PROFESSIONAL

PRACTICE
TENDER

PROF.AR.CHEITALI SHROFF
 TENDER

Tender is nothing but an offer made by one party to another for execution of specified work at a
specified cost in keeping with all the terms and conditions set there in the tender document
including the extent of the work shown on the plans. It remains floating till the time it receives a
seal of acceptance either by the employer and/or his architect/engineer and thereafter forms a
binding contract.
 Invitation Of Tender

As already stated that tender issued by the architect/engineer is not in strict sense a tender or an
offer. It is merely bid papers or "invitation to tender". There are three ways in which the tenders
can be called for namely; by private invitation, by public notice and by negotiations. Looking to the
type and nature of work that is a private work or a public work, a new work, or work of additions
and alterations, etc., and after weighing the advantages and the disadvantages of each of the
methods of calling the tenders, the client should be advised on the most appropriate method of
calling the tenders. At times, there are specific clauses in a trust deed or public bodies like schools,
hospitals, and co-operative housing societies require the tenders by public notice only. .
 By Private Invitation (Selected or limited
Invitation)
Generally, the architects and the engineers do maintain a panel of contractors and from the
panel a few are invited to quote for a particular job. In such case, the architect knows the
contractor, together with his intelligence, integrity and financial standing and thus he is sure of
the type of work that he will get from him. This method of inviting the tender from among the
selected contractors prevents inexperienced persons from entering the contract line. This is
suitable for private works. The usual invitation letter along with the tender notice should be sent
to the contractors concerned.
 By Public Notice

All public works are required to be advertised in the newspapers for the purpose of tenders and
any contractor can quote for the same. There are chances of getting the work at a cheaper rate
and these tenders are also not free from collusion. At times the tenders are so low that it will not
be possible to imagine whether the contractors will be able to complete the work. Such tenders
usually end in dispute, poor quality of work and a lot headaches for the architects. With a public
tender the architect or the engineer may come in contact with new and intelligent contractors
and this opens the field for new entrants in the contracting line. The work is generally given to
the contractor quoting the lowest amount, provided he is otherwise equally qualified.
 By Negotiations

In this case the architect/engineer do possess some base or datum for negotiations like the
work of a building cost more than Rs. 3,000/- per S.M. of plinth area (S.B.A.) or datum like repair
jobs being assigned by the Repair Board at certain percentage above/below the schedule of
rates. With this datum, negotiations are done with one or two contractors and work thereafter is
assigned to the right contractor. This mode is popular with developers and for repair jobs with
schedule of rates as the base.
 E.M.D – Earnest Money
Earnest money can be defined as initial deposit which is sent along with tender in order to show
genuineness of the contractor. The Amount or Earnest money varies from 1-2% of the estimated
cost of the project. Amount remains in the safe custody of the architect or the engineer till the
work is allotted to a particular contractor who will be asked to deposit further sum towards the
security deposit. The Earnest money of the other contractors whose tenders are not accepted
are refunded back to them. The main purpose of the Earnest money is to see that a fair
competition takes place for the work. The Earnest money is forfeited in favor of the owner in
case the contractor refuses to enter into a contract after his tender has been accepted. It is
accepted in cash or cheque at times in the form of negotiable Government securities.
 Security Deposit
When the tender of a particular contractor is accepted, he is asked to deposit a further amount with the
architect varying from 2-5% of the estimated cost of the project and is known as Security deposit. This
amount of Security deposit includes the Earnest money already deposited by the contractor. It is paid in
cash or cheque and at times in the form of negotiable Government securities. This amount is kept as a
check so that contractor fulfills all terms and conditions of the contract, carries out the work to entire
satisfaction and maintains proper progress of the work. If he fails in the same, his whole or part of the
Security deposit is forfeited. It does not carry any interest and is returned to the contractor after his
defect liability period is over.
 Retention Amount and its essential
characteristics and purpose
When a contract of the work is assigned, it is essential for contractor to deposit a fixed amount
either with architect or with the owner as a guarantee for the faithful performance of the terms
of the contract. It is very difficult for contractor to pay such amount all at once as his business
depends mostly on the rolling of his capital. This amount of contractor gets blocked up and does
not bear any interest. Hence, by prior agreement, it is arranged that the contractor should pay
the so called Security deposit by installments from the payments due to him for works already
executed. These installments are retained with the owner and is known as Retention Amount.
Usually 10% of the value of the work is retained by the owner towards retention money and the
architect issues at every stage of the work interim certificates to the value of 90% of the work
done.
AS soon as the total retention fund of 10% of the tendered amount has been collected, the
subsequent interim certificates are required to be issued at their full values. In fact, Retention
Amount is nothing but Security Deposit. On the acceptance of the tender, Contractor is asked to
pay the necessary security deposit. In order to avoid the burden of depositing full security
amount, the contractor requests the architect that the balance of the security deposit over and
above already paid at the time of submitting tender, be deducted from his running bill accounts
till the deducted amount reaches its full value. Amount thus retained from R.A bills is called as
Retention Amount and the same forms part of the Security deposit.
 Essential characteristics Of Retention Amount

1. It is the money that has been earned by contractor but has not become payable under the
Contract.
2. It can be assigned by the contractor to any one he likes.
3. 50% of the said amount is paid after the virtual completion of the work.
4. Final installment of 50% is paid after the defect liability period and after issuing final
certificate by the architect.
5. In case of bankruptcy of the contractor, the trustees of the bankruptcy will have no claim over
the retention fund, till the final certificate has been issued by the architect for the work.
6. Retention fund does not carry any interest..
 Purpose Of Retention Fund

1. To make good the defect before the final certificate has been issued.

2. To meet the claim, damages, compensation, etc., if any, by the adjoining owner or any of the workmen for any
reason whatsoever.

3. To make the necessary payments to the nominated sub-contractor in case the contractor fails in the same.

4. To meet any compensation which may become due from the contractor for delay in completion.

5. It can be utilized for the necessary adjustments in the final bill, over payment and in the makeup of the bills for
extra works.

6. Any work left out by the contractor before virtual completion can be executed by this amount.

7. Disposal of materials wrongly supplied.

Mobilization Fund and its Characteristics
Mobilization Fund In building contracts the contractors are paid by interim certificates wherein
the cost of works is paid at 90% or even 95% of its value and materials on site paid at varying
percentages from 50% to 75% of the value of such materials on site depending upon the terms
and conditions as may have been agreed upon subject to deduction of the amount released as
deduction of Income-tax at source. For works of small magnitudes these arrangements of part
payments have proved to be satisfactory. However, construction works of big projects stand on a
different treatments on financial sides besides payments effected on interim certificates. Before
executing actual work and receipt of payments on account, the contractor is required to incur
initial expenditure for preparatory works, such as recruitment of labour (labour usually demands
advance "Kharchi") travel of staff, erection of temporary structures on site, purchase of
centering materials, insurance premium, etc.
. Such preparatory works involve financial outlay at the beginning for which liquid finance is
essential which will be considerable in case of big projects. One mode of raising initial finance
needed by the contractors has been the banks. Here again since construction is not treated as
an industry and contractors being treated as traders, banks are cautious in advancing loans and
overdraft facilities and if at all granted the same will be against the fixed assets of the
contractors. The above difficulties are overcome by the employers in advancing certain amounts
after the works have been awarded to the contractors and contracts executed. Such advance
payments are called Mobilization Funds, the main purpose of which are to enable the
contractors to make all initial arrangements for commencement of works
 Characteristics Of Mobilization Fund

1. Maximum amount of mobilization fund is limited to about 10% of the contract amount, exact
percentage depends upon the terms of contract.
2. It is paid in full in one installment within one month of the award of the work and after signing of
the contract against bank guarantee for the full mobilization fund advanced or paid in two to three
stages like: Stage — I: 50% of the mobilization fund as agreed is paid within one month of the award
of the work and signing of the contract against bank guarantee for it. Stage – ii : Part released on
completion of preparatory works depending upon their value. Stage — III: Part released on bringing
plants and machineries on site again depending upon their value.
3. It is recovered from each of the interim bill at specified percentage of interim payment and entire
mobilization fund is recovered on completion of 80% of the work.
4. It can be interest free fund or carrying a specified rate of interest. However, the contractors usually
expect interest free fund. If mobilization fund clause carries interest, the same will result in the
enhanced rates of items of works. In other words contractor recovers interest by the way of enhanced
rates from the employer and pays the employer's own money in the form of interest. Hence, it is
advisable to advance mobilization fund free of interest. It is rightly said that the mobilization fund is
the backbone of successful supplementation of big construction projects.
 Tender Documents – Essentials Of Tender
Documents
Tender Documents The tender documents occupy important position not only from the view point of contractors and employers, but also to the architects. They
find their place in the contract documents with required modifications if any. The tender documents are to comprise of the following:

(1) Tender notice.

(2) Special notice.

(3) Letter of offer.

(4) Special conditions.

(5) Form of contract with conditions.

(6) General specifications.

(7) One set of building plans.

(8) One set of R.C.C. plans.

(9) Bill of quantities. (BOQ)

Detailed description of work for tender on lump-sum basis. (OR) Unit of S.M. Basis: which at times take the form of "Supplementary specifications".
Tender Notice and Its Essential Characteristics

TENDER Notice and Cost of Tendering It is the notification for the contractors at large possessing
either expertise in that branch of civil work for which the notification has been issued or having
the skill and human resources to get the work in question executed, to give their offers for the
specified work. In the notification the employer invites the offer and does not make an offer by
himself that he is prepared to give the contract for the work for a specified sum. Even if the
owner has made an offer, still he has got rights to withdraw the same at any time before
acceptance is confirmed by him.
Essential Characteristics Of a Tender Notice

1. Tender notice must mention the name of the owner, the place, nature and extent of work, and
the estimated cost.
2. It must mention amount of earnest money and tender fees.
3. Minimum time of returning the tender by the contractor should be at least 15 to 20 days from
the date of issue of the same.
4. The place of delivery of the tenders by the contractors should be specified.
5. The contractors should be requested to inspect the site prior to filling of the tender, so that
they can ascertain well in advance the working conditions, the nature of soil for the foundation
etc.
6. Now-a-days there is a trend with some of the contractors to introduce non-obstante clause
like. "Notwithstanding the tender provides I.S. mode of measurements for the works, the same
stands modified as under:
(i) For plaster work deductions for openings will be limited to 25% of their physical openings;

(ii) Rolling shutter measurements to be based on manufacturer's measurements, etc. Such practice must be rejected in totality as non-obstante
clause has no place in tender as the said clause makes the tender a conditional one. If it goes unchecked, disputes are bound to crop up.

7. Lastly the architect/engineer have to be very careful in inviting the tenders in time, as the delay in the same way prove to be dangerous both for
the client as well as for the architect. The delay on the part of the architect may result in;

(i) The plot being acquired for a public purpose.

(ii) A new road may be proposed through the plot.

(iii) Rise in the price of the materials and wages of the labour.

(iv) Loss of rent due to non-completion of the work in time. of a These will be the causes of action for

claiming damages by the client against mention the architect unless circumstances differ.
 Acceptance Of Tender And Special Features
Of Acceptance
Acceptance of Tender The architect before accepting any of the tenders, should obtain the
necessary written confirmation to that effect from his client. It should be made clear to the
contractor that the tender is accepted subject to the condition that he will sign the necessary
contract for the same with the owner. Once the tender of a contractor has been accepted, he
cannot withdraw from the same. Before selecting a contractor for the work, it is essential to
examine the following aspects:
(1) Contractor's financial stability depending upon the estimated cost of the proposed work
(2) Intelligence, capacity to organize, and credit in the market.
(3) Previous works executed and certificates to that effect from the previous architects.
(4) Works at present in hand.
(5) General behavior and temperament.
 Special Features Of Acceptance
1. The acceptance must be made within the prescribed time limit.
2. If no such time limit is given, then within a "Reasonable time".
3. Tender must be accepted as an absolute without making any counter offer as otherwise the
original offer does not stand.
4. The contractor can alter the tender or withdraw the tender at any time before its acceptance and
he will for felt his deposit in case of withdrawal.
5. The offer of tender will become ineffective if:
(a) The tender is not accepted within the specified time limit or within a reasonable time.
(b) Due to the death of either party.
(c) If counter offer is made by the client.
(d) If it is expressly withdrawn.
6. If the client and/or the architect suppresses the correct information and misguides the contractor
so as to tender wrongly, and if the fraud is discovered by him as soon as the work is commenced or is
in the intermediate stage of completion, the owner can be sued for the damages by the contractor on
account of fraud and for recession of the contract. Under such circumstances, the contractor will not
only be entitled for the damages but also for the payment of the work done on quantum Merit. The
contractor will not be entitled to claim damages on account of fraud if he chooses to file a suit after
the work is completed, as it is taken for granted that the contractor has completed, the work knowing
fully well all the facts and the only remedy left at that time will be to claim for extras.
7. The deposits of the unsuccessful tenderers should be retuned as soon as the contract has been
signed. If the deposits have been paid in the firm's agency account, the same should be paid by the
firm's cheques with a forwarding letter and the necessary receipts passed by the architect should be
called back. At times the tenders deposit cheques are not sent to the bank and under such
circumstances, the very cheques of the tenderers should be returned to them after canceling the
same with a forwarding letter and the receipts for the same should be called back.
 Schedule Of Architectural Service
1. Furnish a site evaluation and analysis report with basic approach to circulation, activity distribution
and interaction and external linkages.
2. Furnish preliminary report on environmental impact of the project and finalize it after discussion
with the client clearly outlining the measures required for mitigating the adverse impact.
3. Prepare conceptual designs with reference to requirements given and prepare approximate
estimates of cost by cubic measurements or on area basis.
4. Modify the conceptual design incorporating required changes and prepare preliminary drawings
and designs and study model for the client's approval along with revised estimate of cost.
5. Prepare drawings necessary for submission to statutory bodies for sanction and assist and advise
on formalities.
6. Prepare working drawings specification and schedule of quantities sufficient to prepare estimates
of cost.
7. Prepare a short list of contractors, together with appropriate justification.
8. Prepare working drawings including large-scale and full size details, detailed specifications and schedule of
quantities sufficient to invite tenders.
9. Prepare and submit complete working drawing and details sufficient to commence work at the site and for the
proper execution during construction.
10. Visit the site of work and provide periodic supervision as and when necessary to clarify and decision or
interpretation of the drawings and specifications that may be necessary and attend conferences and meetings, as
and when required and to ensure that the project proceeds generally in accordance with conditions of contract.
11. "For frequent or constant supervision" Clerk of works shall be appointed. He shall be nominated or appointed
by the architect and shall be under the direction and control of the architect. He shall be paid by the client or,
alternatively, may be employed by the architect, who shall be reimbursed the cost of the said employment
including overheads. However, the overall cost of the employment of the clerk of works shall not exceed 0.5% of
the overall cost of the project.
On completion of the work, the architect will prepare and submit two sets of as built drawings (one set on
reproduction prints) of the building and services.
 Major CODES OF CONDUCT
(etiquettes and norms)
1. Ensure that his professional activities do not conflict with his general responsibility to
contribute to the quality of the environment and future welfare of society.
2. Apply his skill to the creative, responsible and economic development of his country.
3. Provide professional services of a high standard, to the best of his ability.
4. If in private practice, inform his Client of the conditions of engagement and scale of charges
and agree that these conditions shall be the basis of the appointment.
5. Not give or take discounts, commissions, gifts or other inducements for the introduction of
Clients or of work.
6. Act with fairness and impartiality when administering a building contract.
7. Compete fairly with other Architects.
8. Observe and uphold the Council's conditions of engagement and scale of charges,
9. Not supplant or attempt to supplant another Architect.
Not prepare designs in competition with other Architects for a Client without payment or for a
reduced fee. (Except in a competition conducted in accordance with the Architectural
competition guidelines approved by the Council)
 Rate Analysis
It is the study of the financial role played by the various constituents like labor , materials ,
implements , etc., which formulate an item of construction work and as such that the cost of the
materials , labour , transportation charges , contractor’s profit are worked out separately for
each of the items and then added together so as to give an idea of its rate . This process of
analyzing the rates of various constituents and from there working out the rate of an item is
known as “Rate Analysis.”
 Essentials Of Rate Analysis
1. Good knowledge of construction work and familiarity with the trade and technical terms.
2. Cost of materials , labour , implements ,etc.
3. Out-put by the workers.
Factors Affecting Rate Analysis Of An Item
1. Cost of materials and cost of equipments if any: Material cost is an important factor affecting
rate analysis. The rate of materials like cement, steel, sand aggregates, etc. vary from place to
place. If the execution of an item required the use of some special equipment or plant, the cost
of using such equipments on the rental basis should be included in the rate of that item.
2. Cost of labour: The wage of labour is a variable factor and will vary from place to place,
person to person and from time to time.
3. Locality and situation: The site of work will have some effect on the rate of an item under
certain conditions. If it is too far, more amount will have to be spent on carting. Similarly, if it is
situated in a highly congested area, it will not be possible to take the materials directly to the
site. This will increase the cost of transport of materials and consequently, the rates of the items
will increase.
4. Size of work: If the work consists of large quantities of the items, the rates may be less and
vice versa.
5. Height at which the work is to be executed.
6. Profit of contractor: The usual percentage of the profit of the contractor is 15%. If it is more
or less, the rate of the item will be accordingly affected. Contractor’s profit has been adopted
@15% for the following factors:
a. Contractor’s profit for his labour.
b. Depreciation for tools, plants, scaffolding, etc.
c. Loss of interest of the capital that get blocked up in business.
 Qualification Criteria Of “Arbitrator”
He must be a expert in particular branch of profession to which the dispute relates. He must be
honest, disinterested and independent of the parties. He must not be of bias mind, having ill
feeling against any of the parties. As per conditions No. 56 of I.I.A. form contract the arbitrators
have to be Fellow of the Indian Institute of Architects, Which forms prime qualifications for
being appointed as arbitrators if the I.I.A. form of contract forms a cementing aspects between
the contractors and clients.
 Dis-Qualification Criteria Of “Arbitrator”
He cannot be a witness of an arbitrator in the same dispute
 Advantages Of Arbitration
Persons usually experts in the field are appointed and as such decisions will be fair and refined
and not involving any element of guess work. In case of a dispute concerning building
construction job, the person chosen as arbitrators are usually architects or engineers who
possess expert knowledge of the subject and are fully qualified to act as arbitrators.
Legal formalities are cut short and decision can be reached in much shorter time as compared to
the time consumed in court case.
Saving in time.
Time, date and place of meeting can be arranged so as to suit the convenience of all concern.
Privacy as hearing is not public.
The arbitrator can view the subject at any convenient time.
 Different Kind Of “Arbitration”
1. Arbitration based on arbitration clause in contract.
2. Arbitration with the intervention of a court where there is no suit pending.
3. Arbitration in suits.
 Arbitration based on arbitration clause in
contract
It arises in case of arbitration clause of contract whereby present or future dispute are referred
to the adjudication of the arbitral tribunal. No suit is filed in this case and the arbitral award
takes the form of a decree of a court.
The parties can have arbitration in this manner under CI. 56 of I.I.A. form of contract or in any
other form of contract which carries with it the arbitration clause. This arbitration clause will
constitute as an agreement.
 Arbitration with the intervention of a
court where there is no suit pending.
Where the disputes and differences have arisen between the parties to which the arbitration
agreement applies, the parties have a dual choice:
1. Appoint arbitral tribunal and get an award, if not,
2. One of the parties may apply to the appropriate judicial authority with the original agreement
or duly certified copy thereof, the judicial authority will refer the parties to arbitration.
 Arbitration in suit:
In case of suit pending in a court, all the interested parties at any time before the judgment is
pronounced, agree that the dispute and differences be settled by arbitration and the judicial
authority will refer the parties to arbitration.
In all the above cases the arbitration will be subject to the Arbitration and Conciliation Act, 1966
which is deemed to have come into force on 25th January, 1996. The act deals with a number of
categories of arbitration like:-
1. Domestic arbitration
2. International arbitration
3. Foreign arbitration
4. Institutional arbitration
5. Statutory arbitration
 Grounds for Termination mandate of
Arbitrator
1. The mandate of the arbitrator can be terminated if the arbitrator becomes de jure or de facto
unable to perform his duties.
2. Fails to act without undue delay.
3. If any of the parties has justifiable doubts as to his independence or impartiality.
4. He does not possess the requisite qualification.
5. He resigns from the office.
6. When parties agree to the termination of his mandate.
In case a controversy arises on the above points, the matter will be decided by the court.
 Essentials of “Arbitration Awards”
1.The award must be made without undue delay as otherwise the arbitrator’s mandate can be
terminated.
2. The award as a rule must be in writing and to be signed by the members of the arbitral tribunal and
signature attested.
3. The award must be self explanatory without any ambiguity and must show nature of adjudication
whether unanimous or by majority. The decision by majority will form a binding force in case
unanimous adjudication is not possible.
4. The award to be made on stamp paper of Rs. 100/- value.
5. After the arbitral award is made, a signed copy to be supplied to each of the party.
6. The arbitral award is to state its date and place of arbitration, claim adjudication in term of money
contents, interest on amount awarded or part thereof at such rate as it deems reasonable for the
period or part of period from the date on which cause of action arose to the date of making of the
award
7. The award must provide interest on the awarded amount from the date of making of the
award.
8. The arbitral award must provide for legal cost, cost of arbitration and other incidental
expenses and manner in which cost be shared and paid.
9. The arbitral award has to be a reasoned one unless both the parties agree for a non reasoned
award.
10. The arbitral award has now been given the status of a decree in as much as if the award is
not set aside by the court, it will be executable as a decree and now not necessary to make an
applicable to the court for confirmation of the award.
 Arbitration
It is a method of settling and disputes and differences between two or more parties whereby
they appoint one or more persons to adjudicate upon the said disputes and differences that
have arisen or that may hereafter arise and agree to abide by the decision of the said one or
more persons nominated for the purpose of adjudication.
OR
An arbitration is the reference of a dispute of difference between not less than two parties for
determination after hearing the sides in judicial manner, by a person or persons other than a
court of competent, jurisdiction. Thus, the arbitration aims at the establishment of a domestic
tribunal by the parties to adjudicate upon the disputes and differences and the Arbitration and
Conciliation Act,1996 helps the parties to enforce that decision besides laying down rules,
regulations and procedures.
 ADRM
Alternative Dispute Resolution Methods which will cover the modes of conciliation and
mediation. The mode of conciliation has been given an privileged position along with arbitration
in the title of the Act itself like the arbitration and Conciliation Act,1996 with section 61 to 81
dealing with the subject of conciliation whereas “mediation” as a mode of settlement finds
place in Sec.30 of the said Act of 1996.
Thus it is essential to know core contents of each of the method.
 Role Of Architect
1. The foundation of the arbitration has been based on fairness and impartiality of the arbitral
tribunal, the members/members of the said tribunal is not to have interest direct or indirect in
the subject matter of dispute. Hence before taking up the assignment if the member/members
feel that certain matters are likely to give justifiable doubts about his/their independence or
impartiality, the same to be disclosed to the party in writing.
2. If the appointed arbitrator is lacking in some qualification as per the agreement (like CI.56 of
the I.I.A. form of contract puts a condition on the arbitrator to be a Fellow member of I.I.A., and
appointed person is not), the parties must be informed about it.
3. To conduct arbitration proceedings with equal treatment to both the prties,giving full
opportunities, sufficient advance notice of hearings, order on inspection of document, goods or
other property as also not disregarding the principles of natural justice
4. Can call for the deposit amount towards the cost of arbitral tribunal from both the parties in
equal part.
5. To decide its own jurisdiction and seek reports of experts on issue pertaining to specialized in
equal part.
6. Seek assistance of the court in taking evidence if necessary.
7. To hear the parties patiently on all issues at disputes till termination without exceeding the
scope of authority set out.
8. Issue order for interim measures of protection.
9. Not to give any decision according to what the tribunal thinks just or reasonable. It has to
decide according to law except when the parties have expressly authorized to do so
10. Make declare ad publish interim award final award without undue delay, showing the
outcome including the burden of cost of arbitration and incidental cost and in what protection
to be borne by the parties.
11. Arbitral award to be reasined nature unless both the parties desire to have an unreasoned
award.(unreasoned award are usually not preferred in the present times).
The power of the Arbitral Tribunal come to an and as soon as the arbitral award has been made,
declared and published the award. It becomes “Functus Officio”. However it has power:
a) To correct arithmetical, clerical or typographical errors;
b) Subject to certain conditions, additional arbitral award can be made for the claims presented
at the proceeding but omitted from the declared arbitral award.
 Arbitral award
It is the decision given by the arbitral tribunal to careful investigation of the case submitted to it
for adjudication. It con the finding for the tribunal and is binding on both the parties. The
essential ingredients of the arbitral award are:
i) The award must be made without undue delay as otherwise he arbitrator’s mandate can be
terminated.
ii) The award as a rule must b in writing and to be signed by the embers of the arbitral Tribunal
and signatures attested.
iii) The award must be self-explanatory without any ambiguity and must show nature of
adjudication whether unanimous or by majority. The decision by majority will form a binding
force in case unanimous adjudication is not possible.
iv) The award to be made on stamp paper of Rs.100/- value.
v) After the arbitral award is made, a signed copy to be supplied to each of the party
vi) The arbitral award is to state its date and place of arbitration ,claim adjudication in term of
money contents, on amount awarded or part thereof at such rate as it deems reasonable for the
period or part of period from the date on which cause of action arose to the date of making
award
vii)The award must provide interest on the award amount from the date of award to the date of
payment.
viii) The arbitral award must provide for the legal cost, cost of arbitration and other incidental
expanses and the manner in which cost to be shared and paid.
ix) The arbitral award has to be a reasoned one unless both the party agrees for a non-reasoned
award.
x) The arbitral award has now been given the status of a decree in as much as if the award is not
set aside by court, it will be executable as a decree and now not necessary to make an
application to the court for the confirmation of the award
 Definition of arbitration
• It is a method of settling and disputes and differences between two or more parties whereby
they appoint one or more persons to adjudicate upon the said disputes and differences that
have arisen or that may hereafter arise and agree to abide by the decision of the said one or
more persons nominated for the purpose of adjudication.
•An is the reference of a dispute of difference between not less than two parties for
determination after hearing the sides in judicial manner, by a person or persons other than a
court of competent, jurisdiction.
 Importance of arbitration
Persons usually experts in the field are appointed and as such decisions will be fair and refined
and not involving any element of guess work. In case of a dispute concerning building
construction job, the person chosen as arbitrators are usually architects or engineers who
possess expert knowledge of the subject and are fully qualified to act as arbitrators.
Legal formalities are cut short and decision can be reached in much shorter time as compared
to the time consumed in court case.
Saving in time.
Time, date and place of meeting can be arranged so as to suit the convenience of all concern.
Privacy as hearing is not public.
The arbitrator can view the subject at any convenient time.
 Advantages of ‘Arbitration’
Main advantages of settling the disputes and differences by Arbitration:
1. Persons usually experts in the field are appointed and as such decisions will be fair and refined and
not involving any element of guess work. In case of a dispute concerning building construction job,
the person chosen as arbitrators are usually architects or engineers who possess expert knowledge of
the subject and are fully qualified to act as arbitrators.
2. Legal formalities are cut short and decision can be reached in much shorter time as compared to
the time consumed in a court case.
3. Savings in cost.
4. Time, date and place of meeting can be arranged so as to suit the convenience of all concerned.
5. Privacy as hearing is not public.
6. The arbitrator can view the subject at any convenient time.
7. Finality of the award.
 Distinction between value, prize and cost
. Every individual make use of the art of the valuation without realizing it because when he
purchases a commodity, he balances the value of money parted by him against the value
received by him in the form of other commodity. The word "value" is very difficult to define
precisely. The simple definition by H Hadley is "A price is a fact and a value is an estimate of
what the price ought to be" .
Value, price and cost do not come into existence unless and until an exchange of commodities
or services take place and the exchange usually takes place depending upon utility, satisfaction,
transferability and the extent to which the commodity is scares. The exchange of commodities
helps a person to satisfy a few of his wants from among his bundle of unlimited wants. Today the
process of exchange comes in between wants, efforts and satisfaction.
 Essential Characteristics Of Value
a) In order that a commodity can have value it must possess three essential qualifications,
namely:
i. It must possess utility
ii. It must be scarce
iii. It must be transferable or marketable .
It is necessary that all these essentialities must go hand in hand and in the absence of any one of
them, the commodity will have no value, e.g., air possesses utility but is not scarce and hence it
has no economic value. Rotten apples may be scarce but since they possess no utility hence they
have no value. A property has got a value because it satisfies all the above three requirements.
At times, arguments are also advanced that a bungalow in a desert (a property) has no value as
it has no utility. The bungalow at present has got a demolition value and it is likely to have a
value in future if developments like oil explorations take place in the desert and at that time it
will find a proper class of purchasers for it. If the proposition of a bungalow in the desert is
critically analysed, it will be observed that no investor will construct a bungalow in a desert for
its future utility, or "A bungalow in a desert" can be said to be bungalow in a deserted place and
it is likely that the deserted place may develop once again in future in which case the bungalow
will have a future utility. In the absence of development the value will negligible or may tend to
zero when the cost of demolition and transportation of old building materials of the bungalow
to the place of sale may exceed their sale value.
b) It can be said to be a ratio between the price of money and the price of commodity in return.
c) It is necessarily the price of a commodity.
d) It can be an unearned increment or an unfortunate decrement in the price
 Essential Characteristics Of Price
i. It is the cost of commodity plus additional reward to the producer for his labour and capital.
ii. It is the special form of value.
iii. It is fixed depending upon the demands from consumers as compared to their other wants
and this adjustment of pricing brings into existence the "value".
iv. It depends on utility, durability, satisfaction and the extents to which a commodity is scarce.
 Essential Characteristics Of Cost
i. Expenditure to produce a commodity having a value.
ii. Depreciation is usually worked out on the cost of a commodity either then on its value.
Thank you..

PROF.AR.CHEITALI SHROFF