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: The award states "The statement of claims submitted by the contractor contains seventeen items in respect of which the contractor claimed a total payment of Rs. 4,76,138 12 0 plus interest i.e., approximate total amount claimed: Rs. 5,03,803 12 0 as detailed below". ARG |
Then follow the seventeen items of which item 5 is "Payment for katcha bricks destroyed by rain: Rs. 75,900". ARG |
The body of the award deals with this as follows: " Claim No. 5. ARG |
Payment for 88. ARG |
lacs of katcha bricks destroyed by rain. ARG |
The contractor argued etc The Executive Engineer stated . . ARG |
The C.P.W.D. moreover were safeguarded by clause 6 of the contract. . ARG |
The contractor maintained that clause 6 of the contract could not be invoked when the department was at fault as in this case. ARG |
Clause 6 was meant to cover contingencies which were not of the department 's own making. Ratio |
I hold that the removal of the bricks in such a manner or to prevent accumulation in excess of 60 lacs was an implied contractual obligation on the part of the C.P.W.D. . Ratio |
I further hold that the C.P.W.D. cannot take shelter behind clause 6 of the contract. Ratio |
This clause is not, in my opinion, meant 8 58 to absolve the department from carrying out their part of the contract. Ratio |
It is impossible not to admit this without offending the rudiments of common sense reasoning". Ratio |
We are of opinion that this is not the kind of specific reference on a point of law that the law of arbitration requires. Ratio |
In the first place, what was shown to us is no reference at all. Ratio |
It is only an incidental matter introduced by the Dominion Government to repel the claim made by the contractor in general terms under claim No. 5. Ratio |
In the next place, this was the submission of the contractor alone. Ratio |
A reference requires the assent of both sides. Ratio |
If one side is not prepared to submit a given matter to arbitration when there is an agreement between them that it should be referred, then recourse must be had to the Court under section 20 of the Act and the recalcitrant party can then be compelled to submit the matter under sub section (4). Ratio |
In the absence of either, agreement by both sides about the terms of reference, or an order of the Court under section 20(4) compelling a reference, the arbitrator is not vested with the necessary exclusive jurisdiction. Ratio |
Therefore, when a question of law is the point at issue, unless both sides specifically agree to refer it and agree to be bound by the arbitrator 's decision, the jurisdiction of the Courts to set an arbitration right when the error is apparent on the face of the award is not ousted. Ratio |
The mere fact that both parties submit incidental arguments about a point of law in the course of the proceedings is not enough. Ratio |
The language of Lord Wright in F. R. Absalom Ltd. vs Great Western (London ) Garden Village Society(1), a case similar to this so far as this point is concerned, is apposite here "There is here no submission of any specific question of law as such and as a specific question of law; no doubt incidentally, and indeed nec... |
The arbitrator was not being asked simply and specifically to decide, upon some agreed or assumed basis of fact, the true interpretation of either clause 26 or clause 30 of the conditions or of both together; he was being required to make an award on the two matters submitted on whatever questions of fact and law might... |
Clause 32 of the contract in the House of Lords case was the equivalent of clause 14 in ours. Ratio |
It ran "Provided always that in case any dispute or difference shall arise . . . as to the construction of the contract or as to any matter or thing arising thereunder. . such dispute shall be and is hereby referred to the arbitration and final decision of etc. Ratio |
" The arbitrator relied on that to invest him with juris diction to determine,, as a matter of law, the construction of clauses 26 30 of that contract. Ratio |
The House of Lords held that in the absence of a specific reference about the construction of the contract the jurisdiction of the Courts was not taken away. Ratio |
Lord Russell of Killowen put it this way at page 610 "No specific question of construction or of law was submitted. Ratio |
The parties had, however, been ordered to deliver pleadings, and by their statement of claim the contractor had claimed that the arbitrator should under his powers revise the last certificate issued etc. Ratio |
It is at this point that the question of the construction of condition 30 arose as a question of law, not specifically submitted, but material in the decision of the matters which bad been submitted. Ratio |
This question of law the arbitrator has decided; but if upon the face of the award he has decided it wrongly his decision is, in my opinion, open to review by the Court". Ratio |
That is exactly the position here. Ratio |
Simply because the matter was referred to incidentally in the pleadings (1) (2) , 36.60 and arguments in support of, or against, the general issue about liability for damages, that is not enough to clothe the arbitrator with exclusive jurisdiction on a point of law. Ratio |
The next question is whether the error is apparent on the face of the award. Ratio |
That; in our opinion, is clear from the passages we have quoted from the award. Ratio |
We hold that clause 6 expressly relieves the Union Government of all liability under this head of claim and that the arbitrator was wrong in awarding any sum on that account. Ratio |
The next head in dispute is item No. 8 in the statement of claim: "Cost of additional wages paid to the coolies on account of non supply of ration and cloth Rs. Ratio |
51,495". Ratio |
Here again no specific question of law was referred, so all we have to see is whether there is an error of law apparent on the face of the award. Ratio |
The contractor put his case as follows in the statement of claim: "At the time when this work was allotted to us there was rationing system in the locality. Ratio |
As per conditions of contract we were bound not to employ local labour and we had to import coolies from far off places. Ratio |
We had in our employ about 1800 coolies and it was an impossibility to arrange their ration from open market. Ratio |
This difficulty was brought to the notice of the authorities concerned, and they promised us to supply ration. Ratio |
It was only after this promise that we signed the agreement. . Ratio |
From a perusal of these letters it is clear that the department promised us to supply ration. . . Ratio |
These circumstantial evidences are sufficient enough to show that there was a mutual understanding between the parties that ration will be supplied. Ratio |
In the eyes of law even circumstantial evidence is sufficient to prove that such a promise was made. Ratio |
Any breach of that promise makes the department legally liable to compensate for that loss. . Ratio |
Apart from the legal responsibility it was also a moral responsibility for the department to supply ration". Ratio |
61 This claim, therefore, was not grounded on any clause of the contract, nor was it said to be implied in the contract. Ratio |
What was relied on was a collateral promise evidenced, not by the contract, but by two letters written by "the department" and a promise by "the authorities concerned"; and later this promise is turned into a "mutual understanding" and to a "moral responsibility" in addition to a legal one. Ratio |
The arbitrator dealt with this as follows. Ratio |
He began by saying "The contractor stated that when he submitted his tender on 25 9 45 he did so in the bona fide belief that the department would make the necessary arrangements, etc. Ratio |
" Then he sets out the following dates. Ratio |
On 1 11 45 the contractor was told that his tender had been accepted. Ratio |
On 9 11 45 the contractor "warned" the Executive Engineer about his "immediate requirements in respect of rations". Ratio |
The contract was finally accepted and signed on 22 11 45. Ratio |
Now it is admitted that the contract contains no clause about rations and it is also evident that the question was not raised when the tender was accepted on behalf of the Dominion Government. Ratio |
The question was raised in a letter to the Executive Engineer, and the contractor signed the contract without waiting for a reply. Ratio |
It is well settled that governments can only be bound by contracts that are entered into in a particular way and which are signed by the proper authority. Ratio |
A reference to the agreement, exhibit A(1), will show that it was accepted on behalf of the Dominion Government by the Additional Chief Engineer and not by an Executive Engineer. Ratio |
A letter written to the Executive Engineer would therefore have no effect and even if it be assumed that the letter was forwarded to the Additional Chief Engineer for consideration, what does it amount to? A tender embodying certain terms is submitted and is accepted on 1 11 45. Ratio |
Both sides are agreed on all matters contained in it and their conduct shows that both sides indicated that the contract should be reduced to writing. Ratio |
Be 62 fore the agreement is signed, one party wants to include a further condition in the contract. Ratio |
We will assume that the request was made to the other contracting party. Ratio |
But without waiting for the assent of the other side, both sides accept and sign the contract as it existed before the fresh suggestion was made. Ratio |
It is an error in law to deduce from this that there was acceptance of the fresh proposal. Ratio |
On the contrary, the legal conclusion is that the new suggestion was dropped and that the contractor was content to accept the contract as it was without ' this condition. Ratio |
In any case, a person cannot be bound by a one sided offer which is never accepted, particularly when the parties intend that the contract should be reduced to writing. Ratio |
That is the whole point of insisting on a document. Ratio |
It excludes speculation as to what was and what was not agreed to however much the matter might have been raised by one of the parties during the stage of negotiation. Ratio |
The arbitrator continues that the contractor stated that "it was a well known and established fact that Sindri was a rationed area; that the C.P.W.D. were giving rations at controlled rates to their employees and contractors through arrangements with the local Civil Supply Authorities; that nobody working under the C.P... |
The arbitrator then sets out some more of the contractor 's contentions and from them concludes that "there was an implied contractual obligation for the C.P.W.D. to make available controlled rations to the contractor and that this obligation was not fulfilled with due diligence and care". RLC |
He accordingly awarded Rs. 40,000 as compensation under this head. RLC |
The error is apparent. Ratio |
Facts must be based either on evidence or on admissions; they cannot be found to 63 exist from a mere contention by one side especially when they are expressly denied by the other. Ratio |
The inference from the facts stated above is that the contractor entered into the agreement with his eyes open and whatever his one sided hopes may have been he was content to enter into the agreement as it stood without binding the other side to the new conditions and without even waiting to ascertain the reaction of ... |
It has to be remembered that rationing was not a matter that was under the direction and control of the Dominion Government. Ratio |
It was a local matter handled by the then Provincial authorities and under their direction and contract. Ratio |
The C.P.W.D., as a department of the Dominion Government, was not concerned with rationing except that its employees had to submit to rationing like everybody else in the Sindri area. Ratio |
This confusion between the Dominion Government and the Provincial Government occurs in the arbitrator 's opening sentence under this head where he sets out the contractor 's contention that "commodities such as rations and cloth which were absolutely essential for the maintenance of his labourers and which were under G... |
As the arbitrator bases solely on the contractor 's contentions it is evident that he failed to appreciate the fact that the Dominion Government and the Provincial rationing authorities were separate entities distinct from one another. Ratio |
The position accordingly reduces itself to this: two persons, neither of which is a part of the Provincial Government or has any control over rationing, chose to enter into an agreement for work in a rationed area. Ratio |
They insisted that their contract should be reduced to writing, and that indeed was essential, this being a contract with the Dominion Government which was incapable of contracting in any other way; they agreed upon and concluded all their terms; then, at the last minute, one side raised a point about rationing but wit... |
It is 64 an error in law to hold that any contractual obligation can be inferred or implied from these circumstances. Ratio |
Then there is still another error. Ratio |
If this implied agreement about rations and cloth does not spring out of the written contract but is to be inferred collaterally as a distinct and subsidiary contract, and we gather that that is the finding, especially as reference was made to section 9 of the Contract Act, then that is not a contract to which the arbi... |
Wide though it is, clause 14 is confined to any matter relating to the written con tract and if ration and cloth are not covered by the written contract, they are not matters that relate to it. Ratio |
If parties choose to add a fresh contract in addition to or in substitution for the old, then the arbitration clause cannot cover the new contract. Ratio |
See Lord Macmillan in Heyman vs Darwins Ltd.(1). Ratio |
The last item in dispute in this appeal is claim No. 17 about interest. Ratio |
The statement of claims sets out "Item 17 Interest on the amount of money involved in this claim at the rate of Rs. 6 percent. Ratio |
27,665. STA |
This work was finished in May 1946 and it was proper for the department to have decided all our claims at least by 31st December 1947. . . . Ratio |
But this was not done. Ratio |
Due to this a heavy amount remained blocked up and we were compelled to take money from our bankers on interest. Ratio |
We therefore pray for interest for 16 months from 1 1 48 to 31 4 49". Ratio |
The arbitrator held "The contractor 's contention that his claims should have been settled by January 1948 is, in my opinion, reasonable. Ratio |
I therefore award interest at 6% for 16 months on the total amount of the awards given i.e., Rs. 17,363". Ratio |
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