M/s. Alopi Parshad & Sons, Ltd. v. The Union of India

S.C.R. SUPREME COURT REPORTS 793 clearly stated that the Central Government considered _z960_ it against public interest to disclose to the petitioner, . d l _1_ _agan_ _Nat_ _h 5_ _afou_ any facts or particulars as to ates, persons, p aces, v. nature of activities and the assistance given by him _The Union of India_ other than those which had already been mentioned in the grounds of detention. Under Art. 22(6) of the _Imam_ _J._ Constitution it is clearly stated that nothing in cl. (5) of that Article shall require the authority making an order of detention to disclose facts which such authority considers to be against public interest to be disclosed. In the present case the authority concerned had declined to disclose in the public interest any facts or particulars as to dates, persons, places, nature of activities and the assistance given by the petitioner other than those which had already been mentioned in the grounds of detention. In such circumstances, it would have been entirely inappropriate for the respondent to supply copies of the further materials placed before the Advisory Board although the Advisory Board may have required further information in order to satisfy itself. The petition is accordingly dismissed. _Petition dismissed._ M/s. ALOPI PARSHAD & SONS, LTD. _v._ THE UNION OF INDIA (S. K. DAS, K. N. W ANCHOO AND J. C. SHAH, JJ.) _Arbitration-Award, setting_ _aside_ _of-Error_ _on_ _the_ _face_ _of the_ _record-Reference of_ _specific_ _questions-Contract-Terms of payment_ _specified-Change of circumstances-Power of_ _arbitrator_ _to_ _vary_ _terms-Quantum M eruit payment,_ _when_ _justified._ The appellants were appointed under an agreement in writing - by the Governor-General as agents for purchasing and supplying ghee required for the Army personnel with effect from October l, 1937. After the outbreak of the World War II there was an enormous increase in the demand of ghee by the Government and the agreement was revised by mutual consent on June 20, 1942, and the original rates of payment were scaled down. On December 6, 1943, the appellants made a representation to the Government for enhancing, the rates as conditions had become _I960_ _January_ _20._ **794** **SUPREME** **COURT** **REPORTS (1960 (2)]** _r960_ abnormal. According to the appellants they were given assurances that their claims would be favourably considered by the _**M**_ _**fs.**_ _**Alopi Pars!lad**_ **Government and relying on these assurances they continued to** _and Sons. Ltd._ supply ghee in quantities demanded by the Government incurring v. heavy extra expenditure. The Government did not enhance the _**The Union of**_ _**India**_ **rates and the matter** **\Vas** **referred to arbitration under the agree-** ment of 1937· Before the arbitrators the appellants contended that the agreement of 1942 was not binding upon them and claimed payment on the basis of the agreement of r937; and in the alternative claimed payment on the basis of increased rates of _mandi_ charges, additional buying remuneration and contingency charges. These claims were resisted by the Government and it was denied that any assurances were given by the Government to enhance the rates. The arbitrators incorporated the points of contest in the form of issues. By an award dated May 2, 1954, the arbitrators rejected the primary claim of the appellant holding that the agreement of r942 was binding. On the alternative claim they awarded a sum of money for loss suffered by the appellants **on account** **of** **establishn1ent and contingencies, and another sum** for _mandi_ and fiMncing charges. The award was filled in the Court of the Commercial Sub-Judge, Delhi, and the Government applied to have it set aside. The Sub-Judge held that though there was an error on the face of the award in ordering the payment of additional remuneration and financing and overhead charges the award could not set aside as specific questions had been expressly referred for adjudication to the arbitrators and the award was binding on the parties. On appeal the High Court held that no specific questions of law had been referred to the arbitrators and that the award was vitiated by errors apparent on the face of the award. _Held,_ that the award was liable to be set aside because of an error apparent on the face of the award. An arbitration award may be set aside on the ground of an error on the face of it when **the reasons given for the decision, either in the award or in any** document incorporated with it, are based upon a legal proposition **\Vhich** **is erroneous.** **But** **\Vhere** **a specific question is referred,** the award is not liable to be set aside on the ground of an error on the face of the award even if the answer to the question **involves an** **erroneous decision** **on** **a point of law.** **In the present** **case there was a general reference and not a specific reference on** **any question of law.** _Champsey Bhara and_ _Co._ v. _]ivraj Balloo Spinning_ & _Weav-_ _ing_ _Co.,_ _Ltd.,_ L. R. 50 I. A. 324, _In_ _the_ _matter of an arbitration_ _between_ _King and_ _Du.veen._ L.R. 1913 2 K.B.D. 32, and _Government_ _of Kelantan v._ _Duff_ _Development_ _Co.,_ _Ltd.,_ **L.** R. 1923 A. C. 395, **relied on.** The contract provided for payment of charges at rates specifi**ed therein and the arbitrators could not ignore the express cove-** nants between the parties and award amounts not agreed to be ###### S.C.R. SUPREME COURT REPORTS 795 paid. A contract is not frustrated merely because the circum- _I96°_ stances in which it was made are altered. The courts have no _M/_ _Al_ . _P_ _h d_ - 1 f h f f l · s. _opi ars a_ general power to abso ve a party rom t e per ormance o i1s _d 5_ _Lid_ part of the contract merely because its performance has become _an_ _ons._ onerous on account of an unforseen turn of events. _Th_ _u_ _v. _d'_ ., C _H'"Ml"_ _Ch_ _Y_ _e mono 11 nia_ _Constantine_ s _case_ (1942) A. . 154, _irJi._ _u Ji_ v. _eong_ _ue_ . _Steamship_ _Co.,_ _Ltd.,_ (1926) A. C. 497, _British Movietonews Ltd._ v. _London and District Cinemas,_ L. R. 1952 A. C. 166 and _Parkinson_ & _Co.,_ _Ltd._ v. _Commissioners of Works._ (1949) 2 K. B. D. 632, referred to. _-British Movietonews Ltd._ v. _London and District Cinemas Ltd._ (1951) l K.B.D. 190, disapproved. The award which ignored the express terms of the contract prescribing the remuneration payable could not be justified as proceeding upon the basis of _quantum meruit._ Compensation _quantum meruit_ may be awarded for work done or services rendered only when the price thereof is not fixed by a contract. For work done or service rendered pursuant to the terms of a contract, compensation _quantum meruit_ cannot be awarded where the contract provides for the consideration payable in that behalf. CrvIL APPELLATE JURISDICTION: Civil Appeal No. 693 of 1957. Appeal from the judgment and Order dated the 25th May, 1956 of the Punjab High Court in F.A.C. No. 89/D of 55. _N. 0._ _Chatterjee,_ _S._ _K._ _Kapur,_ _N._ _H. Hingorani_ and _Ganpat_ _Rai,_ for the appellants. _H._ _J._ _Umrigar_ and _T. M. Sen,_ for the respondent. 1960. January 20. The Judgment of the Court was delivered by SHAH J.-On May 3, 1937, M/s. Alopi Parshad and Sons Ltd., who will herinafter be referred to as the Agents, were, under an agreement in writing, appointed by the Governor-General for India in Council, as from October 1, 1937, agents for purchasing _ghee_ required for the use of the Army personnel. The Government of India, by cl. 12 of the agreement, undertook to pay to the Agents the actual expenses incurred for purchasing _ghee,_ cost of empty tins, expenses incurred on clearance ;of Government tins from the railway, export ]and-customs duty levied on _ghee_ purchased and exported from markets situated in Indian States, octroi duty, terminal tax or other local rates on _ghee,_ and certain other charges incurred _Shah]._ 796 SUPREME COURT REPORTS [1960(2)] _**I960**_ by the Agents. The Government also agreed to pay to the Agents at rates specified in the agreement: _**M**_ _/s._ _**Alopi Parshad**_ _and_ _sons._ _Ltd._ **(1)** the financing and overhead _(mandi)_ charges v. incurred in the buying markets. _The Union_ _of India_ (2) the cost of· establishments and contingencies _Shah]._ provided by the Agents on the Government's account for carrying out the purchase and supply of _ghee,_ and _Shah]._ ;. (3) the buying remuneration. In consideration of the Government paying to the Agents a sum of rupee one and anna one only per one hundred pounds nett weight of finally accepted _ghee,_ as combined financing and overhead _(mandi)_ charges, the Agents by cl. 13 undertook to provide the working capital and also to bear the costs, charges and expenses, including financing and overhead charges incurred by them in buying _ghee_ in the market. The Agents also undertook, by cl. **14,** to bear the establishment and contingency charges for the due performance by them of the terms of the agreement, and the Government agreed to pay in consideration thereof annas 14 and pies 6 per every hundred pounds of _ghee_ accepted. The Government also agreed to pay to the Agents remuneration for services · rendered in purchasing _ghee,_ at the rate of one rupee per one hundred pounds nett ·Weight of accepted _ghee._ Pursuant to the agreement, the Agents supplied from time to time ghee to the Government of India, as required. In September, 1939, the World War II broke out, and there was an enormous increase in the demand by the Government of _ghee._ On June 20, 1942, the original agreement was, by mutual consent, revised, and in respect of the establishment and contingencies, the uniform rate of annas 14 and 6 pies per hundred pounds of accepted _ghee,_ was substituted by a graded scale : for the first 5 thousand tons, the Agents were to be paid at the rate of Re. 0-14-6 per hundred pounds, for the next five thousand tons, at the rate of annas 8 per hundred pounds, and at the rate of annas 4 per hundred pounds, for supplies exceeding. ten thousand tons .. :Even in respect of ' ... S.C.R. SUPREME COURT. REPORTS 797 remuneration for services, a graded scale was subs- _r96o_ tituted: for the first five thousand tons, remuneration _Al-. P_ _h d_ . 'd h t f R 1 h d d _M Js_ . _opi_ _ars a_ was to b e pa1 at t e ra e o e. per un re _and Sons. Ltd._ pounds, at the rate of annas 8 per hundred pounds, v. for the next five thousand, and annas 4 per hundred _The Union of_ _I.ndia_ pounds, for supplies exceeding ten thousand tons. This modification in the rates became effective from _Shah_ _J._ September 11, 1940. By their communication dated December 6, 1943, the Agents demanded that the remuneration, establishment and contingencies, and _mandi_ and financing charges, be enhanced. In respect of the buying remuneration, they proposed a 25 per cent increase ; in respect of establishment and contingencies, they proposed an increase of 20 per cent., and in respect of _mandi_ and financing charges, an increase of 112 per cent. This revision of the rates was claimed on the plea that the existing rates, fixed in peace time, were "entirely superseded by the totally altered conditions obtaining in ·war time." To this letter, no immediate reply wafl given by the Government of India, and the Agents continued to supply _ghee_ till May, 1945. On May 17, 1945, the Government of India, purporting to exercise their option under cl. 9 of the agreement, served the Agents with a notice of termination of the agreement. On May 22; 1945, the Chief Director of Purchases, on behalf of the Government of India, replied to the letter dated December 6, 1943, and informed the Agents that normally no claim for revision of rates could be entertained during the currency of the agreement an<) especially with retrospective effect, but a claim for _ex-gratia_ compensation to meet any actual loss suffered by an agent, might be entertained, if the Agents established circumstances justifying such a claim. The Chief Director of Purchases called upon the Agents to submit the report of their auditors on the agency accounts, for the _ghee_ supplied, as also a statement in detail, showing the actual expenditure incurred. The notice dated May 17, 1945, was waived by mutual consent, and under an arrangement dated May It), 1946 1 the Agents agreed to supply five 798 SUPREME COURT REPORTS [1960 (2)) _r96o_ thousand tons of _ghee_ by October 31, 1946, on which _h_ ddate, the agreement dated May 3, 1937, was to come _M_ _fs._ _Al_ _[--:-P ]_ _opi_ _**ars**_ _a_ d _and Sons. Ltd._ to an en ° v. By their letter dated July **1,** 1946, the Agents _The Union of India_ claimed that a dispute had arisen under the contract, and app0inted one Nigam to be arbitrator on their _Shah_ _.J._ behalf to adjudicate upon the dispute, pursuant to cl. 20 of the terms of the agreement dated May 3, 1937, and called upon the Government of India to appoint their arbitrator. The Government of India, by their letter dated July 10, 1946, nominated one Rangi Lal to be arbitrator on their behalf. Before the arbitrators, the Agents made their claim under four heads : (1) The Agents claimed that the agreement dated June 20, 1942, was not binding upon them, and they were entitled to Rs. 23,08,372-8-0 being the difference between the buying remuneration, establishment and contingency charges due under the agreement dated May 3, 1937, and the amount actually received. The details of this claim were set out in Sch. A. (2) In the event of the arbitrators holding the agreement dated June 20, 1942, was binding, a revision of the rates for establishment and contingencies, and an additional amount of Rs. 6,91,600-4-0 at such revised rates as set out in Sch. B. (3) Revision of the rates fixed under the agreement dated June 20, 1942, ofthemandi charges, and an additional amount of Rs. 14,47,204-6-3, at the revised rates as set out in Sch. C. (4) Damages for wrongful termination of the agreement in the month of October, 1946, amounting to Rs. 2,41,235, as set out in Sch. D. The arbitrators did not arrive at any agreed decision, and the dispute was referred to Lala Achru Ram who was nominated an umpire. The umpire was of the view that the agreement dated June 20, 1942, was valid, and the claim as set out in Sch. _A_ was untenable; that the claims set out in Seh. B and Sch. C, did not arise out of the agreement, and he had no jurisdiction to adjudicate upon the same; and that as the claim set out in Sch. D, was outside the scope of S.C.R. SUPREME COURT REPORTS 799 the Reference, he was inco,mpetent to give any finding _I9_ _[60 ]_ #### ### on that claim. _M/s. Alopi Parshad_ This Award was filed in the court of the Subor- _and Sans. Ltd._ dinate Judge, First class, Delhi. The Agents applied v. to set aside the Award on the grounds that the _The Union of India_ umpire was guilty of misconduct in that he failed to _Shah_ _J._ give an adequate opportunity to the Agents to present and substantiate their case before him, and that in holding that the claims as described in Schedules B, C and D, either did not arise out of the agreement or were outside the scope of the Reference, the umpire erred. The learned Subordinate Judge held that the umpire was in error in leaving undetermined claims described in Sch. B and Sch. D, which were within the scope of the Referende, and that the claim described in Sch. C was properly left undecided as it was outside the scope of the Reference. He also held that the Award was vitiated on account of judicial mis condu~t, because the Agents were not allowed by the umpire sufficient opportunity to place their case. The learned Subordinate Judge, in that view, proceeded' to set aside the Award, but he declined to supersede the Reference, antl left it to the parties to "appoint other arbitrators in view of cl. 20 of the agreement, for settling the dispute." Against the order of the Subordinate Judge, the Union of India appealed to the High Court of East Punjab. Khosla, J., who heard the appeal, confirmed the order passed by the court of first instance. The learned Judge agreed with the view of the Subordinate Judge that the umpire had been guilty of judicial misconduct. The learned Judge observed in his judgment that the claim of the Agents, as described iUr Schedules B and C, was not beyond the arbitration agreement. In so observing, .presumably, the learned Judge committed some error. The Subordinate tTudge had come to the conclusion that the. claim described in Sch. C, was beyond the arbitration agreement, and no reasons were given by Khosla, J., for disagreeing with that view. Appeal 31 of 1953 under the Letters Patent, against the judgment of Khosla J., was dismissed by a J02 800 SUPREME COURT REPORTS [1960(2)) _,96o_ Division Bench of the High Court of East Punjab, _{_ _P_ _h_ observing that the claim detailed in Sch. JJ arose out _Ml_ _Al_ _[-. ]_ _and s._ _5 o/n_,, _Ltd a>S_ _ad_ - f l tie contract, u t a b t h t . 1t was unnecessary o t d em 'd e :. _s._ - whether the claim described in Sch. C for an increase _The Union of India_ in the financing and overhead _mandi_ charges, was properly ruled out by the umpire. _Shah_ _]._ In the meantime, by letter dated August 2, l 952, the Agents called upon the Government of India to appoint their arbitrator under cl: 20 of the agreement dated May 3, 1937, for a fresh adjudication of the dispute, and intimated that they had again appointed Nigam to be their arbitrator. The Government of India informed the Agents by their letter dated August 14, 1952, that they had filed an appeal against the judgment of the Subordinate Judge, Delhi, and in the circumstances, the question of appointing an arbitrator, did not arise until the final disposal of the appeal. The Government, however, without prejudice to their rights, including the right to prosecute the appeal, again appointed Rangi Lal to be arbitrator on their behalf. After the Appeal under the LE;tters Patent, was decided by the East Punjab High Court on December 16, 1953, the arbitrators entered upon the reference. On March 1, 1954, the Agents submitted their claim, contending that the supplementary agreement dated June 20, 1942, was void and not binding upon them, and that, in any event, on the representations made on December 6, 1943, and from time to time thereafter, they were assured by the Chief Director of Purchases that the claim made by them would be favourably considered by the Government of India, and relying on these assurances, they continued to supply _ghee_ in quantities demanded by the Government after incurring "heavy extra expenditure". They also claimed that they were constantly demanding an increase· in the _mandi_ and financing charges, but the Chief Director of Purchases, who was duly authorized in that behalf by the Government, gave rRpcated verbal assurances that their demands would be satisfied, and requested them to continue supplies for the successful prosecution of the war. Contending S.C.R. SUPREME COURT REPORTS 801 that the Government of India was estopped from _z96u_ repudiating their claim set out in Schedules B and C, - - - f 11 h f t d - t d · _M/s._ _AlopiParshad_ - in view o a t e ac s an mrcums ances state in _and Sons._ _Ltd._ the petition, the Agents prayed for a declaration that v. the supplementary agreement dated June 20, 1942, _The Union of_ _India_ was void and not binding upon them, and for a decree for payment of Rs. 27,48,515 with interest at the rate _Shah_ _J._ of 6 per cent. per annum from March 1, 1954, and, in the alternative, for a decree for Rs. 25,63,037-7-3, with interest at the rate of 6 per cent. per annum from March 1, 1954, till recovery. This claim of the Agents was resisted by the Government of India. _Inter alia,_ it was denied that any assurances were given by the Director of Purchases, or that the Agents continued to supply ghee relying upon such alleged assurances. It was asserted that the Agents continued to supply _ghee_ without insisting upon any modification of the agreement, because they found, and it must be presumed that they found, it profitable to do so under the terms fixed under the supplementary contract dated June 20, 1942. The claims made for the additional buying remuneration, for _mandi_ charges and for establishment and contingency charges, were denied. It was urged that, in any event, the claim for additional buying remuneration and for _mandi_ charges and for reimbursement of establishment and contingencies, was not covered by cl. 20 of the agreement, under which the submission to arbitration was made, and the arbitrators had no jurisdiction to adjudicate upon those claims. . On the claim made by the Agents, and the denial thereof, the arbitrators incorporated the points of contest in the form of certain issues. On May 2, 1954, the arbitrators made· an award rejecting the primary claim on the view that the supplementary agreement dated June 20, 1942, was for consideration and the same was valid and binding upon the Agents. On the alternative claim, they awarded, under the head of establishment and contingencies, Rs. 80,994-12-6, being the actual loss which, in their view, the Agents had suffered, and Rs. 11,27,965-11-3, in addition to the amounts received by the Agents from the Government 802 SUPREME COURT REPORTS [1960(2)] _I96o_ for _mandi_ and financing charges. The arbitrators _Al-. P_ _h_ daccordingly awarded an amount of Rs. 13,03,676-12-6 :~d Z~ _a_ with future interest from November 15, 1949, till the _;:;,_ v. · - date of realization, and costs. _M_ _Al-. P_ _h_ daccordingly awarded an amount of Rs. 13,03,676-12-6 _The Union_ _of_ _India_ The award was filed in the court of the Commer cial Subordinate Judge, Delhi, on June 2, 1954. The _Shah_ _J._ Government of India applied under ss. 30 and 33 of the Indian Arbitration Act, to set aside the award on the grounds that it was invalid, that it had been improperly procured, and that it was vitiated on account of judicial misconduct of the arbitrators. The Commercial Subordinate Judge held that the arbitrators had committed an error apparent on the face of the award in ordering the Union to pay to the Agents additional remuneration and financing and overhead charges, but, in his view, specific questions having been expressly referred for adjudication to the arbitrators, the award was binding upon the parties and could not be set aside on the ground of an error apparent on the face thereof. The learned Judge, accordingly, rejected the application for setting aside the award. Against the order made by the Subordinate J udgc, an appeal was preferred by the Union of India to the High Court of East Punjab at Chandigarh. At the hearing of the appeal, counsel for the Agents sought to support the award on the plea that certain questions had been specifically referred to the arbitrators, and it was open to the arbitrators to make the award which they. made, on the basis of _quantum meruit._ The High Court held that there was no specific reference of any questions of law to the arbitrators, and the decision of the arbitrators was not conclusive and was open to challenge, because it was vitiated by errors apparent on the face of the award. The High Court reversed the order passed by the Subordinate Judge, and set aside the award of the arbitrators, holding that there was no "legal basis for awarding any compensation" to the Agents for any loss which they might have sustained. This appeal has been filed with leave of the High Court under cl. 133 (l)(a) of the Constitution. S.C.R. SUPREME COURT REPORTS 803 # .< The extent of the jurisdiction of the court to set .r96o aside an award on the ground of an error in making _M/_ _Al-p·_ _0_ _P_, _a_ the award is we - e ne . . ' ll d fi d Th ea war d f o an ar b' itrator _and s._ _sons. i_ _Ltd. arsiia_ ' may be set aside on the ground of an error on the v. face thereof only when in the award or in any docu- _The Union of India_ ment incorporated with it, as for instance, a note appended by the arbitrators, stating the reasons for _Shah]._ his decision, there is found some legal proposition which is the basis· of the award and which is _erroneous-Champsey Bhara and Company_ v. _Jivaraj_ _Balloo Spinning and Weaving Company, Limited_ ( [1 ] ). If, however, a specific question is submitted to the arbitrator and he answers it, the fact that the answer involves an erroneous decision in point of law, does not make the award bad on its face so as to permit of its being set aside-Jn _the_ _matter_ _of_ _an arbitration_ _between_ _King and Duveen and Others_ (2) and _Government_ _of Kelantan_ v. _Duff Development Company Limited_ ( [3] ). Was the reference made by the parties to the arbitrators a specific reference, that is, a reference inviting the arbitrators to decide certain questions of law submitted to them? If the reference is of a specific question of law, even if the award is erroneous, the decision being of arbitrators selected by the parties to adjudicate upon those questions, the award will bind the parties. In the reference originally made to the arbitrators by the letter of the Agents on July 1, 1946, and the reply of the Government dated July 10, _Shah]._ 1946, a general reference of the dispute was made in terms of cl. 20 of the agreement. Even though the award made on that· reference, was set aside by the Subordinate Judge, the arbitration was not superseded, and the reference was expressly kept alive, reserving an opportunity to the parties to appoint fresh arbitrators pursuant to the agreement, for settling the dispute; and by letters respectively dated August _2,_ 1952, and August 14, 1952, a general reference was again made to the arbitrators. Paragraph 14 of the letter written by the Agents on August _2,_ 1952, evidences an intention to serve the notice under cl. 2U (I) L.R. 50 I.A. 324. (2) L.R. (1913) 2 K.B.D. 32. (3) L.R. 1923 A.C. 395· 804 SUPREME COURT REPORTS [1960 (2)] _z96o_ of the agreement. Issues were undoubtedly raised -. _P_ _h_ dby ·the arbitrators, but that was persumably to focus _Mjs._ _Alop• ars a_ th t t• f h - h - t - · £ _and Sons. Ltd._ e at en ion o t e parties on t e porn s ansmg or v. adjudication. The Agents had made their claim _The Union of India_ before the arbitrators, and the claim and the jurisdiction of the arbitrators to adjudicate upon the claim, _Shah_ _f._ were denied. The arbitrators were by the terms of reference only authorized to adjudicate upon the disputes raised. There is no foundation for the view that a specific reference, submitting a question of law for the adjudication of the arbitrators, was made. We agree, therefore, with the view of the High Court that the reference made, was a general reference and not a specific reference on any question of law. The award may, therefore, be set aside if it be demonstrated to be erroneous on the fac.e of it. The original agreement dated May 3, 1937, was modified by the supplementary agreement dated June 20, 1942, and the arbitrators have held that the modified agreement was binding upon the Agents. By the agreement as modified, a graded scale was fixed for the establishment and the contingencies to be paid to the Agents, and also for the _mandi_ charges and overhead expenses. The arbitrators still proceeded to award an additional amount for establishment and contingencies and an additional amount for _mandi_ charges. By cl. 14(a), read with cl. 12(b) (2) of the agreement, the rate at which establishment and contingency charges were to be paid, was expressly stipulated, and there is no dispute that the Government of India have paid to the Agents those charges at the stipulated rate for _ghee_ actually purchased. The award of the arbitrators shows that the amount actually received from the Government, totalled Rs. 6,04, 700-9-0, whereas, according to the accounts maintained by the Agents, they had spent Rs. 6,77,542-0-3. Granting that the Agents had incurred this additional expenditure under the head 'establishment and contingencies', when the contract expressly stipulated for payment of charges at rates specified therein, we fail to appreciate on what ground the arbitrators could ignore the express ##### S.C.R. SUPREME COURT REPORTS 805 _Shah_ _]._ covenants between the parties, and award to the _I9_ _[60 ]_ Agents amounts which the Union of India had not _..1.n_ u _s._ _Az-p· o_ _i_ _P ars a h d_ agreed to pay to the Agents. The award of the _and Sons._ _Ltd._ arbitrators, awarding additional expenses under the ~. head of establishment and •contingencies, together _The Union of India_ with interest thereon, is on the face of it erroneous. _Shah_ _]._ Before the arbitrators, a number of _arhatias,_ who supplied _ghee_ to the Agents, appeared and produced extracts from their books, showing the amounts actually due to them from the latter. Detailed charts, showing the total amount due under each head of expenditure to each _arhatia,_ were produced. The arbitrators were satisfied that the statements produced, reflected a general rise in prices and cost of labour. Taking into consideration the fact that the other persons were buying _ghee_ at rates considerably in excess of the stipulated rates, the arbitrators held that the Agents were entitled to be reimbursed to the extent of Rs. 11,27,965-11-3. But the terms of the contract, stipulating the rate at which the financing and overhead charges were to be paid under cl. 13(a) read with cl. 12(b ), remained binding so long as the contract was not abandoned or altered by mutual agreement, and the arbitrators had no authority to award any amount in excess of the amount expressly stipulated to be paid. Mr. Chatterjee, on behalf of the Agents, submitted that the circumstances existing at the time when the terms of the contract were settled, were "entirely displaced" by reason of the commencement of hostilities in the Second World War, and the terms of the contract agreed upon in the light of circumstances existing in May, 1937, could not, in view of the turn of events which were never in the contemplation of the parties, rymain binding upon the Agents. This argument is untrue in fact and unsupportable in law. The contract was modified on June 20, 1942, by mutual consent, and the modifica tion was made nearly three years after the commencement of the hostilities. The Agents were fully aware of the altered circumstances at the date when the modified schedule for payment of overhead charges, contingencies and buying remuneration, was agreed 806 SUPREME COURT REPORTS [1960(2)) _Ig6o_ upon. Again, a contract is not frustrated merely because the circumstances in which the contract was _M /s._ _Aiopi Panhad_ made, are altered. _and_ So~s. _Ltd._ . . v. Section 56 of the Indian Contract Act provides _The Union_ _of India_ **that:** ' _Ig6o_ " A contract to do an act which, after the contract _Shah]._ is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlaw ful, becomes void when the act becomes impossible or unlawful." _r_ ## Performance of the contract had not become impossible or unlawful; the contract was in fact performed by the Agents, and they have received remuneration expressly stipulated to be paid therein. The Indian Contract Act does not enable a party to a contract to ignore the express covenants thereof, and to claim payment of consideration for performance of the contract at rates different from the stipulated rates, on some vague plea of equity. "The parties to an executory contract are often faced, in the course of carrying it out, with a turn of events which they did not at all anticipate-a wholly abnormal rise or fall in prices, a sudden depreciation of currency, an unexpected obstacle to execution, or the like. Yet this does not in itself affect the bargain they have made. If, on the other hand, a consideration of the terms of the contract, in the light of the circumstances existing when it was made, shows that they never agreed to be bound in a fundamentally different situation which has now unexpectedly emerged, the contract ceases to bind at that point-not because the court in its discretion thinks it just and reasonable to qualify the terms of the contract, but because on its true construction it does not apply in that situation. When it is said that in such circumstances the court reaches a conclusion which is 'just and reasonable' (Lord Wright in _Constantine's_ _case_ ( [1 ] ) or one' which justice derriands' (Lord Sumner in _H irji_ _M ulji_ v. _Cheong_ _Yue Steamship_ _Co._ _Ltd._ ( [2] ), this result is arrived at by putting a just construction upon the contract in accordance with an 'implication ............ from the (1) (1942) A.C. 154· 186. (2) (1926) A.C. 497, 510, S.c.R. SUPREME COURT REPORTS 807 presumed common intention of the parties'-speech _1_ _v6o_ of Lord Simon in _British Movietonews Ltd._ v. _London_ _and District Cinemas Ltd._ (1 ). _M /s. Alopi_ _Parskad_ There is no general liberty reserved to the c~urts _and_ _Sons_ _Ltd._ to absolve a party from liability to perform his part _The Uni;;,_ _of India_ of the contract, merely because on account of an -;... uncontemplated turn of events, the performance of the _Shah_ _f._ contract may become onerous. That is the law both in India and in England, and there is, in our opinion, no general rule to which recourse may be had, as ~ontended by Mr. Chatterjee, relying upon which a· party may ignore the express covenants on account of an uncontemplated turn of evel).ts since the date of the contract. Mr. Chatterjee strenuously contended that in England, a rule has in recent years been evolved which did not attach to contracts the same sanctity which the earlier decisions had attached, and in support of his contention, he relied upon the observations made in _British M ovietonews Ld._ v. _London and_ _District Cinemas Ld._ ( 2 ~ In that case, Denning, L,J., is reported to have observed: " ............ no matter that a contract is framed in words which taken literally or absolutely, cover what has happened, nevertheless, if the ensuing turn of events _was so completely outside the contemplation of the parties that the court is satisfied that the parties, as reasonable people, cannot have intended that the contract should apply to the new situation, then the court will read the words of the. contract in a qualified sense ; it will restrict them to the circumstances contemplated by the parties; it will not apply them to the uncontemplated turn of events, but will do therein what is just and reasonable. " But the observations made by Denning, L.J., upon which reliance has been placed, proceeded substantially upon misapprehension of what was decided in _Parkinson_ _&:_ _Go._ _Ld._ v. _Commissioner.$ of Works_ ( [3] ), on which the learned Lord Justice placed considerable reliance. The view taken by him, was negatived in (1) L.R. 1952 A.C. '66 at pp. 185 & 186. (2) (1951) I KB.D. 190, 201, \3) (1.~49) 2 I\,B,D, 6~2, 808 SUPREME COURT REPORTS [1960 (2)] r96o appeal to the House of Lords in the _British Movie-_ -- _tonew's_ case-(1952) A.C. 166-already referred to. In _M/o ·a Afopi PanhadI ltd_ n ra, m d" . th eco d"fi 1 e d 1 aw o con f t rac t s, th ere1s . no. th" mg _5_ _an_ _°;'·_ - · which justifies the view that a change of circum _The_ _Union_ _of Tndia_ stances, " completely outside the contemplation of parties" at the time when the contract was entered _Shah_ _I_ into, will justify a court, while hol.ding the parties bound by the contract, in departing from the express terms thereof. _Parkinson and_ _Co. Ld._ v. _Commissioners_ _of Works_ (1) was a case in which on the true interpretation of a contract, it was held, though it was not SQ expressly provided, that the profits of a private contractor, ·who had entered into a contract with the Commissioners of Works to make certain building constructions and such other additional constructions as may be demanded by the latter, were restricted to a fixed amount only if the additional quantity of work did not substantially exceed in value a specified sum. The Court in that case held that a term must be implied in the contract that the Commissioners should not be entitled to require work materially in excess of the specified sum. In that case, the Court did not proceed upon any such general principle as was assumed by Denning, L.J., in the _BritishMovietonews_ _Ld. v. London and District Cinemas Ld._ (2). We are, therefore, unable to agree with the contention of Mr. Chatterjee that the arbitrators were justified in ignoring the express terms of the contract prescribing remuneration payable to the Agents, and in proceeding upon the basis of _quantum meruit._ Relying upon s. 222 of the Indian Contract Act, by which duty to indemnify the agent against the consequences of all lawful acts done in exercise of the authority conferred, is imposed upon the employer, the arbitrators could not award compensation to the agents in excess of the expressly stipulated consideration. The claim made by the Agents was not for indemnity for consequences of acts lawfully done by them on behalf of the Government of India; it was a claim for charges incurred by them in excess of those stipulated. Such a claim was not a claim for ., _r_ ~ -...... (') ('949) 2 KP.D. 632. (2) **(19.!)I)** **I** **ICB.D.** **190,** **201,** S.C.R. SUPREME COUH,T REPORTS 809 ,. indemnity, but a claim for enhancement of the rate of _z96o_ the agreed consideration .. Assuming that the Agents _M/_ _Al-. P_ _h_, the re~ied agreed consideration upon assurances alleged . .. Assuming to be given that the by Agents the _1 M/_ :~a _Al-._ ;:~s. _P_ _h_, ";,;/"' Director in-charge of Purcha.ses, m the absence of an v. express covenant modifying the contract which _The Union of India_ governed the relations of the Agents with the Government of India, vague assurances could not _Shah_ _J._ modify the contract. _Ghee_ having been supplied by the Agents under the terms of the contract, the right of the Agents was to receive remuneration un~er the terms of that contract. It is. difficult to appreciate the argument advanced by Mr. Chatterjee that the Agents were entitled to claim remuneration at rates substantially different from the terms stipulated, on the basis of _quantum meruit._ Compensation _quantum_ _meruit_ is awarded for work done or services rendered,. when the price thereof is not fixed by a contract. For work done or services rendered pursuant to the terms of a contract, compensation _quantum meruit_ cannot be awarded where the contract provides for the consideration payable in that behalf. _Quantum meruit_ is but reasonable compensation awarded on implication of a contract to remunerate, and an express stipulation governing the relations between the parties under a contract, cannot be displaced by assuming that the stipulation is not reasonable. It is, therefore, unnecessary to consider the argument advanced by Mr. Chatterjee that a claim for compensation on the basis of _quantum meruit,_ is one which arises out of the agreement within the meaning of cl. 20. Granting that a claim for compensation on the basis of _quantum_ _meruit,_ may be adjudicated upon by the arbitrators in a reference made under cl. 20 of the agreement, in the circumstances of the case before us, compensation on that basis could not be claimed. The plea that there was a bar of _res_ _judicata_ by reason of the decision in the Letters Patent Appeal No. 31of1953, has, in our judgment, no force. The Subordinate Judge set aside the award on the ground that there had been judicial misconduct committed by the umpire and also on the view that the claims made, as described in Schedules B and D, were not outside _1_ re~ied upon assurances alleged . to be given by the _1_ 810 SUPREME COURT REPORTS [1960(2)] _r96o_ the competence of the arbitrators. The High Court ., _Ai-·r_, _din_ appeal under the Letters Patent, did confirm the ""/S. _opi_ _arsna_ d, 'd h d b t th _a?td_ _sans._ _Ltd._ or er, setting as1 e t e awar ; u ere was no v. binding decision between the parties that the claim _The Union_ _of Iudia_ described in Sch. B, that is, the claim for establish _Shah_ _J._ _January_ _2I_ ment and contingency charges, was within the competence of the arbitrators in reference under cl. 20. It may be observed that according to the High Court of East Punjab in the Appeal No. 31 of 1953, under the Letters Patent, it was not necessary to express any opinion whether the claim in Sch. U was within the competence of the arbitrators, and the claims described in Sch.]) does not appear to have been agitated in the second arbitration proceeding. We, accordingly, agree with the view of the High .Court that the Award of the arbitrators was liable to be set aside because of an error apparent on the face of the award. In this view, the appeal fails and _Appeal dismissed,._ CHAMPALAL _v._ MST. SAMARATH BAI (JAFER IMAM, J. L. KAPUR AND K. SUBBA RAO, JJ.) _Arbitration-Award, Registration_ _of-Power_ _of court_ _to_ _extend_ _time for filing-The_ _Arbitration Act, 1940_ (X _of 1940), s._ _14(2)-_ _Jndian Ncgistration Act,_ _(XV I of 1908),_ _ss._ _17, 49-Indian Limita-_ _tion Act,_ (J _X of 1908), Art. 178-Jndian_ _Succession Act, 1925_ _(XXXIX of 1925),_ _s._ _192._ By means of a will the respondent's husband authorised her to adopt the appellant, and the will was duly registered after the death of the testator. The relevant portion of the will ran thus: "Under this will, I am authorising the said Champalal Ishv,:ardas to execute the same. I have appointed him the executor of this will. Under the said will the said Champalal alone shall be the full O\vner of my entire rnovable and im moveable property and the executor of. the will after my i~ dismissed with costs.