B. Rajendran, J.@mdashThe Appellant is a registered State Level Class-I Contractor with Public Works Department. The Respondents 1 and 2
have flouted tender in which the offer made by the Appellant was the lowest and therefore, he was awarded with the contract called ""Formation of
Earth Dam, Uncontrolled Spill-way, Canal Sluice and River Sluice"", in short, Kodumudiyar Reservoir Project near Thirukurungudi Village,
Nanguneri Taluk, Tirunelveli District. On 24.01.2000, an agreement was entered into between the Appellant and the second Respondent herein
for executing and completing the contract. After completing the contract, the Appellant, as per the terms and conditions of the contract, raised a
dispute and requested the Respondents 1 and 2 to refer the dispute to an arbitrator for adjudication. Such a request made by the Appellant was
not considered by the Respondents 1 and 2, hence, the Appellant approached this Court by filing a Petition u/s 11 of the Arbitration and
Conciliation Act, 1996 in O.P. No. 361 of 2005 . By an order dated 30.06.2005, this Court appointed the third Respondent herein as the Sole
Arbitrator for resolving the dispute between the parties.
2. The learned Arbitrator/third Respondent herein, after considering the rival claims made by the parties, allowed the claim petition of the Appellant
by passing an award dated 30.11.2006 directing the Respondents 1 and 2 herein to pay the sum of Rs. 1,62,47,308/-with interest at 9% per
annum on the sum of Rs. 61,29,403/-from 28.10.2004 till the date of award and interest at the rate of 18% per annum on the total amount of Rs.
1,62,47,308/-from the date of the award till the date of payment apart from ordering for release of the Bank Guarantee bearing No. 24 of 2003
drawn on Federal Bank, Kasargode, Kerala State furnished by the Appellant at the time of entering into the contract.
3. Aggrieved by the award dated 30.11.2006 passed by the arbitrator, the Respondents 1 and 2 have filed O.P. No. 126 of 2007 before this
Court and the same was allowed by the learned single Judge on 19.01.2009 setting aside the award passed by the sole arbitrator. The award
passed by the learned arbitrator was set aside by the learned single Judge on the ground that the invocation of the arbitral proceedings by the
Appellant itself was beyond the time limit stipulated under the agreement and therefore, the claim made by the Appellant is barred by limitation. As
against the order dated 19.01.2009 in OP No. 126 of 2007, the present appeal was filed by the Appellant.
4. Mr. Ar.L. Sundaresan, learned Senior Counsel appearing for the Appellant argued that no valid grounds were urged by the Respondents 1 and
2 before the learned single Judge within the scope and ambit of Section 34 of the Arbitration and Conciliation Act, 1996. The Respondents 1 and
2 have issued several notices for rectification of defects as late as on 23.03.2005 thereby, they themselves have extended the defect liability period
giving scope for the Appellant to rectify the defect. The learned single Judge ought to have taken note of the same to hold that the claim petition
preferred by the Appellant before the learned Arbitrator was in time. It is his contention that the special conditions of contract shall prevail over the
general conditions of the contract inasmuch as there was no conflict between the parties with regard to the terms and conditions of the contract.
Therefore there is no reason to invoke the special condition of the contract to negative the claim of the Appellant. As per Clause 35 of the General
conditions of the contract, the defect liability period shall be extended as long as the defect remains to be corrected by the contractor and there is
no ambiguity on this clause. Further, Exs. RE 12 to 14 filed by the Respondents 1 and 2 would clearly indicate that the time was duly extended till
the completion of the rectification work by the Appellant and therefore, the learned single Judge ought not to have set aside the well considered
award passed by the learned Arbitrator on the ground of delay in filing the claim petition.
5. Mrs. Bhavani Subborayan, learned Special Government Pleader appearing for the Respondents 1 and 2 would contend that as per Clause 4.9
of the agreement, neither party is entitled to bring claim to arbitration unless the same is made before the expiration of 30 days after defect liability
period. According to the learned Special Government Pleader, Clause 4.9 is one of the conditions governing the contract, according to which, the
Appellant ought to have invoked the jurisdiction of the arbitrator within 30 days after the defect liability period expired. It was further contended
that the defect liability period had been defined in the contract itself under Clause 1.1 which clarifies that ""The defect liability period is the period
named in the contract Data and calculated from the completion date"". Further, the term ''defect'' is defined to mean that ""defect is any part of work
not completed in accordance with law."". The completion date was defined as ""completion date is the date of completion of the work as certified by
the Engineer in accordance with Clause 55.1 of the agreement. According to the learned Special Government Pleader, the completion date for the
whole of the contract was 19 months from the date of commencement. As agreed by both sides, the completion date was fixed as 30.03.2003. As
per the agreement, the defect liability period is 365 days. Therefore, the Appellant ought to have completed the work on or before 31.04.2004
i.e., including the extended 30 days time but they failed to do so. Therefore, the claim petition filed on 21.10.2004 invoking the jurisdiction of the
arbitrator is barred by limitation. This aspect was rightly considered by the learned single Judge while setting aside the award passed by the learned
arbitrator. Therefore, the learned Special Government Pleader justifies the order passed by the learned single Judge and prayed for dismissal of the
appeal.
6. We have heard both sides and perused the material records placed before us. The main question which arises for our consideration is as to
whether the Appellant had invoked the jurisdiction of the learned Arbitrator within the time stipulated in the agreement entered into between the
parties.
7. As per the agreement, the Appellant was to complete the work on or before 30.03.2003. The agreement provides that if there is a defect on the
part of the Appellant, then the defect has to be rectified within one year. The Respondents 1 and 2 were empowered to point out the defect and till
the rectification of the defect by the Appellant, the period of contract will be automatically extended. In this connection, it is worthwhile to refer to
Clause 4.9 of the agreement which provides that ""neither party is entitled to bring claim to arbitration unless the same is made before the expiration
of 30 days after defect liability period.
8. Clause 35.1 of the agreement makes it clear that ""the Engineer shall give notice of contractor of any defects before the end of the defect liability
period, which begins at completion and is defined in the contract data. The defect liability period shall be extended for as long as defect remains to
be corrected.
9. Clause 35.2 of the agreement stipulates that ""every time notice of a defect is given, the Contractor shall correct the notified defect within the
length of time specified by the Engineer''s notice.
10. Clause 36 deals with ""Uncorrected defects"". Clause 36.1 stipulates that ""if the contractor has not corrected a defect within the time specified in
the Engineer''s notice, the Engineer will assess the cost of having the defect corrected and the contractor will pay this amount."".
11. Clause 55.1 of the agreement under the heading ""completion"" stipulates that ''The contractor shall request the Engineer to issue a Certificate of
completion of the works and the Engineer will do so upon deciding that the work is completed.
12. Relying upon the aforesaid clauses contained in the agreement, the learned Senior Counsel appearing for the Appellant contends that the
period of contract expired on 31.03.2003 and the defect liability period came to an end on 31.03.2004, but the Respondents 1 and 2 have
unilaterally extended the defect liability period for another six months and the extended period came to an end on 30.09.2004. Therefore, within
30 days from the extended period namely 30.09.2004, the Appellant wrote a letter dated 20.10.2004 to the first Respondent expressing their
intention to invoke the arbitration clause available under the agreement entered between them. This letter was received by the first Respondent on
01.11.2004. Therefore, according to the learned senior counsel for the Appellant, the initiation of arbitral proceedings is well within the period
stipulated in the agreement and soon before the lapse of defect liability period and therefore, the invocation of the arbitration clause is within the
time.
13. The learned Special Government Pleader would contend that there is nothing on record to show that the defect liability period was unilaterally
extended by the Respondents for six months. The delay in invoking the arbitral proceedings is attributable on the part of the Appellant and
therefore, the learned single Judge was right in setting aside the award passed by the arbitrator.
14. In this connection, it is necessary to refer to some of the documents marked by both sides before the learned Arbitrator. Ex.RE-11 was a letter
reference No. Lr. No. 188M/F.6/AE(1) dated Nil.10.2003 sent by the Executive Engineer, PWD to the Appellant. In that letter, the site
inspection made by the Superintending Engineer, Projects Circle, Tirunelveli on 08.10.2003 was referred to. It was clearly stated in that letter that
the Superintending Engineer, during his inspection, had pointed out certain defects . In the last paragraph of that letter, it was stated that ""As per
the agreement, the defects liability period is 365 days. As the defects found in the work is well within the defects liability period, since it is aimed to
store water during the monsoon, you are requested to rectify the above mentioned defects immediately."" Therefore, even during October 2003, the
Executive Engineer sent this letter to the Appellant seeking to rectify certain defects.
15. Again, under Ex.RE 12, letter sent by the Executive Engineer, Nambiyur Reservoir Project to the Appellant, it was clearly stated that inspite of
the earlier letters, the Appellant did not complete the work and he was called upon to take effective steps to complete the entire work within the
stipulated period. Again, under Ex.RE 13, a telegram dated 24.06.2004, the Appellant was further directed to rectify the defects in three days. By
Ex.RE 14, letter signed on 09.09.2004, the Executive Engineer, relying on the telegram sent on 24.06.2004 stated that the Appellant has not
turned up or attended to the defects even after lapse of 60 days. Therefore, he was once again requested to attend to the defects already pointed
out otherwise penal action will be initiated as per the conditions of the contract.
16. As per these letters, it is clear that the defect liability period was extended upto 30.09.2004 by the communications sent by the Department. In
all the above letters, it was clearly stated that the defects were pointed out by the Engineers but it was not rectified by the Appellant. As per the
conditions of the contract, till the defects are rectified, the period of contract will be extended automatically. Therefore, the claim made by the
Appellant on 20.10.2004, within 30 days from 30.09.2004 seeking to invoke the arbitral proceedings is well within the defect liability period
stipulated in the contract. As per clause Clause 35.1 of the agreement, it is clearly stipulated that the defect liability period shall be extended as long
as the defects remains to be corrected. Therefore, by virtue of the letters written by the Respondents, it is clear that the defects have not been
rectified by the Appellant. When once it is admitted that the defects have not been rectified as per the terms of the contract, the defect liability
period gets extended automatically as per Clause 35.1 of the agreement. This is all the more made clear and admitted in the letters written by the
Executive Engineer to the Appellant to rectify the defects. In fact, under Ex.RE 15, dated 25.01.2005 written by the Superintending Engineer, the
Executive Engineer was instructed to inform whether the liability period has been duly extended and the action taken to complete the balance
rectification works. Whereas, even prior to this letter, the Appellant had sent a letter to the Respondents 1 and 2 expressing his intention to refer
the disputes to an arbitrator during October 2004.
17. As rightly pointed out by the learned senior counsel for the Appellant, by mutual consent and by the act of the Respondents 1 and 2, the period
of contract was extended upto 30.09.2004 and within thirty days from 30.09.2004, on 20.10.2004, the Appellant had written a letter to the
Respondents expressing their intention to refer the matter to an arbitrator, as stipulated in the agreement. Therefore, the findings rendered by the
learned single Judge that the Appellant had invoked the jurisdiction of the learned Arbitrator with a delay cannot be accepted.
18. In this connection, it is worthwhile to refer to the special conditions of the contract stipulated in Clause 1.1 of the contract where in it is clearly
stated that ""The following special conditions of contract shall supplement the conditions of contract. Whenever there is a conflict, the provision
herein shall prevail over the conditions of contract and / or those elsewhere."" The special conditions of contract will only prevail over the general
conditions if there is a conflict between the parties with regard to the general conditions. Clause 4 of the special conditions of contract relate to
appointment of an arbitrator. Clause 4.9 clearly stipulates that a claim to arbitrator shall be made by the parties to the agreement before the
expiration of 30 days after defect liability period. In this case, the defect liability period defined in the general conditions is not in conflict with that
of the special conditions. Under Clause 25.3 of the general conditions, it is clearly stated that the arbitration shall be conducted in accordance with
the arbitration procedure stated in the special condition of contract. Therefore, for invoking the provisions of the arbitration clause, necessarily, the
special conditions of contract have to be invoked. Therefore, it is clear that both the special conditions and general conditions are co-extensive
only and they are not in conflict.
19. It is very clearly established before us by the Appellant that even before the expiration of the defect liability period namely 31.03.2004, by the
letters under Ex.RE 11 dated Nil. October 2003 and Ex.RE 12 dated March 2004, the Executive Engineer had clearly indicated that the defect
liability period was extended. This was further reiterated in the telegram, Ex.RE 13 dated 24.06.2004. Therefore, taking note of clauses 4.9 and
25.3, definitely, the arbitration proceedings were invoked by the Appellant within the time stipulated. Therefore, the findings rendered by the
learned single Judge with regard to the limitation period is contrary to the facts of the present case on hand.
20. The various decisions relied on by the learned single Judge reiterates that the Arbitrator being a creature of an agreement between the parties,
he has to operate within the four corners of the agreement and if he ignores the specific terms of contract, it would be a question of jurisdictional
error on the face of the award. The decisions relied on by the learned single Judge will not apply to the facts of the case on hand because in this
case, the arbitrator has taken into consideration that the defect liability period was extended by the conduct of the parties especially in writing
letters much after the Appellant invoked the arbitral clause found in the agreement during October 2004. Under those circumstances, we are
unable to agree with the findings of the learned single Judge in so far as it relates to the period of limitation within which the Appellant invoked the
arbitration proceedings. The learned single Judge proceeded only on the basis that the very invocation of the clause for arbitration by the Appellant
is belated and that the learned single Judge has not rendered any findings on merits of the case.
21. In this context, we are guided by the decision of the Honourable Supreme Court reported in State of U.P. Vs. Allied Constructions, wherein in
para-4 it was held as follows:
4. Any award made by an arbitrator can be set aside only if one or the other term specified in Sections 30 and 33 of the Arbitration Act, 1940 is
attracted. It is not a case where it can be said that the arbitrator has misconducted the proceedings. It was within his jurisdiction to interpret Clause
47 of the agreement having regard to the fact-situation obtaining therein. It is submitted that an award made by an arbitrator may be wrong either in
law or on fact and error of law on the face of it could not nullify an award. The award is a speaking one. The arbitrator has assigned sufficient and
cogent reasons in support thereof. Interpretation of a contract, it is trite, is a matter for the arbitrator to determine (see Sudarsan Trading co. v.
Government of Kerala). Section 30 of the Arbitration Act, 1940 providing for setting aside an award is restrictive in its operation. Unless one or
the other condition contained in Section 30 is satisfied, an award cannot be set aside. The arbitrator is a Judge chosen by the parties and his
decision is final. The Court is precluded from reappraising the evidence. Even in a case where the award contains reasons, the interference
therewith would still be not available within the jurisdiction of the Court unless, of course, the reasons are totally perverse or the judgment is based
on a wrong proposition of law. An error apparent on the face of the records would not imply closer scrutiny of the merits of documents and
materials on record. Once it is found that the view of the arbitrator is a plausible one, the Court will refrain itself from interfering.....
22. In the above decision, the Honourable Supreme Court held that when the arbitrator comes to a conclusion on fact and renders a speaking
order, his decision will be final. It was further held that the arbitrator is a person chosen by the parties and his award has to be accepted. It was
also held that unless one or the other condition contained in Section 30 is satisfied, an award cannot be set aside. The arbitrator is a Judge chosen
by the parties and his decision is final, therefore, the Court is precluded from reappraising the evidence.
23. In the case on hand, the learned arbitrator has specifically given a finding that the defect liability period was extended by the conduct of the
parties. When that be so, the award passed by the arbitrator ought not to have been set aside by the learned single Judge especially on the ground
of delay on the part of the Appellant in invoking the arbitral proceedings.
24. In view of the foregoing discussion, inasmuch as the learned single Judge has not gone into the merits of the case and no findings on merits
were rendered, we set aside the order passed by the learned single Judge and remand the matter back to the learned single Judge for giving a
finding on merits of the case as contemplated u/s 34 of the Arbitration and Conciliation Act, 1996.
25. In the result, the appeal is allowed setting aside the judgment and Order made in O.P. No. 126 of 2007 dated 19.01.2009. No costs.
Consequently, connected miscellaneous petition is closed.
