Life Insurance Corporation of India vs M.L. Dalmiya and Company Ltd.

S.K. Datta, J.—This is an appeal by the Life Insurance Corporation of India, a body corporate, (hereinafter referred to as the Corporation) against the order of Ramendra Mohan Dutta J. dated January 31, 1972, whereby the application of the Corporation for setting aside the award dated April 29, 1971, was dismissed.

In 1955, the National Insurance Company Ltd. (hereinafter referred to as the Company) invited tenders for construction of a building at Mew Delhi. The Respondent (hereinafter referred to as the Contractor) submitted his tender on March 11, 1955, which was accepted by M/s Ballardie Thomson sic Mathews (hereinafter referred to as the Architects) on behalf of the Company on the basis of a letter of acceptance dated August 19, 1955. The said letter by the Architects recorded that a form of agreement in respect of such work pursuant to the acceptance of tender would be executed subsequently and the Respondent was directed to start work immediately. The contract for construction of the building was for an amount of Rs. 42,30,000 inclusive of materials, subject to variation only for increase of price of cement and steel, the accepted basis whereof was Rs. 100 and Rs. 500 per ton respectively. The Company assured all its co-operation in obtaining supply of cement and in fact asked the Contractor to avail of a quota of cement allotted to it already. The value of such materials it supplied by the Company was to be deducted from the running bills of the Contracts, The Company on basis thereof started the construction and submitted its bills from time to time in course of execution of the work and payments in part and on account of running bills were made from time to time by the Company to the Respondent on certificates issued by the Architects as provided in the tender.

All assets and liabilities to the life insurance business of the Company including its obligations, rights and liabilities under the said tender and acceptance vested in the Corporation which came into existence on September 1, 1956. The construction of the building was completed on April 1, 1959 and the formal agreement in respect of the above construction by and between the parties, earlier agreed to be executed, was in fact executed on October 26, 1960.

The controversial clause of the agreement is as follows:

The employer hereby agrees that cement and steel as will be required to execute this contract will be supplied to the contractor on their requisition duly certified by the Architects. The amount of money involved for such a purchase by the employer will be deducted and recovered at a rate hereinafter mentioned from any amount due to the Contractor for the execution of this contract. The rate of cement and steel is fixed at Rs. 100 and Rs. 500 per ton respectively inclusive of Sales Tax delivered at site.

The agreement was subject to conditions of the schedule annexed thereto and the relevant clauses thereof are as follows:

Certificates and payment.

Clause 27. The Contractor shall be entitled under the Certificates to be issued by the Architects to the Contractors and within thirty days from the date of each certificate, to payment by the employer from time to time by instalments, when, in the opinion of the Architects, work to the value of Rupees fifty thousand only (or less at the reasonable discretion of the Architects) has been executed in accordance with this Contract, at the rate of 90 per centum of the value of the work so executed in the building and in like manner to payment of the balance at the expiration of nine months from the date mentioned in para. 22, or after the next monsoon following, whichever is the longer period, or as soon after the expiration of such period of six months or the next monsoon following as the works shall have been finally completed and all defects made good according to the true intent and meaning hereof, whichever shall last happen; should any work, such as painting or colour washing, have been deferred on the instructions of the Architects under Clause 22, payment for such painting or colour washing shall be made as to 90 percent on completion and as to the balance at the expiration of six months from that date. The Architects shall, within fourteen days after notice by the Contractor, issue such certificates. Provided always that the issue by the Architects of any certificate during the progress of the works or at or after their completion shall not have effect as a certificate of satisfaction or relieve the Contractor from his liability under Clauses 17 and 18.

Arbitration.

Clause 30. Provided always that in case any dispute or difference shall arise between the employer, or the Architects on his behalf and the Contractor, either during the progress of the works, or after the determination, abandonment or breach of the Contract as to the constructions of the Contract, or as to any matter or thing arising thereunder (except as to the matters left to the sole discretion of the Architects under Clauses 1, 3, 5, 16, 19, 19A and 29 and as to the exercise by them under Clause 18 of the right to have any work opened up) or as to the withholding by the Architects of any certificates to which the Contractor may claim to be entitled, then either party shall forthwith give to the oilier written notice of such dispute or difference, which notice shall specify the maters which are in dispute and such dispute, or difference of which such notice has been given and no other, shall be and is here by referred to the arbitration and final decision of the Chief Engineer, C.P.W.D. Department, Government of India, if he is able and willing to act otherwise to some person to be mutually agreed upon between the Contractor and the Architects and the Award of such arbitration shall be final and binding on the parties. Such reference shall not be entered upon until after the completion, or alleged completion of the works, or until three weeks or more shall have elapsed after the practical cessation of the works arising from any cause, unless with the written consent of the Employer or Architects and the Contractor. The Arbitrator shall have power to open up, review and revise any certificate, opinion, decision, requisition or notice save in regard to the said matters expressly excepted above and to determine all matters in dispute which shall be submitted to him and of which notice shall have been given as aforesaid. Upon every and any such reference the costs of and incidental to, the reference and award respectively, shall be in the discretion of the Arbitrator who may determine the amount thereof and shall direct by whom and to whom and in what manner the same shall be borne and paid. This sub mission shall be deemed to be a submission to arbitration within the meaning of the Indian Arbitration Act, 1899 and any statutory modification thereof for the time being in force. The Employer and Contractor hereby also agree that arbitration under this clause shall be a condition precedent to any tight of action under the Contract with regard to the matters hereby expressly agreed to be so referred to arbitration.

After the completion of the building on April 1, 1959, but long before the signing of the agreement on October 26, 1960, the Contractors submitted its final bill dated October 1, 1959, to the Architects. The bill consisted of two categories of claims--A category claims for the balance due for work done under the Tender and acceptance in respect whereof the Architects issued certificate for Rs. 3,70,632-44. The Corporation paid Rs. 3,50,000 by instalments so that the balance due was only Rs. 20,632-44 only. The B'' category claims represented damages for deterioration of shuttering balli etc. for stoppage of work from March to August, 1956, when cement and steel were not available, idle establishment charges, electric and water charges, depreciation of tools, difference in price of materials purchased later at higher rates. The Architects'' observation to the Corporation on these claims was as follows:

On the above basis we assess that an amount of Rs. 1,14,385-06 is payable to the Contractor against category B''. But we wish to have your final views before the final certificate for payment is issued. If desired, we shall discuss the details with you at your convenience when the Contractor should also be requested to be present with all records so that any further information required can be furnished by him.

The Corporation, on receipt of the demand for payment of aforesaid amounts, agreed to pay Rs. 3,50,107-06 for ''A'' category claims and taking into account Rs. 3-50 lakhs paid already, a sum of Rs. 107-06 only was due according to the Corporation. The recommendation of the Architects for payment of category ''B'' claims was summarily rejected by the Corporation by its letter of November 1, 1961.

The Contractor, thereafter, through its Solicitor Sri B.M. Bagaria demanded payment of the amounts under threat of action in court of law. The Corporation in reply to the Solicitor by its letter of November 30, 1970, referred the Contractor to its letter aforesaid to the Architects stating further that the bills being not in accordance with the terms of the contract, were not acceptable. It was further stated:

In case your client feels aggrieved by this decision of our he may refer the matter to Arbitration under the terms of contract if so advised. No court of law has jurisdiction to entertain the claim of your client in the face of the Arbitration Clause in the agreement.

The Contractor called upon the Chief Engineer, C.P.W.D, Government of India, to act as arbitrator in respect of the disputes but he having declined one Mr. S. Bandopadhaya was proposed by the Contractor to act as arbitrator which was approved by the Architects but he and the Corporation declined to give consent. The Arbitrator entered into the reference and the Contractor filed his statement of claims before him. The Corporation firstly refused to appear before the Arbitrator or to file the counter statement of claims but later on filed the statement before the Arbitrator. The Arbitrator declined to act unless the parties agreed to his appointment and the Contractor then moved this Court for a (sic) on the Arbitrator to proceed with the reference but in the alternative prayed for appointment of a new Arbitrator. By order dated July 17, 1970, Masud J. in view of the disagreement of the parties about the particular person to be appointed the Arbitrator, appointed Mr. S.C. Mitter Barrister-at-law to be the Arbitrator.

The Arbitrator duly entered into reference and heard the parties'' lawyers at length and made published his award on April 29, 1971. The award is as follows:

A. I Award and Direct that the Respondents Life insurance Corporation of India do pay to the claimants M.L. Dalmiya and Company Ltd., a sum of Rs. 1,34,674-99 Paise (Rupees One Lakh thirty-four thousand six hundred seventy-four and Paise ninety only) in full satisfaction of its claim against their final bills including Category ''A'' and Category ''B''.

B. The claim of the Claimants for interest is not justified and hence rejected. I Award and Direct that the Respondents Life Insurance Corporation of India shall pay Rs. Nil to the Claimants M.L. Dalmiya and Company Ltd.

C. I Award and Direct that the Respondents Life Insurance Corporation of India do pay to the Claimants M.L. Dalmiya and Company Ltd. a sum of Rs. 19,000 (Rupees Nineteen thousand only) as cost of this arbitration including the cost of High Court proceedings resulting in Order dated 17th July, 1970.

D. I Award and Direct that the Stamp Duty for the publication of the award shall be borne by the claimant M.L. Dalmiya and Company Ltd. As the Arbitrator had initially purchased the stamp paper of the value of Rs. 100 (Rupees one hundred only), on which the original award is published, It is Directed that the claimants M.L. Dalmiya and Company Ltd. should pay the said sum of Rs. 100 (Rupees one hundred only) to the Arbitrator in repayment of the amount so spent by the Arbitrator.

The Corporation took out a notice of motion of July 16, 1971, for an order that the award of the Arbitrator aforesaid be declared null and void and be set aside. In the petition in support of the notice of motion it was contended, inter alia, as was contended before the Arbitrator, that the category ''B'' claims were outside the ambit and scope of the contract and subsequent completion of the building on April 1, 1960 and settlement of claims at Rs. 3.50 lakhs discharged the Corporation from any obligation of payment in respect of claims of category ''A'' further the contract of construction was on the basis of the tender and its acceptance which provide for assistance by use Corporation in obtaining steel and cement and the formal contract, entered into after completion of the building, being of executory nature was of no effect and there was never any obligation to supply cement after completion of the building. The Arbitrator had no jurisdiction over ''B'' category claims which were not under the contract and also outside the reference. The proceeding before the Arbitrator was abruptly terminated as interpolations of minutes would indicate and no proper opportunity was afforded to the Corporation to represent its case by evidence and all these amounted to legal misconduct on the part of the Arbitrator.

The Contractor filed his affidavit-in-opposition affirmed by Jagmohan Dalmiya on August 14, 1971, denying and disputing the allegations and contentions and praying for dismissal of the application. The Corporation filed its affidavit-in-reply affirmed by Anil Chandra Banerjee on January 31, 1971, reiterating the position taken in the application.

The matter came up before the learned Judge, who by order dated January 31, 1972, on a contentious hearing dismissed the application with costs. It was held that the claims under category ''B'' were made under the contract and flew directly from the contract, for breach thereof while the Corporation itself referred to the arbitration clause at the time of denying the demand. The dispute was accordingly within the scope of the arbitration clause referred to earlier as also within the reference made by the Contractor. There was no legal misconduct on the part of the Arbitrator as there was sufficient evidence before him for making the award and the allegation that no opportunity was given to the Corporation to represent its case duly by abrupt termination of the proceeding was without basis. The present appeal is against this decision.

Mr. J.N. Roy. Learned Counsel appearing for the Corporation, contended that the agreement governing the parties in the matter of the construction of the building was the tender dated March 11, 1955, submitted by the Contractor and its acceptance by letter dated April 19, 1955, by the Architects on behalf of the Corporation. The construction of the building was completed on April 1, 1959, tender the terms of the tender and acceptance which did not provide for any arbitration in respect of disputes there under Accordingly the arbitration proceeding was entirely beyond the terms of the agreement and was thus without jurisdiction Further the tender under Clause 10 provided that all building materials and labour would be provided by the Contractor, so that the claims of category ''B'' did not arise under the agreement through in respect of controlled goods like cement and the Comment''s obligation was merely to collaborate and help the Contractor so that the claims of category ''B'' did not arise under the agreement through in respect of controlled goods like cement and steel the Company''s October 26 1960 and it was a exercise in futility as on the date the construction was already completed. The formal agreement accordingly was not the agreement which could govern the relation ship between the parties.

Mr. Bhabhra, Learned Counsel appearing for the Contractor, submitted on the other hand that the tender and acceptance contemplated the execution of a formal contract which was accordingly, executed even though it was so done after the completion of the work. Execution of formal building contracts after the execution of the work is a common feature in the trade in respect of large and complicated contracts and there was nothing unusual in such course of action. The formal agreement together with the tender and acceptance and variation agreed to from rime to time all formed the agreement of construction between the parties. So that it could not be said that the reference to arbitration was without jurisdiction as such dispute was covered by the arbitration clause of the formal agreement.

In Hudson''s Building and Engineering Contracts (10th ed., 1970, p. 22G) it has been said as follows:

Where, however, the contractor has in fact commenced work in the execution of a contract being entered into (an extremely common state of affairs in building and engineering contracts) an acceptance after the date for commencement will be valid since this requirement will have been waived.

In A. Trollope and Colls Ltd. and Anr. v. Atomic Power Constructions Ltd. (1962) 3 All. E.R. 1035 (Q.B.D.) relied on by the Respondent it has been observed by Megaw J.:

Logically the position is unassailable if but only if, one has to assume that the acceptance of an offer cannot have retrospective effect so as to make the contract apply to thing done earlier in anticipation of the contract. But there is no principle in English law which provides that a contract cannot in any circumstances have retrospective effect, or that if it purports to have, in fact retrospective effect it is in law a nullity If indeed, there were such a principle there would be many important mercantile contracts which would no doubt to the consternation of parties, be nullities. Frequently, in a large transaction a written contract is expressed to have retrospective effect, some times lengthy retrospective effect and this in cases where the negotiations on some of the terms have continued upto almost, if not quite, the date of the signature of the contract. The parties have meanwhile been conducting their transactions with one another it may be for months, on the assumption that a contract would ultimately be agreed on lines known to both parties, though with the final form of various constituent terms of the proposed contract still under discussion. The parties have assumed that when the contract is made when all the terms have been agreed in their final form--the contract will apply retrospectively to the preceding transactions. Often....the ultimate contract expressly so pro vides.

The learned Judge observed that there is no reason why if the parties so intend and agree, such a stipulation should be denied the legal effect.

A contract is an enforceable agreement agreed to by the parties and all its provisions are binding and effective to the extent provided in the agreement covering such matters in respect of transactions between them. Though normally a contract is prospective as parties are required to perform their respective part of performance after the contract is entered into, there may be cases, as noted above, when the parties may commence transactions between them on basis of agreement subject to contract to be entered into by them in future. If such contract is so entered into and the intention of parties therein is to give retrospective effect covering past transactions in addition there can be no impediment standing on the way to give effect to such provisions thereby giving retrospective effect to a contract in respect of past transactions. All that is necessary is the determination of the intention of the parties as expressed in the agreement or evident by implication therefrom. The position will be the same even if the contract is completed by performance at the time the contract is entered into though some of its provisions are still executory and may appear meaning less as the contract is already complete by performance. The provisions of the contract will apply in this situation to completed transactions since the intention of the parties is so. It will, therefore, be no answer to say that since the contract has already been performed and the agreement is executory in law there could be no retrospective operation of the provisions of the agreement, which will be contrary to the intention of the parties. It is not the case here either that the intention of the parties was not given the retrospective operation to provisions of agreement in respect of the construction of the building in question. Once the execution of the agreement is admitted and there is no challenge to the agreement as being void or a nullity the Arbitrator is fully competent to decide its import, scope and ambit as also its applicability to transactions between the parties.

As we have seen, the letter of acceptance by the Architects dated August 19. 1955, mentioned that an agreement which was being drawn would be entered into between the parties in due course. The agreement of October 26, 1960, was executed accordingly and the Corporation cannot be heard to say that such agreement was executed by the Corporation without any purpose or implication. We, accordingly, hold, on the materials before us, that the agreement of October 26, 1960, which appears also to be supplemental, governed the rights and obligations of the parties in respect of the only transaction between them, namely, the construction of the building.

As we have come to the conclusion that the agreement dated October 26, 1960, supplements the earlier arrangement of construction of the building, the award is to be tested in the light of its provisions. The award, which is a non-speaking award, provides for the payment of the sum of Rs. 1,34,674-99 by the Corporation to the Contractor and the amount when split up, consists of the ''A'' category claims duly certified by the Architects for Rs. 20,632-06 P and the balance amount of Rs. 1.14,042-93 represents the ''B'' category claims over which there is no dispute.

Category ''A'' claims when once certified by the Architects could not be disputed by the Corporation on the face of the terms of the agreement. Even so the claim was disputed on the ground that the Contractor agreed to receive Rs. 3-50 lakhs in full settlement of ''A'' category claims abandoning the balance claim Mr. Roy in support of the contention, referred to the letter of A.P. Dalmiya to one Paresk of the Corporation dated March 26 1960, wherein Rs. 350 lakhs had been described as the outstanding amount to the Contractor. According to the Corporation the amount indisputably was paid to the Contractor accordingly so that nothing was due.

This contention, as pointed out by Mr. Bhabhra, is contrary to facts. A certificate of Rs. 3-50 lakhs dated October 24. 1959, was issued by the Architects in course of the work at an earlier stage while the final approval issued by the Architects for Rs. 3,70.632-44 is dated June 1, 1960, in respect of ''A'' category claims, which on payment of Rs. 3-50 lakhs leaves a sum of Rs. 20,632 06 for the said ''A'' category claims. The letter to Parke by A.P. Dalmiya thus had nothing to do with the last approval of the Architects so that it would be contrary to the admitted position to say that the contractor agreed to accept Rs. 3-50 lakhs in full settlement of his claim on basis whereof, it is said, the Corporation made the fall payment of the Rs. 3-50 lakhs thereby closing, the chapter as alleged. The contention is untenable on fact and accordingly, the award for ''A'' category claims in full for Rs. 20,632-06 must be sustained, since under the agreement, the Corporation could not challenge the Architects'' certificate for ''A'' category claims.

We have seen that Masud J. by his order dated July 17, 1970, appointed Mr. S.C. Mitter as Arbitrator to deride the dispute between the parties. In passing the above order the learned Judge took into consideration jurisdictional facts which must exist before reference to arbitration is resorted to and the Court can only decide whether such facts as the conditions precedent did in fact exist. The arbitration clause itself provided

that Arbitration under this clause shall be a condition precedent to any light of action under the Contract with regard to matters, herein expressly agreed to be referred to arbitration.

In fact, it is the Corporation itself which, in its letter we have referred to earlier, indicated the reference to arbitration when the Contractor''s Solicitor demanded payment of the amount on throat of action. This letter of November 30, 1970, did not however enlarge the scope and ambit of the arbitration clause in the agreement, as it appears to us and accordingly this letter cannot be deemed to modify or expand the provisions of the agreement of October 26, 1960. Further, the enlargement of the scope of Arbitration is to be in some form of writing by the parties even if it modified the original agreement relating to the scope and ambit of arbitration and this is not the position here. To consider, therefore, whether the Arbitrator had jurisdiction to decide the dispute and the reference was within the scope and ambit of the arbitration agreement we have to refer to the relevant clauses of the agreement and not to any other document.

The real controversy between the parties centres round the category TV claims. There is no dispute that if the reference is beyond the scope of arbitration clause of the agreement or if the Arbitrator has no jurisdiction to decide the dispute the award will be the nullity. The question, therefore resolves to the construction of the arbitration clause for its scope and ambit. It will depend on the language and meaning of words actually used express sing the intention of the parties. It has been observed in Halsbury''s Laws of England (4th ed., vol. 2, p. 272, Article 533) as follows

An Arbitration agreement for reference of ''all matters in difference includes claims by and against parties in different capacities, disputes of law as well as of fact,... A general reference of all disputes by a contract with an arbitration clause, as, for instance a commercial contract, articles of partnership or the articles of association of a limited company, is generally limited by the nature of the instrument to disputes arising out of or in connection with the main articles of the agreement. In such case the question may arise, for example in proceedings to stay the action or to enforce or set aside the award, whether the arbitration claim covers a particular dispute or claim,... However, matters not strictly arising out of the contract but intimately connected with it, have been held to be within the scope of an arbitration agreement. Thus a reference of "all disputes from time to time arising out of or under this contract" has been held to be wider than a reference of "all disputes arising under the contract" and to include disputes where the whole original contract had been destroyed. Again a reference of "any dispute or difference which arises or occurs between the parties in relation to any thing or matter arising out of or under this agreement" has been held to include claims on a quantum merits claims on a frustrated contract and claims for consequential services and an agreement to refer any dispute arising "during execution of this charter party" has been held to cover the reference of dispute arising out of matters subsequent to the termination of the charter but intimately connected with it.

Mr. Roy submitted that the dispute ''arising from or out of the contract'' is such wider in concept than ''the dispute under the contract'' or ''arising thereunder'' as in the instant case. It is his case that the agreement entered into between the parties dated October 26, 1960, even if it is assumed to govern the parties as has been held by us, did not contain any express or specific provisions for reference of the dispute in question, namely, damages for breach of any provision of the contract duly completed and performed. In absence of such provision. Mr. Roy contends, such dispute could not be within the ambit and scope of arbitration clause as arising under the contract. He submitted that the question is always a matter of agreement between the parties and in absence of any express provision relating thereto it cannot be said that all or any dispute will be within the arbitration clause though such dispute arises out of, or from or in relation to the contract but not under the contract, which implies under any express or specific provision thereof. He further submitted that the last sentence of the arbitration clause, which provides that arbitration under the clause shall be the condition precedent to any right of action under the clause shall be contract with regard to matters thereby expressly agreed, refers to disputes expressly provided therein and not incidental thereto or flowing therefrom. ''B'' category claims are not such which have been expressly agreed to be referred to arbitration and accordingly, for such claims there could be no arbitration. The Arbitrator thus acted in excess of authority in making the award.

Mr. Bhabhra has contended, on the other hand, that the instant claim for damages for breach of the provisions of the agreement is a dispute arising from and out of the contract and is incidental to or directly flows from the contract and is also one under the contract as well. He submitted that on the highest authority that a difference whether there has been the breach by one side or the other and damages arising therefrom are such difference as arising ''in respect of or ''with regard to'' or ''under* the contract so that the present dispute is well under the arbitration clause and the Arbitrator''s award is not in, excess of authority or without jurisdiction.

Mr. Bhabhra strongly relied on the decision in Heyman and Anr. v. Darwins Ltd (1942) 1 All. E.R. 337 (H.L.) which according to him is an authority for the proposition that a claim for damages for breach of any provision of the contract is a claim ''under'' the contract and as such is subject to arbitration when disputed In view of the emphasis laid on this authority we feel constrained to refer to the judgment in some details. The agreement contained the following arbitration clause:

If any dispute shall arise between the parties in respect of this agreement or any of the provisions herein contained or any thing arising hereout, the same shall be referred for arbitration in accordance with the provisions of the Arbitration Act, 1889, or any then subsisting statutory modification thereof.

The question for consideration was whether an action started by the Appellants against the Respondents should, on the application of the latter, be stayed pursuant to the Arbitration Act, 1889, in order that the matter could be dealt with by the arbitration clause, as the Appellants contended that the dispute did not fall within the arbitration clause. According to Viscount Simon L.C., the point for consideration was firstly what was the dispute and secondly, what disputes the arbitration clause covered. It was held that the arbitration clause was as broad as could be imagined and embraced any dispute between the parties ''in respect of the agreement or in respect of any provision in the agreement or in respect of anything arising out of it. It would embrace disputes as to whether the agreement has been broken by either of them, or as to damages resulting from the breach, or as to whether the breach by one of them goes to the root of the contract and entitled the other party to claim to be discharged from further performance or as to whether events supervening since the agreement was made have brought the contract to an end so that neither party is required to perform further--all these were held to be within the arbitration clause. When the repudiation of the contract by one party is accepted by the other party, the contract comes to an end if he chooses, but he is entitled to claim damages for its breach. The mere acceptance of the repudiation may end the liability to perform the contract but not the liability to pay damages for any breach of the contract.

The damages due from the Respondent for this breach of the obligations of the agreement, as well as damages for any other breaches of it, are also disputed matters arising in respect of the agreement.

The learned law lord further observed:

An arbitration clause is a written submission, agreed to by the parties to the contract and like other written submissions to arbitration, must be construed according to its language and in the light of the circumstances in which it is made, if the dispute is as to whether the contract which contains the clause has ever been entered into at all, that issue cannot go to arbitration under the clause, for the party who denies that he has ever entered into the contract is thereby denying that he has ever joined in the submission. Similarly, if one party to the alleged contract is contending that it is void ab initio (because, for example, the making of such a contract is illegal), the arbitration clause cannot operate, for on this view the clause itself is also void.

If, however, the parties are at one in asserting that they entered into a binding contract, but a difference has arisen between them as to whether there has been a breach by one side or the other, or as to whether circumstances have arisen which have discharged one or both parties from further performance, such differences should be regarded as differences which have arisen ''in respect of or ''with regard to'' or ''under'' the contract and an arbitration clause which uses these, or similar expressions should be construed accordingly. By the law of England (though not, as I understand, by (he law of Scotland), such an arbitration clause would also confer authority to assess damages for breach, even though it does not confer upon the arbitral body express power to do so.

It was also observed that the governing consideration in every case must be the precise terms of the language in which the arbitration clause is framed.

Its terms may, of course, be such as will either expressly or by implication reduce that would otherwise be the full ambit of the clause, or again will extend it yet further.

In this case, as has been noted, there is a repudiation of the contract accepted by the other party and though such repudiation ends the liability of the party to perform the contract, it does not end the liability to pay the damages for any breach of the contract. The contract is, therefore, still in existence for certain purposes. Upon its proper construction, the terms of the arbitration clause may be wide enough to include any dispute in connection with the contract and the clause may be still be effective. When there is a difference as to whether a breach has taken place, such difference is one arising in respect of or ''with regard to'' or ''under the contract''. Such arbitration clause will also confer authority to assess damages for breach though no express power to do so is thereby conferred.

In A.M. Mair and Co. Vs. Gordhandass Sagarmull, the Supreme Court was considering an arbitration clause in a contract providing for reference to arbitration of all matters, disputes, differences and or claims arising out of and or concerning or relating to this contract, the further question was whether a party to the contract (sic) merely as broker or was the principal bound by the contract (sic) was held:

this further dispute that the Appellants were not parties to the contract ill their own right as principals but as brokers) is also one which turns upon the true interpretation of the contract, so that the Respondents must have recourse to the contract to establish their claim that the Appellants were not bound as principals which the letter say that they were if that is the position, such a dispute, the determination of which turns the true construction of the contract, would also seem to be a dispute, under or arising out of or concerning the contract. In a passage quoted in Heyman and Darwins Ltd. Supra Lord Dunedin propounds the test thus--If a party has to have recourse to the contract that dispute is a dispute under the contract''. Here, the Respondents must have recourse to the contract to establish their case and therefore it is a dispute tailing within the arbitration clause.

It is thus obvious that in this instant case before us, to establish that there had been a breach of contract on the part of the Corporation, the Contractor had to have recourse to the specific provision of the contract when there was a difference upon the interpretation of the agreement or its applicability while there was no dispute that the contract containing arbitration clause was duly entered, into by the parties. Such difference is not merely confirmed to a declaration whether there has been a breach of any provisions of the agreement but extends naturally to an assessment of damages, if any, caused to the other party by the breach in the usual course of things., Such damages may either be liquidated damages as a genuine pre-estimate of loss that will be caused to one party by the other which the Plaintiff is entitled to recover in event of breach without being required to prove actual damages. In the contract before us, there is a provision for liquidated damages at the rate of Rs. 500 per week payable to the Corporation by the Contractor in the event of non-completion of the work beyond April 30, 1959 (vide Clause 23). When no such liquidated damages are provided for breach of any provision of the contract us one we are concerned with, it will be for the aggrieved party to establish the same by evidence or in such other mode permissible in law. Accordingly, we are unable to hold that the claim for damages for breach of an express provision of the contract was not under the contract or outside the ambit and scope of the arbitration clause of the agreement. Though in the statement of the case before the Arbitrator the Contractor had pleaded relief on the claim based in terms of Section 63 of the Contract Act, 1872, it was also commended that, the category ''B'' claims arose in execution of and out of the said agreement and work thereunder which was well within the arbitration clause.

It has been submitted that in this case the Architects did not issue any certificate for ''B'' category claims and no amount is payable without such certificate. Accordingly, for withholding certificate by the Arbitrator, the Contractor could refer the matter to arbitration under Clause 30 of the Agreement, the only (sic), it was submitted, available to the Contractor was a direction by the Arbitrator on the Architects to issue a certificate for such claims which would be binding on the Corporation, fire instant reference for adjudication of claims of ''B'' category was, it was submitted, accordingly, outside the provisions of the arbitration and thus in excess of authority conferred on the Arbitrator and the award was thus without jurisdiction.

It appears that the recommendation of the Architects in respect of ''B'' category claims was summarily'' rejected by the Corporation and even the Architects'' letter of request for tire final views of the Corporation was not accepted. In this situation, there was failure to issue the necessary certificate by the Architects which amounted to withholding of such certificate, as, according to the Corporation, the Contractor was not entitled to the same for ''B'' category claims. This was a dispute relating to ''B'' category claims, which, as we have held, was under the agreement of October 26, 1960 and came within the scope and ambit of the arbitration clause. The Arbitrator thereunder was entitled to adjudicate such dispute arising from the rejection of the ''B'' category claims by the Corporation and consequent failure to issue certificate by the Architects. There was, accordingly, no legal infirmity in the reference made by the Contractor and the Arbitrator in making the award did not act in excess of his authority or jurisdiction under the reference.

Mr. Roy lastly submitted that the Arbitrator was guilty of misconduct in abruptly closing the proceeding before him. It was said that on April 21, 1971, the minutes recorded that the next meeting would be held on April 22, 1971, but without holding any meeting on that date and without any intimation, the Arbitrator concluded the reference and published his award on April 29, 1971. Such action seriously prejudiced the Corporation as it was not able to present, its entire case before the Arbitrator. The concluding portion of the corrected minute of the meeting of April 21, 1971, fixing next meeting on April 22, 1971, was scored out in absence of the Corporation and new lines substituted on April 21, 1971, recording that the "Hearing concluded and neither party had anything further to add."

The learned Judge found that on April 22, 1971, representative of both parties, but not their lawyers, were present before the Arbitrator and both of them submitted that they had concluded their respective arguments and neither party had anything further to add whereon the Arbitrator scored the minute of April 21, 1971, fixing meeting on April 22, 1971 and recorded the above minute concluding the hearing. Instead of putting April 22, 1971, on the above minute, the Arbitrator by mistake put the date as April 21, 1971 and this position was known to the Corporation. In this situation, the learned Judge was of the view that had the fact been otherwise, the lawyers of the parties would have been present on April 22, 1971, while no protest was even made thereto after April 29, 1971. The allegations of interpolation of the award made by Anil Kumar Banerjee on behalf of the Corporation, who had no personal knowledge, it was held were reckless and irresponsible and could not be accepted at all.

Mr. Roy has submitted that these remarks should be expunged as admittedly there had been a correction of the minutes as would be evident therefrom. Apart from what has been found by the learned Judge, we do not find that there was any contemporaneous protest, before the Arbitrator by Corporation on April 22, 1971, or immediately thereafter prior to the award in respect of the allegations since made. Since the allegations in our opinion also are entire baseless and there was no legal misconduct on the part of the Arbitrator, we have to observe that such allegations were reckless and irresponsible.

The appeal, in the circumstances, as all contentions of the Appellant fail, is dismissed with costs.

Sankar Prasad Mitra, C.J.

I agree.