STATE OF KERALA Vs. POULOSE

JUDGEMENT

(1.) THIS appeal by the State of Kerala, is directed against an award in arbitration made into a rule of court. A contract was entered into between the appellant and the respondent on 19-12-1977 for construction of an aqueduct, and allied works. THIS was to be completed by 3-7-1979, and Rs. 48,66,679/- was to be the remuneration. It was completed only on 15-1-1980, according to respondent for reasons beyond his control, and laches of the department. The respondent says a supplementary agreement was entered into, but amounts due thereunder were not paid. Disputes arose between the parties and these were referred to arbitration. Twelve heads of claim were made, besides claim for interest and cost. The arbitrator upheld all the claims, except claim No. 7. Interest and cost were refused. He claimed (Rs. 1,10,667. 04) for the 'additional work', under different heads based "on law and equity". For losses on account of flood, a claim (Rs. 2,95,449. 50) was made. For suspension of work and consequent loss Rs. 1,32, 000/- was claimed. Likewise, for pile driving, hoisting and pitching. Rs. 2,13,632/- was claimed. For extended pile driving rs. 79,713. 38 was claimed. For test pile driving a claim of Rs. 52,000;- was made and for additional pile driving Rs. 85,760/- was claimed. Claim No. 7 for extended pile driving (Rs. 79,713. 38) was rejected, and against the other claims, an award was made in a sum of Rs. 5,01,925/ -.

(2.) APPELLANT, avers that respondent is not entitled to enhanced rates. The supplemental agreement, dated 16-11-78 reads: "contractor shall not claim at enhanced rates of compensation whatever for, or on account of such extra items due to increase in rate of labour, materials or any other ground". (emphasis supplied) The original agreement states: "rates once agreed cannot be enhanced on any account". Ext. R13 minutes appended to the objections, made this further clear. The so called additional work is also covered by the contract.

(3.) AN award is open to challenge only on limited grounds. AN award would be vitiated by reason of an error appearing on the face of it. The distinction between a mere error and an error resulting in illegality or nullity, though subtle is real. In Adams v. Great North of Scotland Railway co. , ( (1891) AC 31 at 39 (H. L.) Lord Halsbury. L. C. stated the law thus: "a great deal more than mere error on the part of the arbitrator in the conclusion at which he has arrived before the Court can interfere with his award". In Hedgkinson v. Fernie (140 Eng. Rep. (Common Pleas 712)it was stated: "where a cause or matters in difference are referred to an arbitrator, whether a lawyer or a layman, he is constituted the sole and final judge of all questions both of law and of fact. The only exceptions to that rule, are. cases where the award is the result of corruption or fraud, and one other, which, though it is to be regretted, is now, I think, firmly established, viz. where the question of law necessarily arises on the face of the award. or upon some paper accompanying and forming part of the award". (emphasis supplied) But, if the arbitrator or the umpire travels beyond his jurisdiction and arrogates jurisdiction that does not exist in him, that would be a ground to impeach the award. In Attorney-General for Manitoba v. Kelly ( (1922) 1 AC 268 at 276) Lord Parmoor pointed out: "it would be impossible to allow an umpire to arrogate to himself jurisdiction over a question which, on the true construction of the submission, was not referred to him. AN umpire cannot widen the area of his jurisdiction by holding, contrary to the fact, that the matter which be affects to decide is within the submission of the parties". "where a question of law has not specifically been referred, but it material in the decision of matters which have been referred to him and he makes a mistake apparent on the face of the award, an award can be set aside on the ground that it contains an error of law apparent on the face of the award", (at page 283) This statement of law was approved by the Supreme Court of India, in Upper Ganges Valley Electricity Supply Co. v. UP Electricity Board (AIR 1973 SC 683 ). Earlier decisions also had approved this view. (Union of india v. Bungo Steel Furniture AIR 1967 SC 1032 and Alien Berry & Co. (P)Ltd. v. Union of India - AIR 1971 SC 696 ).