P.M. Paul VS. Union Of India

Summary

---

The appellant, a contractor entered into a contract with the respondent for the construction of a building. The contract consisted of two phases. The date of commencement of both the phases was March 10, 1979, the date of comple- tion of Phase I was June 9, 1980 and that of Phase II was November 9, 1980. Dispute arose about the handing over of the site. The appellant's case was that the site was not handed over as stipulated and consequently the work could not either be commenced or completed as stipulated. The respondent asserted that the appellant had abandoned the work and committed a breach of contract. This was negated by the appellant.

As the contract provided for settlement of disputes by an arbitrator, the appellant filed a suit for the appoint- ment of an arbitrator.

The matter came up in appeal to this Court, and one of its former Judges was appointed as an arbitrator. The Arbi- trator entered upon the reference, examined the documents, heard the parties, considered the evidence, and made an award after inspecting the sites.

The respondent aggrieved by the award filed a petition and contested the same. It was contended that the arbitrator had travelled beyond his jurisdiction in awarding a sum of Rs.2 lakhs as escalation cost and charges in respect of claim I.

Disposing of the Civil Miscellaneous Petition the Court,

HELD: 1. It is well-settled that an award can only be set aside under section 30 of the Arbitration Act, if the Arbitrator has misconducted himself or the proceeding.

[121C-D]

116 2. Adjudicating upon a matter which is not the subject- matter of adjudication, is a legal misconduct for the Arbitrator. [121D]

3. Escalation is a normal incident arising out of gap of time in this inflationary age in performing any contract.

[121F]

In the instant case, the dispute that was referred to the arbitrator was, as to who was responsible for the delay, what are the repercussions of the delay in completion of the building, and how to apportion the consequences of the responsibility. After discussing the evidence and the sub- mission of the parties to the contract, the arbitrator, found that it was evident that there was escalation and, therefore, he came to the conclusion that it was reasonable to allow 20% of the compensation under claim I, he accord- ingly allowed the same. This was a matter which was within the jurisdiction of the arbitrator, and the arbitrator had not misconducted himself in awarding the amount as he has done. [121D-E, G-H; 122A]

4. Once It was found that the arbitrator had jurisdic- tion to find that there was delay In execution of the con- tract due to the conduct of the respondent, the respondent was liable for the consequences of the delay, namely, in- crease in prices. [122C-D]

See the full content of this document

Extract

---

P.M. Paul VS. Union Of India

PETITIONER: P.M. PAUL Vs.

RESPONDENT: UNION OF INDIA

DATE OF JUDGMENT16/01/1989

BENCH: MUKHARJI, SABYASACHI (J)

BENCH: MUKHARJI, SABYASACHI (J)

RANGNATHAN, S.

CITATION: 1989 AIR 1034 1989 SCR (1) 115 1989 SCC Supl. (1) 368 JT 1989 (1) 299 1989 SCALE (1)221

ACT: Arbitration Act 1940: Sections 14, 17, 30 and 33--Award-Setting aside of--Whether arbitrator has miscon- ducted himself or proceedings--Adjudicating upon matter not subject matter of adjudication-Legal misconduct.

JUDGMENT: CIVIL APPELLATE JURISDICTION:: Civil Miscellaneous Petition No. 265 19 of 1988.

IN Civil Appeal No. 2632 of 1987.

From the Judgment and Order dated 10.6.1985 of the Kerala High Court in W.P. No. 210 of 19...

See the full content of this document

---