TARAPORE AND CO. Vs. STATE OF M.P.

JUDGEMENT

(1.) THIS is an appeal under section 39 of the Arbitration Act, 1940 (in short, 'the Act'), by the contractor against setting aside of the award under section 30(a) of the Act by the District Judge, Jabalpur.

(2.) IT is not in dispute that in response to notice inviting item rate tenders for certain specified work of Bargi Masonry Dam issued by the respondent, the appellant had submitted its tender for Rs. 12,25,36,000/ - in the year 1977, which was accepted and the formal contract between the parties was executed on 6.10.1978. Clause 4.3.24.1 of the contract provided that: "The contractor shall pay not less than fair wages to the labour engaged by him on the work". The term fair wages was defined as follows:

(3.) THE learned counsel for the appellant did not dispute that the question referred to the arbitrators consisted of two parts: one of liability and the other of quantum; but it was argued that in the earlier Award, it was implicit that the liability part was decided against the State and, thereafter, it was held liable for payment of Rs. 236/ - lakhs to the contractor. While remitting the Award for re -quantification, the District Judge specifically observed that the whole Award was not required to be set aside. This signified that the liability part of the question answered by the arbitrators by necessary implication was not disturbed by the District Judge and the finding became final, as no appeal against that part of the remand order upholding the said finding was preferred by the State, though such an appeal under section 39 of the Act was competent in view of the two decisions of this Court in Dandakaranya Project v. P.C. Corpn; and Jayantilal v. Surendra. Accordingly, it was urged that it was not open to the State to raise any question as to its liability for reimbursement in proceedings for setting aside the subsequent Award, or for the Court to reconsider the question. It was also pointed out that the arbitrators were not bound to discuss evidence or to disclose reasons for the conclusions reached. A number of decisions were cited in support of the contention, which will be dealt with at appropriate places. It was further argued that as the muster rolls were not available with the sub -contractors, they could not be produced before the arbitrators, but it was proved that the appellant had paid to the sub -contractors money for payment of increased wages to the workers and it was not disputed even by the State that there was an average of 35% increase in the wages and, therefore, the arbitrators could not be said to have misconducted the proceeding by relying on these facts and making an Award against the State. The Award was further sought to be justified on the ground that 3 other similar contractors were made payments for escalation in wages. For all these reasons, it was contended that the learned District Judge committed an error in setting aside the Award.