CHANDIGARH CONSTRUCTION CO. PVT. LTDversusSTATE OF PUNJAB & ANR.

                        [2020] 2 S.C.R. 825                             825


          CHANDIGARH CONSTRUCTION CO. PVT. LTD.                         A
                                 v.
                   STATE OF PUNJAB & ANR.
                 (Civil Appeal Nos.867-870 of 2013)
                       FEBRUARY 14, 2020                                B
         [R. BANUMATHI AND A.S. BOPANNA, JJ.]
       Arbitration Act, 1940: Award by arbitrator – Claimant-
contractor and opposite party entered into an agreement for
construction of Sutlej Yamuna Link Canal and in that regard to
                                                                        C
carry out earth work, drainage behind lining and cement concrete
lining – Estimated cost of project was Rs.31 lakhs and contract
amount for the work was fixed at Rs.59.86 lakhs – Claimant raised
demand for additional payment on the ground that during execution,
the scope of work was considerably increased on account of various
decisions by department regarding rebuilding of river banks and         D
changes in the strata encountered during excavation due to incorrect
geological data observations by department prior to inviting tender
– Demand of additional payment led to arbitral dispute – Arbitrator
accepted claim and passed award with 18% interest – Award
presented before Sub-judge for making ‘rule of court’ – Opposite
                                                                        E
party filed objection that no reason was indicated for giving the
award – Sub-judge accepted the objection to the extent of rejection
of Claim no.1 and reduction of interest to 12% p.a. and in other
respects the Award was made ‘Rule of Court’ – First appellate court
rejected the claim in toto taking note of Clause 39 of the Contract
Agreement which provided that the contractor was required to deliver    F
in the office of the Executive Engineer every month during
continuance of the work, the return showing details of extra work
done with value of such work and if the details are not indicated, it
shall be deemed that the contractor has waived all claims not
included in such returns and will have no right to enforce any such
                                                                        G
claim not so included – In that light since the claim was ultimately
found as not included in the monthly statement, the First Appellate
Court held that the requirement of the conditions of the contract
was not adhered to and set aside the Award of the Arbitrator – High
Court also took note of Clause 39 of the contract and declined the
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                                825
826            SUPREME COURT REPORTS                      [2020] 2 S.C.R.


A     claim except claim no.1 – In the instant appeal, it was contended by
      appellant-claimant that Note 6 to the schedule of work which formed
      a part of the contract provided that extra or other items of work
      shall be paid at the rate worked out on the basis of relevant Punjab
      Common Schedule of Rates Basis Plus Sanctioned Premium at the
      time of tendering – The difference between the estimated cost of
B
      Rs.31 lakhs and contract amount of Rs.59.86 lakhs was the
      sanctioned premium which corresponded to the overall premium of
      93.12% on the work for computing the rates of extra items/quantity
      or work done – Insofar as the remaining claims, 93.12% would
      become applicable – It was contended that when the contract
C     agreement is explicit insofar as the value and the difference being
      the sanctioned premium and the percentage being evident at 93.12%,
      the decision of the Arbitrator not indicating any further reasons in
      the Award would not be fatal – Opposite party (State of Punjab),
      referred to Clause 63 of the contract which provides for reference
      of the disputes to arbitration – The said clause specified the
D
      requirement that all Awards shall be in writing and in case of awards
      amounting to Rs.1 lakh and above, such Award shall state the reason
      for the amount awarded – Held: The quantum of the contract amount
      as against the estimated cost by itself could not have formed the
      basis to conclude the claim as made by the claimant towards
E     sanctioned premium – Claim No.8 related to the work carried out
      on Daldal land wherein the soil was marshy and extra construction
      material was required to complete the work – Arbitrator awarded
      Rs.19.15 lakhs after indicating the amount for the said work on the
      same basis and deducting the agreed rate – Clause 39, no doubt,
      prescribes a method by which the claim is to be put forth in the
F
      statement every month – The said requirement will have to be
      construed as being put in the agreement so as to ensure that the
      additional work has actually been done, the claim is put forth along
      with details so that baseless claim is not made at a distant point in
      time when it will not be possible to determine – Though the Clause
G     also indicates that if such claim is not made, it would amount to
      waiver, in a circumstance where the claim is ultimately put forth in
      the forum where an adjudication is made and based on the material
      if the adjudicating authority is satisfied that the actual work had
      been done and the contractor being entitled to the extra amount
      spent by him to carry out the work in an appropriate manner, it
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CHANDIGARH CONSTRUCTION CO. PVT. LTD. v. STATE OF                           827
               PUNJAB & ANR.

would not be just and proper to deny such claim only on the ground          A
that it had not been indicated strictly in the manner as provided in
the contract specially keeping in view the nature of work undertaken
– When the fact remains that the Daldal land was situated in the
area, work was carried out and extra material was used, the claim
cannot be rejected outright adopting a technical view of the matter
                                                                            B
– However, the claim for the extra item will have to be calculated
with premium at the same rate of 35.02% over and above the agreed
rate and not at 93.12% – Regarding Claim No.16, no reason to
interfere with the impugned orders – Further with regard to the
interest sought under Claim No.18 in the absence of agreement with
regard to the rate of interest, the interest as awarded by the Arbitrator   C
was on the higher side and the First Appellate Court was justified
in reducing the same to 12% p.a. – Claimant is entitled to the claim
for extra items as put forth under Claim Nos. 2, 3, 8 and 12 by
working out the difference of cost on the tender premium at 35.02%
– On arriving at the quantum of the amount, the same shall be
                                                                            D
payable with interest at 12% p.a. in the manner as ordered by the
First Appellate Court – Claim No.1 ordered by the High Court is
sustained.
      Partly allowing the appeals, the Court
       HELD: 1. The First Appellate Court as also the High Court            E
was correct to arrive at the conclusion that the claim as put forth
by the claimant in respect of Claims No.2, 3 and 12 at the premium
of 93.12% worked out only on the basis of difference of the amount
between the estimated cost and the contract amount is not
justified. However, in that circumstance when the Arbitrator has
not assigned any reasons but had unilaterally in a cryptic fashion          F
awarded the claim at the premium of 93.12% and when the same
was disapproved as not sustainable, the appropriate course in
the normal circumstance ought to have been to set aside the
Award and remit the matter to the arbitrator to make a fresh
consideration to determine the percentage of premium at which               G
the claim for the extra items would be sustainable, more
particularly in a circumstance where the additional work carried
out was not in serious dispute but the premium for rate of payment
was to be determined. The said course would be open even at
this stage, but in the instant case, the claim was under the Act,
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828           SUPREME COURT REPORTS                      [2020] 2 S.C.R.


A     1940 in respect of agreement dated 05.12.1985 and the claim
      before the Arbitrator itself was of the year 1994. In that
      background, a perusal of the consideration as made by the First
      Appellate Court would indicate that it does not refer to the claim
      that was admissible after working out the percentage of premium
      that is applicable. It has only arrived at the conclusion that the
B
      working out of the premium at 93.12% in respect of the extra
      items on Claim Nos.2, 3 and 12 are set aside. The First Appellate
      Judge ought to have arrived at the conclusion of the admissible
      claim and in that regard a conclusion ought to have been reached
      instead of rejecting the claim outright since the course to remand
C     the matter to the Arbitrator was not adopted. Instead of rejecting
      the entire claim as made by the claimants, premium for the extra
      items is to be determined at 35.02% and the claim based on the
      same is required to be awarded. To that extent, the calculation is
      to be made by the opposite party and the amount be paid to the
      claimant. The said calculation with the premium at 35.02% shall
D
      be made in respect of the extra items indicated under Claim
      Nos.2, 3 and 12. [Paras 14-16][838-C-H; 839-A-C]
            2. Insofar as the Claim No.8, it relates to the work carried
      out on DALDAL land wherein the soil was marshy and extra
      construction material was required to complete the work. The
E     Arbitrator through the impugned Award had taken note of the
      same and awarded the sum of Rs.19,15,143/- after indicting the
      amount for the said work on the same basis and deducting the
      agreed rate. Though the Sub-Judge had accepted the same for
      making it the ‘Rule of Court’, the First Appellate Judge on taking
F     note of the claim had arrived at the conclusion that the Arbitrator
      was not justified in granting the claim. In that regard, the First
      Appellate Court had taken note of Clause 39 of the Contract
      Agreement wherein a provision was made for extra items. The
      second paragraph therein which provides for the manner in which
      the contractor is required to submit the returns of the work
G     claimed for extra items was referred to. The said requirement
      indicated that the contractor shall deliver in the office of the
      Executive Engineer on or before the 10 th day of every month
      during continuance of the work, the return showing details of any
      work claimed for extra, and such return shall also contain the
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CHANDIGARH CONSTRUCTION CO. PVT. LTD. v. STATE OF                     829
               PUNJAB & ANR.

value of such work as claimed by the contractor. If the details are   A
not indicated, the Clause indicates that it shall be deemed that
the contractor has waived all claims not included in such returns
and will have no right to enforce any such claim not so included.
In that light since the claim was ultimately found as not included
in the monthly statement, the First Appellate Court was of the
                                                                      B
opinion that the requirement of the conditions of the contract
was not adhered to and, therefore, set aside the Award of the
said amount by the Arbitrator and the same claim being made
‘Rule of Court’ by the Sub-Judge was also set aside. The High
Court while adverting to this aspect of the matter has held that
insofar as the amount sought under Claim No.8 the question is         C
not whether the petitioner undertook this work but whether the
petitioner raised any claim for this extra amount in terms with
the contract. The High Court has also taken note of Clause 39 of
the contract and has declined the claim. [Para 17][839-C-H; 840-
A]
                                                                      D
      3. Clause 39 of the Contract Agreement no doubt prescribes
a method by which the claim is to be put forth in the statement
every month. The said requirement will have to be construed as
being put in the agreement so as to ensure that the additional
work has actually been done, the claim is put forth along with
                                                                      E
details so that baseless claim is not made at a distant point in
time when it will not be possible to determine. Though the Clause
also indicates that if such claim is not made, it would amount to
waiver, in a circumstance where the claim is ultimately put forth
in the forum where an adjudication is made and based on the
material if the adjudicating authority is satisfied that the actual   F
work had been done and the contractor being entitled to the extra
amount spent by him to carry out the work in an appropriate
manner, it would not be just and proper to deny such claim only
on the ground that it had not been indicated strictly in the manner
as provided in the contract specially keeping in view the nature      G
of work undertaken. To that limited extent a perusal of the Award
passed by the Arbitrator would indicate that the Arbitrator had
taken into consideration the letter dated 14.11.1986 wherein the
identification of soil which was agreed to. The letter dated
09.03.1987 submitting the test results identifying the strata
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830           SUPREME COURT REPORTS                      [2020] 2 S.C.R.


A     encountered as DALDAL is referred therein. The work having
      been completed during the March, 1988 was also taken note. In
      that circumstance when the fact remains that the DALDAL land
      was situated in the area, work was carried out and extra material
      was used, the claim cannot be rejected outright adopting a
B     technical view of the matter. However, the claim for the extra
      item in that regard for the work of 1,33,181.00/- ‘Cum’ will have
      to be calculated with premium at the same rate of 35.02% over
      and above the agreed rate and not at 93.12% as has been taken
      into consideration by the Arbitrator for awarding the amount. The
      appropriate calculation in that regard shall however be worked
C     out in such manner so as to award the amount under the said
      Claim No.8. Insofar as Claim No.16, there is no reason to interfere
      with the orders passed by the High Court or by the First Appellate
      Court. Further with regard to the interest sought under Claim
      No.18, in the absence of agreement with regard to the rate of
D     interest, the interest as awarded by the Arbitrator was on the
      higher side and the First Appellate Court was justified in reducing
      the same to 12% per annum and the High Court was also justified
      in not interfering with the same. [Paras 18, 19][840-B-H; 841-A-
      B]
E           4. The claimant is entitled to the claim for extra items as
      put forth under Claim Nos. 2, 3, 8 and 12 by working out the
      difference of cost on the tender premium at 35.02%. On arriving
      at the quantum of the amount, the same shall be payable with
      interest at 12% per annum in the manner as ordered by the First
      Appellate Court. Claim No.1 ordered by the High Court is
F
      sustained. The said exercise for calculating and paying the amount
      to the claimants on claim Nos.1, 2, 3, 8 and 12 shall be completed
      by the opposite party within the period of six weeks from this
      date. [Para 20][841-E-F]
            Indian Oil Corporation v. Indian Carbon Ltd. (1988) 3
G
            SCC 36 : [1988] 3 SCR 426; Ispat Engineering and
            Foundry Works, B.S. City, Bokaro v. Steel Authority of
            India Ltd. B.S. City Bokaro (2001) 6 SCC 347 : [2001]
            3 SCR 1190; D.C.M Ltd. v. Municipal Corporation of
            Delhi & Anr. (1997) 7 SCC 123; M/s Naraindas R.
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CHANDIGARH CONSTRUCTION CO. PVT. LTD. v. STATE OF                             831
               PUNJAB & ANR.

      Israni v. Union of India DRJ (1993) 25; Raipur                          A
      Development Authority & Ors. v. M/s Chokhamal
      Contractors & Ors. (1989) 2 SCC 721 : [1989] 3 SCR
      144; Gora Lal v. Union of India (2003) 12 SCC 459 :
      [2003] 6 Suppl. SCR 1129 – referred to.
                         Case Law Reference                                   B
[1988] 3 SCR 426                  referred to               Para 10
[2001] 3 SCR 1190                 referred to               Para 10
(1997) 7 SCC 123                  referred to               Para 10
[1989] 3 SCR 144                  referred to               Para 11           C

[2003] 6 Suppl. SCR 1             referred to               Para 11
      CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 867-
870 of 2013.
      From the Judgment and Order dated 08.04.2011 of the High Court          D
of Punjab and Haryana at Chandigarh in Civil Appeal No. 2958-2961 of
2008.
       Nakul Dewan, Sr. Adv., Aditya Swarup, Ajay Marwah, Rohan
Naik, Swaroopananda Mishra, Mukesh Sangwan, Advs. for the Appellant.
       Ms. Uttara Babbar, Ms. Bhavana Duhoon, Manan Bansal, Advs.             E
for the Respondents.
      The Judgment of the Court was delivered by
      A. S. BOPANNA, J.
       1. The appellant is before this Court assailing the order dated        F
08.04.2011 passed by the High Court of Punjab & Haryana at Chandigarh
in Civil Revision No.2958/2008 which was disposed of along with Civil
Revisions Nos. 2949, 2960 and 2961 of 2008. Through the said order the
High Court allowed the Revision in part to the extent of allowing the
Claim No.1 of the appellant by modifying the judgment passed by the           G
Trial Court and the First Appellate Court, but insofar as the remaining
claims the judgments passed by the First Appellate Court was affirmed.
Consequently, the Award passed by the Arbitrator stood modified to that
extent. The appellant, therefore, is aggrieved to the extent, the remaining
claim of the appellant was rejected. In that view the consideration in the
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832             SUPREME COURT REPORTS                           [2020] 2 S.C.R.


A     instant appeal pertains to the Claim Nos. 2, 3, 8, 12 and 16 as put forth
      and also the issue relating to the grant of interest which arose for
      consideration under Claim No.19.
             2. For the purpose of convenience and clarity the parties would
      be referred to in the rank assigned to them in the arbitration proceedings.
B     Accordingly, the appellant herein would be referred to as the claimant,
      while the respondents would be referred to as the opposite party.
             3. The proceedings in question arises relating to an Award passed
      under the Arbitration Act, 1940 (‘Act 1940’ for short). The claimant and
      the opposite party had entered into a contract agreement dated 05.02.1985
C     for construction of Sutlej Yamuna Link Canal (Punjab) and in that regard
      to carry out the earth work, drainage behind lining and cement concrete
      lining of Raech RD 71.50 to 72.50 kms. The estimated cost of the project
      was at Rs.31 lakhs and the contract amount for the work was fixed
      atRs.59,86,732/-. The work concerned was to be executed in eight
      months.
D
             4. In respect of the said contract, the claimant contended that
      during execution, the scope of work was considerably increased on
      account of substantial increase of earth work, sloughing of banks,
      rebuilding of banks with self-draining material, various decisions by the
      department regarding rebuilding of banks and changes in the strata
E     encountered during excavation due to incorrect geological data
      observations by the department prior to inviting tender. In that view, the
      claimant had raised a demand for the additional payment which was
      disputed by the opposite party, which led to an arbitral dispute. Since the
      agreement provided for resolution of disputes by arbitration the claimant
F     took recourse to the same. In that background the claimant had sought
      for additional payment in the claim statement filed before the Arbitrator.
      The opposite party filed their objections disputing the claim put forth by
      the claimant. The learned Arbitrator on considering the rival contentions
      passed the Award dated 31.08.1994 and awarded the amount as claimed
      by the claimant to be paid by the opposite party with interest at the rate
G     of 18%per annum as also the future interest at 18% per annum from the
      date of the Award to the date of payment. As required under Act, 1940the
      said Award was to be made a ‘Rule of Court’ for which purpose the
      Award was presented before the Court of the Senior Sub-Judge, Ropar.
      The opposite party filed objections in the said proceedings and contended
H     that the Award passed by the Arbitrator is not sustainable as the Arbitrator
CHANDIGARH CONSTRUCTION CO. PVT. LTD. v. STATE OF                               833
        PUNJAB & ANR. [A. S. BOPANNA, J.]

had misconducted himself by awarding the amounts which were not                 A
payable as per the contract and the learned Arbitrator had not indicated
reasons for the decision. The learned Sub-Judge through the judgment
and decree dated 21.10.1995 accepted the objections to the extent of
rejection of Claim No.1 and reduction of interest to 12% per annum and
in other respects the Award was made the ‘Rule of Court’.
                                                                                B
       5. The opposite party however continued to remain aggrieved
insofar as the non-interference with regard to other claims and, therefore,
filed an appeal before the District Judge, Ropar in Civil Appeal No.9/
3110 of 2006. The claimant preferred the cross appeal insofar as the
rejection of Claim No.1 by the learned Sub-Judge and reduction of interest.
The learned District Judge through judgment dated 06.11.2007 rejected           C
the cross appeal filed by the claimant and allowed the appeal filed by the
opposite party (State of Punjab) and set aside the amount awarded under
Claim Nos.2, 3, 8, 12 and 16. The claimant, therefore, contending to be
aggrieved preferred the Revision Petitions before the High Court. It is in
the said proceedings the High Court has rejected the remaining claim            D
except Claim No.1 as indicated above. It is in that circumstance the
claimant is before this Court in this appeal.
       6. Shri Nakul Dewan, learned senior advocate appearing for the
claimant would contend that the First Appellate Court and the High Court
were not justified in their conclusion to reject the Award passed by the        E
learned Arbitrator. It is contended that the basis on which the Claim
No.2 would arise for consideration will be the same basis for the Award
of the amount under Claim Nos. 3 and 12. Even insofar as the Claim
No.8 the additional amount will have to be calculated on that basis for
the extra items used. In that background, it is contended that under Note
6 to the schedule of work which forms a part of the contract, it provides       F
that extra or other items of work shall be paid at the rate worked out on
the basis of relevant Punjab Common Schedule of Rates Basis Plus
Sanctioned Premium at the time of tendering, which is to be worked out.
In that light it is contended that the estimated cost of the present contract
is at Rs.31 lakhs while the contract amount has been worked out at              G
Rs.59,86,732/-. The difference between the estimated cost and the
contract amount is the sanctioned premium which corresponds to the
overall premium of 93.12% on the work for the purpose of computing
the rates of extra items/quantity or work done. Insofar as the remaining
claims the said 93.12% would become applicable. In that circumstance
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834            SUPREME COURT REPORTS                           [2020] 2 S.C.R.


A     when the learned Arbitrator has taken note of this aspect and decided
      the Claim No.2, the same would be sustainable. It is contended that
      when the contract agreement is explicit insofar as the value and the
      difference being the sanctioned premium and thepercentage being evident
      at 93.12% the decision of the learned Arbitrator not indicating any further
      reasons in the Award would not be fatal. When the obvious had been
B
      concluded by the learned Arbitrator, the amount ultimately awarded is
      sustainable and the claim put forth by the claimant is justified.
             7. Ms. Uttara Babbar, the learned counsel for the opposite party
      (State of Punjab), would on the other hand contend that the learned
      Arbitrator has not indicated any reason whatsoever to arrive at the
C     conclusion that the claim made at 93.12% is admissible. The learned
      counsel would in that regard refer to Clause 63 of the contract which
      provides for reference of the disputes to arbitration. The said clause
      after referring to the manner in which the learned Arbitrator is to be
      appointed, has further specified the requirement that all Awards shall be
D     in writing and in case of awards amounting to Rs.1 lakh and above, such
      Award shall state the reason for the amount awarded. In that
      circumstance it is contended that when the contract between the parties
      is explicit with regard to the manner in which an Award is to be passed
      by the learned Arbitrator, theAward passed in such manner alone would
      be sustainable. In that light it is contended that in the instant case the
E     Award does not indicate the reasons while answering Claim No.2,
      wherein it is only stated that as per agreement the premium works out to
      93.12% and has awarded the same without specifying the reasons for
      such conclusion. In that view it is contended thatsuch Award would not
      be sustainable. The learned counsel refers to the schedule of through
F     rate items for construction, in the tender form (Annexure P2) wherein
      Note 6 specifies that the Punjab Common Schedule of Rates would be
      applicable. It is contended that as per the communication dated
      05.01.1987 addressed by the Executive Engineer to the claimant, it
      indicates that the percentage above the departmental rates has been
      approved at 35.02%. In that light it is contended that the calculation
G     towards the claim in any event could not have exceeded the same. In
      that view it is contended that the learned Arbitrator had not considered
      these aspects nor does the Award indicate his mind. On the other hand,
      the learned First Appellate Court and the High Court having taken note
      of these aspects has arrived at the conclusion which does not call for
H     interference. With regard to the Claim No.8 relating to extra payment
CHANDIGARH CONSTRUCTION CO. PVT. LTD. v. STATE OF                             835
        PUNJAB & ANR. [A. S. BOPANNA, J.]

for DALDAL (SWAMPYArea) the First Appellate Court and the High                A
Court has taken into consideration that the claim had not been made
within the time provided and has accordingly rejected the claim. In that
view it is contended that the order passed by the High Court does not
call for interference.
       8. In the light of the above, a perusal of the appeal papers would     B
indicate that there is no serious dispute between the parties with regard
to the contract entered into for construction, the work performed and
certain additional work having been carried out by the claimant. The
issue is however as to whether the learned Arbitrator had appropriately
considered the matter in its correct perspective and in that light whether
the Award of the amount at the premium of 93.12% would be justified           C
and the manner of consideration by the learned Arbitrator without
assigning reasons for his Award is sustainable. In that view the issue
would be as to whether the First Appellate Court as also the High Court
were justified in rejecting the claim raised by the claimant.
       9. While considering these aspects it is noticed that as pointed out   D
by the learned counsel for the opposite party, Clause 63 of the contract
which provides for arbitration of all disputes or differences between the
parties also indicates the requirement of the Award to be as follows:
      “All awards shall, be in writing and in case of awards amounting
      to Rs.1 lakh and above, such awards shall state the reasons for         E
      the amount awarded.”
       Keeping this in view, if the Award passed in the instant case by
the learned Arbitrator (Annexure P6) insofar as Claim No.2 is perused,
all that the learned Arbitrator has stated is as follows:
                                                                              F
      “As per agreement premium works out to 93.12% which is
      awarded.”
       10. The said conclusion on Claim No.2 without appropriate
consideration is the basis of reckoning the premium at 93.12% in respect
of the Claims No.3 and 12 as well. The learned senior advocate for the
                                                                              G
claimant while seeking to contend that the Award would still be sustainable
even in that circumstance has relied on the decision of this Court in the
case of Indian Oil Corporation vs. Indian Carbon Ltd. (1988) 3 SCC
36 to contend that it has been indicated therein that if the reason as to
how the Arbitrator has drawn the inference is apparent the same would
be sufficient. The decision in the case of Ispat Engineering and              H
836             SUPREME COURT REPORTS                            [2020] 2 S.C.R.


A     Foundry Works, B.S. City, Bokaro vs. Steel Authority of India
      Ltd.B.S. City Bokaro(2001) 6 SCC 347 is relied, wherein it is held that
      in the event, however, there are reasons, interference would still not be
      available unless of course, there exist a total perversity in the Award or
      the judgment is based on wrong proposition of law. In addition, the decision
      in the case of D.C.M Ltd. vs. Municipal Corporation of Delhi &Anr.
B
      (1997) 7 SCC 123 is relied upon to contend that even in case of a non-
      speaking Award if the Arbitrator has proceeded without overlooking any
      term of the contract, the same cannot be considered as an error apparent
      on the face of the Award. In an attempt to persuade us the learned
      senior counsel has with leave referred to the decision of the High Court
C     of Delhi in the case of M/s Naraindas R. Israni vs. Union of India
      DRJ (1993) 25 to point out that in respect of an agreement containing a
      similar clause the learned Judge had held that the learned Arbitrator is
      not required to give detailed reasons like a Civil Court but what is expected
      of the Arbitrator is that he must give out the trend of his thought process
      and it is not necessary for the Arbitrator to give any arithmetic
D
      computation.
              11. The learned advocate for the opposite party would however
      point outfrom the very decision in the case of Indian Oil Corporation
      Ltd.(supra) relied upon by the learned senior counsel for the claimant
      that this Court in the said decision has also held that where an authority
E     makes an order in exercise of a quasi-judicial function it must record its
      reasons in support of the order it makes. It was further observed that
      every quasi-judicial order must be supported by reasons. It is therefore
      contended that the bar would raise higher for a judicial order which
      should indicate reasons for the conclusion. The learned advocate would
F     further refer to the decision in the case of Raipur Development
      Authority &Ors. vs. M/s Chokhamal Contractors &Ors. (1989) 2
      SCC 721 wherein it is held that though it is well settled that an Award
      can neither be remitted nor set aside merely on the ground that it does
      not contain reasons in support of the conclusion or decision reached in it
      except where the arbitration agreement or the deed of submission requires
G     itto give reasons. In that light the learned advocate would point out that
      in the instant case the agreement between the parties would require that
      the learned Arbitrator has to assign reasons for the Award and when
      such requirement is stipulated the Award passed without reasons would
      not be sustainable being contrary to the explicit requirement in the contract
H     between the parties. The learned advocate for the opposite party has
CHANDIGARH CONSTRUCTION CO. PVT. LTD. v. STATE OF                              837
        PUNJAB & ANR. [A. S. BOPANNA, J.]

further referred to the decision in the case of Gora Lal vs. Union of          A
India (2003) 12 SCC 459 wherein it is held as hereunder:
      “6. A perusal of the aforesaid clause would show that the arbitrator
      is required to indicate a finding along with the sum awarded
      separately on each individual item of the dispute. While giving a
      finding, the arbitrator necessarily has to take into consideration       B
      the disputes, claims and counterclaims of the parties and after
      considering the evidence on such claims and the legal position,
      has to record his finding on each disputed item. In the present
      case what we find is that on each item the arbitrator has awarded
      a sum which according to us is not a finding but is merely a
      conclusion.”                                                             C

        12. In the background of contentions put forth and from the legal
position enunciated in the decisions relied upon, the position is clear that
in the instant facts the agreement between the parties required the learned
Arbitrator to pass the Award in a particular manner whereunder the
reasons were required to be assigned since that was the explicit               D
requirement under the contract. If in that background the Award
impugned in the instant proceedings is taken note the learned Arbitrator
has not assigned any reasons for the conclusion reached on Claim No. 2
which was also relevant for considering the Claim Nos.3 and 12 as well.
If that be the position the only explanation that is sought to be put forth    E
by the learned senior advocate for the claimant that the basis for such
conclusion is the difference of the value between the estimated amount
at Rs.31 lakhs and the contract amount at Rs.59,86,732/- to work out
the premium would not be justified. The quantum of the contract amount
as against the estimated cost by itself could not have formed the basis to
conclude the claim as made by the claimant towards premium of extra            F
items, extra items for supply and laying of self-draining materials and
towards re-handling of earth work. In that regard the contention to the
contrary put forth by the opposite party was that the tender form provided
for that aspect under Note 6, which reads as hereunder:
      “Extra other items shall be paid for each such items of work at          G
      thorough rate worked out on the basis of relevant Punjab Common
      Schedule of Rates basis plus sanctioned premium (at the time of
      tendering), plus or minus percentage above or below worked out
      by the department by reference to department’s estimated cost
      of tender.”                                                              H
838             SUPREME COURT REPORTS                           [2020] 2 S.C.R.


A             13. The said provision would indicate that the rate as prescribed
      under the Punjab Common Schedule of Rates would be applicable. In
      that light it is noticed that the letter dated 05.01.1987 relied upon by the
      learned advocate for the opposite party which was addressed to the
      claimant indicates that the premium as agreed under the schedule is at
      35.02%. The said contention had been urged by the opposite party in
B
      their pleadings. In fact, as pointed out by the learned advocate for the
      opposite party, the First Appellate Court has taken note of this aspect
      and has arrived at its conclusion to disapprove the Award of premium at
      93.12% for extra work.
             14. In the above backdrop, we fully concur with the manner in
C     which the consideration was made by the First Appellate Court as also
      the High Court to arrive at the conclusion that the claim as put forth by
      the claimant in respect of Claims No.2, 3 and 12 at the premium of
      93.12% worked out only on the basis of difference of the amount between
      the estimated cost and the contract amount is not justified.However, in
D     that circumstance when the learned Arbitrator has not assigned any
      reasons but had unilaterally in a cryptic fashion awarded the claim at the
      premium of 93.12% and when the same was disapproved as not
      sustainable, the appropriate course in the normal circumstance ought to
      have been to set aside the Award and remit the matter to the learned
      Arbitrator to make a fresh consideration to determine the percentage of
E     premium at which the claim for the extra items would be sustainable,
      more particularly in a circumstance where the additional work carried
      out was not in serious dispute but the premium for rate of payment was
      to be determined.
              15. The said course would be open even at this stage, but in the
F     instant case we however take note that the claim was under the Act,
      1940 in respect of an agreement dated 05.12.1985 and the claim before
      the Arbitrator itself was of the year 1994. In that background a perusal
      of the consideration as made by the First Appellate Court would indicate
      that it does not refer to the claim that was admissible after working out
G     the percentage of premium that is applicable. It has only arrived at the
      conclusion that the working out of the premium at 93.12% in respect of
      the extra items on Claim Nos.2, 3 and 12 are set aside. The learned First
      Appellate Judge ought to have arrived at the conclusion of the admissible
      claim and in that regard a conclusion ought to have been reached instead
      of rejecting the claim outright since the course to remand the matter to
H     the Arbitrator was not adopted.
CHANDIGARH CONSTRUCTION CO. PVT. LTD. v. STATE OF                              839
        PUNJAB & ANR. [A. S. BOPANNA, J.]

       16. In that background since we have referred to the                    A
communication dated 05.01.1987 which is produced at Annexure R3
with the additional documents and also on taking note of the contention
urged by the opposite party regarding the premium rates to be worked
out at 35.02%, we are of the opinion that instead of rejecting the entire
claim as made by the claimants, premium for the extra items is to be
                                                                               B
determined at 35.02% and the claim based on the same is required to be
awarded. To that extent, the calculation is to be made by the opposite
party and the amount be paid to the claimant. The said calculation with
the premium at 35.02% shall be made in respect of the extra items
indicated under Claim Nos.2, 3 and 12.
        17. Insofar as the Claim No.8, it relates to the work carried out on   C
DALDAL land wherein the soil was marshy and extra construction
material was required to complete the work. The learned Arbitrator
through the impugned Award had taken note of the same and awarded
the sum of Rs.19,15,143/- after indicting the amount for the said work
on the same basis and deducting the agreed rate. Though the learned            D
Sub-Judge had accepted the same for making it the ‘Rule of Court’, the
learned First Appellate Judgeon taking note of the claim had arrived at
the conclusion that the learned Arbitrator was not justified in granting
the claim. In that regard, the First Appellate Court had taken note of
Clause 39 of the Contract Agreement wherein a provision was made for
extra items. The second paragraph therein which provides for the manner        E
in which the contractor is required to submit the returns of the work
claimed for extra items was referred to. The said requirement indicated
that the contractor shall deliver in the office of the Executive Engineer
on or before the 10th day of every month during continuance of the
work, the return showing details of any work claimed for extra, and            F
such return shall also contain the value of such work as claimed by the
contractor. If the details are not indicated, the Clause indicates that it
shall be deemed that the contractor has waived all claims not included in
such returns and will have no right to enforce any such claim not so
included. In that light since the claim was ultimately found as not included
in the monthly statement, the First Appellate Court was of the opinion         G
that the requirement of the conditions of the contract was not adhered to
and, therefore, set aside the Award of the said amount by the learned
Arbitrator and the same claim being made ‘Rule of Court’ by the learned
Sub-Judge was also set aside. The High Court while adverting to this
aspect of the matter has held that insofar as the amount sought under          H
840             SUPREME COURT REPORTS                            [2020] 2 S.C.R.


A     Claim No.8 the question is not whether the petitioner undertook this
      work but whether the petitioner raised any claim for this extra amount in
      terms with the contract. The High Court has also taken note of Clause
      39 of the contract and has declined the claim.
              18. In that background having taken note of Clause 39 of the
B     Contract Agreement, it cannot be considered as a statutory limitation or
      bar for the claim in all circumstances. The said Clause no doubt prescribes
      a method by which the claim is to be put forth in the statement every
      month. The said requirement will have to be construed as being put in
      the agreement so as to ensure that the additional work has actually been
      done, the claim is put forth along with details so that baseless claim is not
C     made at a distant point in time when it will not be possible to determine.
      Though the Clause also indicates that if such claim is not made, it would
      amount to waiver, in a circumstance where the claim is ultimately put
      forth in the forum where an adjudication is made and based on the material
      if the adjudicating authority is satisfied that the actual work had been
D     done and the contractor being entitled to the extra amount spent by him
      to carry out the work in an appropriate manner,it would not be just and
      proper to deny such claim only on the ground that it had not been indicated
      strictly in the manner as provided in the contract specially keeping in
      view the nature of work undertaken. To that limited extent a perusal of
      the Award passed by the learned Arbitrator would indicate that the learned
E     Arbitrator had taken into consideration the letter dated 14.11.1986 wherein
      the identification of soil which was agreed to. The letter dated 09.03.1987
      submitting the test results identifying the strata encountered as DALDAL
      is referred therein. The work having been completed during the March,
      1988 was also taken note. In that circumstance when the fact remains
F     that the DALDAL land wassituated in the area, work was carried out
      and extra material was used, the claim in our opinion cannot be rejected
      outright adopting a technical view of the matter. However, the claim for
      the extra item in that regard for the work of 1,33,181.00/- ‘Cum’ will
      have to be calculated with premium at the same rate of 35.02% over
      and above the agreed rate and not at 93.12% as has been taken into
G     consideration by the learned Arbitrator for awarding the amount. The
      appropriate calculation in that regard shall however be worked out in
      such manner so as to award the amount under the said Claim No.8.
            19. Insofar as Claim No.16 we see no reason to interfere with the
      orders passed by the High Court or by the First Appellate Court. Further
H
CHANDIGARH CONSTRUCTION CO. PVT. LTD. v. STATE OF                             841
        PUNJAB & ANR. [A. S. BOPANNA, J.]

with regard to the interest sought under Claim No.18 we are of the            A
opinion that in the absence of agreement with regard to the rate of
interest, the interest as awarded by the learned Arbitrator was on the
higher side and the First Appellate Court was justified in reducing the
same to 12% per annum and the High Court was also justified in not
interfering with the same.
                                                                              B
       20. As already indicated above the unreasoned award on being
set aside by the First Appellate Court, the matter in a normal circumstance
ought to have been remitted to the learned Arbitrator to redo the
proceedings afresh in accordance with law. Such course ought to have
been adopted by us as well.We had proceeded to examine the matter
with regard to the validity of the claim keeping in view the time lapse       C
and since the validity of the claim was to be taken note at the appropriate
premium if not at the percentage of premium at 93.12% as determined
by the learned Arbitrator. In view of our conclusion relating to the claim
being sustainable to the extent as indicated by us above at the premium
of 35.02%, under Claim Nos.2, 3, and 12 the calculation based on the          D
extent and measurement of the extra items is an exercise which cannot
be undertaken herein and as such the opposite party keeping in view the
directions herein shall work out the actual amount payable in respect of
the extent, measurement, quantity and price based on which the claim is
made. In that regard we hold that the claimant is entitled to the claim for
extra items as put forth under Claim Nos. 2, 3, 8 and 12 by working out       E
the difference of cost on the tender premium at 35.02%. On arriving at
the quantum of the amount, the same shall be payable with interest at
12% per annum in the manner as ordered by the First Appellate Court.
The claim No.1 ordered by the High Court is sustained. The said exercise
for calculating and paying the amount to the claimants on claim Nos.1,2,3,8   F
and 12shall be completed by the opposite party within the period of six
weeks from this date. In the event of there being delay in payment
beyond the said period, the same shall carry interest at the rate of 18%
per annum till the date of payment.
      21. In the result we pass the following:                                G
                               ORDER
      (i) The order dated 06.11.2007 of First Appellate Court and the
      order dated 08.04.2011 by the High Court in Rev. No.2958/2008
      are modified.
                                                                              H
842              SUPREME COURT REPORTS                         [2020] 2 S.C.R.


A            (ii) It is ordered that in addition to the Claim No.1 allowed by the
             High Court, the claimant is also entitled to the amount under Claim
             Nos. 2, 3, 8 and 12, however, to be calculated at the premium of
             35.02%. The same shall be calculated with interest at 12% per
             annum and paid in six weeks from this date failing which the
             same will carry interest at 18% per annum.
B
             (iii) The appeals are,accordingly, allowed in part with costs.
             (iv) The Registry is directed to draw up the decree/award in terms
             of the directions contained hereinabove.
             (v) Pending applications if any, shall also stand disposed of.
C

      Devika Gujral                                          Appeals partly allowed.




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