STATE OF KERALA Vs. K K MATHAI

JUDGEMENT

(1.) The State has filed this appeal when its application under S.30 of the Arbitration Act, 1940 has been dismissed. The main objection raised was with respect to claim A and I. In the judgment only claim A is generally dealt with. The claim I is not seen dealt with in detail.

(2.) Claim A was in respect of enhancement of the rates for the extra items of work agreed as per the supplementary agreement. There was an arbitration earlier for the work carried upto 30.6.1986. The arbitration in question here is for the work carried out after 30.6.1986. The Arbitrator found that the rates agreed upon in the supplementary agreement are the original rates, viz. the rates for the original contract. The arbitrator had gone beyond the agreement and found that there was no fruitful negotiations between the parties to agree so. Therefore, the mutually agreed rates cannot be reckoned. The arbitrator found that the claimant was compelled to enter into supplementary agreement as directed by the department. It was this finding of the arbitrator which was impugned on the contention that it was beyond the scope of the agreement. Once the agreement has been entered into between the parties, the arbitrator was not called upon to adjudicate as to the circumstances under which the parties have come to the agreement. That is a matter for an appropriate court to consider. The arbitrator cannot decide that one party to the agreement was compelled by the other to sign the agreement stipulating a particular rate. Once the agreement disclosed a definite rate whatever be the reasons to agree to that rate, the arbitrator cannot grant anything more than the rates so agreed. The Supreme Court in the decision reported in Rajastan State Mines & Minerals Ltd. v. Eastern Engineering Enterprises ( AIR 1999 SC 3627 ) had enumerated various grounds under which the court has to consider the legality or otherwise of the award. Under item h, the apex court found as follows:

(3.) When thus the arbitrator has departed from the contract between the parties in order to award any amount necessarily it shall be taken as a jurisdictional error and a misconduct in that regard. In the case of claim A, the arbitrator granted enhanced rates for the extra items of work in spite of the specific clause in the supplementary agreement that the contractor had agreed to carry out the additional work at the rates agreed as per the original agreement. So, the arbitrator did have no jurisdiction to award extra rates. The court below ought to have accepted the contention of the State and set aside the finding of the arbitrator under clause A.