P.N. JAISWAL Vs. BANARAS HINDU UNIVERSITY

JUDGEMENT

(1.) The appeal has been filed under Sec. 39 of the Arbitration Act assailing the correctness and legality of an order dated 17-9-1977 passed by the court below setting aside an award on the ground that the arbitrator committed legal misconduct arising from an error of law which was stated to be apparent on the face of the award.

(2.) The relevant facts are that under a written contract the appellant was required to construct Nurses Hostel for the respondent, namely, Banaras Hindu University. In the contract it was provided that some of the materials such as steel and cement shall be provided by the University. The contract also contained a clause for arbitration to the contract the same shall be referred for the arbitration of a person to be named by the Vice-Chancellor, whose decision shall be final and binding It is alleged by the appellant that steel which University was bound to supply to him under the contract had to be purchased by him in order to complete the contract at an exhorbitant price, as a result of which he had to incur an extra expenditure of Rs. 35,143.14. The appellant asserts in his claim that he was further entitled to 10 per cent of profit on the aforesaid purchases as the same resulted from the failure of the University to supply the materials to him. Under this head the appellant claimed a sum of Rs. 13,705/-. It is further asserted that these purchases were made by the appellant at the instance of the University, and though the University was liable to supply the materials under the contract, the University did not reimburse the appellants for these extra payments. The University did not accept the claim of the appellant, whereupon the dispute was referred to the arbitrator nominated by the Vice-Chancellor. The arbitrator gave an award in favour of the appellant amounting to Rs. 38,310.00 against the two claims referred to above. The relevant part of the award is extracted here :

(3.) The appellant moved an application under Sec. 14 of the Arbitration Act for filing of the award and for the same being made the rule of the court, whereupon the University filed objections against the award. The principal objection of the University was that the arbitrator had committed a manifest illegality in including some amount against the claim made by the appellant on account of the alleged investment in the cost of steel procurred by him on account of the failure of the University to issue the same. The contention was that this claim was in substance a claim for damages on damages, and, therefore, not admissible in law. The Arbitrator, therefore, committed manifest error in awarding consolidated sum of Rs. 38,310.00 which included not only the amount against the first claim of the appellant but also the second claim, which, was made on account of the investment in the cost of steel. The aforesaid objection of the respondent-university found favour with the court below as a result of which the award was set aside.