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M/S Lal Builder Petitioner v. Union Of India And Others
Factual and Procedural Background
The petitioner challenged an arbitral award dated 5th July, 2005 passed by the Arbitral Tribunal under Section 34 of the Arbitration and Conciliation Act. The award had partly allowed and partly disallowed the claims of the petitioner. The petitioner contended that the Arbitral Tribunal failed to give reasons for denial of certain claims and made errors in assessing the work done and the applicable contract provisions.
Legal Issues Presented
- Whether the Arbitral Tribunal erred in denying claims without proper reasoning, particularly regarding alleged improper planning and assumption.
- Whether the Arbitral Tribunal wrongly relied on the measurement book (MB) to reject claims when the petitioner asserted that the MB did not reflect the true quantity of work done.
- Whether the Arbitral Tribunal failed to consider contractual clauses properly, including the claim for mental agony and hardship due to unilateral recession of contract.
- Whether the Court can re-appreciate evidence or interfere with the arbitral award on grounds not specified under Section 34 of the Arbitration and Conciliation Act.
Arguments of the Parties
Petitioner's Arguments
- The Arbitral Tribunal denied claim No. 1 on grounds of improper planning and assumption without any party raising this issue and without evidence.
- The Tribunal relied on the measurement book which did not reflect the actual work done by the petitioner, who asserted having completed more work than recorded.
- The Tribunal incorrectly awarded Rs. 89,449 to the respondent ignoring that removal of material required prior permission.
- Claim No. 3 was rejected without basis, and claim No. 4 was not considered in light of Clause 21.5 of the contract.
- The Tribunal failed to address the claim of Rs. 5,00,000 for mental agony and hardship caused by unilateral contract recession.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The Court observed that the Arbitral Tribunal had based its award on the measurement book, which is the authentic record of work done in civil contracts. Since the petitioner did not protest during the contract period about any omission in the measurement book, claims for work not recorded therein could not be entertained. The Court emphasized that under Section 34 of the Arbitration and Conciliation Act, it does not function as an appellate court and cannot reappreciate evidence to arrive at a different conclusion from that of the Arbitrator. The Court noted that challenges based on misinterpretation of contract or non-appreciation of evidence are not permissible under Section 34. Additionally, the Court reiterated the settled principle that an Arbitrator is bound by the contract and cannot entertain tortuous claims such as mental agony, which explains the Tribunal's refusal to consider such claims.
Holding and Implications
The Court dismissed the petition under Section 34 of the Arbitration and Conciliation Act, 1996, holding it not maintainable.
The direct effect of this decision is the confirmation of the arbitral award as passed by the Arbitral Tribunal. No new precedent was set, and the ruling reinforces that courts do not reappreciate evidence or entertain claims beyond the contract in arbitration challenges under Section 34.
1. By this petition under Section 34 of Arbitration and Conciliation Act, the Petitioner has assailed an award dated 5th July, 2005 passed by the Arbitral Tribunal whereby the Tribunal had partly allowed the claims of the petitioner and partly disallowed the claims of the petitioner.
2. The award has been challenged on the ground that Learned Arbitral Tribunal failed to give reasons for denial of the claims. It is submitted that claim No. 1 was denied by the Arbitral Tribunal on the ground of improper planning and assumption, which shows lack of application of mind by the Arbitral Tribunal. None of the parties had claimed that there was improper planning and assumption. The total work awarded was for Rs. 60,46,651/-. There was no evidence that the work was reduced due to improper planning. It is also submitted that the Arbitrators were not experts who could have arrived at a conclusion about the planning in the matter of civil contracts.
3. The other ground of challenging the award is that the Arbitral Tribunal rejected some of the claims of the petitioner on the basis of measurement recorded in the measurement book (MB), while in fact the petitioner had done much more work than all the work shown in the MB. It is submitted that the original work awarded was more than of Rs. 60,00,000/-. After the petitioner had left the work remaining work was awarded for a sum of Rs. 14,00,000/- only to the subsequent contractor. If the petitioner had not done the work to the extent of Rs. 46,00,000/- the remaining work would not have been of Rs. 14,00,000/-. Thus, the Arbitral Tribunal should have taken this into consideration and should have reached the conclusion that the MB had not correctly recorded the work done. The petitioner also challenged awarding of Rs. 89,449/- by the Arbitral Tribunal to the respondent on the ground that the Arbitral Tribunal lost sight of the fact that the applicant could not have removed any material from the site without prior permission of the authorities concerned.
4. The petitioner assailed the award also on the ground that claim No. 3 of the petitioner was rejected without any basis. The Arbitral Tribunal failed to appreciate the evidence produced by the petitioner. Regarding claim No. 4, it is stated by the petitioner that the Arbitral Tribunal did not consider Clause 21.5 in proper prospective. The Arbitral Tribunal should have decided this claim on the basis of work done as claimed by the petitioner. Similarly, regarding claim No. 5 it is stated that the Arbitrators did not even pronounce upon the claim of Rs. 5,00,000/- made by the petitioner for mental agony and hardship caused to the claimant due to unilateral recession of the contract.
5. A perusal of the award would show that the Learned Arbitral Tribunal had considered the claims of the petitioner and counter-claim of the respondent on the basis of measurement book which records the measurement of the work done. The contention of the petitioner that the measurement book did not reflect the true quantity of work done by the petitioner could not have been considered by the Arbitrators. In any civil contract where measurement book is maintained and the work done is recorded in the measurement book, the contractor cannot lay claim for a work which is not recorded in the measurement book unless during the continuation of work, the contractor had protested to the authorities that a particular work done by him was not recorded in the measurement book. It is not the case of the petitioner that he had protested against non recording of work done by him in the measurement book by the concerned Engineer. Measurement book is the authentic record of the work done. No contractor can claim for a work allegedly done which is not recorded in the measurement book. I, therefore consider that the Learned Arbitral Tribunal rightly based the award on the measurement book.
6. It is a settled law that under Section 34 of the Arbitration and Conciliation Act, the Court does not act as an Appellate Court and cannot re-appreciate the evidence to arrive at a conclusion different from that of the Arbitrator. An award can be challenged under Section 34 only on one of the grounds as mentioned in Section 34 of the Act. Petitioner in the present case has made challenge to the award on the basis of non-appreciation of evidence and misinterpretation of contract, challenge on such grounds cannot be considered.
7. It is also settled law that an Arbitrator is prisoner of the contract. The Arbitrator cannot travel beyond the contract. The tortuous liabilities or claims for mental agony etc. cannot be raised before the Arbitrator. Only the claims which flow from the contract and which are not tortuous liabilities can be considered by the Arbitrator. The Arbitrator therefore rightly did not touch the claim for mental agony.
8. I find that the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 is not maintainable and is hereby dismissed.
SHIV NARAYAN DHINGRA, J.
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