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REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL  NO. 2726    OF 2004

Ravindra & Associates .... Appellant

Versus

Union of India .... Respondent

O R D E R

1. Heard learned counsel for the parties.

2. This appeal by special leave has been filed against  

the judgment and order dated 15.1.2003 of the High Court of  

Kerala at Ernakulam whereby the High Court has allowed the  

appeal  filed  by  the  respondent  herein  against  the  order  

dated 9.10.1996 of the Principal Sub Judge, Kochi.

3. It appears that the appellant was awarded a contract  

for construction of married accommodation for petty officers  

of the Navy at Rameswaram, Kochi.  The value of the work  

awarded  was Rs. 5,44,47,087/-.  The work which commenced on  

24.12.1990 had to be completed by 23.6.1993 and admittedly  

it was completed by the said date.   

4. Disputes arose between the parties and the parties  

invoked  the  arbitration  clause  provided  in  the  General  

Conditions of Contract.  The claimant-appellant made claims  

under 25 heads.  The arbitrator awarded to the claimant a

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sum of Rs. 70,94,265/- and allowed simple interest at the  

rate of 18% from the date of accrual for cause of action  

till date of reference, from the date of reference till date  

of award and from the date of award till the date of decree  

or date of payment whichever is earlier.  An application by  

the appellant-claimant was filed before the Principal Sub  

Judge, Kochi to make the award a Rule of the Court.  The  

respondent-Union  of  India  also  filed  an  application  for  

setting aside the award of the arbitrator.  The Sub-Judge  

allowed the application of the appellant and made it a Rule  

of the Court, but awarded 12% interest on the amount awarded  

from the date of decree till realization and dismissed the  

application  of  the  respondent-Union  of  India.   Aggrieved  

against the order dated 9.10.1996 of the Sub-Judge, Kochi  

the respondent herein preferred an appeal before the High  

Court which has been allowed by the impugned judgment and  

order.  Hence, the present appeal.

5. In our opinion, the High Court wrongly interfered  

with the arbitration award and practically acted as a Court  

of Appeal, which it could not do (See : State of Rajasthan  

Vs. Puri Construction Co. Ltd. (1994) 6 SCC 485; Trustees of  

Port of Madras Vs. Engineering Construction Corporation Ltd.  

(1995) 5 SCC 531; EOC India Ltd. Vs. Bhagwati Oxygen Ltd.

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(2007) 9 SCC 503 and G. Ram Chandra Reddy & Company Vs.  

Union of India & Anr. (2009) 6 SCC 414).

6. As regards the allegation that while in the contract  

mixture provided for in the contract is M/15, but in fact,  

M/20 was used, it has been held by the arbitrator that this  

was  done  at  the  insistence  of  the  Department.   The  

arbitrator  also  held  that  the  relevant  drawing  for  M/15  

mixture and the drawing relied upon by the respondent did  

not find place in the list of drawings forming part of the  

tender documents.  Hence, in our opinion, the High Court has  

wrongly interfered with the findings of the arbitrator as  

regards claim Nos. 1 and 9.        

7. As regards claim No. 10(b) relating to payment of  

over-time to labour it has been contended by the learned  

counsel for the appellant that there was a delay in supply  

of stores by the respondent and therefore the labour had to  

be retained for a longer period of time than envisaged under  

the contract and hence overtime charges had to be paid to  

the labour.   

8. In this connection, the learned counsel appearing  

for  the  respondent  has  relied  upon  the  decision  of  this  

Court in the case of Ramnath International Construction (P)  

Ltd. Vs.  Union of India (2007) 2 SCC 453.  We have gone

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through the said decision.  In our opinion that decision has  

no  application  to  the  case  at  hand  as  in  that  case  the  

contractor  sought  and  obtained  extension  of  time  for  

execution  of  the  contract  whereas  in  the  present  case  

neither  extension  of  time  was  sought  for,  nor  in  fact,  

granted  for  completion  of  the  contract.   Hence,  the  

aforesaid decision is clearly distinguishable. Clause 11(c)  

of the General Conditions of Contract has no application in  

this case at all.   

9. As regards Claim No. 12 relating to difference in  

price of wood frames for doors and windows, it is stated  

that no doubt the contract provided for teak wood but it was  

changed to second class hard-wood at the insistence of the  

Department.  The High Court has in this regard relied upon  

the  decision  of  the  Board  of  Officers  who  has  made  its  

assessment  by  relying  upon  Clause  62(G)  of  the  General  

Conditions of Contract which provided that the decision of  

the Garrison Engineer would be final unless it was set aside  

in appeal.  In the present case, the price was not fixed by  

the  Garrison  Engineer  at  all.   Moreover,  the  Board  of  

Officers had made an inquiry in the matter after three years  

and the arbitrator, in our opinion, rightly held that such  

an inquiry was of no consequence.  

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10. As  regards  Claims  No.  20  and  23  relating  to  

escalation  in  prices  of  material,  in  our  opinion,  the  

arbitrator has given his findings of fact and the High Court  

misread Clause 18 of the Special Conditions of Contract.   

11. For the reasons given above, we are of the opinion  

that  the  High  Court  has  wrongly  interfered  with  the  

arbitration award.  Accordingly, the appeal is allowed and  

the impugned judgment and order is set aside.   

12. We  may  also  point  out  that  in  para  12  of  the  

judgment there appears to be a typographical error inasmuch  

as the Principal Sub-Judge Kochi has reduced the interest  

from 18% to 12% and not 10%, as wrongly recorded in the  

impugned judgment.  We make it clear that the appellant is  

entitled to interest @ 12%, as awarded by the Principal Sub  

Judge, Kochi.

Appeal allowed.  No order as to the costs.

.....................J.       (MARKANDEY KATJU)

.....................J.                (ASOK KUMAR GANGULY)

NEW DELHI; OCTOBER 21, 2009