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1 CIVIL APPEAL NO. 1533 OF 2017 REPORTABLEIN THE SUPREME court OF INDIACIVIL APPELLATE JURISDICTIONCIVIL APPEAL NO. 1533 OF 2017 ATLANTA LIMITED THR. ITS MANAGING .. APPELLANTDIRECTORVERSUSUNION OF INDIA REPRESENTED BY CHIEF .. RESPONDENTENGINEER MILITARY ENGINEERING SERVICEJ U D G M E N THima Kohli appellant-claimant has preferred this appeal against thejudgment and order dated 20th July, 2010 passed by the Division Benchof the high court of Madras partly allowing the appeal preferred by therespondent-Union of India under Section 39 of the Arbitration Act1, 1940and interfering with the order dated 19th January, 2009 passed by thelearned Single Judge in No. 663 of 1999, a petition filed by therespondent-Union of India under Sections 30 and 33 of the 1940 Actagainst the arbitral Award dated 24th June, 1999. Vide judgment dated19th January, 2009, the learned Single Judge had dismissed the said1 In short 1940 Act 1 CIVIL APPEAL NO.

2 1533 OF 2017petition filed by the respondent-Union of India and had upheld theAward. The Division Bench of the high court has, however, set asidethe amount awarded by the learned Sole Arbitrator in favour of theappellant herein towards idle hire charges and value of the tools andmachineries. Further, the findings returned in the Award relating toextension of time and illegal termination of the contract by therespondent-Union of India in favour of the appellant-claimant were alsoset aside. On the remaining issues, the order of the learned SingleJudge was duly confirmed and the decree conspectus of the facts of the case, relevant for disposing of thepresent appeal, are as follows:On 16th November, 1988, the appellant-claimant, a constructioncompany, entered into a contract with the respondent-Union of India forconstruction of a runway and allied works at the Naval Air Station,Arakonam for a total contract price of 19,58,94,190/-[Rupees NineteenCrores fifty eight lakhs ninety four thousand one hundred and ninety].

3 As per the contract, the work was to be completed within a period of 21months from the date of the commencement, ending on 23rd August,1990. It is the stand of the respondent-Union of India that the site washanded over to the appellant-claimant on 24th November, 1988 andreckoned from the said date, the date of completion of the contractwould have expired on 23rd August, 1990. On the contrary, the2 CIVIL APPEAL NO. 1533 OF 2017appellant s stand is that it could commence the work only on 1st January,1989, since the site was heavily waterlogged due to the rainy the course of execution of the work, the appellant-claimantsought extension of time for completion of the project for 45 15th July, 1992 as the probable target date. The respondent-Unionof India granted extension of time thrice, firstly upto 31st December,1990, then upto 30th June, 1991 and lastly upto 31st March, 1992. ByMid-March, 1992, the appellant-claimant claims to have completed thesubstantial work of construction of the runway and taxi track to the extentof 72%.

4 Since the respondent-Union of India proposed to have therunway inaugurated by the then President of India on 11th March, 1992,the appellant-claimant had to hand back the site on 9th March, 1992whereafter, for security reasons, the station became a restricted a result, the appellant-claimant had to request the respondent-Unionof India to issue passes for its staff, operators and labourers to completethe balance work. But no entry passes were issued. Instead, vide letterdated 2nd April, 1992 the contract was terminated with immediate effectby the Chief Engineer, who declined to extend the time any further forcompletion of the work which was otherwise to expire on 31st March,1992. by the aforesaid termination order, the appellant-claimant invoked the Arbitration Clause in the contract executed by the3 CIVIL APPEAL NO. 1533 OF 2017parties and a Sole Arbitrator was appointed to adjudicate the disputesbetween them. Several claims were raised by the appellant-claimantbefore the learned Sole Arbitrator.

5 The respondent-Union of India alsoraised counter claims. The learned Sole Arbitrator framed as many as33 issues and on evaluating the evidence and hearing the partiespronounced a detailed Award dated 24th June, 1999, running into 506pages, wherein a sum of 25,96,87, [Rupees Twenty five croresninety six lakhs eighty seven thousand four hundred forty two and eightynine paise] was awarded in favour of the appellant-claimant, inclusive ofinterest upto 31st May, 1999. Further, future interest was directed to bepaid by the respondent-Union of India from 1st June, 1999 at the rate of18% per annum on the principal amount of 14,12,50, [RupeesFourteen crores twelve lakhs fifty thousand nine hundred and seven andfifty paise], till realization. As regards the counter-claim of therespondent-Union of India, the learned Sole Arbitrator awarded a sum of 1,42,255/-[Rupees One lakh forty two thousand two hundred and fiftyfive] in its favour in respect of Claim No.

6 6 along with future interest. by the Award dated 24th June, 1999, the respondent-Union of India moved a petition under Section 30 read with Section 33 ofthe 1940 Act, which was dismissed by the learned Single Judge videorder dated 19th January, 2009 and a decree was passed in terms of theAward holding that the appellant-claimant herein would be entitled to4 CIVIL APPEAL NO. 1533 OF 2017interest at the rate of 12% per annum on the principal amount from thedate of the decree, , 19th January, 2009, till the date of payment. Thejudgment dated 19th January, 2009 was challenged in an intra-courtappeal filed by the respondent-Union of India. By the impugnedjudgment, the Division Bench has set aside the amount awarded infavour of the appellant-claimant towards idle hire charges and the valueof the tools and machineries. Further, the findings returned in the Awardin respect of the extension of time and illegal termination of the contracton the part of the respondent-Union of India, were also set , the present may note that arguments have been addressed in the presentappeal only on two issues, viz.

7 (i) reasonableness of the extension oftime and validity of the termination of the contract on the part of therespondent-Union of India; and (ii) the claim granted in favour of theappellant-claimant in respect of idle hire charges at the site from 02ndApril, 1992 to 23rd December,1995, with interest from 24th December,1995 to 31st December,1999 and the value of the tools and Meenakshi Arora, learned Senior Advocate appearing for theappellant-claimant assailed the impugned judgment and submitted that itwas for cogent reasons that the learned Sole Arbitrator had ruled infavour of the appellant-claimant in respect of the claim relating toreasonableness of the extension of time granted by the respondent-5 CIVIL APPEAL NO. 1533 OF 2017 Union of India for completing the project and a related claim pertaining tothe validity of the decision taken by the respondent-Union of India toterminate the contract. The claim of the appellant-claimant in respect of idle hire charges andthe value of the machinery and its equipment lying at the site was alsoawarded in its favour for justified reasons and has been erroneouslyturned down by the Division Bench.

8 It was canvassed that the AppellateCourt has erred in re-appreciating the evidence led by the parties whichwas duly scrutinized and evaluated by the learned Sole Arbitrator andupheld by the learned Single Judge. Learned senior counsel contendedthat the scope of interference by courts in arbitral Awards made underthe old Act, viz., the Arbitration Act, 1940, is fairly limited. Courts do notsit in appeal over an Award passed by the learned Arbitrator, nor docourts interfere with the Award only on the ground that the Arbitrator hastaken a possible view, though a different view could have been taken onthe very same evidence. Stating that the present case is not one wherethe Award suffers from any patent perversity or an error of law; nor hasthe learned Sole Arbitrator mis-conducted himself on the proceedings,learned senior counsel submitted that the Appellate court has exceededits jurisdiction by substituting its own opinion in place of the conclusionsarrived at by the learned Sole Arbitrator.

9 To buttress the argument on thescope of interference by courts in an arbitral Award passed under the6 CIVIL APPEAL NO. 1533 OF 20171940 Act, reliance has been placed on NTPC Ltd. v. Deconar ServicesPvt. Ltd. 2 . contra, Mr. Sanjay Jain, learned Additional Solicitor Generalappearing for the respondent-Union of India, supported the impugnedjudgment and submitted that the Appellate court had every reason to setaside the Award in respect of the findings returned by the learned SoleArbitrator on the aspect of reasonableness of extension of time, validityof the termination of the contract by the respondent-Union of India asalso the claim of idle cost of the machinery and plant awarded in favourof the appellant-claimant. He submitted that the issues relating toreasonableness of extension of time and validity of termination of thecontract were excepted matters in terms of Clauses 7, 11, 54 and 70 ofthe contract governing the parties, which aspects were completelyoverlooked by the Sole Arbitrator; that the issue relating to the validity oftermination of the contract on the part of the respondent-Union of Indiawas also covered under excepted matters by virtue of Clauses 54 and70 of the contract and that the Sole Arbitrator had travelled beyond theterms of the contract by allowing the claim for idling cost of plant andmachinery in favour of the appellant-claimant.

10 Was submitted on behalf of the respondent-Union of India thatallowing idling charges in favour of the appellant-claimant amounted to a2 (2021) SCC Online SC 4987 CIVIL APPEAL NO. 1533 OF 2017patent illegality in the Award for the reason that in a separate proceedinginitiated by the appellant-claimant, the high court had permitted it to liftits material from the site, post termination of the contract, an optionwhich it elected not to exercise, for reasons best known to it. To buttresshis argument that an excepted matter cannot be adjudicated by anArbitrator, the decisions in Food Corporation of India v. SreekanthTransport 3, Grid Corporation of Orissa Ltd. And Another v. BalasoreTechnical School 4 and General Manager, Northern Railway andAnother v. Sarvesh Chopra 5 have been cited. On the scope ofSections 30 and 33 of the Arbitration Act, 1940, reliance has beenplaced on the decision of this court in Rajasthan State Mines andMinerals Ltd.