BUILD INDIA CONSTRUCTION SYSTEM Vs. UNION OF INDIA
SUPREME COURT OF INDIA
BUILD INDIA CONSTRUCTION SYSTEM
UNION OF INDIA
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R.C.LAHOTI, J. -
(2.)IN response to a Notice INviting Tenders (NIT) issued by the respondent on 12-9-1984, the appellant submitted the tender based on the tender document issued by the respondents. The tender submitted by the appellant was accepted. On 22-2-1985, the appellant signed a letter to the following effect :-
"CA No. (GE) B-10 of 85 86SERIAL PAGE NO. 23
(GENERAL CONDITIONS OF CONTRACT-IAFW-2249)
LUMP SUM CONTRACT FOR IAFW-2159
TERM CONTRACT FOR ARTIFICERS WORK (IAFW-1821)
MEASUREMENT CONTRACT-IAFW-1779 AND 1779A
1. A copy of GENERAL CONDITIONS OF CONTRACTS (IAFW-2249 1976 PRINT) with Errata No. 1 to 27 and Amendment No. 1 to 27 has been supplied to me/us and is in my/our possession. I/We have read and understood the provisions contained in the aforesaid GENERAL CONDITIONS OF CONTRACTS before submission of this tender and I/We agree that I/We shall abide by the terms and conditions thereof, as modified, if any, elsewhere in these tender documents.
2. It is hereby further agreed and declared by me/us, that the GENERAL CONDITIONS OF CONTRACTS-IAFW-2249 (1976 PRINT) including Conditions 70 there pertaining to settlement of disputes by arbitration containing 30 pages (Serial Page Number 1 to 30) with Errata Numbers 1 to 27 and amendment Numbers 1 to 27 form Part of these Tender documents.
The respondent accepted the tender and a contract was entered into between the parties on 29-5-1985. It is not in dispute that the contract contains an arbitration clause requiring all disputes, between the parties to the contract (other than those for which the decision of the CWE or any other person is by the contract expressed to be final and binding) shall, after written notice by either party to the contract to the other of them, be referred to the sole arbitration of an Engineer Officer to be appointed by the authority mentioned in the tender documents. There are other recitals contained in the arbitration clause which are not relevant for our purpose. What is relevant to mention is that the clause does not provide for a reasoned award or a speaking award being given by the arbitrator. There is nothing in the arbitration clause spelling out an obligation on the part of the arbitrator to give reasons for the findings arrived at by him.
On 4-9-1986, the Government of India, Ministry of Defence, New Delhi sanctioned an amendment in the general conditions of the contract which reads as under :-
48 1978 Print24Condition 70 Sub para 9 Add the following at the end of the sub paras : " If the value of the claims or counter claims in an arbitration reference exceeds Rs. 1 lakh the arbitration shall given reasons for the award.
2. Sanction of the Government is also accorded for incorporation of the above mentioned amendment at the appropriate place in the earlier prints of IAFW 2249.
3. This amendment shall come into effect from 3-10-1986."
(3.)DISPUTES arose between the parties leading to cancellation of contract by the respondents on 3-11-1987 and again on 4-4-1990. On 31-5-1991, the respondents appointed a Senior Engineer Officer as the sole arbitrator in accordance with the arbitration agreement. On 28-9-1995, the arbitrator published his award allowing the appellant's claim to the extent of Rs. 80,000.00 only and rejecting the respondents' counter-claim. The award was made a rule of the Court by the learned single Judge of the High Court. In an appeal preferred by the respondent, the decree passed by the learned single Judge has been set aside by the Division Bench of the High Court which has also directed the award to be set aside and remitted back to the arbitrator for proceeding afresh and making a reasoned award. For doing so the Division Bench has relied on the amendment dated 4/09/1986 and held it to be applicable to the contract between the parties. Feeling aggrieved by the judgment of the Division Bench, the appellant has preferred this appeal by special leave.
The singular question arising for decision in this appeal is whether the amendment dated 4-9-1986 applies to the general conditions of contract as applicable to the parties, and therefore, the arbitration clause should have been read as amended casting an obligation on the arbitrator to give a reasoned award.
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