Holding

The Special Arbitration Tribunal was validly constituted under the proviso to sub‑section (1) of Section 41A, its jurisdiction cannot be repudiated after the State’s submission, the time‑extension with parties’ consent is permissible, and absent a ground under Section 30 the award stands.

Summary

Hindustan Construction Co. Ltd. entered into a dam‑construction contract with the Government of Orissa. A dispute over escalation charges and other sums exceeding Rs 1 crore was referred to an Arbitration Tribunal, which directed the State to refer the matter to a Special Arbitration Tribunal under the proviso to sub‑section (1) of Section 41A of the Arbitration Act, 1940. The State constituted the Special Tribunal by notification and later, after an adverse award, challenged the Tribunal’s jurisdiction, the validity of the time‑extension granted for the award, and alleged non‑consideration of material. The Supreme Court held that the notification was correctly made under the proviso to sub‑section (1), that a party which has submitted to the Tribunal’s jurisdiction cannot later repudiate it, that the extension of time with the consent of both parties is permissible under Section 28 and the Schedule, and that no ground under Section 30 existed to set aside the award. Consequently, the High Court’s order setting aside the award was reversed.

Issues considered

The scope of the power under the proviso to sub‑section (1) versus sub‑section (7) of Section 41A for constituting a Special Arbitration Tribunal.
Whether the State Government can withdraw its submission to the Special Tribunal’s jurisdiction after an adverse award.
Whether the Special Tribunal had authority to extend the time for making the award with the parties’ consent under Section 28 and Schedule condition No. 3.
Whether the award was invalid for non‑consideration of material, justifying setting it aside under Section 30.
Whether the High Court correctly set aside the award and remitted the matter for fresh adjudication.

Legislation cited

Arbitration Act, 1940s. 28, s. 30, s. 41A

Subjects

ArbitrationSpecial Arbitration TribunalSection 41AJurisdictionAwardSection 28Section 30Escalation chargesContract disputeHigh Court set aside

Judgment

{

THE HINDUSTAN CONSTRUCTION CO. LTD. A
v.
GOVERNOR OF ORISSA AND ORS.

MARCH 2, 1995

(AM. AHMADI, CTI, N.P. SINGH AND B
SUJATA V. MANOHAR, JJ.]

Arbitration Act, 1940: Section 41A(l) Proviso and 41A(7}-Proviso
Cont:-act-Dispute-State party to the dispute-Reference to Arbitration
Tribuna~As dispute involved was for more than rupees one crore Tribunal C
directed State to refer the dispute to Special Tribuna~State Notification con-
stituting special Tribunal and referertce of dispute-Held within the scope of
Proviso tu Section 41A(J).

Award-Objections to-Constitution of Special Tribunal by State-Sub-
mission to jurisdiction without objection-Subsequent objections by State D
cannot be raised merely because award was against it.

Award--Power of Court to enlarge time for making Schedule-Implied
conditions-Condition No. 3-Should be read with Section 28-Tnounal
entering reference--subsequent thereto time for award extended by consent of E
partie~Award given by Tribunal within extended time held valid. .

Section 30-Award-Setting as.itie of-Scope of Court's power.

The appellant-Company entered into an agreement with the Respon·
/ dent-State for construction of a dam. In terms of the agreement, the work F
was to be completed by 30.9.1982 and the escalation charges were to be
paid to the contractor. On appellant-Company's request, the respondents
granted extension of time for completion of project by December, 1985 and
in the supplementary agreement it was provided that extra arrangement
for completion of the work as per the agreed schedule ~hould be done by
the contractor without liability to the Government of Orissa or without G
liability to both contracting parties. A dispute having arisen between the
parties on payment of escalation charges and certain other amounts, a
reference was made to the Arbitration Tribunal constituted under section
41-A of the Arbitration Act, 1940 as introduced by Arbitration (Orissa)
Amendment Act, 1982. ·Since the disputed amount was more than rupee H
441
\

442 SUPREME COURT REPORTS [1995} 2 S.C.R.

A one crore, the Arbitration Tribunal directed the State Government to
/

exercise its power under Proviso to Section 41A(l) and to refer the dispute
to Special Tribunal. Consequently by a Notification dated 6.5.88 the State
Government referred the dispute before a Special Tribunal and the State
submitted to its jurisdiction without raising any objections. After the
B special Tribunal entered reference, both the parties i.e. State and appel-
lant-company submitted memorandum before it on two occasions on the
basis of which the Tribunal extended time for submission of award for four
months on both the occasions. But when the Special Tribunal gave its
award the respondent-State raised oJ>jections. The Trial· Court rejected the
objections and made the award a rule of the Court.
c On appeal by the Respondent-State the High Court set aside the
award on the ground that (1) the Constitution of the Special Tribunal
under Section 41A of the Act and the reference of the dispute by the State
Government which was already pending before the Arbitration Tribunal
for adjudication was without jurisdiction; (2) the Special Tribunal had no
D jurisdiction to enlarge the time for making of the award; and (3) the Award
was otherwise invalid due to non-consideration of relevant materials avail- ~~
able on the record in respect of a question which was at issue. The High
Court accepted the contention of the State that in view of the no liability
clauses in the supplementary agreement, State Government was not bound
E to pay any charges under the head 'escalation'. Against the order of the
High Court the appellant-Company preferred an appeal before this Court.

Allowing the appeal and setting asi~e the order of the High Court,
this Court

F HELD: 1. The Notification dated 6.S.1988 constituting the Special
Tribunal and referring the dispute to such Special Tribunal cannot be held - .,..__ -
to be one in exercise of power under proviso to sub-section (7) of Section
41-A of the Arbitration Act, 1940. The said notification of reference to
Special Tribunal is within the scope of proviso to sub-section (1) of Section
G 41· A. (448-EJ

2. The State Government itself by a statutory notification constituted
the Special Tribunal and referred the dispute to said Special Tribunal. It
had not at any stage questioned before the Special Tribunal the jurisdic-
tion thereof to adjudicate the dispute. For the first time a stand was taken
H by the State Government before the High Court that the Special Tribunal
f
HINDUSTAN CONSTN. CO. LTD. v. GOVERNOROFORISSA 443

had no jurisdiction to adjudicate the dispute or to make the award. A
Therefore, the High Court ought not to have permitted the State Govern-
ment to raise such a contention after it had submitted to the jurisdiction
of the Special Tribunal merely because the award went against it. It hardly
behoves the State Government to question the jurisdiction of the Special
Tribunal at such a belated stage merely because the award was not to its B
liking. The State Government cannot be permitted to behave like an
ordinary dishonest litigant who takes an off chance hoping to succeed and
if the outcome is not to his liking to turn back and question the Special
Tribunal's jurisdiction. [448-F-H, 449-A]

3. The first schedule to the Arbitration Act specifies the implied C
conditions of the arbitration agreements. Because of condition No. 3, the
arbitrator has to make award within four months of his entering on the
reference or after having been called upon to act by notice in writing from
any party to the arbitration agreement or within such extended time as the
Court may allow. But that condition has to be read along with Section 28 D
of the Act. The High Court over-looked the provision of sub-section (2) of
Section 28. After the Special Tribunal had entered into reference, by
consent of the parties, the time for making the award could have been
extended. In the present case the appellant and the respondent-State both
had agreed for extension of the period for making the award after the
Special Tribunal had entered into reference. As such the award cannot be E
held to be invalid on that ground. [449-H, 450-A, 452-A-B]

Hari Krishan Wattal v. Vaikunth Nath Pandya, [1974] 1 S.C.R. 259;
State of Punjab v. Sri Hardya~ [1985] 3 S.C.R. 649 and Hindustan Steel
Works ConstlUction Ltd. v. C. Rajasekhar Rao, [1987) 4 S.C.C. 93, referred F
to.
---<- 4. In the circumstances of the case it cannot be said that there is any
error apparent on the face of the award which required an interference by
the High Court. The Court while considering the question whether the
award should be set aside, does not examine that question as an Appellate G
Court. While exercising the said power, the Court cannot reappreciate all
the materials on the record for the purpose of recording a finding whether
in the facts and circumstances of a particular case the award in question
could have been made. Such award can be set aside on any of the grounds
specified in Section 30 of the Act. In this case no ground has been made H
444 SUPREME COURT REPORTS [1995] 2 S.C.R.

A out on behalf of respondents to set aside the award holding it to be invalid.
(453-G-H, 454-A]
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3158 of
1995. .

B From the Judgment and Order dated 23.7.91, of the Orissa High
Court in Misc. A.No. 1 of 1990.

R.F. Nariman, S. Vajitdar, Y.P. Dandiwala, D.M. Popal, Sunil Dogra,
E.R. Kumar and P.H. Parekh for the Appellant.

C G.L. Sanghi, Ms. Mona Chakraborty and Raj Kumar Mehta for the
Respondents.

The Judgment of the Court was delivered by

N.P. SINGH, J. Leave granted.

D The award given by the Special Arbitration Tribunal (hereinafter
referred to as 'the Special Tribunal') has been set aside by the High Court
\.
and the proceeding has been remitted to the Arbitration Tribunal for fresh ~
adjudication. That order is under challenge in the present appeal.

On 16.7.1979, tenders were invited by the respondents for construc-
E tion work of concrete cum-masonary dam of Upper Kolab, Multi Purpose
River Project, in the State of Orissa. The tender of the appellant having
been accepted, an agreement was executed between the appellant and the
respondent-State for the execution of the said project. The work order was
issued to the appellant on 2.1.1981. The work was to be completed by \

F 30.9.1982. In terms of the agreement, escalation charges were to be paid '-
to the contractor. The respondents granted extension for the completion
of the project by end of the December, 1985. There is no dispute that work
was completed before that date. However, escalation charges were paid
by the Executive Engineer in the running bills only till 31.3.1985 after which
no payment in this respect was made. Some other amounts also remained
G to be paid including the refund of security deposits, which led to the
reference of the dispute to the Arbitration Tribunal, constituted under
Section 4lA of the Arbitration Act, as introduced by Arbitration ( Orissa
Amendment) Act, 1982. A counter claim was also filed before the Arbitra-
tion Tribunal, on behalf of the State. The Arbitration Tribunal having
H found that the dispute involved a claim for more than Rs. one . crore
I
I

HINDUSfANCONSTN. CO. LTD. v. GOVERNOROFORISSA[N.P.SINGH,J.j 445

directed the State· Government to exercise power under proviso to Section A
41A (ltof the Arbitration Act (hereinafter referred to as 'the Act') as
amended by the Arbitration (Orissa Amendment) Act, 1982 and to refer
the dispute to the Special Tribunal. We do not express any view on the
question whether the initial jurisdiction exercisable by the Arbitration
Tribunal got lost on the opposite party laying a counter-claim exceeding
Rs. one crore. That may have to be answered in an appropriate case. The
B
State Government referred the dispute aforesaid by a Notification dated
6.5.1988 to the Special Tribunal, which had been constituted with a retired
Judge of the High Court. The Special Tribunal issued notices to the parties
on 14.5.1988 and had its first sitting on 28.5.1988. No party raised any
dispute on the question whether or not the Special Tribunal had any C
jurisdiction. On 28.8.1988, the Special Tribunal extended the time for
making the award by four months from the date of expiry of time i.e. from
27.9.1988, pursuant to a memorandum put in by both sides for such
extension. On 27.9.1988, the four months statutory time calculated from
28.5.1988 expired. But in view of the aforesaid extension on 28.8.1988 on D
basis of the memorandum put in by both sides for such extension, the
Special Tribunal proceeded with the dispute. However, the award could
not be given. On 18.1.1988, another joint memorandum was filed on behalf
of both the parties before the Special Tribunal for extension of time for
submission of the award by four months from 27.1.1989. With the consent
of both the parties, the period for making the award was extended. On E
10.2.1989, the Special Tribunal made and signed its award. Objection was
filed on behalf of the respondents to the award. On 26.9.1989 the Subor-
dinate Judge rejected the said objection and made the award Rule of the
Court granting 6% pendente lite interest and 4% future interest. An appeal
/ was filed on behalf of the respondent-State before the High Court. That
F
appeal has been allowed by the High Court and the award of the Special
Tribunal has been set aside. A direction has been given to the Arbitration
Tribunal to proceed with the adjudication of the disputes afresh.

From the Order of the High Court, it appears that the award
aforesaid has been set-aside primarily on the grounds; (1) The constitution G
of the Special Tribunal under Section 41A of the Act and the reference of
the dispute by the State Government which was already pending before the
Arbitration Tribunal for adjudication was without jurisdiction; (2) The
Special Tribunal had no jurisdiction to enlarge the time for making of the
award; and (3) The award was otherwise invalid due to non-consideration H
I

446 SUPREME COURT REPORTS [1995] 2 S.C.R.
'
A of relevant materials available on the record in respect of a question which
was at issue.

The relevant part of Section 41A, which was introduced by the
Arbitration (Orissa Amendment) Act 1982 aforesaid is as follows : -

' B "41-A. Constitution of and reference to the Arbitration
Tribunal-

(1) Notwithstanding anything contained in the Act or in any con-
tract or any other instrument, but without prejudice to the
c provisions contained in. Section 47,' in all cases where the State
Government, a local or other authority controlled by the State
~·
. Government, a statutory corporation or a Government company is
. a party to the dispute, all references to arbitration shall be made
to the Arbitration Tribunal :

D Provided that reference to arbitration of the disputes specified in
sub~section (1) involving claims of rupees one crore or above may
be made by the State Government to a Special Arbitration Tribunal
comprising of one of more retired High Court Judges, as may be
'r
constituted by the State Government from time to time.
E (2) to (6) xxx xxx xxx

(7) All arbitration proceedings relating to a dispute of the nature
specified in sub-section (1) which are pending before any arbitrator
on the date of commencement of the Arbitration ( Orissa Amend-
F ment) Act, 1982, and in which no award has been made by the
said date, shall stand transferred to and disposed of by the Ar-
bitration Tribunal.

Provided that the State Government may by order in writing direct
that the arbitration proceedings relating to disputes and claims
G involving rupees one crore or above, pending before any Arbitrator
or Board of Arbitrators on the date of the commencement of the
Arbitration (Orissa Amendment) Act, 1982, (Orissa Act 3of1983)
shall be transferred to any special arbitration tribunal constituted
under the proviso to sub~section (1) for disposal in accordance
H with law''.
HINDUSfAN CONSfN. CO. LTD. v. GOVERNOROFORISSA[N.P.SINGH,J.) 447

In view of sub-section (1) of Section 41A, in all cases where the State A
Government, a local or other authority controlled by the State Govern-
ment, a statutory corporation or· a Government company is a party to the
dispute, references shall be made .for arbitration to the Arbitration
Tribunal. Proviso to the said sub-section says that where the dispute
involves a claim of Rs. one crore or above, the reference for arbitration B
shall be made by the State Government to the Special Tribunal comprising
of one or more retired judges of the High Court as may be constituted by
r
....1.
the State Government from time to time. Because of sub-section (7) of
Section 41A, any arbitration proceeding pending before any Arbitrator on
the date of the commencement of the Arbitration (Orissa Amendment)
Act, 1982, in which no award has been made by the said date, shall stand C
transferred, to be disposed of by the Arbitration Tribunal. Proviso to the
said sub-section (7) says that if in the dispute so pending, the claim is in
respect of Rs. one crore or above, it shall be transferred to any Special
Tribunal constituted under the proviso to sub-section (1) for disposal in
accordance with law. It appears that the aforesaid Arbitration (Orissa D
Amendment) Act, 1982 (Orissa Act 3 of 1983) received the assent of the
President on 21.3.1983 and was published in the extra~ordinary issue of the
Orissa Gazette on 26.3.1983. According to the High Court, as the dispute
in question arose in the year 1985-86, there was no question of exercise of
power by the State Government tinder sub-section (7) of Section 41A
aforesaid, which was applicable only to such disputes which were pending E
on 26.3.1983, when the Arbitration (Orissa Amendment) Act, 1982 came
in force. The High Court was of the view that even proviso to sub-section
(7) of Section 41A shall be applicable to only such disputes which were
pending when the Arbitration (Orissa Amendment) Act, 1982 came in
force and the State Government could have transferred only such disputes F
to the Special Tribunal.

The learned counsel appearing for the appellant, pointed out that
from a bare reference to the Notification dated 6.5.1988 issued by the State
Government, it shall appear that the State Government had not transferred
the dispute pending before Arbitration Tribunal to Special Tribunal in G
-~ exercise of power under proviso to sub-section (7) of Section 41A but the
dispute was referred to the Special Tribunal in exercise of power under
proviso to sub-section (1) of Section 41A of the Act. The High Court was
in error in proceeding on the assumption that the State Government had
exercised the power of transfer from the Arbitration Tribunal to the H
\
448 SUPREME COURT REPORTS [1995] 2 S.C.R.

A Special Tribunal in exercise of the power under proviso to sub-section (7)
of Section 41A of the Act. In the Notification dated 6.5.1988, it has been
clearly stated that a dispute had arisen between the appellant and the State
Government involving rupees more than one crore and the Arbitration
Tribunal has also given a direction to appoint Special Tribunal; because of
B which "in exercise of the powers conferred by the proviso to sub-section
(1) of Section 41A of the Arbitration Act, 1948 (X of 1948) as amended
by the Arbitration (Orissa Amendment) Act, 1984, (Orissa Act 17of1984)
the State Government do hereby constitute a Special Arbitration Tribunal
comprising Mr. Justice B. Behra, retired Justice Orissa High Court to settle
the said disputes ..... ". It may be mentioned that the Arbitration Act was
C further amended by Arbitration (Orissa Amendment) Act, 1984 (Orissa
Act 17of1984) which has been referred to in the aforesaid Notification of
the State Government. But we are not concerned in the present appeal in
respect of the said amendment and as such details thereof need not be
mentioned.
D
According to us, the Notification dated 6.5.1988 constituting the
Special Tribunal and referring the dispute to such Special Tribunal cannot
be held to be one in exercise of power under proviso to sub-section (7) of
Section 41A. The said notification of reference to Special Tribunal is within
the scope of proviso to sub-section (1)' of Section 41A. The State Govern-
E ment exercised the said power taking into consideration all the facts and
circumstances of the case including the direction of the Arbitration
Tribunal because it involved a claim of Rs. one crore and above. It is an
admitted position that the State Government had not at any stage ques-
tioned before the Special Tribunal the jurisdiction thereof to adjudicate
F the said dispute. The State Government itself by a statutory notification
having constituted the Special Tribunal and referred the dispute to said
Special Tribunal, we fail to appreciate as to how for the first time this stand
was taken before the High Court by the State Government that the Special
Tribunal had no jurisdiction to adjudicate the dispute or to make the
award. According to us, in the facts and circumstances of the case, the
G High Court ought not to have permitted the State Government to raise
such a contention after it had submitted to the jurisdiction of the Special
Tribunal merely because the award went against it. It hardly behoves the
State Government to question the jurisdiction of the Special Tribunal at
such a belated stage merely because the award was not to its liking. The
H State Government cannot be permitted to behave like an ordinary
I
HINDUSTAN CONSTN. CO. LTD.'" GOVERNOROFORISSA[N.P.SINGH,J.) 449

dishonest litigant who takes an off chance hoping to succeed and if the A
outcome is not to his liking to turn back and question the Special Tribunal's
.iurisdiction. The High Court should not have permitted such as somersault.
We, therefore, set-aside the High Court's finding on this issue for the above
reasons.

So far the question of extension of time for making the award is B
concerned, it is an admitted position that a memorandum was filed on
behalf of both the parties including the State Government on 28.8.1988 for
extension of the period for making the award by four months from the date
of the expiry of the time on 27.9.1988. In the order dated 28.8.1988 the
Special Tribunal said : C
"While receiVing the notification, the Irrigation and Power
Department, Orissa, has given a direction for submission of the
Award within 120 days from the date of first sitting. The first sitting
of the Special Arbitration Tribunal had taken place on 28th May,
1988. The learned Counsel for both the sides have put in a D
memorandum stating that time for submission of the Award may
be enlarged by a period of four months from the date of expiry of
time. Time is enlarged as submitted by learned counsel for both
the sides."

Again on 18.1.1989, a joint memorandum signed by the Advocates for the E
appellant and the respondent-State was filed, saying that both parties agree
for extension of time for submission of the Award by a period of four
months with .effect form the due date i.e. 27.1.1989. On the said joint
memorandum, the Special Tribunal passed an order the same day saying
that the learned counsel for both the sides on behalf of the parties had F
filed a joint memorandum for extension of time for submission of the award
by a period of four months, 'with the consent of both the parties, time is
extended for submission of the Award by a period of four months with
effect from 27.1.1989 keeping in mind the legal principle laid down by the
Supreme Court in [1987] 4 SCC 93.' Within the extended period as already G
mentioned above the award was made on 10.2.1989.

The first schedule to the Arbitration Act specifies the implied con-
ditions of the arbitration agreements. Because of condition No. 3, the
arbitrator has to make award within four months of his entering on the
reference or after having been called upon to act by notice in writing from H
\
450 SUPREME COURT REPORTS [1995) 2 S.C.R.

A any party to the arbitration agreement or within such extended time as the
Court may allow. In other words, the power to extend the time of four
months has been vested in the Court, otherwise the award after expiry may
become invalid. But that conditioR has to be read along with Section 28 of
the Act.

B "28. Power to Cowt only to enlarge time for making award. - (1)
Court may, if it thinks fit, whether the time for making the award
has expired or not and whether the award has been made or not,
enlarge from time to time the time for making the award.

(2) any provisions in an arbitration agreement whereby the
·C
arbitrators or umpire may, except with the consent of all the parties
to the agreement, enlarge the time for making the award, shall be
void and of no effect."

Sub-section (1) of Section 28 vests power in the Court to enlarge the time
D for making the award from time to time. Sub- section (2) of Section 28 says
in clear and unambiguous terms that any provision in an arbitration agree-
ment whereby the arbitrators or umpire can enlarge the time for making
the award shall be void and of on effect 'except with the consent of all the
parties to the agreement'. Sub-section (2) of Section 28 has been the
subject matter of controversy, as to whether even if the time is extended
E With the consent of both the parties, the restrictions prescribed in sub-sec-
tion (1) of Section 28 and under condition No. 3 of th!.! first schedule are
contravened. In the case of Hari Krishan Wattal v. Vaikunth Nath Pandya,
[1974) 1 SCR 259, it was pointed out that under clause (3) of the Schedule
to the Arbitration Act, the Arbitrator is expected to make his award within
F four months from his entering on the reference or on his being called upon
to act or within such extended time as the court may allow. But then it was
said :-

"Sub-section 2 of section 28, however, indicates one exception
to the above rule that the Arbitrator cannot enlarge the time, and
G that is when the parties agree to such an enlargement. The occasion
for the Arbitrator to enlarge the time occurs only after he is called
upon to proceed with the arbitration or he enters upon the refer-
ence. Hence, it is clear that if the parties agree to the ~nlargement
of time after the Arbitrator has entered on the reference, the
H Arbitrator has the power to enlarge it in accordance with the
I
HINDUSTAN CONSTN. CO. LTD. v. GOVERNOROFORISSA(N.P.SINGRJ.) 451

mutual agreement or consent of the parties. That such a consent A
must be a post- reference consent, is also clear from section 28(2)
which renders null and void a provision in the original aweement
to that effect. In a sense where a provision is made in the original
agreement that the Arbitrator may enlarge the time, such a
provision always implies mutual consent for enlargement but such
mutual consent initially expressed in the original agreement does
B
not save the provision from being void. It is, therefore clear that
the Arbitrator gets the jurisdiction to enlarge the time for making
the award only in a case where after entering on the arbitration
the parties to the arbitration agreement consent to such enlarge-
ment of time." c
Again in the case of State of Punjab v. Sri Hardyal, (1985) 3 SCR 649, it
was said:

"Sub-section (1) of s.28 is very wide and confers full discretion D
on the court to enlarge time for making the award at any time.
The direction under sub-s.(1) of s.28 should, however, be exercised
judiciously. Sub-section (2) of s.28 also makes it evident that the
court alone has the power to extend time. It further provides that
a clause in the arbitration agreement giving the arbitrator power
to enlarge time shall be void and of no effect except when all the E
parties consent to such enlargement. It is not open to arbitrators
at their own pleasure without consent of the parties to the agree-
ment to enlarge time for making the award."

In the case of Hindustan Steel Works Construction Ltd. v. C. Rajasekhar F
Rao, (1987) 4 SCC 93, this Court said:

"In this connection reference may be made to H.K Wattal v. V.N.
Pandya, where this Court reiterated that sub-section (2) of Section
28 indicated one exception to the above rule that the arbitrator
could not enlarge the time, and that was when the parties agreed G
to such an enlargement. It is clear this Court reiterated that the
arbitrator gets the jurisdiction to enlarge the time for making the
award only in a case where after entering on the arbitration the
parties to the arbitration agreement consent to such enlargement
of time. In this case precisely it so happened". · H
\
452 SUPREME COURT REPORTS [1995) 2 S.C.R.

A According to us, the High Court over-looked the provision of sub-section
(2) of Section 28. After the Special Tribunal had entered into reference,
by consent of the parties, the time for making the award' could have been
extended. In the present case it is not in dispute that the appellant and the
respondent-State both had agreed for extension of the period for making
B the award after the Special Tribunal had entered into reference. As such
the award cannot be held to be invalid on that ground.

The third ground for declaring the aware invalid by the High Court
is that the Special Tribunal had not considered important documents which
were on the record of the arbitration proceeding. In this connection our
C attention was drawn to a letter dated 28.8.1982 addressed by the appellant
company to the Executive Engineer saying that they were applying for
extension of time for completion of works upto 30.6.1984 because of valid
reasons given in the prescribed proforma. In that letter, it was also men-
tioned that during the discussion between the Dy. General Manager of the
D company with the Government Officials at Bhubaneshwar on 20.2.1982, it
had been agreed to consider the extension of time upto 30.6.1984. In the
proforma attached to the said letter, again the same thing was reiterated.
It was said in the said proforma on behalf of the appellant company that
they had undertaken that they shall not claim any compensation or extra
rate for executing the work beyond the stipulated date except whatever was
E permissible as per the contract. It was urged that the letter and the
proforma aforesaid was not considered by the Special Tribunal while
making order in respect of escalations. According to the respondent State
as the extension was given at the request of the appellant, they were not
entitled for any escalation charges. Reference was also made on behalf of
F the respondents to the supplementary agreement, especially clauses VI and
VII thereof. In Clause VI, it has been stated that any extra arrangement if
required to be made by the company to complete the work as per the above ·
agreed schedule "shall be <lone by them without liability to the Govern-
ment of Orissa". In Clause VII of the said supplementary agreement, it has

·a been s.aid that Government of Orissa shall consider to extend the date of
completion of the work upto 30.6.1984 "without liability to the both con-
tracting parties". On basis of the aforesaid clauses, it was urged on behalf
of the respondents, which has been accepted by the High Court, that the
State Government was not bound to pay any charges under the he_!td
'escalation'. On behalf of the appellant, it was demonstrated thl,lt the
· If aforesaid no liabilitY clause in the supplementary agreement related to
{

HINDUSTAN CONSTN. CO. LTD. v. GOVERNOR OFORISSA[N.P.SINGH,J.) 453

clause 13 of the original agreement under the heading 'Compensation for A
delay in works'. It says that the contractor's rate are based on the assump-
tion that the contract will be completed by 30th September, 1982 and the
contractor shall not claim " any compensation or revision of rates if {he
works gets delayed upto 6 months beyond the contract completion time i.e.
30.9.1982". It further says that if the contract completion date gets delayed B
beyond 31.3.1983 for the reasons not attributable to the contractor, the
rates shall be revised for the unfinished work as on 31.3.1983 by Engineer-
in-charge in consultation with the contractor, subject to the approval of the
Government. When in the supplementary agreement in clauses VI and VII
it was said that extra arrangement for completion of the work as per the
agreed schedule shall be done by the Contractor without liability to the C
Government of Orissa or without liability to both contracting parties, it was
with reference to the aforesaid clause (13) which stipulated compensation
for delay in works. According to the appellant, the Special Tribunal has
awarded extra amount in respect of escalations of labour charges which
had been stipulated in para 12.1 of the agreement saying that for the D
increase in the cost of labour the Contractor shall be paid extra as per the
formula given in the said clause. In other words, the escalation charges
allowed to the appellant by the Special Tribunal is in respect of escalation
of the labour charges and that was not regulated by clauses VI and VII of
the supplementary agreement. The learned counsel for the appellant E
pointed out from the award that the Special Tribunal was conscious of
Clause (13) relating to 'compensation for delay in works' and 'labour
escalations' under clause 12.1 of the agreement. It has been said in the
award that the competent authority by a letter dated 16.10.1984, addressed
to the appellant, had categorically assured that the appellant shall be paid
the escalation charges under clauses 12.1, 12.2 and 12.3 of the special
F
conditions. The Tribunal has also held that the said authority was com-
petent to give such assurance on behalf of the State apart from the fact
that under clauses 12.1, 12.2 and 12.3 of the special conditions, the appel-
lant was entitled to the escalation charges. In this background, it cannot be
said that there is any error apparent on the face of the award which G
required an interference by the High Court. It is well known that the Court
while considering the question whether the award should be set aside, does
not examine that question as an Appellate Court. While exercising the said
power, the Court cannot reappreciate all the materials on the record for
the purpose of recording a finding whether in the facts and circumstances H
454 SUPREME COURT REPORTS [1995) 2 S.C.R.

A of a particular case the award in question could have been made. Such
award can be set-aside on any of the grounds specified in Section 30 of the
Act. According to us, no ground has been made out on behalf of respon-
dents to set aside the award holding it to be invalid.

In the result, the appeal is allowed and the order of the High Court
B is set aside. The order making the award the Rule of the Court, by the
learned Subordinate Judge is upheld. However, in the facts and cir-
cumstances of the case, there shall be no order as to costs.

T.NA. Appeal allowed.
,