Holding

The arbitrator possessed full powers to frame issues, time was not of the essence, and the award was not vitiated by misconduct; therefore the award stands and the appeal fails.

Summary

The M.P. Housing Board and Progressive Writers & Publishers entered into three successive agreements concerning the construction and ownership of a press complex. The third agreement of 31 May 1980 required full payment by 31 October 1980, failing which it would be cancelled. The Board alleged the arbitrator exceeded his jurisdiction by framing additional issues, ignored the contract terms, and committed misconduct, seeking to set aside the award. The Supreme Court examined whether the third agreement was automatically cancelled, whether time was of the essence, and whether the arbitrator could validly frame issues under Section 23 of the Arbitration Act, 1940. It held that the arbitrator’s power is equivalent to a court’s, allowing him to frame necessary issues, that time was not essential to the contract, and that the award was not vitiated by any legal misconduct. Consequently, the award was deemed final and the appeal was dismissed.

Issues considered

Whether the third agreement dated 31 May 1980 stood automatically cancelled for non‑payment by the depositor.
Whether the second agreement of 4 May 1977 was automatically revived upon alleged cancellation of the third agreement.
Whether time was of the essence of the third agreement.
Whether the arbitrator exceeded his jurisdiction by framing and deciding issues not raised by the parties.
Whether the arbitrator committed grave misconduct warranting setting aside of the award under Sections 30/39 of the Arbitration Act, 1940.
Whether the award is ordinarily final and not subject to appellate jurisdiction under Section 30 of the Arbitration Act, 1940.

Legislation cited

Arbitration Act, 1940s. 23, s. 30, s. 39
Constitution of Indias. 136

Subjects

ArbitrationArbitrator jurisdictionSection 23 Arbitration ActSection 30 Arbitration ActSection 39 Arbitration ActTime of essenceContract interpretationAward finalityLegal misconductSupreme Court of India

Judgment

[2009] 4 S.C.R. 725

M.P. HOUSING BOARD A
V.
PROGRESSIVE WRITERS & PUBLISHERS
Civil Appeal No. 1746 of 2009
MARCH 20, 2009
B
(LOKESHWAR SINGH PANTA AND B. SUDERSHAN
REDDY, JJ)

Arbitration Act, 1940:
s.23 - Reference by court for arbitration - Power of c
arbitrator- HELD: Arbitrator in such matters has all the powes
which the court itself would have in deciding the issues in the
suit - Arbitrator was well within his jurisdiction to frame such
additional issues as would be just and necessary for disposal
of reference u/s 23.
D
s.30-Award by arbitrator- HELD: An award by arbitrator
is ordinarily final and courts hearing application uls 30 would
not exercise any appellate jurisdiction - Reappraisal of
evidence of court is impermissible - Once it is found that view
of arbitrator is plausible, court will refrain itself from interfering. E
Arbitration - Interpretation of agreement - HELD: Is a
• ~ matter for arbitrator to determine - In order to determine scope
of an agreement, intention of parties is to be gathered - In the
instant case, arbitrator having considered the relevant
agreements, and subsequent events and documents F
including correspondence between parties, rightly arrived at
the conclusion that cost of construction mentioned in Clause
1 of agreement dated 30 5. 1980 was tentative, and though in
Clause 4 thereof a date was mentioned for payment, but time
· ,. ~ was not the essence of contract. G

Arbitrator - Misconduct - HELD: Erroneous application
of law constituting the very basis of award and improper and
incorrect findings of fact, which without closer and intrinsic
725 H
726 SUPREME COURT REPORTS [2009] 4 S.C.R.

A scrutiny are demonstrable on the face of material on record
are held as legal misconduct rendering the award as invalid -
In the instant case, there is no erroneous application of law by
arbitrator or any improper or incorrect finding demonstrable
on the face of material on record - There is nothing in the
B award requiring interference by courts - Courts rightly refused
to interfere with the award passed by arbitrator- It is not a fit
case warranting interference in exercise of jurisdiction under
Article 136 of the Constitution - Constitution of India, 1950 - •
Article 136.
C The appellant-Housing Board and the respondent-
depositor entered into an agreement on 18.2.1975
stipulating that the Board would execute construction of
Press Complex building for the respondent. The depositor
made the initial payment towards the proposed cost, but
D since it failed to deposit the balance amount, another
agreement dated 4.5.1977 was entered into between the
parties to the effect that the depositor would transfer the
total area of the land and building to the Board, which in
turn would re-transfer a part of the constructed portion to
E the depositor. The parties entered into a third building
agreement on 31.5.1980 which stated that the depositor
would take the entire complex building on payment of the
total amount of cost which was estimated at Rs.73.50
lakhs. Under Clause 4 of the agreement, the depositor
F agreed to pay the entire amount not later than 31.10.1980,
failing which the agreement would be deemed to have
been cancelled. The depositor could not comply with
Clause 4 of the third agreement by 31.10.1980 and
subsequently made certain representations to the Board
G that they were willing to perform their part but were unable
to do so for want of proper accounts and other details
from the Board. The Board first filed a suit for permanent
injunction and subsequently a comprehensive suit for
declaration, specific performance of the contract and
permanent injunction. The trial court referred both the
H
M.P HOUSING BOARD V. 727
PROGRESSIVE WRITERS & PUBLISHERS

suits for arbitration. The arbitrator made the award A
whereunder the Board was required to handover
immediate possession to the depositor and the Board
would be entitled to a sum of Rs.37,70,309.87. In case of
any default, the Board was held to be entitled to interest
at 18% per annum capitalized quarterly. The trial court B
confirmed the award and the High Court dismissed
Board's appeals.
In the instant appeal filed by the Housing Board it
was contended for the appellant that the arbitrator
· committed grave misconduct as he disregarded the terms C
of the contract and based the award on conjectures and
· surmises. It was submitted that the arbitrator exceeded
his jurisdiction by framing and deciding issues which
:1 were not referred to him by the parties. The questions for
consideration before the Court were: (i) whether the third D
agreement dated May 31, 1980 stood automatically
cancelled on account of non- compliance of the terms
there.under by the depositor and the second agreement
dated May 4, 1977 stood automatically revived; and (ii)
whether time was the essence of the third agreement E
dated May 31, 1980.
Dismissing the appeal, the Court
HELD: 1.1 In order to determine the scope of an
agreement, the intention of the parties is to be gathered. F
The third agreement dated 31.5.1980, as is evident from
the recitals, .was entered into mainly for the purpose of
arriving at, terms for the paym~nt of construction cost and
other fees payable by the depositor to the Board. The
depositor agreed to pay to the Board the total amount of G
'cost. of Complex' incurred by the Board for the
construction pursuant to the first agreement dated
February 18, 1975. The third agreement does not
speak about any transfer of land. The nature and scope
ofthe said agreement is entirely ~ifferent from that of the H
728 SUPREME COURT REPORTS (2009] 4 S.C.R

A earlier agreements dated 18.02.1975 and 04.05.1977. [para
y ,
.
13] [ 739-8-G]
1.2 It is true that Clause 4 of the third agreement
provides the depositor to make all the payments on or
before October 31, 1980 on the pain of cancellation of
B agreement. But it is to be seen as to what are those
amounts that were required to be paid. The arbitrator in
this regard upon consideration of the material available •
on record found that the depositor was under confusion,
and rightly so, as to the amount of actual cost of
c construction. The amount actually paid to the architect
as his fees and the fees as the Board has included in the
cost of construction were different. The duration of period
of construction was also not clear from the records
produced by the Board. Therefore, the depositor was not
in a position to know the capitalized interest. The Board ..
D
had realised rents from the building which was not set off
against the amount of Rs.73.50 lakhs shown in the
agreement as cost of construction. The arbitrator after
taking the sequence of events and correspondence
1
between the parties even after 31" October, 1980 into
E consideration, arrived at a conclusion that the figure of
Rs.73.50 lakhs as cost of construction mentioned in
Clause 1was tentatively shown in the third agreement. The l. •
Board did not raise any objection contending that the cost
of construction was quantified at Rs.73.50 lakhs after
F negotiation and verification of the accounts by the parities
to their satisfaction. It was not the case of the Board that
the quantified amounts towards cost of construction of
complex was non-negotiable. Interpretation of the terms
of the agreement concerning the quantification of cost of ~ ' .
G construction in the instant case, does not amount to
rewriting the terms of the contract. [para 14, 15,21and31]
[ 740-A-G; 743-C-E; 748-F]
2.1 The arbitrator found that the Board had itself
waived the time clause and was willing to accept money
H from the depositor even after 31st October, 1980 as is
M.P. HOUSING BOARD V. 729
PROGRESSIVE WRITERS & PUBLISHERS

evident from tlTe-'negotiations which continued between A
the parties till the year 1985-86. The arbitrator relied on
documentary evidence made available by the parties in
arriving at the conclusion that in the instant case the time
was not essence; that the agreement subsisted even after
31.10.1980 and the matter was kept open till 1990 for B
settlement of accounts. The finding cannot be said to be
perverse to give rise to legal misconduct deserving
intervention u/s 30 of the Act. [para 16, 20 and 31] [ 740-H;
741-A" 743-B · 748-E-F]
' '
2.2 It is fairly well settled that the time is not normally C
essence of any agreement qua immovable properties and
even there was an express covenant of time being an
essence, the overall agreement has to ,be looked at to
determine whether the time was the essence. Whether the
time is the essence of the contract would, therefore, be a
question of fact to be determined in each case and mere D
expression of the stipulated time would not make time an
essence of the contract. The finding arrived at by the
arbitrator in this regard is not even challenged by the
Board in the proceedings initiated by it u/s 30 of the Act.
[para 17] [ 741-B-D] - E
Sudarsan Trading Co. vs. Govt. of Kera/a (1989) 2 SCC
38 and State of UP vs. Allied Constructions (2003) 7 SCC
396 - referred to.
2.3 The onus to plead and prove that time was of the
essence of the contract is on the person alleging it. In the F
instant case, the Board never took the plea before initiating
the legal proceedings that the time was of the essence of
the contract. The Board never took any stand during the
negotiations that the agreement stood cancelled nor did
it take any steps to terminate the same. [para 24 and 21] G
[ 744-G-H; 743-D-E]
'
2.4 In any event, even the time was the essence of
the agreement, the same was not insisted upon by the
parties. The materials available on record disclose that
even after October, 1980, parties continued negotiations H
730 SUPREME COURT REPORTS [2009) 4 S.C.R.

A as regards the actual amounts payable based on what y
the construction cost would be on reconciliation of
accounts and the same would indicate that the parties
were still working out their rights and obligations under
the agreement. [para 21] [ 743-C-D]
B 3.1 It is well settled that the award of an arbitrator is
ordinarily final and the courts hearing applications u/s 30
the Arbitration Act, 1940 do not exercise any appellate
jurisdiction. Reappraisal of evidence by the court is •
impermissible. [para 18] [ 741-D-E]
c
/spat Engineering & Foundry Works, B. S. City, Bokaro
vs. Steel Authority of India, B. S. City, Bokaro (2001) 6 SCC
347 - referred to.
3.2 Interpretation of a contract, it is trite, is a matter
D for the arbitrator to determine. Even in a case where the
award contained reasons, interference therewith would
..
still be not available within the jurisdiction of the court
unless, of course, the reasons are totally perverse or
award is based on wrong proposition of law. An error
E apparent on the face of the records would not imply closed
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."
[para 19] [ 742-F-H]
l . '

F 3.3 The courts below found conclusions drawn and
findings arrived at by the arbitrator that non payment of
amounts by the depositor by 31st October, 1980 as
provided for did not result in automatic cancellation of
the agreement were plausible and accordingly refused to
G interfere in the matter. The courts below upheld the
• . -·
findings that the depositor continued to be the owner of
the property. [para 22] [ 744-A-B]
Swarnam Ramachandran and Anr. Vs. Aravacode
Chakunga/ Jayapalan 2004 (8) SCC 689 - held inapplicable.
H
M.P. HOUSING BOARD V. 731 ·
PROGRESSIVE WRITERS & PUBLISHERS

4.1 It cannot be said that no additional issue could A
have been framed by the arbitrator on his own for its
decision. In a reference made u/s 23, arbitrator's power to
determine the lis between the parties is much wider. The
arbitrator has all the powers which the court itself would
have in deciding the issues in the suit. In the light of the B
settled legal principle, the arbitrator was not bound to
adopt only the issues submitted by the parties but was
well within his jurisdiction to frame such other issue or
issues as may be just and necessary for the purpose of
disposal of the reference made u/s 23 of the Act. Therefore, C
it cannot be said that the arbitrator exceeded his
jurisdiction and committed grave legal misconduct in
framing said issue and determining the same. [para 26-
27] [ 745-E, G-H; 746-A]
Jugal Kishore Prabhati/al Sharma and Ors. Vs. D
Vijayendra Prabhatilal Sharma and Anr. 1993 (1) SCC 114 -
referred to.
4.2 It is true that the arbitrator took judicial note of
certain facts which were in the realm of conjectures and
s~rmises to conclude that the second agreement was E
entered into under political pressure, and depositor was
compelled to execute the said agreement under such
pressure. Even this surmise and conjecture is ignored
and not taken into consideration, the award of the
arbitrator continues to be valid and binding on the parties. F
The findings recorded by the arbitrator that the specific
performance of the second agreement was barred by
limitation; that the agreement was itself unconscionable;
that the agreement ceased to subsist after the 1980
agreement and was not revived are not based on the sole G
ground that the second agreement came to be executed
under political pressure. There is enough material
available on record to arrive at such conclusion as the
one arrived at by the arbitrator. [para 28] [ 746-8-E]
H
732 SUPREME COURT REPORTS [2009] 4 S.C.R.

A Gujarat Water Supply and Sewerage Board vs. Unique
Erectors (Gujarat) (P) Ltd. and Anr. 1989 (1) SCC 532 and
Food Corporation Vs. Joginder Pal 1989 (2) SCC 34 7 -
referred to.
5.1 The erroneous application of law constituting the
B very basis of the award and improper and incorrect
findings of fact, which without closer and intrinsic
scrutiny, are demonstrable on the face of the materials
on record, have been held as legal misconduct rendering
the award as invalid but at the same time the court could
c not reappraise the evidences intrinsically with a close
scrutiny for finding out that the conclusion drawn from
some facts, by the arbitrator is according to the
understanding of the court, erroneous. Such exercise of
power which can be exercised by an appellate court with
D power to reverse the finding of fact, is alien to the scope
and ambit of challenge of an award under the Arbitration
Act. In the instant case there is no erroneous application
of law by the arbitrator or any improper and incorrect
finding which is demonstrable on the face of the material
E on record. [para 30] [ 747-D-G]
State of Rajasthan vs. Puri Construction Co. Ltd. and Anr
1994 (6) sec 485 - referred to.
•
5.2 There is nothing in the award requiring
F intervention by the courts. The courts below rightly
refused to interfere with the award passed by the
arbitrator. It is not a case which warrants interference in
exercise of jurisdiction under Article 136 of the
Constitution of India. [para 34] [ 749-E]
G Case Law Reference ~ .-
(2001) 6 sec 347 referred to para 18
(1989) 2 sec 38 referred to para 19
(2003) 7 sec 396 referred to para 19
H
M.P. HOUSING BOARD V. 733
PROGRESSIVE WRITERS & PUBLISHERS

- 'I 2004 (B) sec 689 held inapplicable para 23 A
1993 (1) sec 114 referred to para 26

1989 (1) sec 532 referred to para 28

1989 (2) sec 347 referred to para 29
B
1994 (6) sec 485 referred to para 30

CIVILAPPELLATE JURISDICTION: Civil Appeal No. 1746
~ -·-~

of 2009

From the Judgement and Order dated 27.07.2006 of the c
Hon'ble of Madhya Pradesh, Judicature at Jabalpur in M.A. No.
705 of 2002 and MA No. 824 of 2002.

L.N. Rao, Vibha Datta Makhija, for the Appellants.

C.A. Sundaram, Sushi! Kumar Jain, Puneet Jain, Rohini D
Musa, Abhishek Gupta, Zafar lnayat, Anand Kannan, Archana
Tiwari, Rajeev Mishra, for the Respondent.

The Judgement of the Court was delivered by

B.SUDERSHAN REDDY, J.
E
1. On February 18, 1975 the M.P. Housing Board (for short
'the Board') and Progressive Writers and Publishers, New Delhi
(hereinafter called as the 'depositor') entered into an agreement
whereunder the Board agreed to construct a building called the
'Hitavada Press Complex' on the land admeasuring 33932 sq. F
fl. situated at T.T.Nagar, Bhopal. The terms of agreement, inter-
alia, provided that the Board would execute the construction of
Hitavada Press Complex and charge 5% supervision charges
of the actual expenditure on the project. The cost of construction
was to be borne by the depositor. The depositor was required G
to place funds including supervision charges at the disposal of
the Board in advance as agreed upon. The work was expected
to be completed within 18-24 months. The possession of the
land was handed over to the Board for the purposes of
construction of building. In case of overrun of expenditure and H
734 SUPREME COURT REPORTS [2009] 4 S.C.R.

...
A funds, the revised estimates were to be submitted and the r -
administrative approval of the depositor was required to be
obtained. In the event of any dispute, the matter was required to
be referred to the Secretary, Government of Madhya Pradesh
for decision.
B 2. The cost of construction of the building was estimated
at Rs. 28 lakhs out of which the depositor was required to
deposit an amount of Rs. 14 lakhs at the outset and the balance
•
thereafter. The initial amount of Rs.14 lakhs was accordingly
. deposited by the depositor with the Board. However, the
C depositor failed to deposit the balance amount. In the
meanwhile, the Board had paid the amounts from its own funds
in order to complete the construction of the building. The
depositor expressed its desire to retain only that portion of the
building where the printing press was located including
D mezzanine floor along with two adjacent halls on the first floor
and accordingly made a representation to the Board. The Board
in its turn agreed to the suggestion and thereafter parties entered
into the second building agreement dated May 4, 1977; under
which it was expressly agreed between the parties that the
E depositor would transfer the total area of the land and building
which was 33932 sq. ft. and the Board would in turn re-transfer
7437 sq.ft. of land along with hall having Press portion
constructed thereon for which the depositor would pay Rs. 3.50
• •
lakhs to the Board in 15 equal yearly installments. The Board
F agreed to grant a loan of Rs. 3.50 lakhs repayable with interest
against an equitable mortgage of the Press building and the
portion of the land thereon. Out of the said amount, Rs. 50,000/
- was to be paid by the Board to Punjab and Sind Bank as per
the instructions of the depositor. It was also agreed between
G the parties that the Board in order to acquire full ownership of •
the entire complex shall return the amount of Rs. 14 lakhs and
for that purpose the original documents pledged by the depositor
with the Punjab and Sind Bank were to be redeemed by the
Board upon payment of Rs.13.50 lakhs to the Bank. Upon
-
fulfillment of the said conditions, the Board was entitled to
H
M.P. HOUSING BOARD V. PROGRESSIVE WRITERS & 735
PUBLISHERS [B.SUDERSHAN REDDY, J.]

complete the construction of the building in its possession and A·
enjoy the same as the full owner.

3. The Board in terms of the second building agreement
had paid the agreed sum to the Bank and obtained the original
title deeds of the part of the plot admeasuring 19319 sq. ft only. B
However, the title deeds of the residual area were not handed
over to the Board. The construction was completed by the Board.

4. For whatever be the reasons, the parties have entered
into third building agreement on May 31, 1980. The recitals in
the agreement disclose that certain complications and disputes c
arose between the parties after execution of the earlier two
agreements resulting in litigation between the parties which were
pending as on the date of third building agreement. In the third
building agreement it is inter-alia stated that "on the request of
the depositor vide their letter of May 1, 1980, expressing their o
desire to take the entire Complex building on the following terms
and conditions and to end all litigation for all time to come, to
which the Board agrees ...... " Under the said agreement, the
depositor agreed to pay to the Board the total amount of cost
incurred by the Board for construction of Complex undertaken E
by it under the first agreement of February 18, 1975, estimated
at Rs. 73.50 lakhs including architectural fee, capitalised interest
and supervision charges. The depositor was required to pay
interest on the principal amount at the rate of 15% per annum
from the date of completion of construction of the building (i.e. F
01.01.1979) upto the date of payment. The depositor also
agreed to repay the entire loan amount of Rs. 3.50 lakhs paid
to it under the second agreement dated May 4, 1977 with
interest at the rate of 1OYi % till the date of repayment.
r •
5. The dispute centers around the interpretation of Clause G
4 of the agreement and it may be just and necessary to notice
the same in its entirety.
" Clause 4: That the depositor agrees to pay the entire
aforesaid amount of cost, loan and interest on execution
736 SUPREME COURT REPORTS [2009] 4 S.C.R.

A of this agreement not later than 31st October, 1980, failing
which this agreement shall be deemed to be cancelled."
The agreement further provides that as soon as the
aforesaid amounts are paid in full, the parties were required to
take follow up action and withdraw all suits and appeals filed by
B the parties that were pending in courts and as well as before
Property Administrator, M.P. Housing Board. The Board was
required to hand over possession and the title deeds by duly
declaring the depositor as the owner of the Complex. It was •
expressly provided that all such provisions of the previous two
c agreements which were inconsistent with the third agreement
shall be deemed to be ineffective.
6. It is an admitted fact that the depositor did not comply
with Clause 4 of the third agreement which required the
51
payments to be made by 31 October, 1980. It is equally an
D
admitted fact that the depositor made certain representations
to the Board that they were willing to perform their part but were
unable to do so for want of proper accounts and other details
from the Board and thus required further time for payments of
the amounts under the third agreement. Exchange of
E correspondence in that regard between the parties went on till
1986.
7. Since the parties failed in arriving at any agreed
settlement. the Board filed Suit No.2A/87 before the court of
F llnd Additional Judge, Bhopal for permanent injunction seeking
a restraint against the depositor from disturbing their possession
of the land and building and also sought a further restraint order
restraining the depositor from demolishing sheds .constructed
by the Board. The court granted a temporary injunction. The
depositor filed Misc. First Appeal in the High Court challenging • '
G
the order of temporary injunction granted by the trial court. The
High Court vacated the temporary injunction order. The Board
thereafter filed a comprehensive Civil Suit bearing RCS No.8A/
90 in the court of llnd Additional District Judge, Bhopal for
declaration, Specific Performance of the Contract and
H
M.P. HOUSING BOARD V. PROGRESSIVE WRITERS & 737 ·
PUBLISHERS [B.SUDERSHAN REDDY, J.]

• • Permanent Injunction. The learned trial court referred the disputes A
arising out of RCS No. 8A/90 (New No.63-A/94) and Regular.
Civil Suit No.2A/87 (New No. 16A/94) to the sole arbitrator Shri
Justice K.K. Dubey (Retired) for determination of disputes. The
said cases were registered before the arbitrator as Reference
Case No.1 /95 and Reference Case No.2/95. The arbitrator by B
his award dated September 23, 1998 granted the following
reliefs:
"1. The board shall give immeuiate possession of the
building to the society. This should be done within a
week of the award being made the rule of the Court. C
2. The board shall be entitled to a sum of Rs.37,70,309-
87. Half of this amount shall be paid by the society
as soon as the award is declared the rule of the
court.-The rest of the amount shall be paid in monthly D
installments of Rs.2.4 lakhs from the monthly rental
income of the building. If there is any shortfall in the
realization of the rent, it shall be made good by the
society. This amount shall be receivable by the board
by the end of the month. In case of any default, the
board shall be entitled @ 18% per annum capitc.:;Led E
quarterly.
3. There shall be no interest payable to the board for
the interim period, that is, after passing of this award
and the decree of the court making this award the F
rule of the court.
4. As regards unrealized rent, the parties shall enter
into an agreement to the effect assigning the rental
debt to the board.
G
5. Both the parties shall take steps to withdraw all cases
against each other before the court and before other
authorities.
6. The relief of specific performance of the third
agreement dated 31-5-80 as prayed by the society H
738 SUPREME COURT REPORTS [2009] 4 S.C.R

A has been allowed subject to the relief under this • ~

award."
8. Being aggrieved by the award passed by the arbitrator,
the Board initiated appropriate proceedings for setting aside
the award passed by the arbitrator. The trial court confirmed the
B award passed by the arbitrator against which the Board
preferred appeals under Section 39 of the Arbitration Act, 1940
(for short 'the Act'). The High Court dismissed the appeals
preferred by the Board. Hence the present Special Leave
Petition.
c 9. Leave granted.
10. The present appeal is directed against the common
judgment and order dated July 27, 2006 passed by the High
Court of Madhya Pradesh judicature at Jabalpur whereby the
D High Court dismissed the appeals of the appellant filed under lo,.

Section 39 of the Act.
11. Shri L.N. Rao, learned senior counsel forthe appellant
submitted that the award of the arbitrator is vitiated and required
to be set aside. The courts below have committed a grave error
E in confirming the award passed by the arbitrator. The arbitrator
has committed gross misconduct which is apparent from the
face of the record. The arbitrator disregarded the terms of the ._
"
contract and passed his award on events and circumstances
which were irrelevant for interpreting the terms of the contract.
F The award is based on conjectures and surmises. It was also
submitted that the arbitrator has exceeded his jurisdiction by
framing and deciding issues which were not referred to him by
either of the parties which reflects the predetermined mind of
the arbitrator.
G • '
12. Shri C.A. Sundaram, learned senior counsel appearing
for the respondent submitted that the award does not suffer from
any infirmities whatsoever requiring the interference of this Court
in exercise of its jurisdiction under Article 136 of the Constitution
of India. Learned senior counsel submitted that both the courts
H
M.P. HOUSING BOARD V. PROGRESSIVE WRITERS & 739
PUBLISHERS [B.SUDERSHAN REDDY, J.]

below concurrently found that the award passed by the arbitrator A
is just and reasonable and is not vitiated by any act of
misconduct on the part of the arbitrator. The findings so recorded
by the courts below by no stretch of imagination could be
characterised as perverse and that being the position, there is
no scope for any interference with the award. B

13. Shorn of all the details and embellishments, the crucial
question that arises for our consideration is whether the third
building agreement dated May 31, 1980 stood automatically
cancelled on account of non-compliance of the terms thereunder
by the depositor and whether the second agreement dated May C
4, 1977 stood automatically revived? In order to resolve the
controversy it is just and necessary to make a detailed analysis
of terms and conditions incorporated in the third building
agreement dated May 31, 1980. The intention of the parties is
to be gathered for determining the scope of the agreement. The D
third agreement as is evident from the recitals was entered into
mainly for the purpose of arriving at terms for the payment of
construction cost and other fees payable by the depositor to
the Board. The depositor agreed to pay to the Board the total
amount of 'cost of Complex' incurred by the Board for the E
construction pursuant to the first agreement dated February 18,
1975. The amount was quantified at Rs. 73.50 lakhs which
included the architectural fees, capitalised interest and
supervision charges etc. The said agreement does not speak
about any transfer of land. There is no doubt that the depositor F
agreed to pay the entire amount of cost of construction, loan
and interest payable to the Board on or before October 31, 1980.
The question is whether non payment results in automatic
cancellation of the third agreement? The nature and scope of
the said agreement is entirely different from that of the earlier G
agreements of 18.02.1975 and 04.05.1977 executed by and
between parties.

14. Whether time is the essence of the agreement dated
May 31, 1980:
H
740 SUPREME COURT REPORTS [2009] 4 S.C.R. I

1
A It is true that Clause 4 of the third agreement provides that
the depositor to make all the payments on or before October
31, 1980 on the pain of cancellation of agreement. But the
question is what are those amounts that were required to be
paid?
B 15. The arbitrator in this regard upon consideration of the
material available on record found that the depositor was under
confusion and rightly so as to the amount of actual cost of
construction. It was also found that the amount actually paid to
the architect as his fees and the fees as the Board has included
c in the cost of construction was different. The duration of period
of construction was also not clear from the records produced
by the Board. Therefore, the depositor was not in a position to
know the capitalised interest. It is an admitted fact that the Board
had been realising rents from the lessees of the building. The
D same has not been taken into account and it is under those
circumstances the depositor went on requesting the Board to
provide the detailed accounts as regards the actual cost and
also details as to the rent collected by the Board in order to
enable them to pay the exact amount to the Board. The arbitrator
E found that despite such request'the account books were not
shown to them and in fact the account books were not maintained
in terms of the first agreement. The arbitrator found that the ._ ""
Board always assured the depositor that it would provide the
details as required after complete verification as regards the
F amounts of cost incurred by the Board for construction of the
building. The arbitrator found that the Board has realised rents
from the building which had not been set off against the amount
of Rs.73.50 lakhs shown in the agreement as cost of
construction. The arbitrator after taking the sequence of events
1
and correspondence between the parties even after 31 ' October, ,,.
G '
1980 into consideration arrived at a conclusion that the figure
of Rs.73.50 lakhs as cost of construction was tentatively shown
in the agreement.
16. The arbitrator found that the Board had itself waived
H the time clause and was willing to accept money from the
M.P. HOUSING BOARD V. PROGRESSIVE WRITERS & 741
F'.UBLISHERS [B.SUDERSHAN REDDY, J]

depositor even after 31st October, 1980 as is evident from the A
- 1-
negotiations which continued between the parties till the year
1985-86. The arbitrator relied on documentary evidence made
available by the parties in arriving at the conclusion that in the
present case the time is not essence of the agreement
17. It is fairly well settled that the time is not normally an B
essence of any agreement qua immovable properties and even
there was an express covenant of time being an essence, the
·; overall agreement have to be looked at to determine whether
the time was the essence. Whether the time is the essence of
the contract would, therefore, be a question of fact to be c
determined in each case and merely expression of the stipulated
time would not make time an essence of the contract. The finding
arrived at by the arbitrator in this regard is not even challenged
by the Board in the proceedings initiated by it under Section 30
of the Act. D
18. It is fairly well settled and needs no restatement that
the award of the arbitrator is ordinarily final and the courts
hearing applications under Section 30 the Act do not exercise
any appellate jurisdiction. Reappraisal of evidence by the court
is impermissible. In lspat Engineering & Foundry Works, B. S. E
City, Bokaro vs. Steel Authority of India, B. S. City, Bokaro
_.;.
[(2001) 6 sec 347], it is held:
...
" 4. Needless to record that there exists a long catena of
cases through which the law seems to be rather well settled F
that the reappraisal of evidence by the court is not
permissible. This Court in one of its latest decisions
[Arosan Enterprises Ltd. v. Union of India (1999) 9 SCC
449] upon consideration of decisions in Champsey Bhara
& Co. v. Jivraj Ba/loo Spg. & Wvg. Co. Ltd. [AIR 1923 PC
.. " 66], Union of India v. Bungo Steel Furniture (P) Ltd.[(1967
G
1 SCR 324], N. Chellappan v. Secy., Kera/a SEB {(1975)
1 SCC 289], Sudarsan Trading Co. v. Govt. of Kera/a
{(1989) 2 SCC 38], State of Rajasthan v. Puri Construction
Co. Ltd. [(1994) 6 SCC 485] as also in Olympus
H
742 SUPREME COURT REPORTS (2009] 4 S.C.R.

A Superstructures (P) Ltd. v. Meena Vijay Khetan [(1999)
r
5 sec 651] has stated that reappraisal of evidence by *

the court is not permissible and as a matter of fact, exercise
of power to reappraise the evidence is unknown to a
proceeding under Section 30 of the Arbitration Act. This
B Court in Arosan Enterprises categorically stated that in
the event of there being no reason in the award, question
of interference of the court would not arise at all. In the
event, however, there are reasons, interference would still
be not available unless of course, there exist a total
c perversity in the award or the judgment is based on a
wrong proposition of law. This Court went on to record that
in the event, however, two views are possible on a question
of law, the court would not be justified in interfering with the
award of the arbitrator if the view taken recourse to is a
D possible view. The observations of Lord Dunedin in
Champsey Bhara stand accepted and adopted by this
Court in Bungo Steel Furniture to the effect that the court
had no jurisdiction to investigate into the merits of the
case or to examine the documentary and oral evidence in
E the record for the purposes of finding out whether or not
the arbitrator has committed an error of law. The court as
a matter of fact, cannot substitute its own evaluation and
come to the conclusion that the arbitrator had acted . "
contrary to the bargain between the parties."
F
19. Interpretation of a contract, it is trite, is a matter for the
arbitrator to determine. Even in, a case where the award
contained reasons, the interference therewith would still be not
available within the jurisdiction of the court unless, of course,
the reasons are totally perverse or award is based on wrong
G
proposition of law. An error apparent on the face of the records • 'f

would not imply closed 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." (see Sudr>rsan Trading Co. vs. Govt. of Kera/a
H
M.P. HOUSING BOARD V. PROGRESSIVE WRITERS & 743
PUBLISHERS [B.SUDERSHAN REDDY, J.]

(1989) 2 SCC 38 and State of UP vs. Allied Constructions A
(2003) 7 sec 396].
20. In the present case, on the material available and upon
appreciating the same the arbitrator arrived at the finding that
the time was not of the essence and the agreement subsisted
even after 31st October, 1980. The finding cannot be said to be B
perverse to give rise to legal misconduct deserving intervention
under Section 30 of the Act.

21. In any event, even the time was the essence of the
agreement, the same was not insisted upon by the parties in c
the present case. The material available on record disclose that
even after October, 1980, parties continued negotiations as
regards the actual amounts payable based on what the
construction cost would be on reconciliation of accounts and
the same would indicate that the parties were still working out D
their rights and obligations under the agreement. The parties
would not have acted in such a manner had the agreement had
come to an end. Be it noted that the Board never took any stand
during the negotiations that the agreement stood cancelled or
took any steps to terminate the same. It did not raise any
; objection contending that the cost of construction was quantified E
at Rs.73.50 lakhs after negotiation and verification of the
accounts by the parities to their satisfaction. It was not the case
of the Board that the quantified amounts towards cost of
construction of complex was non negotiable. It is under those
circumstances the arbitrator accepted the case set out by the F
depositor that the Board was always assuring them to furnish
the correct figure and the accounts of cost incurred by them but
refused to do so. The arbitrator took into consideration variety
of circumstances in arriving at the conclusion that the figure of
'I' • Rs.73.50 lakhs stipulated in the agreement was tentative and G
not a final figure. The arbitrator has fully discussed the issue as
to how the non-payment of the amounts was on account of the
Board's action in not furnishing the accounts even at the stage
of arbitration and, therefore, held that the Board could not seek
to wriggle out of 1980 agreement. H
744 SUPREME COURT REPORTS [2009] 4 S.C.R.

A 22. The courts below found conclusions drawn and findings
arrived at by the arbitrator that non payment of amounts by the
1
depositor by 31 ' October, 1980 as provided for did not result in
automatic cancellation of the agreement were plausible and
accordingly refused to interfere in the matter. The courts below
B upheld the findings that the depositor continued to be the owner
of the property.

23. The decision in Swamam Ramachandran and Anr.
Vs. Aravacode Chakungal Jayapalan, [2004 (8) SCC 689],
upon which reliance has been placed by the learned senior
C counsel, in our considered opinion, in no manner, supports the
contention advanced before us. In the said decision the Court
took the view that the time is presumed not to be of the essence
of the contract relating to immovable property, but it is of the
essence in contracts of reconveyance or renewal of lease. It is
D further held that whether time is of the essence is a question of
fact and the real test is the intention of the parties. It depends
upon the facts and circumstances of each case. In cases where
notice is given making time of the essence, it is the duty of the
court to examine the real intention of the party giving such notice
E by looking at the facts and circumstances of each case. The
intention can be ascertained from:

(i) the express words used in the contract;
.
(ii) the nature of the property which forms the subject
F matter of the contract;

(iii) The nature of the contract itself; and
(iv) The surrounding circumstances.

G
24. The onus to plead and prove that time was of the
essence of the contract is on the person alleging it. In the present
case, the Board never took the plea before initiating the legal
. ..,

proceedings that the time was of the essence of the contract.
The arbitrator after taking all the relevant facts into consideration
in the present c:se found that there was no justification in
H claiming to treat time as of the essence of the contract.
M.P. HOUSING BOARD V. PROGRESSIVE WRITERS & 745
PUBLISHERS [B.SUDERSHAN REDDY, J]

25. Mr. Nageshwar Rao, learned senior counsel for the A
appellant submitted that amongst the issues submitted by the
parties to the arbitrator there was no issue regarding the non-
execution of the contract or with regard to whether the non-
performance of the third agreement was due to non-supply of
accounts by the Board. The contention was that the arbitrator B
himself framed a specific issue, being issue No. 13 to the effect
whether the Board thwarted the fulfillment of the condition of the
payment within the period of time by not supplying the proper
accounts of the costs of the building, thus, denying the depositor
the opportunity to deposit the amount. The submission was that c
the arbitrator exceeded his jurisdiction in framing such an issue
and thus committed grave legal misconduct. It was submitted
that in the present case both the parties acted in accordance
with the terms of the 1980 agreement and upon admitted failure
of the depositor to pay the stipulated amounts within the agreed
0
period, the contract stood automatically terminated and the 1977
contract automatically revived.

26. We cannot accept the contention of the Board that no
additional issue could have been framed by the arbitrator on
his own for its decision. In a reference made under Section 23, E
arbitrator's power to determine the lis between the parties is
much wider. The arbitrator has all the powers which the court
itself would have in deciding the issues in the suit. The court's
power to frame an additional issue if its is just and necessary
for deciding the matter in dispute cannot be denied and so also F
of the arbitrator where disputes between the parties pending
adjudication on suits have been referred to arbitrator for
determination [See: Jugal Kishore Prabhatilal Sharma and Ors.
Vs. Vijayendra Prabhatilal Sharma and Anr. [1993(1) SCC
114)]. G
27. In the light of the settled legal principle, we are of the
opinion that the arbitrator was not bound to adopt only the issues
submitted by the parties but was well within his jurisdiction to
frame such other issue or issues as may be just and necessary
for the purpose of disposal of the reference made under Section H
746 SUPREME COURT REPORTS [2009] 4 S.C.R

A 23 of the Act. We accordingly find no merit in the submissions
made by the learned senior counsel that the arbitrator exceeded
his jurisdiction and committed grave legal misconduct in framing
said issue and determining the same.

28. It is true that the arbitrator took judicial note of certain
B facts which were in the realm and conjectures and surmises to
conclude that the second agreement 1977 was entered into
under political pressure and depositor was compelled to execute
the said agreement under such pressure. But the question is
what is the effect of the same. In our considered opinion even
c this surmise and conjecture is ignored and not taken into
consideration, the award of the arbitrator continues to be valid
and binding on the parties. The findings recorded by the
arbitrator that the specific performance of the second agreement
is barred by limitation; that the agreement is itself
D unconscionable; that the agreement ceases to subsist after the ...
1980 agreement and was not revived are not based on the sole
ground that the second agreement came to be executed under
political pressure. There is enough material available on record
to arrive at such conclusion as the one arrived at by the arbitrator.
E All the said conclusions were not arrived solely on the basis of
conjectures and surmises. In Gujarat Water Supply and
Sewerage Board vs. Unique Erectors (Gujarat) (P) Ltd. and
Anr. [1989 (1) sec 532], this Court held that "an award of an :ii

arbitrator should be read reasonably as a whole to find out the
F implication and the meaning thereof. Even in a case where the
arbitrator has to state reasons, the sufficiency of the.reasons
depends upon the facts and circumstances of the case. The
Court, however, does not sit in appeal over the award and review
the reasons. The court can set aside the award only if it is
apparent from the award that there is no evidence to support
G y

the conclusion or if the award is based upon any legal proposition
which is erroneous." The award under challenge is not the one
which is based on no evidence.

29. In Food Corporation Vs. Joginder Pal [ 1989 (2) SCC
H 347] this Court reiterated the principle that an award of an
MP. HOUSING BOARD V. PROGRESSIVE WRITERS & 747
PUBLISHERS [B.SUDERSHAN REDDY, J]

arbitrator can only be interfered with or set aside or modified A
within four corners of the procedure provided by the Act. It is not
misconduct on the part of an arbitrator to come to an erroneous
decision, whether error is one of the fact or law, and whether or
not his findings of fact are supported by evidence. In case of
errors apparent on the face of the award it can only be set aside B
if in the award there is any proposition of law which is apparent
on the face of the award, namely, in the award itself or any
document incorporated in the award. Errors of law as such are
not to be presumed.

30. Learned senior counsel for the appellant further C
contended that the arbitrator in the instant case has committed
grave error in going beyond the terms of the contract admittedly
entered into by and between the parties. The question is what
is the legal misconduct committed by the arbitrator in the instant
case? Whether the award by the arbitrator perpetrates gross D
miscarriage of justice? Is it reduced to mockery of a fair decision
of the lis between the parties to the arbitration? The . erroneous
application of law constituting the very basis of the award and
improper and incorrect findings of fact, which without closer and
intrinsic scrutiny, are demonstrable on the face of the :materials E
on record, have been held as legal misconduct rendering the
award as invalid but at the same time the court could not
reappraise the evidences intrinsically with a close scrutiny for
finding out that the conclusion drawn from some facts, by the
arbitrator is according to the understanding of the court, F
erroneous. Such exercise of power which can be exercised by
an Appellate Court with power to reverse the finding of fact, is
alien to the scope and ambit of challenge of an award under the
Arbitration Act. [See: .State of Rajasthan vs. Puri Construction
Co. Ltd. and Anr. [1994 (6) SCC 485]. In the present case there G
y ,
is no erroneous application of law by the arbitrator or any
improper and incorrect finding which is demonstrable on the
face of the material on record.
31. ltwas submitted that when there has been quantification
of the costs of the construction of the building and incorporation H
748 SUPREME COURT REPORTS [2009] 4 S.C.R.

A of the same in the third agreement the same could not be re-
determined by the arbitrator by rewriting the terms of the
agreement entered into between the parties. We find no merit
in the submission. There is no dispute with the proposition that
the intention of the parties is to be gathered from the words
B used in the agreement. If the words are clear, there is very little
that the Court can do about it. In the present case, the parties
entered into three agreements one after the another. The
arbitrator while interpreting clause I of the third building
agreement whereunder the figure of Rs.73.50 lakhs being the
c amount of cost of complex arrived at the conclusion that the
figure has been given by the Board. The arbitrator upon
appreciation of the material available on record found that the
depositor repeatedly requested the Board to provide the details
of accounts of the cost as also the rent realization in order to
enable them to pay the exact amount to the Board. The arbitrator
D
after taking all the relevant facts and circumstances into
consideration found that determination as to the actual cost of
the construction was absolutely imperative to determine the
exact amount payable and found that the figure of 73.50 lakhs
as stated in clause 1 of the third agreement was only indicative.
E The arbitrator derived support from the numerous documents
filed before him which revealed that the cost of construction was
stipulated in clause 1 of the agreement was tentative, the matter
was kept open till 1990 for settlement of accounts. Interpretation
of the terms of the agreement concerning the quantification of
F cost of construction in the present case, in our considered
opinion, does not amount to rewriting the terms of the contract.
32. The arbitrator having considered the overall situation
and having arrived at a conclusion that the second building
agreement was not enforceable held that the property would
G
continue to vest with the depositor. But the arbitrator did not
ignore the legitimate right of the Board to realize the amounts
spent by it for putting up the construction. The arbitrator
considered the matter and worked out a reasonable, just and
fair solution and accordingly held that the depositor was bound
H
M.P. HOUSING BOARD V. PROGRESSIVE WRITERS & 749 '
PUBLISHERS [B.SUDERSHAN REDDY, J.]

,_ >- to pay the amounts spent by the Board for construction whether A
or not they wanted such a construction to have come up or
whether or not the Board could have expended monies to pay
for the construction without the consent of the depositor as
provided in the 1975 agreement.

33. The arbitrator accordingly passed the award declaring B
that the Board shall be entitled to a sum of Rs.37,70,309.85
and directed the depositor to pay half of the amount as soon as
award is declared a Rule of the Court. The rest of the amount to
be paid in monthly installments of 2.4 lakhs from the monthly
rental income of the building. In case of any default the Board C
shall be entitled to interest @ 18% per annum capitalized
quarterly. Relief granted by the arbitrator, in our considered view
is fair and equitable one. The arbitrator awarded the amounts
towards cost of construction plus supervision and other charges
payable to the Board together with a hefty interest @ 15% D
compound from the date of expenditure by the Board till the
date of payment.
34. In our considered opinion, there is nothing in the award
requiring intervention by the courts. The courts below rightly
refused to interfere with the award passed by the arbitrator. It is E
not a case which warrants our interference in exercise of

- jurisdiction under Article 136 of the Constitution of India.
35. Appeal fails and is accordingly dismissed with no order
as to costs. F

R.P. Appeal dismissed.

,