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PETITIONER: RAJASTHAN STATE MINES & MINERALS LIMITED

       Vs.

RESPONDENT: EASTERN ENGINEERING ENTERPRISES & ANR.

DATE OF JUDGMENT:       20/09/1999

BENCH: D.P.Wadhwa, M.B.Shah

JUDGMENT:

Shah, J.

     By   the  impugned  Judgment   and  Order  dated  17th December, 1991, the High Court of Judicature of Rajasthan at Jodhpur,  dismissed the S.B.  Civil Miscellaneous Appeal No. 254  of  1991  filed  by the  appellant  and  confirmed  the Judgment  and  Order  dated 1st August, 1989 passed  by  the District Judge, Udaipur in Petition under Sections 30 and 33 of the Arbitration Act, 1940.  The District Judge had passed the decree in terms of the award.

     The  brief  facts  of the case are that on  14th  May, 1981,  appellant  and  respondent  no.  1  entered  into  an agreement  on  a  turn-key basis  for  excavation,  removal, transportation  including  loading and  unloading,  disposal dumping  dozing,  levelling  etc.   of over  burden  at  the specified  dump  yards including final dressing of the  mine benches, faces and sides etc.  and incidental mining of rock phosphate   ore  encountered  during   the   excavation   of over-burden  and its transportation to ore-stacks etc.  from the  footwall,  western portion and eastern portions of  D Block of the Jhamarkotra mines including drilling, blasting, loading,  transportation, unloading etc.  with the leads and lifts  involved  in connection therewith, more  particularly described in the said contract for the period of three years and  three months, that is, from 13.3.81 to 12.6.84 for  the quantity of 21.15 lacs cubic meter subject to plus minus 10% at  the  fixed  rate of Rs.  35.80 (Rupees Thirty  Five  and eighty  paise)  all inclusive per cubic meter in respect  of over  burden  and/or ore actually excavated  mined,  removed etc.

     Respondent No.  1 vide its letter dated 7th September, 1983,  raised  certain  disputes and  claimed  reimbursement and/or additional payments and/or compensation on account of escalation  of  cost of work and breach of contract  by  the Appellant.   The  Appellant  vide   its  letter  dated  11th September,  1984 refuted the claims of Respondent No.  1  by stating  that in no case the rates over and above Rs.  35.80 per  cubic  meter could be given.  On 10th  November,  1984, respondent No.  1 invoking the arbitration clause, requested the  Managing  Director  of  Appellant  to  appoint  a  sole arbitrator  to adjudicate the claims made by the Contractor. Thereafter,   on  5th  February,   1985,  Shri  C.S.    Jha,

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Chairman-cum-Managing   Director,   Bihar    State   Mineral Development  Corporation  Ltd.   was  appointed  as  a  sole arbitrator  to decide all claims raised by the  contractor, M/s.   Eastern Engineering Enterprises vide its letter dated 7th September, 1983.

     On  20th September, 1985, the sole arbitrator made  an interim award in respect of three claims, namely, claim nos. 2,  3  &  5  and  awarded Rs.  65  lacs  to  the  claimants. Paragraph  1 of the said award mentions that Mr.  C.S.   Jha was appointed as the sole arbitrator to decide the disputes between  the parties arising out of the agreement dated 14th May,  1981.  It  also recites that by the  consent  of  the parties, arguments were heard claim-wise and out of 7 claims submitted  by the claimants, hearing in respect of claim no. 2,  3 & 5 was completed.  It is also stated that when  final award  would  be made in respect of the entire  proceedings, interim  award would be integrated into and form part of the final  award.  The Appellant challenged the interim award on 15th January, 1986 in the Court of District Judge, Udaipur.

     Thereafter, on 18th February, 1986 the sole arbitrator made  final  award.   It, inter-alia,  provides  that  after considering  the  long  drawn arguments and  examination  of documentary evidence and having made detailed examination of the  calculations I have given due thought and weightage to all   that   was  placed/argued   before  me,   as   regards admissibility  as  well  as quantum of each claim  by  going through  details  of work done under each item of  claim  as filed before me. Thereafter, he awarded Rs.  1.07 crore for the  claims made by the respondent no.  1.  The said  amount included  the amount awarded against the claims 2, 3 & 5 for which  he  had  passed interim award.   He  further  awarded interest  @  12.5  %  p.a.   on the  sum  awarded  from  5th February,  1985 till the date of payment or decree whichever is earlier.

     That  final  award  was  also  challenged  before  the District  Judge.  The Court framed as many as 12 issues  out of  which  issues  (5) to (8) are as under:  - 5.   Did  the Arbitrator  fail correctly to consider Clauses 17 and 18  of the  Agreement  and  the   Contract  labour  (Abolition  and Regulation) Act, 1970?  6.  Did the Arbitrator fail to apply his  mind to consider pleadings, documents and evidence?  7. Whether  the  award  is bad as the learned  sole  Arbitrator failed to apply his mind to documents and decide the dispute on  per unit basis?  8.  Is the award perverse?  Has it been improperly procured and is it otherwise invalid as mentioned in the Objection Petition?

     Thereafter,   the   District   Judge,   rejected   the contentions  raised by the appellant and declared the  award as  the  rule  of  court and passed the  decree.   That  was challenged by filing the appeal before the High Court.

     Before  the  High  Court, it was  contended  that  the District Judge erred in accepting the interim as well as the final  award  and  it was required to be set  aside  as  the arbitrator  had ignored the fixed rate mentioned in  clauses 17 & 18 of the agreement and thereby he has travelled beyond his  jurisdiction.  It was also pointed out that by doing so the  arbitrator  has legally misconducted himself.   It  was also submitted that the arbitrator was influenced by Mr.  K. Sehgal,  hence, the award was required to be set aside.  The High  Court  arrived  at the conclusion that  the  point  of

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jurisdiction   was  not  raised   before   the   arbitrator. Therefore, appellant cannot raise the same before the court. The  learned Judge held that the perusal of the letter dated 5th  February,  1985 goes to show that there was nothing  by which the arbitrator was restricted with regard to rates, on the  contrary, he was asked to decide all the claims  raised by the contractor without any clarification.  The High Court further  observed  that the appellant raised  objection  in view  of  clauses 17 and 18 of the Contract in his reply  to the  claim petition but he has not raised this point  before the  arbitrator  and thus the arbitrator has  not  disclosed it.   The learned Judge further observed that the appellant never  asked  the  arbitrator  to decide  his  objection  at initial  stage  or  final  stage and  this  conduct  of  the appellant  goes  to show that he has waived  the  objection, otherwise he ought to have asked the arbitrator to decide at proper  stage.   The  Court held that even  before  District Judge,  the  point of jurisdiction was never raised and  the issues framed were with regard to clauses 17 & 18 which were decided against the appellant.

     Dr.   A.M.   Singhvi,  the   learned  senior   Counsel appearing  on  behalf  of the appellant contended  that  the judgment  and order passed by the High Court is, on the face of  it,  illegal  because all throughout the  appellant  has contended  that  claims made by respondent no.  1  were  not entertainable  in view of clauses 17 & 18 of the  agreement. He  submitted  that, on the face of it, claims made  by  the respondent  no.   1  were for prohibited or  excepted  items under  clauses 17 & 18 of the agreement between the parties. Therefore, he submitted that the arbitrator travelled beyond his  jurisdiction in awarding the compensation for the  said claims.   He  referred  to all claims and pointed  out  that except  the claim for release of additional security deposit of  Rs.  5 lacs furnished by way of bank guarantee, no claim could  be entertained and granted in view of stipulations in clauses  17  &  18  of the agreement and  also  because  the contract is on a turn-key basis.

     As against this, learned senior Counsel, Mr.  Ashok H. Desai,  appearing  on  behalf  of   the  Respondent  No.   1 strenuously submitted that, in the present case, arbitration clause  is  of  widest amplitude and it provides  that  all disputes  and  differences  arising  out of or  in  any  way touching  or  concerning  the contract whatsoever  shall  be referred  to the sole arbitration.  Hence, the award passed by  the arbitrator cannot be held to be without jurisdiction or  it  cannot be held that arbitrator has travelled  beyond his  jurisdiction.   He  also  submitted  that  award  is  a non-speaking  one  and, therefore, also the Court cannot  go behind  the said award for finding out the mental process of the arbitrator for awarding the said sum.  He submitted that the award only depends upon interpretation of the clauses of the  agreement  between  the  parties.  It  is  his  further contention  that,  in any case, jurisdictional question  was not  raised  properly  before the arbitrator or  before  the District  Court and the appellant allowed the arbitrator  to proceed  with the proceedings without raising its  objection of  jurisdiction  or  competence.  By the  reference  letter dated  5th  February,  1985, arbitrator  was  empowered  to decide  all claims raised by the contractor vide its  letter dated 7th September, 1983.  He also submitted that even the committee  appointed by the appellant-company to examine the claims  of  the respondent, has recommended same payment  to the  contractor by granting an escalation in contracted rate

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and  to pay compensation towards loss suffered on account of non  supply of explosives.  Hence, the appellant should  not be permitted to raise the contention of jurisdiction and the appeal  be dismissed.  For deciding the controversy, clauses 17  & 18 as well as clause 74 which provides for arbitration is required to be referred.  Clauses 17 & 18 reads thus:  -

     17.  Blasting Operation

     It  is  express  term  of  this  contract  that  while carrying  out  the  excavation/Mining  operations  from  the aforesaid  areas,  blasting  wherever   required,  shall  be undertaken  by the contractor at his cost.  The remuneration payable  under  this  contract  for the  work  aforesaid  is inclusive of this element which includes cost of explosives, its  accessories  transportation,  salary and wages  of  its crew/blasters etc., or otherwise.  In view of aforesaid, the contractor  shall  obtain  necessary permission/s  from  the Director  General  of  Mines Safety and/or  other  competent authorities   for   undertaking   the   blasting   operation independently  at  the  aforesaid   areas  covered  by  this contract  as also obtain necessary licence for the explosive magazine etc.  The contractor shall do all that are required to be done to obtain the necessary permission etc., from the competent  authorities immediately without any further  loss of  time  and shall make regular and continuous efforts  for the  same if for the present such permission is not  granted to him/her.

     In  the event of the contractor failing to obtain such permission  required from the competent authority for  doing blasting  operation  in the areas covered by  this  contract after  all genuine and effective efforts, the company may at the request of the contractor and subject to its convenience take up the blasting operation in the areas entrusted to the contractor  under this contract, at the cost and risk of the contractor.   Provided, however that the contractor shall be bound  to  observe  all  terms and  conditions  of  blasting operation  in  the  contract and other  operations  involved therein shall be duly observed/undertaken by the contractor, as if the blasting is being done by them.  Drilling shall be done  by  the  contractor at places and as per  the  pattern approved   in  writing  by   the  Engineer-in-charge.    The Engineer-in-charge, may require drilling of additional holes by  the  contractor before blasting is taken up.  The  holes not  drilled as per the approved drilling pattern shall  not be taken up for blasting.  On receipt of written requisition from  the contractor in the prescribed proforma duly  signed by  the  authorised representative of the contractor to  the company  not  less  than 2 days prior to  intended  date  of blasting,  blasting will be done by the Company as and  when felt  necessary  and convenient by  the  Engineer-in-charge. The  company shall make available the blasting material, its transportation,  blasting  accessories  and  blasting  crews including  blaster/s.   In  case  the company is  not  in  a position  to arrange for the same, the contractor shall make his  own arrangements for the same without any liability and obligation  on  the company.  The company shall  deduct  the actual  landed cost of all explosives ex-Jhamarkotra as  may be  used in the course of blasting plus five per cent  value of  the  landed cost of explosives as blasting charges  from the  contractors  running Bill/s or any amount that may  be found  due  and  payable to the contractor or  the  security amount.   It is agreed and understood by the contractor that in the event of company doing blasting as aforesaid, for and

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on  behalf  of the contractor, the contractor shall  not  be allowed  and/or  permitted to raise any dispute as to  make, type  quantity  of  the  explosives that  will  be  used  in blasting  by the company, fragmentation of rock, toes at the mining face, landed cost of explosive, time and frequency of blasting  etc.,  and the contractor shall be bound  to  make good  the  landed  cost  of  explosives,  cost  of  blasting accessories etc., plus overheads @ 5% as may be certified by the  Engineer-in-charge  from time to time.   Provided  also that  the contractor shall not be entitled and/or  justified to  raise any claim or dispute on account of blasting or non blasting  or  idling of his equipment or his labour  or  any rise  in the landed cost of explosives at any time or during the  currency  of  this agreement or on any  ground  or  any reason of any account, whatsoever.

     At  the time of blasting in the areas being worked  by the  Company or by the contractor if the company is required to  carry  out blasting operation, the contractor  shall  be required  to  vacate  the  areas if the  areas  fall  within blasting  zone, worked by him for which the contractor shall not   be   entitled  for   any  claim,  additional   payment whatsoever.

     18.   Contractors  remuneration for works  under  the Contract:-

     In  consideration  of  the performance  of  the  work, fulfillment  of all the obligations, terms and conditions of this  agreement  by the contractor in execution of the  work covered  by  this contract in and from the aforesaid  areas, the  contractor shall be paid remuneration calculated @  Rs. 35.80 (thirty five and eighty paise) all inclusive per cubic meter  in  respect  of  over   burden  and/or  Ore  actually excavated,   mined,  removed,   transported,  disposed  off, dumped,  dozed,  levelled and spreaded  including  drilling, blasting,  mucking,  loading, and unloading, etc., with  all leads   and   lifts   involved  in   connection   with   the transportation  and dumping of over-burden to the dump yards or ore stacks, including all preparatory dressing, finishing and  other operational works etc., executed and approved  by the  Engineer-  in-charge.   The rates  aforesaid  shall  be composite  and  inclusive  of all services,  activities  and operations  involved  in  the execution of the work  as  per terms  and conditions of this agreement which constitute the whole  and  inclusive  remuneration that is payable  by  the Company   to  the  contractor   under  this  contract.   The contractor  shall  be  only  entitled   to  the  payment  of composite  rate as aforesaid and no other or further payment of any kind or item, whatsoever, shall be due and payable by the Company to the contractor under this agreement except as aforesaid.

     The  rates  aforesaid  shall remain  firm,  fixed  and binding during the currency of this agreement till the issue of final certificate irrespective of any fall or rise in the cost  of  Mining  operations  of the work  covered  by  this contract  or  for  any other reason or any  account  or  any ground whatsoever.

     Provided,  however,  that  the company has  agreed  to freeze  the issue rate of Diesel as on 13th March, 1981,  at the  rate  of Rs.  2.78 (Rupees Two and seventy eight  paise only)  per  litre  and the company shall  issue  the  Diesel subject   to  availability  and   its  convenience  to   the

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contractor   against  the  surrender  of  permit/s  of   the equipment  by him at the frozen rate of Rs.  2.78 per  litre during  the  currency of this contract even if there by  any rise in the cost of diesel after execution of this agreement subject  to  a ceiling of 1.3 litres(one point three  litre) for  one cubit meter of rock (in situ) actually handled  and work  executed  by  the  contractor   and  approved  by  the Engineer-in-charge, as per provisions of this agreement.  No diesel  at  the frozen rate of Rs.  2.78 per litre shall  be supplied  and/or issued to the contractor after the 12th day of  June, 1984, if the work is not finally completed by  the contractor  as aforesaid.  The company shall deduct the cost of  diesel  @  Rs.  2.78 per litre actually  issued  to  the contractor from the contractors running bills or any amount that  may  be due to him or the security amount.   Save  and except  as aforesaid the contractor shall not be entitled to raise any claim and/or dispute on account of any rise in the price  of oil, lubricants, tyres, tubes, explosives,  spares etc.   statutory  or otherwise or increase in the  wages  or Minimum  wages or on any other ground or reason or  account, whatsoever.

     Relevant part of arbitration clause 74 is as under:-

     All  disputes and differences arising out of or in any way  touching or concerning this contract whatsoever, except as to any matter, the decision of which is expressly vested in  any authority in this contract, shall be referred to the sole  arbitration  of the person appointed by  the  Managing Director of Company who shall have status of a Mines Manager having  1st  Class  Mines Managers Certificate  and  having experience  not less than five years in open cast mining  as Mines Manager.

     At  this stage, we would refer to the relevant portion of  letter dated 7- 9-1983 written by the Contractor to  the appellant  as  the dispute for the said claims made  in  the letter  are referred to for arbitration.  1.  After  stating the  reasons in delay in starting the work, it is mentioned: -  In  view of above, we now request RSMML to consider  our case  and condone the theoretical delay, which, in fact, was not  there  and  also  give  us  necessary,  relief  as   to consequential  damages  thereof.  Hence, we request  you  to consider  1st August, 1981 as the date of start of work  and accordingly, extend the validity of the contract.

     2.   The  demand  is Release of  additional  security deposit of Rs.  5 lakhs furnished by us in RSMMLs favour by way  of bank guarantee for the reasons stated therein.   3. Request  for  Rescheduling  of   the  existing   excavation schedule  for the reasons mentioned therein.  4.  Claim for Escalation  in the existing rate of excavation:  We  signed the  contract with a clear understanding that the rate under this  contract  is  firm  and  final and  we  shall  get  no escalation  in  our rates, except in case of  diesel,  which will  be  supplied  to us by the Company at a  frozen  rate. With  the passage of time our cost calculations went  hayway for reasons which were beyond our control.

     5  (i) From the beginning of the contract we had  paid wages  equivalent  to RSMML wages instead of Minimum  wages. The  difference between the two on an average in the last 25 months  works  out  to  Rs.75,000/- per  month,  against  an average  production  of 40,000 cu.m.  per month.   Thus  the additional cost works out to Rs.1.80 per cu.m.

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     (ii)  Unforeseen and difficult operating condition  in the  footwall and its effect on the cost of operation:  The work in footwall area of D block is a major constituent of the  contract  both  quality and quantity wise.   While  the contract  is termed as a Turnkey contract, at least in the footwall  the work cannot, by any stretch of imagination, be considered  as  Turnkey, as the operation in that area  is totally controlled by the Principal employer.

     In  fact,  it  was  beyond our  imagination  that  our working  in  the  footwall  will   be  so  much  restricted, resulting  the  cost of operation, which is  virtually  very high  than  normal cost of operation.  In view of above,  we feel that our request in this regard will be sympathetically considered  by  the  Management,  who are  also  engaged  in similar  work.   Thus,  for  such poor  utilisation  of  the Shovel,  the rate should be 35.80 = 61.20.  58.50x100  Thus, an  additional  rate of Rs.25.40 per cu.m.  for  the  entire footwall   operation   has  to  be  provided   for.    (iii) Non-availability  of  explosive and use of costly  explosive for blasting :

     Reimbursement  of Rs.22.55 lakhs towards cash loss due to  non- supply of explosives in time plus Rs.1.82 per cu.m. of rock handled so far.  6.  Claim for Transportation of ore :  After stating reasons in detail, it is claimed thus:

     Till  31st August, 1983 mined and transported  45,456 tonnes  of  ore  and  mixed  ore  from  Eastern  Saddle  and Footwall, the additional expenses involved in this operation are:  -

     (i) Care being taken during mining to avoid as much as possible admixture of ore and overburden, and

     (ii)  Additional transportation involved for taking it to  the  crusher instead of the dumpyard.  Towards  this  we have  to  make claim of Rs.6/- towards this mining cost  per tonne  and  Rs.4/-  towards transportation  cost  per  tonne making  the total to Rs.4,05,660/- for 40,566 tonnes of  ore after allowing ½% of the total excavation volume of footwall i.e.  3.36 lakhs cu/.m.

     To  sum up, claims under various heads are as  under: -

     (i)  Not to levy any damages for not starting work  in time  and to treat 1st August, 1981 as the date of start  of work  and  thereafter calculate 3 years for completing  this work  under this contract;  (ii) To release performance bank guarantee  of  5  lakhs furnished in your favour by  way  of additional  security  deposit;   (iii)  To  re-schedule  the excavation  schedule keeping in view the industrial  climate at  Jhamarkotra @ 40,000/- cu.m.  per month;  (iv) To  allow us  escalation  of Rs.3.62 in our rates  towards  additional cost that has been incurred by us with retrospective effect. (v)  To  admit  our  claim of Rs.22.55  lakhs  towards  loss suffered   on   account  of   non  supply   of   explosives, Rs.4,05,660/-   towards  additional  cost   of  mining   and transportation  of ore and Rs.52,53,650/- on account of loss suffered  by  us  for  unforeseen  and  difficult  operating condition  at footwall or in other words the present rate of Rs.35.80 per cu.m.  with retrospective effect. On the basis

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of  the claims made in the letter dated 7th September, 1983, respondent  filed  claim  statement  for 8  items  which  is tabulated  by  the  High  Court   in  its  judgment.   Claim Description of Relief claimed No.  claim

     1.  Claim for increase in rate Claimed reimbursement @ for  excavation  work  at  Rs.25.40 per  cu.m.   up  to  the Footwall   area  demand  Aug.83   thereafter  @  63.56   for escalation  in the per cu.m.  Over and above existing  rates of  the contract rate of Rs.35.80 excavation.  Cu.m.  In all claim under this item quantified for Rs.  1,36,43,218/-.

     2.   Claim for increase in costs Claimed reimbursement @  Rs.   Of work due to use of high 1.80 per cu.m.  for  all Explosives instead of use excavation done/to be done Of ANFO mixture.   Under the contract using high Explosives  instead of ANFO mixture.

     3.  Claim for reimbursement for Claim reimbursement of Losses  suffered due to non- Rs.  22.55 lacs by way of  loss Availability of explosive.  During the period February, 1963 to May 1983.

     4.   Claim for reimbursement Claimed reimbursement  of of  additional costs for mining additional costs at the rate of  and  transport of ore.  Rs.  6/- per ton Towards  mining and  Rs.4/- per ton towards additional transportation to the crusher.   Total Rs.10/- per ton for 47856 tonnes of ore and mixed  ore  upto  31st December, 1984 quantifying  claim  of Rs.4,31,890/-.

     5.   Claim for reimbursement Claim reimbursement @ Rs. of  additional  expenditure 1.82 per cu.m.   for  excavation incurred  on account of done/to be done on account Agreement with  RPMS.-  Of  respondent  entering  into  For  wages  to labourers.   An agreement with RPMS Dated 26.5.81 Ex.C/I  of the Arbitration proceedings.

     6.   Claim  for  release of Claimed  release  of  duly discharged  additional  securities  Bank guarantee  of  Rs.5 lacks on deposit.  Account of Addl.  Security deposit.

     7.   Claim  for reimbursement Claim  reimbursement  of Rs.0.90  of additional expenses on per cu.m.  of  excavation done  account  of  revised wage since 1.4.83 or to  be  done structure w.e.f.1.4.83.  thereafter as per Ex.C/58 and C/68.

     8.  Interest Claimed interest on the amount of Award @ Rs.18% per annum Or decree whichever is earlier.

     As  stated  earlier by interim award,  arbitrator  has awarded Rs.  65 lakhs for claims No.  2, 3 & 5.  Thereafter, by  final  award, he has awarded total sum Rs.  1.07  crores with 12.5% interest w.e.f.  5.2.85.

     Before discussing further, what emerges from the facts

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stated above is:  -

     (1) in the award, no reasons are assigned for granting various  claims  to  that extent, it is  non-speaking.   For claim Nos.  2,3 and 5, Rs.  65 lakhs were awarded by interim award dated 20th September, 1985.  (2) In the interim award, the  arbitrator  has made it clear that he was appointed  as the  sole  arbitrator vide memo dated 5th February 1985  to decide  the  dispute between the parties arising out of  the agreement  dated  14th  May, 1981.  So,  his  authority  or jurisdiction  to decide the claims raised by the  contractor was  on the basis of the agreement between the parties.  (3) In  the  final  award also, in the first  paragraph  itself, arbitrator has stated that:-

     The  claimants have put in claims arising out of  and in  relation  to  the  work   Excavation  and  removal   of overburden  at  the  Jhamarkotra mines of  RSMML  executed under  agreement  dated  14.5.1981, and have  put  in  their claims  under  7  heads of claim and  have  further  claimed interest,  pendentelite  and future at 18% per  annum..  It further  mentions that he has given due weightage to all the documents  placed  and  arguments submitted before  him  as regards  admissibility  as well as quantum of each claim  by going through details of work done under each item of claims as filed before me.

     (4)  In  the  letter dated 7th  September,  1983,  the Contractor himself has clarified, admitted and stated thus:

     We  signed  the contract with a  clear  understanding that  the rate under this contract is firm and final and  we shall  get  no  escalation in our rates, except in  case  of diesel,  which  will be supplied to us by the company  at  a frozen rate.  With the passage of time our cost calculations went hay way for reasons which were beyond our control.

     (5)  The  appellant in his detailed reply  before  the arbitrator  to the claims made by the contractor has pointed out  and  relied  upon clauses 17 & 18 for  contending  that contractor  was  not  entitled to any such claim  under  the contract.   (6)  Before the District Judge also, the  issues pertaining  to clauses 17 & 18 as stated above were  raised. (7)  Before  the  High  Court also, it  was  contended  that arbitrator  made  award  against  the  stipulations  of  the agreement  between the parties and thereby travelled  beyond his jurisdiction.

     From  the facts stated above, learned Counsel for  the appellant  has  rightly  pointed out that Claim No.   1  for increase  in  rate of excavation work at footwall  area  and claim  no.   4  for reimbursement of  additional  costs  for mining  and  transport of ore is against the stipulation  of clause  18 as narrated above, which inter-alia, specifically provides as under:-

     (a)  The  contractor  shall   be  paid   remuneration calculated  @ Rs.  35.80(Rupees Thirty Five and Eighty Paise only)  all  inclusive  per cubic meter in  respect  of  over burden and/or Ore actually excavated  transported  (b) The  contractor  shall  be  only  entitled  to  payment  of composite  rate as aforesaid and no other or further payment of any kind of item, whatsoever, shall be due and payable by the Company to the contractor under this agreement except as aforesaid.  (c) The rates shall remain in firm, fixed  and

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binding  irrespective  of  any fall or rise in the  cost  of Mining operations of the work covered by the contract or for any  other reason or any account or any ground  whatsoever. Similarly, claim no.  2 for increase in costs of work due to use  of  high explosives instead of use of ANFO mixture  and claim  no.   3 for reimbursement for losses suffered due  to non-availability  of  explosive is also against  Clause  17, which inter-alia, provides:- (a) It is express term of this contract  that  while  carrying  out  the  excavation/Mining operations  from  the  aforesaid  areas,  blasting  wherever required, shall be undertaken by the contractor at his cost. The  remuneration  payable under this contract for the  work aforesaid  is inclusive of this element which includes  cost of  explosives,  its accessories transportation, salary  and wages   of  its  crew/blasters   etc.,  or  otherwise.  (b) Provided  also  that the contractor shall not  be  entitled and/or justified to raise any claim or dispute on account of blasting  or non blasting or idling of his equipment or  his labour  or any rise in the landed cost of explosives at  any time  or  during  the currency of this agreement or  on  any ground or any reason of any account, whatsoever.

     Similarly,   claim   no.   5  for   reimbursement   of additional expenditure incurred on account of RPMS and claim no.   7 for reimbursement of additional expenses on  account of  revised  wage  structure w.e.f.  1.4.83 also  cannot  be granted  in view of aforesaid stipulations and also part  of Clause  18 which, inter-alia, provides as under:  Save  and except  as aforesaid the contractor shall not be entitled to raise any claim and/or dispute on account of any rise in the price  of oil, lubricants, tyres, tubes, explosives, spares, etc.   statutory  or otherwise or increase in the  wages  or Minimum  wages or on any other ground or reason or  account, whatsoever.

     Apart  from the aforesaid specific stipulations,  even the  contractor  has  admitted  in   his  letter  dated  7th September,  1983  that  the contract was signed  with  clear understanding  that the rate under the contract was firm and final  and  that  no escalation in rates except in  case  of diesel  would  be  granted.  Despite the  admission  by  the contractor,  it is apparent that arbitrator has ignored  the aforesaid  stipulations in the contract.  In the award,  the arbitrator  has specifically mentioned that he has given due weightage  to  all the documents placed before him  and  has also  considered the admissibility of each claim.   However, while  passing the award basic and fundamental terms of  the agreement  between the parties are ignored.  By doing so, it is apparent that he has exceeded his jurisdiction.  Further, in  the present case, there is no question of interpretation of  clauses  17  & 18 as the said clauses are so  clear  and unambiguous that they do not require any interpretation.  It is  both,  in positive and negative terms by providing  that contractor  shall  be paid rates as fixed and that he  shall not  be entitled to extra payment or further payment for any ground  whatsoever  except as mentioned therein.  The  rates agreed were firm, fixed and binding irrespective of any fall or  rise in the cost of the work covered by the contract  or for  any  other  reason  or any ground  whatsoever.   It  is specifically  agreed that contractor will not be entitled or justified  in  raising  any  claim  or  dispute  because  of increase  in cost of expenses on any ground whatsoever.   By ignoring the said terms, arbitrator has travelled beyond his jurisdiction as his existence depends upon the agreement and his  function  is  to  act within the  limits  of  the  said

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agreement.   This  deliberate  departure from  the  contract amounts  not only to manifests disregard of the authority or misconduct  on  his part but it may tantamount to mala  fide action.

     It  is settled law that the arbitrator is the creature of  the contract between the parties and hence if he ignores the  specific terms of the contract, it would be a  question of  jurisdictional  error  which could be corrected  by  the Court  for that limited purpose agreement is required to  be considered.   For  deciding  whether   the  arbitrator   has exceeded  his  jurisdiction  reference to the terms  of  the contract  is a must It is true that arbitration clause 74 is very  widely worded, therefore, the dispute was required  to be  referred to the arbitrator.  Hence, the award passed  by the  arbitrator  cannot be said to be  without  jurisdiction but,  at the same time, it is apparent that he has  exceeded his  jurisdiction  by ignoring the specific stipulations  in the  agreement  which prohibits entertaining of  the  claims made  by the contractor.  In the letter dated 5th  February, 1985   appointing   the  sole   arbitrator,  it   has   been specifically  mentioned that agreement dated 14th May,  1981 was  executed by and between the parties and that contractor has  raised the claims as mentioned in the letter dated  7th September,  1983 which was denied by the company and at  the request  of the contractor, sole arbitrator was appointed to adjudicate the claims made by the contractor vide his letter dated 7th September, 1983.  This reference to the arbitrator also  clearly provides that reference was with regard to the dispute  arising  between  the parties on the basis  of  the agreement  dated 14th May, 1981.  It nowhere indicates  that the  arbitrator was empowered to adjudicate any other claims beyond the agreement between the parties.  No such issue was referred  for  adjudication.   Even the  arbitrator  in  his interim  award has specifically stated that he was appointed to  adjudicate the disputes between the parties arising  out of the agreement dated 14th May, 1981.

     However, learned senior Counsel, Mr.  Ashok H.  Desai, submitted   that  award  is  a  non-speaking  one  and   the arbitration clause, in this case empowers the arbitrator not only  to decide all disputes arising out of the contract but also to decide all disputes in any way touching the contract whatsoever,  hence the arbitrator is not required to confine himself  only  to  the terms of the contract  but  can  pass appropriate  award  so as to do justice between the  parties including  awarding  damages  suffered  by  the  contracting parties.   Therefore, award cannot be said to be without  or beyond  jurisdiction.   He further submitted that the  award passed   by   the  arbitrator  is  on  the  basis   of   the interpretation  of clauses 17 & 18 and, therefore, the award would  be within his jurisdiction.  Learned counsel for both the  parties  submitted  that law on this  subject  is  well settled.   However,  they referred to various  decisions  to buttress  their  respective contentions.  To do  justice  to their  contentions, we would refer to the various  decisions of  this Court relied upon by them.  In Jivarajbhai  Ujamshi Sheth and Others Vs.  Chintamanrao Balaji and Others [(1964) 5  S.C.R.  481], the dispute arose between the partners of a firm  on  retirement of partners which was referred  to  the arbitrator.   The arbitrator had passed non-speaking  award. While revoking the award, the High Court in concurrence with the  Court  below  upheld two objections:  -  (a)  that  the arbitrator  exceeded his jurisdiction;  and (b) that he  was guilty  of misconduct in receiving some evidence behind  the

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back  of one partner, Chintaman Rao.  Before this Court,  it was  contended  that the deed of partnership as well as  the order  of reference left the arbitrator a free hand and even if   the   arbitrator  wrongly   interpreted  the  deed   of partnership   and   had  included   the   depreciation   and appreciation while valuing partnership property, no question of  jurisdiction could arise.  The partnership deed referred to  by the Court provided that in ascertaining the valuation of the firm, the property was to be valued at the book value of the firm and such stock and movables thus valued shall be given  to  the  remaining partners.  After  considering  the decision  in  Chempsey Bhara and Company Vs.  Jivraj  Balloo Spinning  and  Weaving  Company  Ltd.  [LR  50  I.A.   324], Shah.J,  observed that :  (a) It is not open to the Court to speculate,  where no reasons are given by the arbitrator, as to  what impelled arbitrator to arrive at his conclusion (b) It  is  not open to the Court to admit to probe  the  mental process  by which the arbitrator has reached his  conclusion where  it  is not disclosed by the terms of the award.   (c) The  primary  duty  of the arbitrator under the  deed  of  a reference   in  which  was   incorporated  the   partnership agreement,  was  to value the net assets of the firm and  to award  to the retiring partners a share therein.  In  making the valuation of the firm, his jurisdiction was restricted in  a  manner  provided by paragraph 13 of  the  partnership agreement.   As  the arbitrator has expressly stated in  his award that in arriving at his valuation, he has included the depreciation   and  appreciation  of   the   property,   the arbitrator  has  travelled outside his jurisdiction and  the award  was on that account liable to be set aside.  This was not  a  case  in which the arbitrator has committed  a  mere error  of  fact  or law in reaching his  conclusion  on  the disputed  question submitted for his adjudication.  It is  a case of assumption of jurisdiction not possessed by him, and that  renders the award, to the extent to which it is beyond the arbitrators jurisdiction, invalid.  The award must fail in  its  entirety as it was not possible to sever  from  the valuation  made  by  the  arbitrator,   the  value  of   the depreciation  and  appreciation included.  In  a  concurring judgment,  Hidayatullah J, after considering the decision in Chempsey Bhara and Companys case (supra) observed that the first  point is therefore to decide what were the limits  of the  arbitrators  action as disclosed by the reference  and the  deed of partnership and then to see what the arbitrator has actually done and not what he may have stated loosely in his  award.   This  is the only way in which the  excess  of jurisdiction  can  be found.  If the interpretation  of  the deed  of partnership lies with the arbitrator, then there is no question of sitting in appeal over his interpretation, in view of the passage quoted above from Champseys case but if the parties set limits to action by the arbitrator, then the arbitrator  had  to follow the limits set for him,  and  the court  can  find  that he has exceeded his  jurisdiction  on proof of such action.

     The  next  decision  on which reliance  is  placed  is Continental  Construction  Co.   Ltd.  Vs.   State  of  M.P. [1988  (3) SCR 103].  In the said case, it was contended  by the  contractor that contract could not be completed  within stipulated  time because of alleged gross delay on the  part of  the  State  in allotment of work and  discharge  of  its obligation  under the contract.  He had, therefore, incurred unforeseen  expenditure  and claimed damages to the tune  of Rs.   5,29,812/-.   The matter was referred to  the  retired Engineer-in-  Chief,  PWD,  Bhopal, who partly  allowed  the

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contractors claim.  The award was set aside by the District Judge.   Appeal was also dismissed by the High Court and  in appeal  before  this  Court,  it   was  contended  that  the contractor  was not entitled to extra cost for material  and labour  in  terms  of the contract.  This  Court  held  that arbitrator  misconducted  himself  in   allowing  the  claim without  deciding the objection of the State that in view of the specific clauses of the contract, the Contractor was not legally  entitled to claim extra cost.  The Court  observed: If no specific question of law is referred, the decision of the arbitrator on that question is not final however much it may  be within his jurisdiction and indeed essential for him to  decide the question incidentally.  The arbitrator is not a  conciliator  and cannot ignore the law or misapply it  in order  to  do  what he thinks is just and  reasonable.   The arbitrator  is a tribunal selected by the parties to  decide their  disputes  according to law and so is bound to  follow and apply the law, and if he does not he can be set right by the  Court  provided  his error appears on the face  of  the award.   In this case, the contractor having contracted,  he cannot  go back to the agreement simply because he does  not suit him to abide by it.  The decision of this Court in M/s. Alopi  Parshad Vs.  Union of India, [1960] 2 SCR 793 may  be examined.   There  it  was observed that a contract  is  not frustrated  merely  because the circumstances in  which  the contract  was  made,  altered.  The Contract  Act  does  not enable a party to a contract to ignore the express covenants thereof,   and  to  claim   payment  of  consideration   for performance  of  the  contract at rates different  from  the stipulated rates, on some vague plea of equity.  The parties to  an executory contract are often faced, in the course  of carrying  it out, with a turn of event which they did not at all  anticipate, a wholly abnormal rise or fall in prices, a sudden  depreciation of currency, an unexpected obstacle  to execution,  or  the  like.   There  is  no  general  liberty reserved  to the courts to absolve a party from liability to perform  his part of the contract merely because on  account of  an uncontemplated turn of events, the performance of the contract may become onerous.

     Thereafter,  the  Court distinguished the decision  in Tarapore  Company  Vs.   Cochin Shipyard Ltd.   And  another [1984(2) SCC 680].  In the said case, there were no specific clauses which barred consideration of extra claims in events of  price escalation.  At this stage, we would mention  that in Tarapore Companys case, this Court after considering the various  decisions  has held that a specific question as  to whether  the  claim of compensation made by  the  Contractor demurred  and  disputed by the respondent would  be  covered within  the scope, ambit and width of the arbitration clause was specifically referred by the parties for the decision of the  Arbitrator.   In  such cases, the award cannot  be  set aside  on  the ground that there is an error of law  on  the face  of  the  award.  Learned Sr.  Counsel, Mr.   Ashok  H. Desai  has  heavily relied upon this decision in support  of his  contention  that in the present case also,  arbitration clause  74 is very widely worded.  Dealing with  arbitration clause, Court observed arbitration clause so widely worded, as  disputes  arising out of the contract or in relation  to the  contract  or execution of the works,  would  comprehend within  its  compass  a claim for  compensation  related  to estimates  and  arising  out of the contract.  The  test  is whether  it is necessary to have recourse to the contract to settle  the  dispute  that   has  arisen.   Further,  while interpreting  such clause, the Court has held as under:- We

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may  now  turn to some decisions to which our attention  was drawn.   The  first case we would like to refer to  is  A.M. Mair  & Co.  Vs.  Gordhandass Sagarmull [1950] SCR 792.  The Court  was concerned with the arbitration clause drawn up as :   all  matters, questions, disputes,  differences  and/or claims,   arising  out  of   and/or  concerning,  and/or  in connection  and/or  in consequence of, or relating  to,  the contract  etc..   The question arose whether the  due  date under  the  contract was extended within the  time,  earlier reserved.   The  arbitrator  held that the due date  of  the contract  has  been extended by a mutual agreement  and  the respondents  were  held  liable to pay a sum  of  Rs.   4116 together  with interest at the rates specified in the award. It  was  contended  that the dispute is not covered  by  the arbitration  clause.   This  clause while holding  that  the dispute  is covered by the arbitration clause observed  that looking  to  the  rival  contentions, such  a  dispute,  the determination of which turns on the true construction of the contract,  would also seem to be a dispute under or  arising out  of or concerning the contract.  The test formulated was that  if in settling a dispute, a reference to the  contract is  necessary,  such  a  dispute would  be  covered  by  the arbitration clause.

     It  is  true  that arbitration clause in  the  present case,  is  also very widely worded and that all disputes  in any  way touching or concerning the contract whatsoever  are required  to  be  referred to the  arbitration.   Therefore, reference  of the dispute to the arbitrator cannot be termed as  without  jurisdiction.   Still  the  question  would  be whether  arbitrator  will have authority or jurisdiction  to grant  damages  or  compensation  in  teeth  of  stipulation providing  that  no  escalation would be  granted  and  that contractor  would  only be entitled to payment of  composite rate  as  mentioned and no other or further payment  of  any kind  or  item whatsoever, shall be due and payable  by  the company  to  the contractor;  the rates wherever  fixed  are binding during the currency of the agreement irrespective of any  fall  or  rise in the cost of the work covered  by  the contract  or  for any other reason or on any account or  any other  ground  whatsoever.  In the said case, there  was  no such  specific agreement or stipulation.  Further, the Court has also given a finding that it was a case where a specific question  of  law  touching  upon the  jurisdiction  of  the arbitrator  was referred for the decision of the  arbitrator by  the  parties.   Hence  the Court held  that  in  such  a situation,  even if the view taken by the arbitrator may not accord  with the view of the Court, the award cannot be  set aside  on the ground that there is an error of law  apparent on  the face of the record.  Facts and issues in the present case are quite different as stated above.

     In  M/s.   Sudarshan Trading Co.  Vs.   Government  of Kerala  and  Another [1989] 2 SCC 38, this Court  posed  the following  questions  for its decision:  - How  should  the court examine an award to find out whether it was a speaking award or not;  and if it be a non-speaking award, how and to what  extent  the court could go to determine whether  there was any error apparent on the face of the award to be liable for  the interference by the court.  The other question that arises in this case is, to what extent can the court examine the contract in question though not incorporated or referred to in the award.

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     In  that  case  also, the arbitrator  has  passed  the non-speaking  awards but with regard to each and every claim it  has  separated and passed the order either accepting  or rejecting  the  claim or partly accepting the claim  of  the contractor.   After  referring  to   the  various  decisions including  Jivarbhai Ujamshi Sheth case, the Court  observed as under:  This was reiterated by Justice Hidayatullah that if  the parties set limits to action by the arbitrator, then the  arbitrator had to follow the limits set for him and the court can find that he exceeded his jurisdiction on proof of such excess.  In that case the arbitrator in working out net profits  for  four years took into account  depreciation  of immovable property.  For this reason he must be held to have exceeded  his  jurisdiction and it is not a question of  his having  merely  interpreted  the partnership  agreement  for himself  as to which the civil court could have had no  say, unless  there was an error of law on the face of the  award. Therefore, it appears to us that there are two different and distinct  grounds involved in many of the cases.  One is the error  apparent  on the face of the award, and the other  is that  the  arbitrator  exceeded his  jurisdiction.   In  the latter  case,  the  courts  can look  into  the  arbitration agreement but in the former, it cannot, unless the agreement was incorporated or recited in the award.

     This Court further observed:

     An  award may be remitted or set aside on the  ground that  the  arbitrator  in  making   it,  had  exceeded   his jurisdiction  and  evidence of matters not appearing on  the face  of it, will be admitted in order to establish  whether the  jurisdiction  had  been exceeded or  not,  because  the nature  of  the  dispute  is   something  which  has  to  be determined  outside the award  whatever might be said about it  in  the  award  or by the arbitrator...  It  has  to  be reiterated that an arbitrator acting beyond his jurisdiction -- is a different ground from the error apparent on the face of the award.

     Further,  dealing with the non-speaking award and also for  the claims on the ground of escalation of price, due to various  reasons including payment of minimum rates of wages payable  to  various  categories of workers, this  Court  in Associated  Engineering  Co.   Vs.    Government  of  Andhra Pradesh and Another [1991] 4 SCC 93 referred to the contract clauses  and  set  aside  the award  by  holding:   -  This conclusion  is  reached not by construction of the  contract but by merely looking at the contract.  The umpire travelled totally  outside the permissible territory and thus exceeded his  jurisdiction  in making the award under  those  claims. This is an error going to the root of his jurisdiction:  See Jivarajbhai Ujamshi Sheth Vs.  Chintamanrao Balaji.

     The  Court further held as under:  An arbitrator  who acts  in  manifest  disregard of the contract  acts  without jurisdiction.   His  authority is derived from the  contract and  is  governed  by  the Arbitration  Act  which  embodies principles  derived from a specialised branch of the law  of agency(see  Mustill  and Boyds Commercial Arbitration,  2nd edn.,  p.   641).  He commits misconduct if by his award  he decides  matters  excluded by the  agreement(see  Halsburys Laws  of  England,  Volume  II,  4th  edn.,  para  622).   A deliberate  departure  from  contract amounts  to  not  only manifest  disregard of his authority or a misconduct on  his part,  but  it  may  tantamount to a mala  fide  action.   A

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conscious  disregard  of  the law or the provisions  of  the contract  from  which he has derived his authority  vitiates the award.

     Learned  Counsel  for the Respondent relied  upon  the case  of  Hindustan  Construction Co.  Ltd.  Vs.   State  of Jammu  &  Kashmir [1992] 4 SCC 217.  In the said  case,  the Court  has  observed that award was a non- speaking one  and contained no reasoning which could be declared to be faulty; the  scope  of the Courts jurisdiction in interfering  with the  non-  speaking  award  is  extremely  limited.    While discussing  the contention, the Court quoted the decision in the  case  of  Sudarshan Trading Co.  case  (which  we  have earlier  referred)  and thereafter held that High Court  has not  rested  its decision on any question of the  arbitrator having  exceeded  his jurisdiction or travelled  beyond  the contract;   the Court has set aside the award on the  ground of error apparent on the face of it.  The Court further held that  clauses of the contract referred to by the High  Court are  not so clear or unambiguous as to warrant an  inference that the interpretation placed on them by the arbitrators is totally  unsustainable.   In  that view of the  matter,  the Court   held  that  it  was   difficult  to  say  that   the arbitrators interpretation was erroneous on the face of it. Hence,  the aforesaid decision would have no bearing to  the facts  and  the law involved in this matter.  Similarly,  in Managing  Director,  J&K Handicrafts, Jammu Vs.   Good  Luck Carpets  [1990]  4  SCC 740, dealing with  the  non-speaking award, the Court negatived the contention that the agreement containing the arbitration clause cannot be looked into even to  find  out  as  to what was the  nature  of  the  dispute contemplated  by  it with regard to which a reference to  an arbitrator  was  contemplated,  nor so, when the  award  was non-speaking one, by observing thus:  Firstly, the award is not a totally non-speaking one inasmuch as it gives a resume of  the  incentive  scheme  and the  agreement  between  the parties  as  also  the  items  of  the  claim  made  by  the respondent.  Of course while fixing the amount found payable by  the  appellant, no reasons are recorded.   Secondly,  if there  is any challenge to the award on the ground that  the arbitrator had no jurisdiction to make the award with regard to  a particular item inasmuch as it was beyond the scope of reference,  the  only way to test the correctness of such  a challenge  is  to  look into the agreement itself.   In  our opinion, looking into the agreement for this limited purpose is neither tantamount to going into the evidence produced by the  parties  nor  into the reasons which weighed  with  the arbitrator in making the award.

     In  Tarapore  & Co.  Vs.  State of M.P.   1994(3)  SCC 521,  this Court again considered whether the arbitrator has exceeded  his jurisdiction in awarding extra payment to  the contractor on account of payment of enhanced wages to labour by  the contractor pursuant to statutory revision of minimum wages  by  Government or increase in rates of fair wages  by wage committee binding on the contractor under conditions of tender  notice.   In  the said case,  Court  considered  the distinction  between  the latent and patent jurisdiction  of the  arbitrator in deciding the disputes and after referring to  the  arbitration clause, observed that:  - Any  dispute relating  to or arising out of or in any way connected  with the  contract has to be referred to arbitration.  It  cannot be  said  that there was patent lack of jurisdiction on  the part  of  arbitrators  in having gone into the  question  of reimbursement;    at  the  best  it   could  be  said   that

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arbitrators  had no jurisdiction to entertain the claim  and hence a case of latent lack of jurisdiction.

     After   considering  the   decisions  in   Continental Construction  Co.(supra) and Tarapore and Co.  (supra), this Court  held that as there was absence of escalation  clause, it  was  not a case where on the basis of the terms  of  the agreement  entered between the parties, it can be held  that arbitrator had no jurisdiction to make the award.  The Court observed  that  it  cannot be held that  arbitrator  has  no jurisdiction  to make the award because of lack of  specific provision  permitting  the  claim at the  hand.   The  Court further  observed:-  It has to be seen whether the term  of the  agreement  permitted  entertainment  of  the  claim  by necessary  implication.   It  may be stated that we  do  not accept the broad contention of Shri Nariman that whatever is not   excluded   specifically  by   the  contract   can   be subject-matter of claim by a contractor.  Such a proposition will  mock  at  the terms agreed upon.   Parties  cannot  be allowed  to depart from what they had agreed.  Of course, if something  flows  as  a necessary concomitant  to  what  was agreed  upon,  courts can assume that too as a part  of  the contract between the parties.

     After referring to the facts as found from the record, the  Court  held that the award cannot be said to be  beyond the  jurisdiction  of  the arbitrator insofar  as  increased payment  on  account  of  rise in rates of  fair  wages  was concerned.   In  our  view,  the said finding  is  based  on appreciation  of  evidence  on record and the terms  of  the contract.  However, the Court made it clear that part of the award which is relatable to increase in minimum wages cannot be   regarded  as  one   within  jurisdiction  and  observed needless   to   say   that  if   arbitrator   goes   beyond jurisdiction, the same would amount to misconduct.

     In   T.N.   Electricity  Board   Vs.   Bridge   Tunnel Constructions and Others 1997(4) SCC 121, the contractor had set up the claims raised at rates higher than the contracted rates  and twice the rate for the work done after the expiry of  the  contract  period.  For those  claims,  dispute  was raised  and the matter was referred to the arbitrator.   The Civil  Court  made  the award rule of the Court.   The  High Court  confirmed the same.  In appeal, this Court set  aside the award and while discussing various contentions, observed as  under:   If the arbitrator decides a dispute  which  is beyond   the   scope  of  his   reference  or   beyond   the subject-matter  of  the  reference  or he  makes  the  award disregarding  the  terms  of reference  or  the  arbitration agreement   or  terms  of  the   contract,  it  would  be  a jurisdictional  error  beyond  the scope of  reference;   he cannot clothe himself to decide conclusively that dispute as it  is  an  error  of  jurisdiction  which  requires  to  be ultimately decided by the Court.

     In  New  India  Civil Erectors (P) Ltd.   Vs.   Oil  & Natural  Gas Corporation [1997] 11 SCC 75, this Court  again considered  the contention wherein the arbitrator has passed award   contrary  to   the  specific   stipulation/condition contained  in the agreement between the parties.  The  Court observed thus:- It is axiomatic that the arbitrator being a creature  of  the  agreement, must operate within  the  four corners  of the agreement and cannot travel beyond it.  More particularly,  he cannot award any amount which is ruled out or  prohibited by the terms of the agreement.  In this case,

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the  agreement  between  the parties clearly  says  that  in measuring  the  built-up area, the balcony areas  should  be excluded.   The arbitrators could not have acted contrary to the said stipulation and awarded any amount to the appellant on that account.

     The  aforesaid judgment was considered in H.P.   State Electricity  Board Vs.  R.J.  Shah and Company [1999(4)  SCC 214] and in paragraph 26, the Court held as under:

     In  order  to  determine whether the  arbitrator  has acted  in  excess  of jurisdiction what has to  be  seen  is whether  the  claimant could raise a particular  dispute  or claim   before  the  arbitrator.   If   the  answer  is   in affirmative, then it is clear that arbitrator would have the jurisdiction  to deal with such a claim.  On the other  hand if the arbitration clause or a specific term in the contract or  the law does not permit or give the arbitrator the power to  decide  or  to  adjudicate on a dispute  raised  by  the claimant  or  there  is a specific bar to the raising  of  a particular  dispute or claim, then any decision given by the Arbitrator  in respect thereof would clearly be in excess of jurisdiction.

     Learned Sr.  Counsel, Mr.  Ashok H.  Desai relied upon the  case of P.V.  Subba Naidu and Others Vs.  Government of A.P.   and  others  1998(9)  SCC 407.   In  that  case,  the non-speaking  award  was  rendered by the  arbitrator.   The Court  held  that the terms of the arbitration  clause  were very  wide,  therefore,  all the disputes which arise  as  a result  of the contract would be covered by the  arbitration clause  and  that all claims were expressly referred to  the arbitrator  and were raised before the arbitrator.  In  that set of circumstances, by purporting to construe the contract the  Court  could not take upon itself the burden of  saying that  it  was  contrary to the contract and as  such  beyond jurisdiction.   Thereafter,  the  Court   referred  to   the decision  in  Ch.   Ramalinga   Reddy  Vs.    Superintending Engineer  (1994)  5 Scale 67 and observed that in that  case arbitrator was required to decide the claims referred to him having  regard to the contract.  Hence, his jurisdiction was expressly  limited  to decide claims under the terms of  the contract  but in the case which was considered by the Court, there  was  no  clause in the contract which  prevented  the arbitrator  from  examining  the claims put  up  before  the arbitrator.   Considering the aforesaid aspect, in our view, this  judgment  also  would have no bearing in  the  present case,  as there are express prohibitions and stipulations in the  contract for non-payment of extra amount on any  ground whatsoever.   In the present case, the rates were to  remain firm, fixed and binding irrespective of fall or rise in cost of  mining operation of the work covered by the contract  or for  any other reason.  The contract was for composite  rate and  it  stipulated that no other or further payment of  any kind  of  item whatsoever was payable by the company to  the Contractor.   From the resume of the aforesaid decisions, it can  be  stated  that:  (a) it is not open to the  Court  to speculate,  where no reasons are given by the arbitrator, as to  what  impelled arbitrator to arrive at  his  conclusion. (b) It is not open to the Court to admit to probe the mental process  by which the arbitrator has reached his  conclusion where it is not disclosed by the terms of the award.  (c) If the  arbitrator has committed a mere error of fact or law in reaching  his conclusion on the disputed question  submitted

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for  his adjudication then the Court cannot interfere.   (d) If  no specific question of law is referred, the decision of the  Arbitrator on that question is not final, however  much it  may be within his jurisdiction and indeed essential  for him  to  decide the question incidentally.  In a case  where specific  question of law touching upon the jurisdiction  of the  arbitrator  was  referred  for   the  decision  of  the arbitrator  by  the  parties,  then   the  finding  of   the arbitrator  on the said question between the parties may  be binding.   (e)  In  a  case   of  non-speaking  award,   the jurisdiction  of the Court is limited.  The award can be set aside  if the arbitrator acts beyond his jurisdiction.   (f) To  find out whether the arbitrator has travelled beyond his jurisdiction,   it  would  be   necessary  to  consider  the agreement  between  the parties containing  the  arbitration clause.   Arbitrator  acting beyond his jurisdiction  is  a different  ground from the error apparent on the face of the award.   (g)  In order to determine whether  arbitrator  has acted  in excess of his jurisdiction what has to be seen  is whether  the claimant could raise a particular claim  before the arbitrator.  If there is a specific term in the contract or  the law which does not permit or give the arbitrator the power  to decide the dispute raised by the claimant or there is  a  specific  bar in the contract to the raising  of  the particular  claim then the award passed by the arbitrator in respect thereof would be in excess of jurisdiction.  (h) The award  made by the Arbitrator disregarding the terms of  the reference  or the arbitration agreement or the terms of  the contract  would  be  a jurisdictional error  which  requires ultimately  to be decided by the Court.  He cannot award  an amount  which is ruled out or prohibited by the terms of the agreement.   Because  of  specific  bar  stipulated  by  the parties  in  the agreement, that claim could not be  raised. Even  if it is raised and referred to arbitration because of wider arbitration clause such claim amount cannot be awarded as  agreement  is  binding  between   the  parties  and  the arbitrator  has  to adjudicate as per the  agreement.   This aspect  is absolutely made clear in Continental Construction Co.   Ltd.(supra) by relying upon the following passage from M/s.   Alopi  Parshad Vs.  Union of India [1960] 2  SCR  703 which  is to the following effect:  - There it was observed that  a  contract  is  not  frustrated  merely  because  the circumstances  in which the contract was made, altered.  The Contract Act does not enable a party to a contract to ignore the  express  covenants  thereof, and to  claim  payment  of consideration  for  performance  of the  contract  at  rates different  from the stipulated rates, on some vague plea  of equity.   The  parties  to an executory contract  are  often faced,  in  the  course of carrying it out, with a  turn  of event  which  they  did  not at  all  anticipate,  a  wholly abnormal  rise  or fall in prices, a sudden depreciation  of currency,  an unexpected obstacle to execution, or the like. There  is  no  general  liberty reserved to  the  courts  to absolve  a  party from liability to perform his part of  the contract merely because on account of an uncontemplated turn of  events,  the  performance  of the  contract  may  become onerous.

     (i)   The  arbitrator  could   not  act   arbitrarily, irrationally, capriciously or independently of the contract. A  deliberate  departure  or   conscious  disregard  of  the contract  not only manifests the disregard of his  authority or misconduct on his part but it may tantamount to mala fide action.   (j) The arbitrator is not a conciliator and cannot ignore  the law or misapply it in order to do what he thinks

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just  and reasonable;  the arbitrator is a tribunal selected by the parties to decide the disputes according to law.

     In  view  of  the aforesaid law and the  facts  stated above,  it  is  apparent  that   the  award  passed  by  the arbitrator  is  against  the stipulations  and  prohibitions contained  in  the  contract between the  parties.   In  the present  case,  there  is no question of  interpretation  of clauses  17  &  18 as the language of the  said  clauses  is absolutely  clear and unambiguous.  Even the contractor  has admitted  in  his  letter  demanding such  claims  that  the contract  was signed with clear understanding that the  rate under  the contract was firm and final and no escalation  in rates  except in case of diesel would be granted.  Hence, by ignoring  the same, the arbitrator has travelled beyond  his jurisdiction.   It amounts to deliberate departure from  the contract.   Further,  the  reference to  the  arbitrator  is solely  based upon the agreement between the parties and the arbitrator  has  stated so in his interim award that he  was appointed  to  adjudicate the disputes between  the  parties arising  out  of  the  agreement.   No  specific  issue  was referred  to the arbitrator which would confer  jurisdiction on  the  arbitrator to go beyond the terms of the  contract. Hence, the award passed by the arbitrator is, on the face of it, illegal and in excess of his jurisdiction which requires to be quashed and set aside.

     Lastly,  we would mention few other contentions raised by the learned counsel for the respondent which are required to  be stated for rejection.  His contention that arbitrator has  acted beyond his jurisdiction was not raised before the District  Court as well as before the Arbitrator, is without any  substance.   Surprisingly, to say the least,  the  High Court  as  well  as  the District  Court  observed  that  no specific  contention  with  regard to the  jurisdiction  was raised  before  the  arbitrator.  It appears that  the  High Court  and the District Court had not considered the written statement filed by the appellant before the arbitrator.  The District  Court  has also raised issue Nos.  5 to  8  quoted above,  which  would  cover  the contention  raised  by  the appellant.  The issue whether the award is perverse and that the  arbitrator  failed  to  apply his  mind  to  pleadings, documents and evidence as well as the clauses 17 & 18 of the agreement  would  cover the contention that  the  arbitrator acted  beyond  his jurisdiction in ignoring stipulations  of the  contract.   With  regard to the committees  report  on which  the  learned  Counsel for the respondent  has  relied upon, it had been pointed out by the learned Counsel for the appellant  that the said report was specifically rejected by the board of the appellant.  Hence, it would have no bearing on the award which was to be passed by the Arbitrator.

     In  the result, the appeal is allowed with costs.  The award  passed  by the arbitrator is quashed and  set  aside. Consequently,  the  judgment and order dated 17th  December, 1991  passed by the High Court in S.B.  Civil  Miscellaneous Appeal No.254 of 1991confirming the judgment and order dated 1st  August,  1989 passed by the District Judge, Udaipur  in Civil  Miscellaneous Case No.  131 of 1985 and 45 of 1986 is also quashed and set aside.