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1 REPORTABLEIN THE SUPREME COURT OF INDIACIVIL APPELLATE JURISDICTIONCIVIL APPEAL 7380 OF 2021 State of Haryana ..Appellant (S)VERSUSM/s. shiv Shankar Construction Co. & Anr..Respondent (S)J U D G M E N T M. R. Shah, aggrieved and dissatisfied with the impugnedjudgment and order dated passed by the HighCourt of Punjab and Haryana at Chandigarh in FAO of 2011 (O&M), by which the High Court has dismissedthe appeal preferred by the appellant herein under Section137 of the Arbitration and Conciliation Act, 1996, the State ofHaryana has preferred the present appeals. the outset it is required to be noted that while issuingnotice in the present appeals, this Court has stayed theaward exceeding ,03,50,263/ insofar as claim 8 are concerned. facts leading to the present appeals in a nutshell are asunder: the appellant herein awarded the contract to herein contractor for strengthening, up gradation andmaintenance of road from Palwal to Hasanpur, Haryana for alength of kilometres on certain terms and conditions asper the contract entered into between the parties.

2 Thecontract was for ,26,59,688/ . That as per the designcalculation data, the specifications as prepared by theappellant department were meant for 3364 traffic intensityPCU (Passenger Car Unit)/day. The contract was up That on due to the closing of thePalwal Aligarh Road on account of the construction of therailway bridge, the entire traffic was diverted from Palwal2 Aligarh Road to the present road. That due to this diversionof traffic from Palwal Aligarh Road, heavy traffic of 24418 PCUS per day was plying on the road as against the design of3364 PCUS per day, which damaged the road. That accordingto the contractor respondent herein, he was requiredto do heavy repair by incurring additional arose between the parties. A legal notice was servedupon the appellant making the claims.

3 Disputes were notresolved and therefore respondent contractor invokedthe arbitration clause as per clauses 24 & 25 andapproached the High Court for appointment of an arbitratorin exercise of power conferred under Section 11 (6) of theArbitration and Conciliation Act, 1996. order dated , the High Court appointed Jindal, retired Chief Engineer, Delhi DevelopmentAuthority as the sole Arbitrator to adjudicate upon all thedisputes between the parties. That the contractor submittedvarious claims including claim Nos. 1 and 8. For the purposeof deciding the present appeals, claim and 8 arerelevant. The sole Arbitrator awarded a total sum ,51,95,400/ with respect to claim and 8. aggrieved and dissatisfied with the award declared bythe learned Arbitrator, the appellant preferred an applicationbefore the Court under Section 34 of the Arbitration andConciliation Act, 1996, which came to be dismissed againstwhich the appellant State preferred an appeal underSection 37 of the Arbitration and Conciliation Act, 1996before the High Court.

4 By the impugned judgment and orderthe High Court has dismissed the said appeal. Hence, theState of Haryana has preferred the present appeals. Shyam Divan, learned Senior Advocate has appeared onbehalf of the State appellant and Shri Ranjit kumar ,learned Senior Advocate has appeared on behalf of therespondent contractor. Shyam Divan, learned Senior Advocate appearing onbehalf of the appellant submitted that the appellant hasalready paid to respondent contractor an amount ,03,50,263/ pursuant to the interim order passed by this Shyam Divan, learned Senior Advocate appearing onbehalf of the appellant has submitted that the arbitral awardis liable to be set aside on the following grounds: (i)The award is in excess of claim;(ii)The Arbitrator exceeded the scope of reference.

5 (iii)The Arbitrator has rewritten the contract with respect tothe amount payable which was specified in the , so far as ground that the award is in excess ofclaim, it is vehemently submitted by Shri Shyam Divan,learned Senior Advocate appearing on behalf of the appellantthat the contractor in its statement of claim had claimed anamount of Rs. 1,03,50,263/ only under the claim and8. It is submitted that despite the above the Arbitrator hasawarded a total sum of ,51,95,400/ , which is in farexcess of amount claimed. It is submitted that the statementof claim was never modified by the contractor and therefore,the Arbitrator ought not to have awarded the sum/amount inexcess of the amount is submitted that the differential amount ,45,137/ is in excess of claim and to that extent thearbitral award is invalid and liable to be set aside.

6 Relianceis placed on the decision of this Court in the case of ONGCLtd. v. Off Shore Enterprises Inc., (2011) 14 SCC 147(para 16). is submitted that as held by this Court in the cases ofAssociate Builders v. Delhi Development Authority,(2015) 3 SCC 49 (para 36) and Budhraja , Orissa Mining Corpn. Ltd. & Anr., (2008) 2 SCC 444 (para 31 32), making an award in excess of claimis clear cut an act exceeding the jurisdiction and amountsto a misconduct of the , so far as ground namely, that the Arbitratorexceeded the scope of reference, it is contended that theArbitrator cannot exceed the scope of is submitted that the contractor invoked the arbitrationclause on The High Court appointed the sole6 Arbitrator on and the Arbitrator entered uponreference on It is urged that by allowing theclaims for a period beyond , the Arbitratorexceeded the scope of reference.

7 Is submitted that an amount of ,96,000/ (approx.)has been awarded for claims arising between (calculated as amount for maintenance of road@ Rs. 45,000/ per kilometre (km) per month). It issubmitted that it was not permissible for the Arbitrator toexceed the scope of the reference beyond the date uponentering reference and as a consequence the award is liableto be set aside. senior counsel appearing on behalf of theappellant has relied upon the decisions of this Court in thecases of Indian Aluminium Cables Ltd. v. Haryana StateElectricity Board, 1996 (5) SCALE 708 (para 2) and MSKP rojects India (JV) Ltd. v. State of Rajasthan & Anr.(2011) 10 SCC 573 (para 15), in support of his abovesubmissions that as the Arbitrator exceeded the scope ofreference and hence the award is liable to be set so far as the ground is concerned namely, theArbitrator has rewritten the contract with respect to theamount payable which was specified in the contract, it issubmitted that the Arbitrator has rewritten the terms of thecontract by directing the appellant to pay the compensationto respondent contractor at the rate of ,000/ per km per month instead of mutually agreed contractualrate of ,000/ per km per month.

8 It is contended that itwas not open to the Arbitrator to rewrite the terms of thecontract and award the contractor a higher rate for the workthan the rate which was already fixed in the contract. It issubmitted that such an exercise is beyond the competenceand authority of the Arbitrator. Reliance is placed on thedecision of this Court in the case of SatyanarayanaConstruction Company v. Union of India and Others(2011) 15 SCC 101 (para 11). is further contended by Shri Divan, learned SeniorAdvocate appearing on behalf of the appellant that evenotherwise, the amount awarded by the Arbitrator ,000/ per km per month beyond the time period ofadditional traffic from to tillthe end of contract is wholly impermissible. It is submittedthat diversion of traffic on km stretch of the road whichgave rise to the cause of action ceased to exist January2008.

9 It is submitted that however, the Arbitrator hasdirected the appellant to make payment at Rs. 45,000/ perkm per month even beyond the time period of additionaltraffic. It is contended that the aforesaid is whollyimpermissible. the above submissions, it is prayed to allow thepresent appeals. Ranjit kumar , learned Senior Advocate appearing onbehalf of respondent contractor, has vehementlycontended that the award passed by the Arbitrator cannot besaid to be (i) in excess of claim; (ii) exceeding the scope ofreference and (iii) rewriting the contract with respect to theamount payable which was specified in the contract, assubmitted on behalf of the appellant. It is submitted that inthe statement of claim the contractor specifically stated that9the amount has been worked out up to the month of May,2007 and the details of expenditure beyond May, 2007 will besubmitted during the course of hearing.

10 It is thereforesubmitted that it cannot be said that claim and 8 wererestricted to Rs. 1,03,50,263/ only. It is urged that onappreciation of the evidence on record the Arbitrator hasawarded Rs. 1,51,95,400/ for claim and 8, which inany case cannot be said to be beyond the amount claimed inthe statement of claim. is next contended that it also cannot be said that theaward passed by the Arbitrator was beyond the scope ofreference. It is submitted that as such cause of action toclaim the additional amount arose due to over expenditureowing to maintenance of road due to diversion of traffic fromPalwal Aligarh Road to the present road which continuedeven beyond and/or and is submitted that the amount awarded by the Arbitratorunder claim and 8 cannot be said to be exceeding thescope of is further submitted that even the award passed by theArbitrator to make payment at ,000/ per km permonth cannot be said to be rewriting of the contract withrespect to the amount payable which was specified in thecontract.