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CASE NO.: Appeal (civil) 1329  of  1995

PETITIONER: NATIONAL FERTILIZERS ...

       Vs.

RESPONDENT: PURAN CHAND NANGIA

DATE OF JUDGMENT:       17/10/2000

BENCH: M.J.Rao, K.G.Balakrishnana

JUDGMENT:

L.....I.........T.......T.......T.......T.......T.......T..J

     M.JAGANNADHA RAO,J.

     This appeal, which arises out of an award passed

     under the Indian Arbitration Act, 1940 concerns the

     interpretation of a ’variation’ clause in the contract

     which allows the appellant, the National Fertilizers

     Ltd.,  to  issue directions to the contractor  varying the

     extent   of  the  contract   work,  both  upwards  and downwards

     upto 25%.  Question is whether ( as contended by the

     appellant) the said 25% is to be arrived at by taking

     into account the net overall increase in the work i.e.

     by adding up the increases in work and deducting

     therefrom the decreases in work or whether ( as

     contended  for the respondent-contractor) the 25%  was to

     be computed by adding up the total variations, both

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     involving the increase in the work and the decrease in

     the work.  The importance of the point is that if the

     variations exceed 25% of the contract price, the

     contractor  is not confined to the contract rates  but can

     claim market rates.

     The disputes were referred to arbitration and the

     arbitrator   gave   a     non-speaking   award.    The arbitrator’s

     award  was set aside by the learned District Judge  on the

     ground that the reference was bad.  He, however, gave

     alternative findings accepting the conclusions in the

     award.   As  the  learned   District  Judge  held  the reference

     was bad, he set aside the award.  The contractor

     appealed to the High Court which by its judgment in

     Civil Misc.(First)Appeal No.211 of 1991 dated 18.10.94

     held  the  reference was valid and allowed the  appeal and

     directed  the  award  be made Rule of  Court.   It  is against

     the said judgment that this appeal is preferred.

     The facts of the case are as follows.  Quotations

     were called by the appellant for works amounting to

     Rs.3,39,88,000.  It appears that the respondent

     submitted his quotation which was opened on 12.9.84.

     His  tender was accepted.  But, instead of giving  him the

     entire contract, the appellant awarded only 48% of the

     work of Rs.3,39,88,000 amounting to Rs.1,52,94,235, by

     letter dated 5.11.84.  Part I of the work was upto

     Rs.94,34,323 and Part II was upto Rs.94,34,323.

     Subsequently, letter of intent was issued on 5/6.11.84

     and then a work order was issued on 22.1.85.  The said

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     letter dated 22.1.85 of the appellant contained the +

     25% clause which permitted rates higher than the

     contract rates to be paid, as an exception.  It stated as

     follows:

     "The  contract price has been arrived at on the  basis of  your  quoted  rates  in your  tender  and  the  enclosed schedule  of  quantities, your quoted rates shall hold  good for  a variation of+25% (plus/minus twenty five percent)  of the  contract price stated in this work order, beyond  which your quoted rates will be suitably revised subject to mutual agreement."

     It appears the site was not made available on time

     and there were lot of disputes between the parties.

     There was correspondence between the appellant and

     respondent.  The appellant varied the works both

     upwards   and  downwards.   As,   according   to   the contractor,

     the sum total of variations went above 25% of the

     contract  value, the contractor asked for higher rates in

     his letters dated 20.11.86, 8.12.86 and 9.12.86.  The

     final bill was submitted by the contractor on 9.12.86

     for  Rs.85,98,705  as  detailed  in  the  Annexure   A thereto.

     This plea for extra rates was rejected on 31.1.286 by

     the appellant stating that the + 25% clause applied to

     the overall net increase.  The letter stated:

     "......no  enhancement  is justified unless the  total contract  value  of the work has increased or  decreased  by 25%.   Enhancement  of rates is therefore not on account  of any  increase  or  decrease in the  quantity  of  individual items.......on completion of the entire work, it is expected that  there will not be any variation in the contract  value within the limits of + 25%."

     The letter also blamed the contractor for delay in the

     work.

     It is not denied that the original date of

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     completion was 30.6.86 and was extended upto 30.10.86.

     The total value of work done upto 30.10.86, according

     to the appellant, was Rs.1,01,84,968.58.  According to

     the appellant, the Contractor abandoned the work in

     November, 1986.  According to the contractor, the

     appellant committed breach.  Another contractor was

     appointed by the appellant for the balance work and in

     fact, a cross claim for compensation for Rs.7.64 lakhs

     was raised against the respondent.

     On 26.12.86, the respondent claimed reference to

     arbitration.  By consent, the District Court appointed

     Sri   Dharwadkar,  Ex.    General  Manager,   Northern Railway,

     as sole arbitrator.  It was stated that he was also

     connected with the appellant.  He entered on the

     reference on 22.1.88.  The arbitrator in his award

     accepted the plea of the contractor for higher rates

     upto the extended date.  On the disputed claim No.4 he

     held as follows:

     Payment  of  final bill, 50% of the revised  including extra rates amount awarded.  for increase & decrease Balance escalation   in   the   quantities  at   on   the   original Rs.80,08,000(approx.)  rate only may be Revised on 17.6.1986 as allowed upto Rs.70,98,852.67 30.10.86

     In other words, the arbitrator awarded 50% of

     Rs.70,98,852.67  towards increase in rates.  So far as the

     cross  claim  by  the appellant for  compensation  for delay,

     the  arbitrator  negatived the same.  That would  mean that

     the breach was not by the contractor.

     The appellant filed an appeal before the District

     Court for setting aside the award.  (No appeal was

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     preferred so far as the rejection of the cross-claim)

     The District Court, as already stated, set aside the

     award on the ground that the reference itself was bad.

     But, it gave alternative findings on merits.  It held

     that,  as the award was not a reasoned award, but  was one

     made on consideration of all documents, the NIT, the

     tender papers, the offer, the acceptance and

     correspondence,  it was not permissible to probe  into the

     mind  of the arbitrator.  The District Court  referred to

     Madan  Lal  vs.   Hukum  Chand  [1967  (1)  SCR  106], Hindustan

     Steel  Works  vs.  Rajeswar Rao [1987 (4) SCC 93]  and held

     that  the  award  was not liable to be  set  aside  on merits.

     The District Court also found (para 38) that the value

     of variations in the work, both upwards and downwards

     exceeded 25% and was in fact more than 100%.  It said:

     "Because  of  modifications in quantities of items  of work,  which  the  respondent   required  the  applicant  to execute,  the deviation difference was more than 100%,  what to  talk  about  25%.   Therefore, the  arbitrator  has  not misconducted in awarding 50% of the claimed amount."

     It is necessary to explain what the Arbitrator

     meant by ’Balance of escalation’.  As pointed by the

     respondent in his counter filed in this Court, it

     appears that 75% of the escalation was released by the

     appellant  and  the  balance 25% was not paid  on  the ground

     that the appellant slowed down.  While the matter was

     pending  before the arbitrator, the appellant prepared a

     final  bill  and the balance 25% was also allowed  but only

     upto 30.11.85.  The balance escalation was not allowed

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     upto 30.10.86, on the ground that the delay was

     attributable to the contractor.  It was this balance

     that was allowed upto 50% by the arbitrator.  (These

     facts are clear from the reply of the appellant on

     18.3.88 filed before the arbitrator).

     The High Court, as already stated, held that the

     reference  was  maintainable  and  it  set  aside  the judgment

     of  the learned District Judge and directed the  award be

     made a Rule of Court.

     In this appeal, it was contended by the learned

     senior counsel for the appellant Sri Bhaskar P.Gupta

     that the arbitrator acted without jurisdiction in

     granting  extra  amount or higher rates for  the  work done

     upto  the extended date 30.10.86.  This was prohibited by

     several clauses of the NIT, Special and general

     conditions and under annexure R attached to the work

     order   dated  22.1.85.   The   variation   limit   of plus/minus

     25% of the contract price was applicable on the ’total

     contract  price’ and not on any individual  quantities or

     items.   Any  revision of rates would  be  permissible only

     after the total contract price stood increased or

     decreased   beyond  25%  on   actual   execution   and completion

     of the contract project.  In any event, the arbitrator

     could  not have allowed a uniform increase of 50%  for all

     items.

     On the other hand, Sri S.Ganesh, learned counsel

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     for the respondent-contractor contended that the

     question was not one of increase or decrease in total

     contract  value.   If the sum total of the  variations i.e.

     both plus and minus exceeded 25%, the contract rates

     were  no  longer  binding and market rates had  to  be paid.

     The learned District Judge had found, as a fact, that

     the  sum  total of the additions and deletions in  the work

     exceeded 100%.  A tabular statement in this behalf was

     also filed before us to show that the total variation,

     both  upward and downwards in the work was of a  value of

     more  than  25% of the contract price, and in fact  it was

     more than 100%.

     On the above contentions, the following points

     arise for consideration.

     (1) Whether, in view of the various clauses in the

     NIT, special and general conditions, schedules and

     Annexure  R, the arbitrator acted without jurisdiction in

     revising the rates and in ignoring the contract rates

     which were to be "firm" upto date of extension of the

     contract?

     (2) Whether, the case fell within the exception of

     escalation  of  "+25% of contract price".  If so  what was

     the  meaning of that clause?  Did it mean the  overall net

     increase  in contract price after deducting the  value of

     the reduction in work from the value of the additional

     items  of work (as contended by the appellant) or  did it

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     mean  that  the  plus and minus variations had  to  be added

     or pooled together (as contended by the contractor) to

     find  out  if  they  were together above  25%  of  the contract

     price?

     (3) Was the arbitrator wrong in granting 50% out of

     the escalation claimed by the respondent?

     Points 1 and 2:

     It is true that there are various conditions in

     the NIT, the Tender Form and the Special and General

     Conditions  that no extra amount or higher rates  will be

     allowed  under  any circumstances  whatsoever.   These have

     been strongly relied upon by the appellant.  We shall

     refer to them.

     The Notice inviting tender (NIT) is dated 24.7.84.

     The  instructions to the tenderer require 4  envelopes to

     be submitted.  Envelope 1 related to earnest money

     deposit, envelope 2 to contain tenderer’s conditions,

     envelope  3  to  contain tender  documents  as  filed. After

     envelopes  1  to  3 were opened and  discussions  were over,

     envelope   4  which  contained   papers  relating   to resultant

     modification,  were opened.  The Tender Form contained an

     undertaking to be signed by the contractor that he had

     seen the NIT, the instructions and the special

     conditions, the particular specifications and the

     general  conditions  of contract Schedules A, B and  E and

     the drawings.  Schedule A contained the rates of work

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     fixed  by  the appellant and Schedule E contained  the time

     stipulations.   It  also  stated  in  para  11   which referred

     to deviations/variations as follows:

     "Para   11:   Maximum  limit   +(plus/minus)   25   of deviation/ (twenty five) per- variation cent of the contract value"

     That meant that the appellant’s officers could entrust

     work upto the said variations and the contractor would

     have to execute the same without any extra payment or

     higher rate.

     In the Special conditions, it was stated in para

     1.4   that  the  rates   quoted  would  remain  "firm" throughout

     the  pendency  of  contract;  including  the  extended period

     and "shall not be subject to any sort of escalation"

     even if labour costs, material or petroleum oil and

     lubricant  (P.O.L.) prices increased.  The rates  were to

     be quoted by the tenderer to the approximate Bill of

     quantity.  Para 4 dealt with ’additional works and

     states  that’,  if  required, the  contractor  was  to execute

     works  to the extent of an extra 25%.  "No  adjustment of

     rates  shall  be made for the additional work  ordered upto

     this  limit.   Terms  and conditions of  the  contract remain

     unaltered.

     The General Conditions of the contract defined

     ’contract  value’ in clause 3(e) to mean, in the  case of

     item  rate  contracts,  the cost of works  arrived  at after

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     execution of the quantities shown in the schedule of

     quantities  of the items rates quoted by the  tenderer for

     variations.  Para 11 of the general condition also

     required   additional  work  to  be  carried  and   it permitted

     "alterations,  omissions,  additions" to the work,  at the

     same price as agreed.  Schedule A to the general

     conditions stated in para 1.00.02 that

     "The  total  quantities  of work may vary upto  +  20% (later amended as 25%) on either side and nothing extra will be paid on this account."

     Para 1.00.05 also stated that the quantities in the

     schedule were approximate and nothing extra would be

     paid  above the quoted rates if there was any increase or

     decrease in quantities.

     It will be noticed that the above clauses

     permitted increase or decrease in the work upto 25% of

     the contract price.  As to what should happen if the

     value of the variations exceeded 25% of the contract

     price  was stated in Annexure R attached to the letter of

     the appellant dated 22.1.85 by which the general and

     special conditions were modified.  This clause in

     Annexure R has already been extracted and it permitted

     higher rates to be paid if the "variation is + 25%

     (plus/minus, twenty five percent) of the contract

     price".

     The question therefore is as to what is the

     meaning of this clause.  The arbitrator, as already

     stated,  granted  50% of the extra rates obviously  on the

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     basis that the case fell within the above exception.

     The District Court found that the total variations -

     both plus and minus - exceeded 100%.

     The contention of the appellant is that the above

     exception is applicable only to the net difference

     between  the  increases and decreases and if it  works out

     to more than 25% of the contract value, then rates can

     be revised.  For example if the contract value is Rs.

     50  lakhs,  the  increases are of a value of  Rs.   15 lakhs

     and  the  reductions are of a value of Rs.  10  lakhs, the

     net difference according to the appellant, in the

     overall  contract value is only Rs.  5 lakhs and being 10%

     of Rs.  50 lakhs, there can be no escalation in rates.

     On the other hand, the respondent contends that

     one has to add up the total variations both plus and

     minus and hence, in the above example, the value of

     total variation, both plus and minus amounts to Rs.25

     lakhs  which works out to more than 25% ( in fact 50%) of

     the contract price and the enhanced rates will be

     applicable.

     In our opinion, the construction put on this

     escalation clause by the learned counsel for the

     respondents,  Sri  S.  Ganesh is the proper  one.   On that

     basis, this case would come within the exception and

     there was no error of jurisdiction on the part of the

     arbitrator.

     The point raises certain important issues

     concerning integrity of the contract.  The concept of

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     variation of the question of work is no doubt a common

     feature of works contracts.  This is because in

     contracts  relating  to major works, the estimates  of work

     at the time the tenders are invited can only be

     approximate.  But, it was also realised that the power

     of the employer to vary the terms relating to the

     quantum of work cannot be unlimited.  In Hudson’s

     Building and Engineering Contracts (8th Ed.) (pp.294-

     296) it has been pointed out that this power

     "although  unlimited,  is in fact limited to  ordering extras upto a certain value."

     McCardie,   J.    in  Naylor,   Benson  &   Co.    vs. Krarinische

     Industrie  Gessellschaft  [1918 (1) KB 331] said  that the

     words "even though general, must be limited to

     circumstances   within   the   contemplation  of   the parties".

     In   Parkinson   (Sir  Lindsay)  &  Co.    Ltd.    vs. Commissioners

     of Works and Public Buildings [1949 (2) KB 632],

     Asquith,  LJ.   stated  (at   p.682)  that  the  words enabling

     the  employer to add extra work, though wide, have  to be

     limited for otherwise it would amount to ’placing one

     party so completely at the mercy of the other’.

     Singleton, LJ.  observed (p.673) that, to confer an

     unbridled power on the employer to vary the quantities

     of   work  would  lead   "to  manifest  absurdity  and injustice

     as  stated by Mathew, J.  in Bush vs.  Whitehaven Town &

     Harbour Trustees (I) (1888) 52 J.P.  392.

     We may also state that under the general law of

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     Contracts,  once  the  contract is entered  into,  any clause

     giving  absolute  power  to one party to  override  or modify

     the  terms  of  the contract at his sweet will  or  to cancel

     the contract -even if the opposite party is not in

     breach,   -  will  amount  to  interfering  with   the integrity

     of  the  contract  (Per Rajamanner,  CJ.   in  Maddali Thathiah

     vs.   Union  of India AIR 1957 Mad.82).  On appeal  to this

     Court, in that case, in Union of India vs.  Maddali

     Thathiah [ 1964(3) SCR 61 =AIR 1966 SC 1724] the

     conclusion was upheld on other grounds.  The said

     judgment of the Madras High Court was considered again

     in  Central Bank of India Vs.  H.F.  Insurance Co.   ( AIR

     1965   SC  1288)  but   the  principle  enunciated  by Rajamanner

     CJ was not differed from.  (See the discussion on this

     aspect in Mulla’s Contract Act, (10th Ed.) PP.371-372,

     under Section 31 of the Indian Contract Act.)

     There is thus good reason as to why, in modern

     works  contract,  a limitation upto 20% (now 25%)  has been

     put on this power of alteration, both plus and minus.

     (See   Gajaria’s   Law  Relating   to   Building   and Engineering

     Contracts in India, 3rd Ed., pp.410-412).  Such a

     limitation upto 20% or 25% is now imposed under clause

     12A of the Standard Terms of CPWD Contracts.

     These aspects were discussed in detail in

     S.Harcharan  Singh  vs.  Union of India [1990 (4)  SCC 647]

     by  a three Judge Bench of this Court.  That  judgment

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is

     very  much  relevant  to  the  present  case  both  on principle

     and  on  facts.   It  was  held  by  S.C.Aggarwal,  J. speaking

     for the Court that the arbitrator could award higher

     rates on the analogy of clause 12 A of CPWD contracts

     for  excess variations beyond 20%.  The contract  rate was

     Rs.129 per thousand cft plus 2% but the contractor

     claimed  at  Rs.200  per cubic ft in  respect  of  the excess

     over 20% extras.  The arbitrator upheld part of the

     enhancement claimed and that was upheld by this Court.

     Clause 12A of the CPWD contract which permits

     variations upto 20% again come up for consideration

     recently  in Himachal Pradesh State Electricity  Board vs.

     R.J.Shah & Co.  [1999 (4) SCC 214].  In that case, the

     arbitrator gave a non-speaking award on disputes 1, 2

     and  4.   Dispute  1  related to  revision  of  rates. Dispute

     2 was whether the quantities were payable at the

     deviated rates, where quantities of individual items

     exceeded the deviation limit.  Dispute 4 was as to

     whether  the  quantities  to  be  considered  for  the purpose

     of deviation limit.  Under clause 3(2)(e) (ii)

     deviations upto 20% were liable to be carried without

     any extra.  The contention of the department was that

     the  contract  was an items rate contract and that  it was

     only  those  items which crossed the  deviation  limit that

     were  to be paid at revised rates.  The rate for  work in

     excess of the deviation limit was to be fixed only as

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     per  clause 12A.  It was contended for the Board  that the

     arbitrators acted beyond their jurisdiction and could

     not have revised the rates of items merely because the

     overall value of the contract which was executed

     exceeded 20%.  On the other hand, it was contended for

     the contractor that the claim as to revised rates must

     be deemed to have been specifically referred to the

     arbitrator,  the  arbitration clause being  wide,  and that

     the  construction  put  on  the   20%  clause  by  the arbitrator

     could not be held to be vitiated by any error apparent

     on  the face of the word.  Kirpal, J.  after referring to

     a number of judgments dealing with the power of the

     arbitrator to interpret the terms of the contract, -

     including Hindustan Construction Co.  Ltd.  vs.  State of

     J&K  [1992 (4) SCC 217], K.R.Ravendranathan vs.  State of

     Kerala [1998 (9) SCC 410],-held that the grant by the

     arbitrator  at  a rate higher than the  contract  rate could

     not be treated as outside his jurisdiction.  It was

     observed:

     "The  construction  placed  on  the  contract  by  the contractor cannot be said to be an implausible one.  Even if the  arbitrators  considered  the   terms  of  the  contract incorrectly,  it cannot be said that the award was in excess of jurisdiction."

     It was, however, contended before us for the

     appellant that by a wrong construction of the clause

     permitting revised rates as stated in Annexure R, the

     arbitrator could not have clutched at jurisdiction he

     did not have.  The question then is whether the

     arbitrator  clutched at jurisdiction he did not  have, by

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     an  unreasonable construction of the clause "+  (25%)" for

     purposes of escalation.

     We are of the view that the abovesaid clause

     "+25%"   was  understood  by   the  arbitrator  in   a reasonable

     manner  as being applicable to a case where the  value of

     the sum total of the additions and deletions exceeded

     25% of the contract price.  That construction, in our

     view, cannot be said to be vitiated by any serious

     error of law.  The following are our reasons.

     When a contractor bids in a contract, he has to

     offer reasonable rates for the works which are both

     difficult  to  perform and other works which  are  not that

     difficult  to  perform.   Every  contractor  tries  to balance

     his rates in such a manner that the employer may

     consider his offer reasonable.  In that process the

     contractor  tries to get a reasonable margin of profit by

     balancing  the  more  difficult (and  less  profitable items)

     and  the  less difficult (and more profitable  items). His

     bid is, normally, a package.  If the employer is

     permitted in law to make variations upwards and

     downwards - even if it be upto a limit beyond which

     market  rates become payable - then the interpretation of

     the  clause  must be one which balances the rights  of both

     parties.    For  example,  if   the  plus  and   minus variations

     go beyond 25% and are made in a manner increasing the

     less   profitable  items  and   decreasing  the   more

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profitable

     items, and if the net result of the contract is to be

     the basis, as contended by the appellant, then it may

     work  out that the contractor could be made to perform a

     substantially  new  contract  on the  same  contracted rates.

     In fact, if the said reasoning of the appellant is

     accepted and if, in a given case, the value of the

     increases in unprofitable items is 50% of the contract

     value and the value of the reductions of the remaining

     more profitable items is 50% of the contract value, it

     could  still  be contended for the appellant that  the net

     variation was nil, even though that was a situation

     where the contract had been substantially modified and

     was   almost  a  different   contract  from  the   one stipulated.

     Such an unreasonable construction is to be avoided and

     was rightly avoided by the arbitrator.

     The additions and decreases in work are, in our

     opinion, therefore both independent for the purpose of

     finding out the + 25% variation and have to be pooled

     together.   The arbitrator was right in thinking  that the

     case  fell  within the exception.  Obviously, he  must have

     felt that the plus and minus variations are more than

     25% and that the contract rates are no longer binding.

     His construction of the clause appears to be rational

     and just and cannot be said to be unreasonable.

     In the result, the interpretation put on the

     clause by the arbitrator appears to us to be quite

     reasonable  and very plausible and it cannot therefore

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be

     said that the award is vitiated by any error of law

     affecting his jurisdiction.  In fact, the learned

     District Judge found that the total variation - both

     upwards  and  downwards  was  more than  100%  of  the contract

     price.  For the aforesaid reasons, we are of the view

     that  Points  1 and 2 should be answered in favour  of the

     respondent-contractor.

     Point 3:

     This concerns the question whether the arbitrator

     could have awarded at a flat rate of 50% of the extra

     claim or at 50% of the difference between the market

     prices  and  the contract rates.  Both on law  and  on facts,

     the case of the appellant cannot be accepted.

     There is material on record that the appellant

     had,   during   the  pendency   of   the   arbitration proceedings,

     not seriously disputed that market rates were payable

     because the plus and minus variations exceeded 25% of

     the   contract   price.   As   pointed  out   in   the respondent’s

     counter filed in this Court, the appellant had, in a

     reply  dated  18.3.88  filed   before  the  arbitrator conceded

     having paid 75% of the additional work at the revised

     rates  though  not  upto the extended date.   Now  the award

     by the arbitrator was for the ’balance’ and upto

     30.10.86.  That is also an indication that, on facts,

     the  arbitrator’s  construction of the "+ 25%"  clause was

     correct.

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     In the appellant’s defence to the respondent’s

     claim before the arbitrator, there was no specific

     denial of the contractor’s right to the market rates.

     The  appellant  was relying more on its  general  plea that

     the + 25% clause was not attracted at all as the

     contract  value as a whole or the net increase was  to be

     taken  into  consideration.   In   fact,  there   were favourable

     recommendations  of  the   departmental  officers  for payment

     at higher rates.  In S.Harcharan Singh’s case to which

     we have referred earlier, there were similar

     recommendations of the officers.  The arbitrator

     cannot, therefore, be said to have acted illegally on

     facts  for  he  has not in fact granted  at  the  full market

     rate claimed by the contractor but has only granted at

     50% of the claim.

     In law also, the appellant has no case.  In the

     case  of  a non-speaking award, it is not  permissible for

     the Court to probe into the mental process of the

     arbitrator  [ See Hindustan Steel Works Vs.   Rajeswar Rao

     (  1987(4) SCC 93)] when he rejected 50% of the  claim in

     favour  of the appellant and accepted 50% of the claim in

     favour  of  the contractor.  In two decided  cases  of non-

     speaking awards when a flat increase of 20% or 25% for

     permissible  items  of additional work was granted  by the

     arbitrator, this Court accepted the same as not being

     illegal.   See  P.M.Paul  vs.  Union  of  India  [1989 Suppl.

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     (1) SCC 368] and Himachal Pradesh Nagar Vikas

     Pradhikaran  vs.   M/s  Aggarwal & Co.  [AIR  1997  SC 1027].

     Therefore, merely because the increase was at a flat

     rate, we cannot find fault with the award.  The

     arbitrator  was  appointed  by consent and  he  was  a former

     General   Manager  in  the   Railways  and  was   also associated

     with the appellant corporation.  We do not therefore

     find  any error apparent on the face of the record  in the

     award  of  50%  of the escalation claimed and  in  the claim

     upto the extended date, 30.10.86.

     For the aforesaid reasons, the appeal is

     dismissed.  The interim orders passed by this Court

     stand vacated.  No costs.