Page 1 of 8 Following decisions were cited on the alleged proposition that Arbitrator cannot exceed the scope of reference:- AIR 1997 SC 3603 (Para 22 & 24)] AIR 1997 SC 1376 (Para 20 and 24) AIR 1999 SC 463 (Para 12, 13, 14 & 15) AIR 1992 SC 232 (Para 28) AIR 2003 SC 1495 (Para 7) AIR 2003 SC 2629 (Para 74, 75 IV) The case reported in AIR 1997 SC 3603 involves a dispute under Section33 of Arbitration Act, 1940. In the said case, the Contractor was engaged by the Respondent-Corporation to execute some works and accordingly an agreement was executed between the parties. Clause 78 of the said contract is impregnated with an arbitration clause. The relevant portion of clause 78(2) is quoted hereunder:- “x x x x xx Such demand for arbitration shall be delivered to the employer by the contractor and shall specify the matters which are in question, dispute or difference and only such question, dispute or difference of which the demand has been made and no other shall be referred to arbitration.” Therefore, agreement, which was the subject matter in the aforesaid case, had an arbitration cause, which spelt out that the notice/demand to refer the matter to arbitration or to spell out the dispute or difference and only such question and no other shall be referred to arbitration. But in the instant case the arbitration cause (clause 87) does not incorporate any such mandate as was in the aforesaid case. The judgment reported in AIR 1997 SC 1376 relied upon by the Respondent-NALCO also concerns a dispute under Arbitration Act, 1940. In the said case the notice was issued by the Respondent for Page 2 of 8 appointment of an Arbitrator and there was delay on the part of the appellant in nomination of Arbitrator. When the Respondent exercised the power, after expiry of the time prescribed in the notice, appoint a sole Arbitrator, proceedings were initiated by the Appellant under Section 33 of the 1940 Act. One of the grounds taken by the Appellant under Section33 was that under the terms of contract the claims sought to be put up in the notice given by the Respondent was not arbitrable. Therefore, it becomes abundantly clear that in the said case when a notice of arbitration was to be given, such notice was suppose to carry those items which were sought to be referred to arbitration but such is not the case in the present dispute. Such clause 87 of the present contract is worded differently than the wordings of the clause 50 of the contract, which was the subject matter in AIR 1997 SC 1376. Apart from that paragraph 13 of the said judgment may be looked into. The relevant portion of the Paragraph 13 is quoted hereunder:- “Parties, thereafter, agreed to submit the specific questions even with regard to scope, ambit, width and the construction of the arbitration clause so as to define its parameters contours with a view to ascertaining whether the claim advanced by the Appellant and disputed by the Respondent would be covered by the arbitration clause. In the instant case the arbitration clause includes, within its ambit, any and all differences between the parties.” In the decisions reported in AIR 1999 463 which was pressed into service by the Respondent-NALCO. The facts are quite different from the facts of the present case. In the said case a writ petition was filed by one of the parties, wherein certain disputed questions of facts were raised and the same was dismissed by the Learned Single Judge of Punjab and Haryana High Court. The order of dismissal rendered by the Learned Single Judge was upheld by the Division Bench of the said High Court against which a leave to appeal was preferred before Page 3 of 8 the Hon’ble Supreme Court. While the matter was pending before the Hon’ble Supreme Court, the parties agreed to go to arbitration to settle their disputes and accordingly the parties filed an arbitration agreement before the Hon’ble Supreme Court, whereby they referred their disputes to the two named arbitrators therein. In the said judgment at paragraph 13 the Hon’ble Apex Court clearly observed the following:- “It is, therefore, reasonable to conclude that what was referred to arbitration was the dispute in the writ petition. This is, in face, not contested.” Therefore, it becomes crystal clear that reference to arbitration in the said case was only those disputes, which were sought to be decided in the writ petition. Therefore, anything beyond the writ petition, could not have been decided by the Arbitrator. And that too in the said judgment the question of arbitrability under Section 16 of the Act was not in controversy. The Hon’ble Apex Court, while deciding the said case, was dealing with the scope of Section 34(2) (IV) of the Arbitration Act. Therefore, the said judgment cannot be of any assistance in the present case. The decision reported in AIR 1992 SC 232 is also a case under Sections 30 and 8 of the Arbitration Act, 1940. In the said case the scope of set a siding an award under Section 30 came for consideration and while dealing with the scope of Section 30 the Hon’ble Apex Court held that a claim not covered by an agreement, if is granted by the Arbitrator, the same is an error apparent on the face of record and in that circumstance the award could be set aside by the Court only. Legality of an award and arbitrability of a dispute are two separate concepts. The scope of Section 16 under the 1996 Act is totally different from Section 30 of 1940 Act. Page 4 of 8 In the aforesaid judgment reported in AIR 1992 SC 232 some disputes not coming within the ambit of the agreement were decided by the Arbitrator. Therefore, in that situation, the Hon’ble Apex Court set aside the portion of the award, which was not dealing with a dispute within the meaning of the contract. The case reported in AIR 2003 SC 1495 cited by the Respondent- NALCO is based on particular set of facts, which is different from that of the present case. In the said case Clause-XX, which an arbitration clause in the agreement was sought to be interpreted by the Hon’ble Apex Court. In that case on request made by one of the parties to the arbitration to appoint an Arbitrator and failure by the other party to comply with such request, a petitioner under Section 20 under 1940 Act was filed before the Hon’ble High Court of Calcutta on its original side. The Hon’ble High Court directed the Managing Director of the Corporation to appoint an Arbitrator in terms of clause XX of the agreement within six weeks. The direction was given on the following terms:- “Court Order in terms of prayer (a) of the petition. The Managing Director, Food Corporation of India is directed to appoint an Arbitrator in terms of clause 20 of the agreement within six weeks from the date of communication of the order. All disputes in the petitioner particularly the disputes mentioned in paragraph 24 there of be referred to Arbitrator to be appointed by the Managing Director. Xxx x x x” Clause XX speaks that all disputes and differences arising out or in any way concerning the agreement whatsoever were to be referred to the sole arbitration of a person appointed by the Managing Director the except as to any matter decision of which was expressly provide for in the contract. Page 5 of 8 Therefore, the order of reference of Hon’ble High Court of Calcutta and clause 20 of the agreement restricting the reference to a particular extent. But as the Arbitrator went beyond the reference the award was partly disallowed. Therefore, the said judgment is not applicable to the facts of the present case at all. In the case reported in AIR 2003 SC 2629, the Hon’ble Apex Court was dealing with the provisions under Sections 34, 24, 28 and 31(3) of the Arbitration and Conciliation Act, 1996. The said judgment is not case of Section 16 of the Act. The paragraphs cited by the Respondent-NALCO (74, 75 IV) do not fall for consideration to the instant case. In the said judgment, which is held that, the court may set aside the award if the award deals with a dispute not contemplated by or not following within the terms of submission to the arbitration, or it contains decision on matters beyond the scope of submission of the arbitration. The case at hand is absolutely different as clause 87 of the agreement is wide enough for any and every dispute to be referred and adjudicated by the Arbitrator. If the scope of clause 87 is wide and the same is the resultant of the agreement of both sides, its scope cannot be squeezed by citing judicial pronouncement, which is based on different sets of facts. That the Respondent-NALCO cited AIR 1973 Clacutta 253, AIR 1991 Punjab and Haryana 258, and AIR 1990 Kerala 101 to advance the argument that when the terms of the contract require reference to be done in a particular way, there cannot be a reference of disputes dehors the said procedure. Page 6 of 8 The decision reported in AIR 1991 Punjab and Haryana 258 deals with Section 30 of the 1940 Act, wherein an award was sought to be set aside. In the said case the arbitration clause runs thus:- “All disputes or differences in respect of which the decision has not been final and conclusive shall be referred for arbitration to a sole Arbitrator appointed as follows. xxx xxx” Besides, the other portion of the arbitration agreement was providing the procedure for appointment of the Arbitrator. In that case the Hon’ble Punjab and Haryana High Court held that Arbitrator must confirm to the conditions contained in the arbitration agreement. The said case is not applicable to the fact of the instant case. The case before the Punjab and Haryana High Court was under Section 30 of the 1940 Act whereas the present case is under Section 16 of the 1996 Act. Besides, the present agreement is differently awarded than that of the agreement in question in the Punjab and Haryana High Court decision. The concept of an award beyond reference to be gone into Section 30 of 1940 Act is different from the concept of Section 16 of the 1996 Act. Therefore, the said judgment is not applicable to the fact of the present case. AIR 1990 Kerala 101 cited by the Respondent-NALCO to vindicate its stand that when the terms of the contract require the reference to be done in a particular way the same has to be followed and in case of a departure there from the award is vitiated. Paragraphs 20 and 21 were pressed into service. It is seen from the said paragraph that in the referred case clauses 3 and 24 of the agreement state that the contractor should raise the dispute before the office next higher to the second Respondent and thereafter, the dispute was to be referred to the Arbitrator. The facts of the referred are totally different from the Page 7 of 8 facts of the case at hand. In the case at hand clause 87 is Arbitration clause and what are required to invoke the arbitration under clause 87 have been complied with by the claimant/VCC for which the above referred decision reported in AIR 1990 Keral 101 does not arise for consideration. That the Respondent-NALCO cited AIR 1996 SC 2965, AIR 1992 SC 1809 and AIR 1990 Bombay 45 in support of the proposition that a party in course of the proceeding cannot go on enhancing the claim. In the referred case learned Arbitrator unilaterally enlarged the scope of the dispute without their being any agreement to the extent. Besides, in the said case the Arbitrator had given a non-speaking award. The above-cited case has no application to the instant case as the instant case is at the very threshold. The claimant/VCC has filed its claim statement and on receipt of the same application under Section 16 have been filed by the Respondent-NALCO. So the question of enlarging the scope during the proceeding cannot be said to have arisen at this point, especially, in view of clause-87 of the contract. Apart from that the referred case decided the matter under the old Act and that too at the stage of Section 30 of the 1940 Act. The other decision reported in AIR 1992 SC 1809 is also under the provisions of the old Act. Besides, in the said case in respect of three contracts earlier reference was made to the Arbitrator, wherein a claim statement was filed. In a subsequent reference another claim statement was filed incorporating fresh items in respect of damages said to have been suffered by the appellant subsequent to the reference of the dispute of arbitration. But unfortunately the case at hand is not of the above nature so that the judgment reported in AIR 1992 SC 1809 could be pressed into service. Page 8 of 8 The other decision, i.e., AIR 1990 Bombay 45 cited by the Respondent-NALCO on the above point is not applicable to the present case at all. The said case also resolves a dispute under the 1940 Act. Paragraph 39 of the said judgment was pressed into service. The said paragraph deals with a claim subsequently entertained by the Arbitrator. The facts of the referred case is that the Arbitrator entertained certain claims during the arbitral proceeding which were not made initially of which one of the parties had no knowledge and which therefore, that party had no opportunity to meet. In the instant case Section 16 application has been filed by the Respondent-NALCO after receipt of the claim statement. There is no subsequent incorporation of additional claim. Besides, it is not the case of NALCO Respondent that it had no knowledge about such claims so as to meet those. Therefore, the above case reported in AIR 1990 Bombay 45 has no application to the facts of this case. That Respondent-NALCO cited AIR 2004 Calcutta 267, AIR 2004 Rajasthan 51 and AIR 2005 SC 214 to vindicate its stand that if the reference is bad, the award becomes void.