, the arbitrator has varied the contractual stipulation as regards the price, which he was not entitled to do. To grant compensation on account of breaches is one thing. To vary the terms of the contract by an award is another thing altogether.

65. Under Clause 1.6.9 of the Instructions to Tenderers which formed a part of the contract, the quoted rates for the work mentioned in the scope of work are all inclusive - including the tenderer's own plant, machinery and labour.

66. In the circumstances, the challenge to the award in respect of Claim No. 7.3 is upheld.

Re : Claim No. 8.2

67. As against the claim for Rs. 73,767/- the arbitrator awarded a sum of Rs. 33,380/- for 50 mm thick full grout bituminous surface.

68. The only contention was that the basis of the rate was not furnished. There is however no challenge to the award on this ground.

69. The challenge to the award in respect of Claim No. 8.2 is therefore dismissed.

Re: Claim No. 9.1

70. The arbitrator awarded a sum of Rs. 3,36,537/- against the claim of Rs. 4,11,537/- for deduction of Rs. 15,000/- per month made by the petitioner for vehicles.

71. Under Clause 7 of the Additional Special Conditions of Contract, the respondent was required to provide and maintain one jeep in working condition with a driver for inspection of the petitioner's inspecting officials and was also required to bear expenses for its maintenance, operation and running, limited to 2500 kms. per month.

72. However, at the petitioner's instance, instead of providing the jeep, it was agreed that the respondent would be entitled to deduct a sum of Rs. 15000/- per month. The petitioner however continued to deduct the said amount even beyond the original contract period.

73. The arbitrator held that the execution of the work having extended beyond the stipulated contract period due to the breaches on the part of the petitioner, the petitioner would not be entitled to deduct the said amount beyond the original contract period.

74. I have already upheld the findings in the award on the question of breaches having been committed by the petitioner, being the cause for the work not having been completed within the stipulated time.

75. In view thereof, the petitioner would not be entitled to continue to deduct the said amount beyond the original date of completion as that would amount to the petitioner taking advantage of its own wrong. The award in this regard cannot be faulted.

76. In the circumstances, the challenge to the award in respect of Claim No. 9.1 is rejected.

Re : Claim No. 9.2

77. The arbitrator awarded a sum of Rs. 1,00,000/- towards refund of deduction made by the petitioner towards deficiency in the work.

78. The findings in this regard are purely questions of fact. The arbitrator found that the reasons furnished by the petitioner for deducting the said amounts were vague and that the petitioner had not produced any documents to establish that it had carried out the rectification work in accordance with the agreement. These are purely questions and findings of fact which warrant no interference.

79. In the circumstances, the challenge to the award in respect of Claim No. 9.2 is rejected.

Re : Claim No. 9.4

80. The arbitrator awarded a sum of Rs. 2,93,323/- being the refund of the said amount deducted by the petitioner as penalty for the delay in completion of the work.

81. For the reasons stated above viz. that it was the petitioner who was responsible for the delay in the execution of the work, the award in this respect must be upheld.

82. In the circumstances, the challenge to the award in respect of Claim No. 9.4 is rejected.

Re : Claim No. 10

83. As against a sum of Rs. 21,42,122, the arbitrator has awarded a sum of Rs. 19,30,100/- towards price adjustment in the contract price.

84. The claim was as per the formula based on price indices for work done, beyond the original completion period viz. 18-11-1999 on the basis that the delay was attributable to the petitioner. The respondent contended that under the contract the price was to remain firm during the original period of the contract but not thereafter.

85. As I have already held, the arbitrator's finding that petitioner was in breach cannot be faulted and that some of the breaches justified the award of compensation/damages despite the fact that no claim or compensation was maintainable on account of some of the breaches. Thus, the basis for granting the award cannot be faulted.

86. However, apart from stating that the parties had made detailed arguments and cited voluminous documents, the arbitrator has not referred to a single document on the basis whereof the sums awarded for adjustment for labour and material were computed. The award contains no reasons in this respect.

87. In the circumstances, the challenge to the award in respect of Claim No. 10 is upheld.

88. I would have exercised power under section 34 to enable the arbitrator to furnish reasons and thereby possibly rectify the defect. However, as I have set aside the award as a whole on the basis of the judgments of this Court, I will refer to later I refrain from exercising this power.

Re : Claim No. 11

89. As against the claim of Rs. 1,95,93,838/-, the arbitrator awarded a sum of Rs. 97,96,919/- for extra cost on account of loss of overheads for the extended period of the contract. The arbitrator held that the respondent could not adjust the overheads for the extra period of over 26 months and had to employ overheads till completion of the work.

90. The respondent had calculated the claim on the basis of 15% towards overhead expenditure contending that this was the assumed percentage while working out the cost of the tender. The arbitrator examined the respondent's audited and certified accounts which were produced before him. They showed that the average overhead expenditure of the head office was 5.23% of the turnover and that the average overhead expenditure including site expenses, was nearly 10%. The arbitrator also examined the authorities and the sample vouchers produced by the respondent, which adopted the overhead expenditure at 15% in respect of the said site itself.

91. The arbitrator however found that most of the work had been completed by 30-9-2001 leaving only minor work to be completed thereafter. This finding was based on the value of the bills during the last four months.

92. Considering the above, the arbitrator did not grant the overheads on the basis of 15% but reduced the same to 7.5%.

93. I am unable to fault the reasoning adopted by the arbitrator at the petitioner's instance. It was not even suggested before me that the petitioner had indicated any other basis or appropriate percentage while computing the claim.

94. Even assuming that there are no cogent reasons for reducing the claim from 15% to 7.5%, surely, the grievance in that regard could only be voiced by the respondent and not the petitioner for the infirmity, if any, was to the petitioner's benefit.

95. It cannot be said that the award contains no reasons in this regard. It does. The arbitrator has adopted a particular approach while computing the claim and analysed the evidence in a particular manner. This he was entitled to do.

96. In the circumstances, the challenge to the award in respect of Claim No. 11 is dismissed.

Re : Claim No. 12

97. As against the claim of Rs. 26,74,396/- the arbitrator awarded a sum of Rs. 17,72,178/- for extra cost on account of under utilization of machinery, equipment, shuttering plates etc. due to delay in completion of contract.

98. In view of the findings regarding breaches on the petitioner's part the respondent was entitled to the claim in this regard. The basis for awarding the claim therefore cannot be questioned.

99. The arbitrator has however merely noted the rival contentions in respect of this claim. For instance, the petitioner had also contended that the respondent was bound to mobilize only that much machinery as was required at any time and that the respondent had in fact demobilized the machinery when it was not needed.

100. The petitioner also contended that some of the machinery for which a claim was made, was not included in the notice of arbitration. The arbitrator had furnished absolutely no reasons whatsoever. He merely states that he considered the case of the parties and awarded the amounts. There is nothing whatsoever to indicate the basis of the decision regarding quantifying the claim.

101. The award in respect of Claim No. 12 is therefore set aside.

102. I would have exercised power under section 34 to enable the arbitrator to furnish reasons and thereby possibly rectify the defect. However, as I have set aside the award as a whole on the basis of the judgments of this Court, I will refer to later I refrain from exercising this power.

Re : Claim No. 13

103. The arbitrator awarded a sum of Rs. 6,48,000/- against the claim of Rs. 10,42,668/- towards fixed labour during the delayed period.

104. In view of the finding that the petitioner was responsible for the delay in execution of the work, the respondent would certainly be entitled to maintain the claim. However, as submitted by Mrs. Srikrishna there are not only no reasons whatsoever in support of the findings but the findings are based purely on conjuncture. The arbitrator had himself noted the petitioner's submission that no documents had been furnished by the respondent to prove the claim. The arbitrator however based his award only on the basis that work of this nature requires “fixed labour till completion which is different from casual labour”. He does not say that in fact the labour was so deployed. The award is therefore without reasons, based on no evidence and based purely on conjuncture.

105. The challenge to award in respect of Claim No. 13 is therefore upheld.

106. I would have exercised power under section 34 to enable the arbitrator to furnish reasons and thereby possibly rectify the defect. However, as I have set aside the award as a whole on the basis of the judgments of this Court, I will refer to later I refrain from exercising this power.

Re: Claim No. 14.1

107. The arbitrator awarded a sum of Rs. 3,95,005/- against the respondent's claim of Rs. 9,71,033/- on account of reduction by more than 25% of the tender quantities.

108. Mrs. Srikrishna reiterated Ground “H” in challenging the award in respect of this claim. She submitted that it was contrary to Clause 53.1 of the General Conditions of Contract, which reads as under :—

CLAUSE 53 - PROCEDURE FOR CLAIMS

53.1 Notice of Claims : Notwithstanding any other provision of the Contract, if the Contractor intends to claim any additional payment pursuant to any Clause of these Conditions or otherwise, he shall give notice of his intention to the Engineer, with a copy to the Employer, within 28 days after the event giving rise to the claim has first arisen.”

109. In the affidavit in reply, the respondent has stated that the petitioner had raised the contention based on Clause 53.1 of the General Conditions of Contract in respect of certain claims but not in respect of Claim No. 14. Paragraph 34 of the affidavit in rejoinder deals inter-alia with paragraph 19 of the reply. Despite the fact that in paragraph 19 of the reply it is stated that the allegations in paragraph 4(h) of the petition are vague, no attempt is made even in therejoinder to furnish the said-particulars. What is important to note is that in paragraph 34 of the rejoinder, it is not denied that the contention based on Clause 53.1 of the General Conditions of Contract was not in respect of Claim No. 14.

110. Further, it appears as a matter of fact that by a notice dated 2-8-2002 addressed to the petitioner's General Manager, the respondent had raised the said claim.

111. In the circumstances, the challenge to the award in respect of Claim No. 14.1 is rejected.

Re : Claim No. 15

112. The respondent claimed interest on all amounts at all stages. The arbitrator however rejected the interest prior to the commencement of the arbitration proceedings. The notice of arbitration was given on 2-8-2002. He held that as per the agreement the arbitration is deemed to have begun 56 days thereafter. The award was published on 5-5-2005. The arbitrator restricted the award of interest to the period 27-9-2002 to 1-1-2005. Simple interest was awarded at 13% per annum. The arbitrator also awarded future interest at the same rate and on the same basis with effect from 60 days from the date on which the award was published, till payment.

113. To my mind, it is the respondent and not the petitioner who can have any grievance against the award. The claims having been awarded, the arbitrator was bound to award interest thereon in the absence of any legal bar to the same.

114. The challenge to the award on the question of interest is rejected.

115. In the circumstances, the award is upheld in respect of Claim Nos. 7.2, 11, 4.5, 4.6, 5.1, 8.2, 9.1, 9.2, 9.4, 14.1 and 15. The petition is allowed and the award is set aside in respect of Claim Nos. 7.3, 10, 12, 4.1 and 13. Interest as granted by the learned arbitrator shall be restricted to the claims in respect whereof the award has been upheld. But for the fact that the petition is allowed and the entire award is set aside for reasons I shall state next, I would have exercised powers under section 34 in respect of Claim Nos. 10, 12 and 13 as stated earlier.

116. After the matter was reserved for judgment, my attention was invited in an another matter, to the judgments of this Court including in the case of Mrs. Pushpa P. Mulchandani v. Admiral Radhakrishin Tahiliani, 2008 (7) LJ Soft, 161 wherein it is held that under the 1996 Act which applies to the present case also, the power to set aside only part of the award is conferred on the Court only in one contingency which is to be found in section 34(2)(iv). The Division Bench held:—

“24. It was submitted on behalf of the respondents that only that part of the award which is based on the valuation reports, which were not supplied to the Appellants should be set aside.

25. Now, for considering this aspect of the matter, first reference has to be made to the provisions of section 34 of the Act. Section 34 of the Act reads as under :—

“34. Application for setting aside arbitral award.— (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3).

(2) An arbitral award may be set aside by the Court only if—

(a) the party making the application furnishes proof that —

(i) a party was under some incapacity, or

(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or

(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration;

Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or

(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or

(b) the Court finds that —

(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or

(ii) the arbitral award is in conflict with the public policy of India.

Explanation. — Without prejudice to the generality of sub-clause (ii) it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81.

(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal.

Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.

(4) On receipt of an application under sub-section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award.”

117. Perusal of the above provisions shows that under sub-section (1) of section 34, an application to the Court against the arbitral award can be made only for setting aside such award in accordance with sub-section (2) and sub-section (3). Perusal of sub-section (2) shows that power is conferred on the Court only to set aside an award. Perusal of proviso to Clause (iv) of sub-section (2) of section 34 shows that in case the Court finds that part of the award made by the learned arbitrator deals with dispute not contemplated by or not falling within the terms for submission to arbitrator, or it contains decision on matters beyond the scope of submission to arbitration, if the decision on matters submitted to the arbitration can be separated from those not so submitted, then only that part of the arbitral award can be set aside. Thus, power to set aside only part of the award is conferred on Court by section 34 only in one contingency which is to be found in Clause (iv) of sub-section (2) of section 34 of the Act. Section 15 of the Arbitration Act, 1940 in terms conferred power on the Court to modify the award. The Arbitration Act, 1996 does not have any provision similar to the provisions of section 15 of the Act, 1940. But, 1996 Act has the provisions in section 34(4), which empowers the Court to remit the award to the arbitrator to enable him to cure the defect because of which the award may be liable to be set aside. Thus, from perusal of section 34 of the Act it appears that while examining the award if the Court finds that the arbitrator in the award has dealt with the matters not submitted to arbitration, then the Court has to make an inquiry to find out whether it is possible to segregate the other part of the award, which was within the jurisdiction of the arbitrator and if the Court finds that it is possible so to do, then the Court can set aside only that part of the award which according to the Court was beyond the jurisdiction of the arbitrator, because it was not submitted to arbitration. In all other cases, if the Court finds that only a part of the award is affected by illegality which is pointed out to the Court, the Court cannot itself modify the award, but if a party to the petition applies to the Court in exercise of its power under sub-section (4) of section 34, the Court can direct the arbitral tribunal to resume the proceedings and take such action to eliminate the ground for setting aside the award. In such situation, the arbitral tribunal on resumption may be able to delete that part of the award which the Court finds to be invalid or illegal and make suitable modification in the award. It, thus, appears that while exercising jurisdiction under section 34, the Court can modify the award only in one situation which is to be found in Clause (iv) of sub-section (2) of section 34. In all other cases if the Court finds that only part of the award is affected, then in case the party makes an application, the Court can adopt the course of action contemplated by sub-section (4) of section 34 and only option available to it would be to set aside the award. We find that the following observations of the Supreme Court in its judgment in the case of McDermott International Inc. v. Burn Standard Co. Ltd., JT 2006 (II) SC 376 clearly indicate that this is the course of action sanctioned by law. In paragraph 55 of the above referred judgment the Supreme Court has observed thus:

“55. The 1996 Act makes provision for the supervisory role of Courts, for the review of the arbitral award only to ensure fairness, intervention of the Court is envisaged in few circumstances only, like, in case of fraud or bias by the Arbitrators, violation of natural justice, etc. The Court cannot correct errors of the Arbitrators. It can only quash the award leaving the parties free to begin the arbitration again if it is desired. So, scheme of the provision aims at keeping the supervisory role of the Court at minimum level and this can be justified as parties to the agreement make a conscious decision to exclude the Court's jurisdiction by opting for arbitration as they prefer the expediency and finality offered by it.”

26. It is, thus, clear that if the Court finds that the award is vitiated because of violation of principles of natural justice, or such other reasons which cannot be called as “adjudication” on merits, the Court can set aside the award and if the award is set aside for such reasons, it is open to the parties to invoke the arbitration clause again and initiate arbitration proceeding. In our opinion, in this regard reference can be made to the provisions of sub-section (4) of section 43. They read as under :—

“43(4) Where the Court orders that an arbitral award be set aside, the period between the commencement of the arbitration and the date of the order of the Court shall be excluded in computing the time prescribed by the Limitation Act, 1963 (36 of 1963), for the commencement of the proceedings (including arbitration) with respect to the dispute so submitted.”

“When the award is set aside for the reasons other than merits, then it is open to the parties to the arbitration agreement, if arbitration agreement survives, to invoke the arbitration agreement and to have the matter referred to arbitration. In other contingencies they can adopt other remedy that may be available to them and in that situation, either for adopting any other remedy or in initiating arbitration, the period spent during the earlier arbitration is liable to be excluded while computing the period of limitation. In our opinion, the decision of various Courts either on Arbitration Act, 1940 or the Acts which were in the field before that, while considering whether the Court has the power to modify the award in a petition filed under section 34 cannot be considered because under those enactments power was positively conferred on the Court to modify the award. It is further to be seen here that Arbitration Act, 1996 has repealed the Arbitration Act, 1940. Arbitration Act, 1940 had a specific power conferred on the Court to modify the award. While enacting 1996 Act, the Parliament has chosen not enact that provision. In our opinion, the intention of the Legislature, therefore, was clear not to confer on the Court power to modify the award. It is now well settled that scheme of Arbitration Act, 1996 is clear departure from the scheme of 1940 Act. In 1940 Act, power was conferred on the Court itself to modify the award. In 1996 Act, as observed above, the scheme is that the power is conferred on the Court to modify the award only in one situation found in Clause (iv) of section 34(2), and in all other situations the Court, if an application-is made by the party, has to follow the course of action contemplated by sub-section (4) of section 34 or in the absence of any application set aside the award and leave the parties to their own remedy. In our opinion, one more principle has to be taken into consideration. The Court before 1996 Act came into force, under the Arbitration Act had power to modify an award. While framing 1996, Act, the Legislature was conscious of the power of the Court under 1940 Act to modify the award. While enacting 1996 Act, the Legislature has chosen to confer power on the Court to modify the award only in one contingency found in Clause (iv) of section 34(2), and therefore, in our opinion, it will have to be held that the Legislature has denied power to the Court to modify the award in all other situations.”

118. I informed the learned counsel about the judgments and invited their submissions in respect thereof. The award in respect of Claim Nos. 7.3 and 4.1 has also been set aside. They do not fall within the scope of section 34(2)(iv). I have no option therefore, however reluctantly, but to set aside the award. If the respondent is willing to give up the claim with regard to the amounts awarded but in respect whereof the award is set aside, it would be a different matter. The respondent is at liberty to make such an application even in this petition. If such a claim is given up, the ratio of the judgment would not obviously apply as the award in respect of such a claim requires no consideration in an application under section 34. The respondent is also at liberty to make any other application including in the present petition including as indicated in the judgment of the Division Bench in the case of Mrs. Pushpa P. Mulchandani.

119. I do not for a moment suggest that I disagree with Mr. Joshi's very persuasive submissions in regard to this point of law. I am however bound by the judgment. Being bound by the judgment, I do not consider it appropriate to consider the matter further. Nor do I disagree with Mr. Joshi that the matter requires to be considered by a Full Bench. However, being a judgment of a Division Bench, I do not consider it appropriate to direct the papers to be placed before the learned Chief Justice for considering whether the matter ought to be referred to a Full Bench. That must be left to be decided by the Division Bench which considers the appeal that will quite obviously and understandably be filed against this judgment.

120. In the result, the petition is made absolute, the award is set aside.

Order accordingly.