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PETITIONER: S. HARCHARAN SINOH

       Vs.

RESPONDENT: UNION OF INDIA

DATE OF JUDGMENT28/08/1990

BENCH: AGRAWAL, S.C. (J) BENCH: AGRAWAL, S.C. (J) MISRA RANGNATH PUNCHHI, M.M.

CITATION:  1991 AIR  945            1990 SCR  Supl. (1)  76  1990 SCC  (4) 647        JT 1990 (3)   692  1990 SCALE  (2)413

ACT:     Arbitration   Act,  1940:  Sections  14,  17,   30   and 33--Contract for specified work--Claim for entire additional work  at increased rate-Arbitrator awarding  increased  rate for part of the additional work-Whether Arbitrator  exceeded his jurisdiction--Award--Whether vitiated.

HEADNOTE:     The  appellant was awarded a contract  for  constructing approaches  to certain Bridge structure. As per  the  agree- ment, he was required to do hard rock cutting to the  extent of 7,54,530 cft. and the rate fixed was Rs.129 per  thousand cft. plus 2%. Actually the appellant was required to perform hard  rock cutting to the extent of 18,18,704 cft.  For  the additional  work, the appellant claimed payment at the  rate of  Rs.200 per thousand cft. He also claimed  certain  other sums  under other heads. Dispute in respect of 4  heads  was referred to arbitration. The arbitrator in his award  disal- lowed  two claims and allowed the other two claims,  one  of which  was  in respect of the additional work of  hard  rock cutting, and awarded a sum of Rs.52,800 under this head. The arbitrator filed the award in the High Court. After  consid- ering the objections filed by the respondent a Single  Judge of  the High Court ordered that the award be made a rule  of the  Court. The respondent filed an appeal against the  said order and the Division Bench set aside, ex-parte, the  claim for  higher remuneration at the rate of Rs.200 per  thousand cft.  Aggrieved, the appellant has preferred an appeal,  by’ special leave.     The other appeal, also by special leave, is against  the High  Court’s rejection of the prayer for setting aside  the ex-parte judgment. Allowing the former appeal and disposing of the latter one,     HELD: 1. As regards the award of an arbitrator under the Act, the law is well settled that the arbitrator’s adjudica- tion is generally considered binding between the parties for he  is a tribunal selected by the parties and the  power  of the court to set aside the award is restricted to cases  set out  In section 30 of the Act. It is, however, not  open  to the

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77 Court to speculate, where no reasons are given by the  arbi- trator, as to what impelled the arbitrator to arrive at  his conclusion. But the jurisdiction of the arbitrator is limit- ed by the reference and if the arbitrator has assumed juris- diction  not  possessed by him, the award to the  extent  to which  it is beyond the arbitrator’s jurisdiction  would  be invalid and liable to be set aside. An arbitrator or  umpire is  under  no obligation to give reasons in support  of  the decision reached by him unless under the arbitration  agree- ment  or the deed of submission he is required to give  such reasons. If the arbitrator or umpire chooses to give reasons in  support of his decision it is open to the Court  to  set aside  the award if it finds that an error of law  has  been committed  by  him on the face of the record. An  award  can neither be permitted nor set aside merely on the ground that it does not contain reasons in support of the conclusion  or decisions reached in it except where the arbitration  agree- ment or the deed of submission requires him to give reasons. [82H; 83A-E]     Jivarajbhai  Ujamshi  Sheth and Others  v.  Chintamanrao Balaji  and  Others, [1964] 5 SCR  480;  Raipur  Development Authority and Others v. M/s Chokhamal Contractor and Others, [1989] 2 SCC 721, relied on.     2.1 In the instant case the arbitration agreement or the deed  of submission did not require the arbitrator  to  give reasons  and, therefore, the award cannot be  questioned  on the  ground of an error on the face of the award. The  Divi- sion Bench of the High Court set aside the award in  respect of the claim relating to payment for additional work of hard rock  cutting  on the ground that in making  the  award  the arbitrator  exceeded his jurisdiction by allowing a rate  to the  contractor in excess of the agreed rate for the job  of hard rock cutting against the terms and conditions in clause 12 of the agreement. [83F-G]     2.2  Under clause 12 of the agreement, the  Engineer-in- charge  was empowered to make any additions to the  original specifications  that  may appear to him to be  necessary  or advisable during the progress of the work and the contractor was  bound  to  carry out the work in  accordance  with  any instructions   given  to  him  in  writing  signed  by   the Engineer-in-charge. [85B-C]     2.3 It has to be inferred from the terms of the contract whether  this  power to order  extras,  although  apparently unlimited,  is  in fact limited to ordering  extras  upto  a certain  value and in such a case, extras ordered in  excess of that amount may be outside the terms of the contract. 78     Parkinson  (Sir Lindsay) & Co. Ltd. v. Commissioners  of His Majesty’s Works and Public Buildings, [1949] 2 K.B. 632, referred to.     Hudson’s  Building and Engineering Contracts,  8th  Edn. pp. 294, 296, referred to.     3.  In some awards given by the arbitrators in the  Cen- tral Public Works Department of the Government of India  the variation  of  the tendered quantities under  the  variation clause  in  the contract has been restricted to  10%  beyond which  the  contractor was entitled to claim as  extras  and awards have been accepted and implemented by the Government. It appears that the standard form of contract of the Central Public Works Department has been amended and now it specifi- cally  permits  for a limit of variation  called  "deviation limit"  upto a maximum of 20% and upto such limit  the  con- tractor has to carry out the work stipulated in the contract and for the work in excess of that limit at the rates to  be

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determined  in accordance with clause 12-A under  which  the Engineer-in-Charge can revise the rates having regard to the prevailing market rates. [88D-F]     Gajaria’s  Law  relating  to  Building  and  Engineering Contracts in India, 3rd Edn., pages 410-412, referred to.     4.  In  the instant case, the  Executive  Engineer,  the Superintending  Engineer and the Additional  Chief  Engineer have  expressed the view that the additional work under  the terms of the contract may be confined to 20% and the  appel- lant may be paid at the rates prescribed in the contract for 20%  of  the additional work and for the extra  quantity  of additional work he may be paid remuneration at the increased rate taking into account the increased costs in execution of the said work on account of the peculiar nature of the  work while considering the claim of the appellant the  arbitrator was  required to consider the terms of the contract  and  to construe  the same. It was, therefore, permissible  for  the arbitrator  to  consider whether clause 12 of  the  contract enables  the Engineer-in-charge to require the appellant  to execute  additional work without any limit, or a  reasonable limit  should  be placed on the quantity of  the  additional work, which the appellant may be required to execute at  the rate  stipulated for the main work under the  contract.  For that  purpose the arbitrator could take  into  consideration the  practice prevalent in the Central Public Works  Depart- ment  in this regard as well as the  correspondence  between the  appellant and the authorities recommending  payment  of remuneration  at the increased rate for the additional  work in excess of 20% of the quantity stipulated in the contract. 79 The appellant was claiming increased rate of Rs.200 per 1000 cft.  for the entire quantity of additional work. The  arbi- trator  did  not accept the said claim of the  appellant  in full  and  has  partly allowed the said  claim  by  awarding Rs.52,800  which means that the arbitrator has  awarded  the increased  rate  only for a part of the additional  work  of hard  rock cutting which the appellant was required to  exe- cute. The arbitrator was entitled to do so on the  construc- tion placed by him on clause 12 of the contract and,  there- fore,  it  cannot  be  said that  in  awarding  the  sum  of Rs.52,800 for the additional work the arbitrator has exceed- ed his jurisdiction and the award is vitiated by an error of jurisdiction. [88G-H; 89A-E]     5. The judgment of the Division Bench of the High  Court setting aside the award of the arbitrator with regard to the claim  relating to payment for additional work of hard  rock cutting  is  set aside and the order passed  by  the  Single Judge  upholding the award of the arbitrator in this  regard is restored. [89F]     6. Since the judgment of the Division Bench of the  High Court  is set aside the appeal against the  order  rejecting the prayer for setting aside the ex-parte judgment, does not survive. [90B]

JUDGMENT:     CIVIL  APPELLATE JURISDICTION: Civil Appeals Nos. 322  & 323 of 1976.     From the Judgment and Order dated 27.3.1973 and  23.5.75 of the Delhi High Court in F.A.O. (O.S.) No. 35 of 1969  and C.M. No. 1300 of 1974 in F.A.O. (O.S.) 35 of 1969. P.P. Juneja for the Appellant.     B.B.  Barua,  Ms. A. Subhashini (N.P.)  and  Ms.  Indira Sawhney ( N.P. ) for the Respondent.

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The Judgment of the Court was delivered by S.C. AGRAWAL, J. Civil Appeal No. 322 of 1976     This appeal by special leave has been filed against  the judgment dated March 27, 1973 of the High Court of Delhi  in F.A.O. (O.S.) No. 35 of 1968. The  appellant, S. Harcharan Singh, was awarded  a  contract for 80 constructing  approaches to the Bridge Structure B-2 on  the North Sikkim Road in 1959-60. Under the agreement the appel- lant  was required to do hard rock cutting to the extent  of 7.54,530  cft. The rate fixed for the said work in the  con- tract  was Rs.129 per thousand cft. plus 2%.  The  appellant was  required to perform hard rock cutting to the extent  of 18, 18,704 cft. The appellant claimed payment at the rate of Rs.200  per  thousand cft. for the additional work  of  hard rock cutting. He also claimed certain other sums under other heads. The dispute in respect of four heads was referred  to arbitration  in accordance with the clause 25 of the  agree- ment.  The arbitrator gave his award dated February 5,  1965 wherein he disallowed the claim of the appellant in  respect of two items but made an award in favour of the appellant in respect  of two items of claim. In this appeal we  are  only concerned with the claim of the appellant in respect of  the additional work of hard rock cutting which the appellant was required  to  execute.  The  arbitrator  awarded  a  sum  of Rs.52,800 against the said item. The award was filed in  the High Court by the arbitrator alongwith his letter dated June 6,  1968.  Objections  were filed by  the  respondent  under Sections 30 and 33 of the Arbitration Act, 1940 (hereinafter referred to as ’the Act’). The said objections were  consid- ered by the learned single Judge of the Delhi High Court and by  order dated April 23, 1969. the said objections  of  the respondent  were rejected and it was ordered that the  award be made a rule of the Court. The respondent filed an  appeal against  the  said order and decree passed  by  the  learned single Judge. The appeal was partly allowed by the  Division Bench  of the High Court by judgment dated March  27,  1973, whereby the award as regards the claim for higher  remunera- tion  at the rate of Rs.200 per thousand cft. for the  addi- tional work of hard rock cutting was set aside. The award in respect  of other item of the claim relating to  expenditure incurred  by the appellant in reconstructing  the  retaining walls  after damage, was maintained. Aggrieved by  the  said decision of the Division Bench of the High Court the  appel- lant has filed this appeal after obtaining special leave.     As  indicated  earlier, this appeal is confined  to  the claim  of the appellant for payment for the additional  work of  hard  rock cutting which the appellant was  required  to execute.  The appellant has claimed a higher rate of  Rs.200 per thousand cft. for this additional work. Under the agree- ment the appellant was required to execute hard rock cutting to the extent of 7,54,530 cft. but actually he was  required to execute such cutting to the extent of 18.15 lacs cft. The extent  of  the additional work was about 10.60  lacs  cft., i.e.  about  140%. While undertaking the  execution  of  the additional work of hard rock 81 cutting  the appellant in his letter dates August  24,  1960 addressed  to the Executive Engineer, Central  Division  No. II, Gangtok, had requested for revision of the rate for hard rock  cutting and stated that the minimum working rates  for this  item are 52% above the tendered rates.  The  ExecUtive Engineer  by his letter dated September 2,  1960,  requested the  appellant to submit an analysis of rate for  hard  rock

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cutting.  The appellant submitted his analysis of  rates  on September  14,  1960 wherein after analysing  the  rates  of materials and labour the workable rate worked out to  Rs.200 per thousand cft. The Executive Engineer also got an  analy- sis  of  rates done on the basis of the  data  collected  on actual observation and he arrived at a figure of Rs.237  per thousand cft. By his letter dated November 9, 1961 addressed to the Superintending Engineer, Calcutta Central Circle  No. III, CPWD, Calcutta, the Executive Engineer recommended  the extra rate of Rs.200 per thousand cft. for work in excess of 20% of the stipulated quantity. The Superintending Engineer, in  his  letter  dated February 23, 1962  addressed  to  the Additional  Chief Engineer III, Central P.W.D.,  New  Delhi, made  a  similar  recommendation and  the  Additional  Chief Engineer  made a similar recommendation in his letter  dated July  16, 1962 addressed to the Secretary to the  Government of India, Ministry of Works and Housing. It appears that the Government  did not agree to pay at a rate in excess of  the rate  of Rs.129 per thousand cft. plus 2%  stipulated  under the  agreement.  The  dispute was,  therefore,  referred  to arbitration.     The arbitrator in his award has considered this item  of claim as under:  Claim                  Dispute         Award "The contractor claims  The arbitrator  The claim of the that for Item No 3 of   is to deter-    contractor is the agreement he should mine whether    partly justified. be paid at the rate of  under the       He should be paid Rs.200 per 1000 cft.    terms and con-  an amount of for the quantities      ditions of the  Rs.52,800 (Rupees beyond what is stipu-   contract, the   fifty two thousand lated in the agreement. claim is jus-   and Eight hundred                         tified and if   only) in addition                         so, to what ex  to the payment to                         tent.           be made to him at                                         relevant agreement                                         rate for the total                                         quantity of work                                         executed by him                                         under this item." 82     Before  the  learned single Judge it  was  submitted  on behalf of the respondent that the award is a speaking  award and  from the award it is apparent that the  arbitrator  has fixed rates for additional work done by the contractor which the arbitrator has no jurisdiction to do by reason of clause 12 of the agreement between the parties which provides  that additions  to the contract work shall be carried out by  the contractor  on the same conditions in all respects on  which he  agreed  to  do the main work and at the  same  rates  as specified in the tender for the mainwork. The learned single Judge  rejected the said contention and held that the  arbi- trator was determining only the value of the additional work at  the  rate  of  Rs.200  which  had  been  agreed  by  the Engineer-in-charge  and the Superintending Engineer  of  the Circle  as  contemplated by clause 12 and the scope  of  the inquiry before the arbitrator was only the quantity of  work which  was  additional to the quantities  specified  in  the agreement.  The learned Judges of the Division Bench of  the High  Court have disagreed with the said view and  have  ob- served  that  it  is clear from the statement  of  claim  as incorporated in the award, and the affidavit of the contrac- tor that there was no dispute with regard to the quantity of work  and the only dispute was with regard to the  rate  and that  the arbitrator had allowed a sum of Rs.52,800  to  the

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contractor in respect of the total quantity of work executed by  him under item No. 3 in addition to the agreed rate  and that there was no escape from the conclusion that the  arbi- trator  had  awarded the above ’amount by  applying  a  rate higher  than  the  agreed rate. The learned  Judges  of  the Division Bench were of the view that under clause 12 of  the agreement  the  provision with regard to the fixing  of  the rate  by the Engineer-incharge and the Superintending  Engi- neer of the Circle comes into play only when the  additional item  of  work does not form part of the main work  and  the rates  for  such work are not specified in the  schedule  of rates.  The learned Judges of the Division Bench  have  held that since the additional hard rock cutting job done by  the appellant  was part of the main work and the agreement  pro- vided the rate for the said item, there was no occasion  for the  Engineer-in-charge or the Suprer intending Engineer  to fix the rate for the extra quantity of hard rock cutting and that  the action of the arbitrator in allowing the  rate  to the  contractor in excess of the agreed rate for the job  of hard rock cutting was against clause 12 of the agreement and thereby the arbitrator had exceeded his jurisdiction.     As regards the award of an arbitrator under the Act. the law  is well settled that the arbitrator’s  adjudication  is generally considered binding between the parties for he is a tribunal selected by the parties and the power of the  court to set aside the award is restricted to cases 83 set out in section 30 of the Act, viz. (a) if the arbitrator has misconducted himself or the proceedings; or (b) when the award has been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid under Section 35; or (c) when the  award has been improperly procured or is otherwise invalid.  Under clause  (c) of Section 30 the Court can set aside  an  award which suffers from an error on the face of the award. It is. however.  not open to the Court to speculate, where no  rea- sons  are given by the arbitrator. as to what  impelled  the arbitrator to arrive at his conclusion. But the jurisdiction of  the  arbitrator is limited by the reference and  if  the arbitrator  has assumed jurisdiction not possessed  by  him, the  award to the extent to which it is beyond the  arbitra- tor’s  jurisdiction  would be invalid and liable to  be  set aside  (See: Jivarajbhai Ujarnshi Sheth and Others v.  Chin- tatnanrao  Balaji and Others, [1964] 5 SCR 480). This  posi- tion at law has been reiterated by the Constitution Bench of this  Court  in its recent decision  in  Raipur  Development Authority  and  Others  v. M/s  Chokharnal  Contractors  and Others, [1989] 2 S.C.C. 721. It has been held that an  arbi- trator  or umpire is under no obligation to give reasons  in support  of  the decision reached by him  unless  under  the arbitration  agreement or the deed of submission he  is  re- quired to give such reasons and if the arbitrator or  umpire chooses  to  give reasons in support of his decision  it  is open to the Court to set aside the award if it finds that an error of law has been committed by the arbitrator or  umpire on the face of the record on going through such reasons  and that  an award can neither be remitted nor set aside  merely on the ground that it does not contain reasons in support of the  conclusion or decisions reached in it except where  the arbitration agreement or the deed of submission requires him to give reasons.     In  the  instant case the arbitration agreement  or  the deed  of submissions did not require the arbitrator to  give reasons  and, therefore, the award cannot be  questioned  on the ground of an error on the face of the award. The learned

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Judges  of  the Division Bench of the High  Court  have  set aside the award in relation to claim No. 1 relating  payment for additional work of hard rock cutting on the ground  that in making the award the arbitrator exceeded his jurisdiction by allowing a rate to the contractor in excess of the agreed rate for the job of hard rock cutting against the terms  and conditions contained in clause 12 of the agreement.     The question which needs to be considered here is as  to whether  in awarding the sum of Rs.52,800 to  the  appellant for the additional 84 work of hard rock cutting executed by him the arbitrator has disregarded  clause  12 of the agreement.  The  said  clause reads as under: "The Engineer-in-charge shall have power to make any altera- tions  in,  commissions from, additions to  or  substituting for,  the  original specifications,  drawings,  designs  and instructions,  that  may appear to him to  be  necessary  or advisable during the progress of the work, and the  contrac- tor shall be bound to carry out the work in accordance  with any instructions which may be given to him in writing signed by the Engineer-in-charge, and such alterations,  omissions, additions  or  substitutions shall not invalidate  the  con- tract: and any altered, additional or substituted work which the  contractor  may be directed to do in the  manner  above specified  as part of the work shall be carried out  by  the contractor  on the same conditions in all respects on  which he  agreed to do the main work and at the same rates as  are specified in the tender for the main work. The time for  the completion  of the work shall be extended in the  proportion that the additional or substituted work bears to the  Origi- nal  work,  and the certificate  of  the  Engineer-in-charge shall  be conclusive as to such proportion. And if  the  al- tered, additional or substituted work included any class  of work  for which no rate is specified in this contract,  then such class of work shall be carried out at the rates entered in  the schedule of rates of the C.P.W.D. Schedule of  Rates 53-54 on which the estimated cost shown on page 1 of  tender is based provided that when the tender for the original work is a percentage above the schedule rates the altered,  addi- tional  or substituted work required as aforesaid  shall  be chargeable at the said schedule rate plus the same  percent- age  deduction  addition and if such class of  work  is  not entered  in the said schedule of rates, then the  contractor shall  within seven days of the date of the receipt  of  the order to carry out the work inform the Engineer-incharge  of the  rat.  e which it is his intention to  charge  for  such class of work, and if the Engineer-in-charge does not  agree to this rate he shall by notice in writing be’ at liberty to cancel his order to carry out such class of work and arrange to carry it out in such manner as he may consider  advisable provided always that if the contractor "shall commence  work or incur any expenditure in regard thereto before the  rates shall have been determined as lastly hereinbefore 85 mentioned,  then and in such case he shall only be  entitled to be paid in respect of the work carried out or expenditure incurred  by him prior to the date of the  determination  of the  rate  as aforesaid according to such rate or  rates  as shall be fixed by the Engineer-in-charge. In the event of  a dispute  the decision of the Superintending Engineer of  the Circle shall be final."     Under  this clause the Engineer-in-charge was  empowered to  make any additions to the original  specifications  that may  appear to him to be necessary or advisable  during  the

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progress  of the work and the contractor was bound to  carry out  the work in accordance with any instructions  given  to him in writing signed by the Engineer-in-charge. As  regards payment  for  the additional work which the  contractor  was directed to do it was provided that: (i)  The contractor shall be paid at the same rates  as  are specified in the tender for the main work; (ii)  If the additional work included any class of work  for which  no rate was specified in the contract then  the  con- tractor shall be paid at the rates entered into the schedule of  rates of the C.P.W.D. Schedule of Rates 53-54  on  which the estimated cost shown on page 1 of tender is based and if the  tender for the original work is a percentage above  the schedule  rates the additional work shall be  chargeable  at the   said   schedule  rates  plus   the   same   percentage deductions/addition; and (iii)  If  such  class of work is not entered  in  the  said Schedule  of  Rates then the contractor  should  inform  the Engineer-in-charge  within seven days of the receipt of  the order the rate he wants to charge for such class of work and the  Engineer-in-charge,  if he does not agree to  the  said rate,  may cancel the order for such additional work and  if the  contractor has commenced the work or incurred  expendi- ture in regard thereto before the determination of the rates the contractor shall be paid in respect of work carried  out or expenditure incurred by him prior to the determination of the rates according to such rates or rates as shall be fixed by the Engineer-in-charge and in the event of a dispute  the decision of the Superintending Engineer of the Circle  would be final. The case of the appellant is that clause 12 envisages alter- ations or 86 additions  within reasonable limits and an addition  to  the extent  of 140% in respect of one particular item  alone  is not covered by this clause and that in awarding Rs.52,800 as extra payment for the additional work the arbitrator has not acted  in  disregard of clause 12 and he cannot be  said  to have exceeded his jurisdiction.     A  clause making provision for additions and  variations is  generally found in building and construction  contracts. In  Hudson’s Building and Engineering Contracts 8th Edn.  it has been observed: "It  may  be that it can be inferred from the terms  of  the contract that the power to order extras, although apparently unlimited,  is  in fact limited to ordering extras up  to  a certain value and, in such a case, extras ordered in  excess of that amount, although work of a kind contemplated by  the contract,  may  yet be quite outside the terms of  the  con- tract." (p. 294) "If the extra work ordered is outside the contract the terms of the contract have no application." (p. 296)     In this context it would be relevant to take note of the decision of the Court of Appeal in England in Parkinson (Sir Lindsay) & Co. Ltd. v. Commissioners of His Majesty’s  Works and  Public Buildings, [1949] 2 K.B. 632. In that  case  the contractors  had agreed with His Majesty’s Commissioners  of Works  and  Public Buildings to erect  an  ordnance  factory according  to the general conditions and specifications  and bills  of quantities and drawings annexed for  the  contract sum  of Pound 3,500,000 and under the general conditions  of contract  the  Commissioners had power,  at  their  absolute discretion,  to modify the extent and character of the  work or to order alterations of or additions to the works and  it was  the  duty of the contractor to comply with  the  archi-

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tect’s instructions in this respect. In the contract it  was also  provided that it is probable that further work to  the value of approximately, Pound 500,000 would be ordered on  a measured basis under the terms of the contract. The contract was amended by a deed of variation and it was provided  that exceptional  methods should be used to hasten the  work  and that a system of uneconomic working should be introduced  to bring about the completion of the factory by the date  fixed by  the contract. The Commissioners ordered work to be  exe- cuted greatly in excess of the amount contemplated  although not  different in character from that covered by the  varied contract,  so that the works could not be completed until  a year beyond the time anticipated and the actual cost of the 87 contracts was L6,683,056 which amount had been paid to  them          - alongwith  L300,000  the maximum profit under  the  deed  of       - variation.  During the progress of the work the  contractors had.  complained to the Commissioners that they  were  being called on to execute more work than was contemplated by  the varied contract and claimed that they were entitled to extra remuneration for the work in excess of that contemplated but they  proceeded with the work at the request of the  Commis- sioners  leaving  the issue to be  subsequently  decided  by arbitration. The arbitrator found that the estimated cost of the work under the varied contract was L500,000 and  awarded                                   - L90,298  as proportionate or reasonable profit or  remunera-    - tion  to the contractors for the additional work.  The  said award  was upheld by the Court of Appeal on the view that  a term must be implied in the varied contract that the Commis- sioners should not be entitled to require work materially in excess  of the sum of L5,000,000 and that such  excess  work                  - having been done by the contractors, the Commissioners  were liable to pay the contractors reasonable remuneration there- fore. On behalf of the Commissioners reliance was placed  on Condition 33 of the original contract which gave the Commis- sioners  an unlimited power of ordering extras even  to  the extent  of altering the character of the work. The  contrac- tors,  on the other hand, placed reliance on  the  following observations  of  Mc Cardie, J. in Naylor, Benzon &  Co.  v. Krainische Industrie Gesellschart, [1918] 1 K.B.331: "It  is  essential to remember, however,  that  words,  even though general, must be limited to circumstances within  the contemplation of the parties."     Accepting the contention urged on behalf of the contrac- tors Asquith L. J. observed: "If the original contract plus the deed are read without any implied limitation on their literal meaning, the result,  as indicated  above,  is that after L300,000  profit  has  been                             - earned by the contractor, he can be compelled to labour like the Danaids without reward or limit, or any further "extras" which  the commissioners may elect to exact from him,  ’till the  last syllable of recorded time.’ Only the most  compel- ling language would induce a court to construe the  combined instruments as placing one party so completely at the  mercy of the other. Where the language of the contract is  capable of  a  literal and a more restricted meaning,  all  relevant circumstances can be taken into account in decid- 88 ing whether the literal or a more limited meaning should  be

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ascribed to it". (p. 662) Similarly Singleton L.J. has observed: "1  find myself unable to agree with the submission  of  Mr. Rewcastle  that under the contract as varied by the deed  of variation, the contractors would have been bound to continue making alterations and additions, if ordered, for years  and years,  without  any extra payment by way  of  profit.  That would  have  led  to manifest absurdity  and  injustice,  as Mathew,  J. said in Bush v. Whitehaven Trustees, (1).  There must be a limit." (p. 673)     Here  also  the question has often  arisen  whether  the contractor  under the variation clause is liable to  execute the extra or additional quantities of the tendered items  at the  tendered rates to an unlimited extent. In  some  awards given by the arbitrators in the Central Public Works Depart- ment  of the Government of India the variation of  the  ten- dered quantities under the variation clause in the  contract has  been restricted to 10% beyond which the contractor  was entitled  to  claim  as extras and these  awards  have  been accepted and implemented by the Government. It appears  that the  standard form of contract of the Central  Public  Works Department has been amended and now it specifically  permits for  a  limit of variation called "deviation limit"  upto  a maximum  of  20% and upto such limit the contractor  has  to carry  out the work at the rates stipulated in the  contract and for the work in excess of that limit at the rates to  be determined  in accordance with clause 12-A under  which  the Engineer-in-charge can revise the rates having regard to the prevailing  market  rates (See: Gajaria’s  Law  relating  to Building and Engineering Contracts in India, 3rd Edn., pages 410-412).      In  the  instant case, it appears  that  the  Executive Engineer,  the  Superintending Engineer and the Additional Chief  Engineer  in their letters dated  November  9,  1961, February  23, 1962 and July 16, 1962 respectively  have  ex- pressed the view that the additional work under the terms of the contract may be confined to 20% and the appellant may be paid at the rates prescribed in the contract for 20% of  the additional  work  and for the extra quantity  of  additional work  he  may  be paid remuneration at  the  increased  rate taking into account the increased costs in execution of  the said  work  on account of the peculiar nature of  the  work. While considering the claim of the appellant the 89 arbitrator  was required to consider the terms of  the  con- tract and to construe the same. It was, therefore, permissi- ble for the arbitrator to consider whether clause 12 of  the contract enables the Engineer-incharge to require the appel- lant  to  execute  additional work without any  limit  or  a reasonable  limit  should be placed on the quantity  of  the additional  work,  which the appellant may  be  required  to execute  at the rate stipulated for the main work under  the contract.  For that purpose the arbitrator could  take  into consideration  the practice prevalent in the Central  Public Works  Department in this regard as well as the  correspond- ence between the appellant and the authorities including the letters  dated November 9, 1961, February 23, 1962 and  July 16,  1962  of  the Executive  Engineer,  the  Superintending Engineer  and  the Additional  Chief  Engineer  recommending payment of remuneration at the increased rate for the  addi- tional  work in excess of 20% of the quantity stipulated  in the  contract. The appellant was claiming increased rate  of Rs.200  per 1000 cft. for the entire quantity of  additional work.  The arbitrator did not accept the said claim  of  the appellant  in full and has partly allowed the said claim  by

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awarding  Rs.52,800  which  means that  the  arbitrator  has awarded the increased rate only for a part of the additional work  of hard rock cutting which the appellant was  required to  execute.  The arbitrator was entitled to do  so  on  the construction placed by him on clause 12 of the contract and, therefore,  it  cannot be said that in awarding the  sum  of Rs.52,800 for the additional work the arbitrator has exceed- ed his jurisdiction and the award is vitiated by an error of jurisdiction.  In the circumstances, we are unable to  agree with  the  judgment of the learned Judges  of  the  Division Bench of the High Court on this part of the claim.     The  appeal is, therefore, allowed and the  judgment  of the Division Bench of the High Court setting aside the award of  the  arbitrator with regard to item No. 1 of  the  claim relating to payment for additional work of hard rock cutting is  set  aside and the order passed by  the  learned  Single Judge  upholding the award of the arbitrator in this  regard is restored. The appellant will be entitled to his costs. Civil Appeal No. 323 of 1976     This appeal is directed against the order dated May  23, 1975  of  the  High Court of Delhi whereby  the  High  Court rejected C.M. No. 1300 of 1974 filed by the appellant  under Order 41, rule 21 read with Section 151 C.P.C., praying that the ex-parte judgment dated March 27, 1973 in F.A.O.  (O.S.) No. 35 of 1969 may be set aside and the appeal be  re-admit- ted to its original number and the appeal be heard 90 and decided on merits. The appellant has filed C.A. No.  322 of  1976 against the said judgment of the High  Court  dated March  27,  1973 in F.A.O. (O.S.) No. 35 of 1968.  The  said appeal  has been allowed by the judgment given today.  Since the judgment of the High Court dated March 27, 1973 has been set aside by this Court in C.A. No. 322 of 1976 this  appeal does  not  survive  and it is disposed  of  accordingly.  No costs. G.N.                                   Appeal disposed of. 91