Bangalore District Court
M/S Deepak Cables (India) Ltd vs Karnataka Power Transmission on 10 December, 2021
1
Com.A.S.105/2018
IN THE COURT OF LXXXVII ADDL.CITY CIVIL &
SESSIONS JUDGE, (EXCLUSIVE DEDICATED
COMMERCIAL COURT)
AT BENGALURU (CCH.88)
THIS THE 10th DAY OF DECEMBER 2021
PRESENT:
SRI.CHANDRASHEKHAR U., B.Sc., LL.M.,
LXXXVII ADDL.CITY CIVIL & SESSIONS JUDGE,
BENGALURU.
Com.A.S.No.105/2018
PLAINTIFF/ M/S Deepak Cables (INDIA) Ltd.,
plaintiff: A company registered under the
companies Act, represented by its
Managing Director,
Shri K.Venkateshwara Rao,
No.7, N.S. Iyengr Street,
Sheshadripuram,
Bangalore 560 020.
(Reptd by LMC -Adv)
AND
DEFENDANT : Karnataka Power Transmission
Corportion Limited,
A company registered under the
Companies Act, represented by its
Managing Director,
Corporate office, Kaveri Bhavan,
Bangalore 560 009.
(Reptd by SS- Adv)
2
Com.A.S.105/2018
Date of Institution of the 28.04.2018
suit
Nature of the suit (suit on
pronote, suit for declaration
& Possession, Suit for Arbitration Suit
injunction etc.)
Date of commencement of -
recording of evidence
Date on which judgment
was pronounced 10 .12.2021
Total Duration Year/s Month/s Day/s
06 04 18
(CHANDRASHEKHAR U),
LXXXVII Addl.City Civil & Sessions Judge,
(Exclusive dedicated Commercial Court)
Bengaluru.
JUDGMENT
The plaintiff has filed above petition under Section 34 of the Arbitration & Conciliation Act, 1996, (hereinafter called as 'the Act') for setting aside that portion of award denying the claim Nos.2 and 3 and allowing part of claim No. 7 and denying claim Nos. 9, 10, 11, 13 and 14 and to 3 Com.A.S.105/2018 allow the same with interest at 18% per annum, beyond the original period of contract.
2. The brief facts of the case of the plaintiff are as hereunder:-
The plaintiff is a company registered under the Companies Act, aggrieved by the denial of claim Nos.2 and
3 allowing claim No.7 in part and denying claim Nos. 9, 10, 11, 13 and 14, the suit is filed for setting aside that portion of the award rejecting the claim of the plaintiff. It is further stated that plaintiff company has been involved in various infrastructural work in the country, including the State of Karnataka and it has completed many projects, such as, construction of transmission lines, laying of underground cables, establishment of sub-stations and others. The defendant, in order to set up a transmission system of 220 KW line, invited tender for designing, manufacture, supply, installation and setting of 220 KW, 1000 sq meter spindling core underground cable. The said invitation is as per the bid document. The plaintiff participated in the bid on 4 Com.A.S.105/2018 20.8.2008 and his bid was accepted as it was lowest tender amount to others. Thereafter, the matter was placed before the purchase committee of the defendant, which taken the decision, entrusted the execution of the project work to the plaintiff's company and after resolution, it entrusted the work to plaintiff and plaintiff after complying all the conditions mentioned in letter of intent, accepted the terms and conditions and furnished Bank Guarantee to the tune of 15% of the contract value. Since, the price relating to import of cable was not reflected, the plaintiff requested to correct the arithmetic error in the letter of intent and plaintiff requested the defendant to furnish detailed work award, which is essential to commence the work. In order to rectify the letter of intent, plaintiff wrote a letter, dated 8.5.2009, requested the defendant to issue the detailed work award, containing the approved unit price and the total quantity was required for the execution of the work. The entire work was required to be completed within 12 months from the date of original letter of intent, but, after 5 Com.A.S.105/2018 lapse of 140 days, from the date of letter of intent, amending letters of intent was issued for supply of civil work portion of the work. The plaintiff offered Bank Guarantee to the tune of Rs. 11,10,61,041/- and they have entered into pre-agreement on 20.1.2009. The plaintiff mobilised all the resources for execution of the work and also import of cable from LS Cables, South Korea, to manufacture the underground cable. The work could not be commenced on account of several breaches committed by the defendant and there was delay in issuing the detailed work award. Without issuing detailed work award, the plaintiff could not commence the work and breaches are only on the part of the defendant. The entire work has two divisions, i.e., work 'A', which is laying of underground cable for route length of 4.116 KMs from 220 KV NRS substation to Ananda Rao circle. The work to be entrusted to plaintiff pertains to the laying of underground cable of route length of 1.35 Kms from cable termination tower point No.2, 220 Kms HSR Layout substation, Bangalore. 6
Com.A.S.105/2018 The plaintiff completed the work 'A' within time, with a delay of 6 days, but, work 'B' could not be completed within a period of bench mark and it was completed on 20.4.2014. The reasons for delay is only on account of breaches committed by the defendant in issuing the DWA, road cutting permission, approval of route profile, objection by Lake Dew Residential Layout owners, approval of 220 KV DC gantry structure and many other problems attributed by the defendant. On account of the breaches committed by the defendant, it could complete the work only on 30.1.2013, resulting in huge financial loss to it. Since, there is delay in payment of running bills, the plaintiff faced huge financial crunch and accordingly, it submitted statement before the designated Engineer, who did not complete the same and thereafter, having recourse to clause No. 49 of GCC, appointed Arbitrator and defendant did not appoint Arbitrator within 60 days, accordingly, CMP came to be filed on the file of the Hon'ble High Court of Karnataka and Arbitrator came to be appointed. Learned 7 Com.A.S.105/2018 Arbitrator, after framing of issues, though allowed the case partly rejected some of the claims, without any basis and reasons.
3. The Arbitrator, while denying claim Nos.2 and 3, which is against the express provision in terms of the contract. Further, the relying of Ex. 174 is contrary to the express provision of agreement as Ex.174 is an internal communication of the defendant, which, ought not have been relied upon by the Arbitrator to decide the claim. The award is contrary to express provisions of agreement i.e., clause No.22 of SCC and clause No. 24 of GCC. Learned Arbitrator failed to consider that no proof and pleadings in the statement of objection on accord and satisfaction except stating that the plaintiff has made to claim at the rate of Rs.2,800/-. The denial of claim Nos. 2 and 3 is conflict against the express terms of the agreement. Learned Arbitrator has passed award against Ex.C16, 17, 18, 22, 24 and 26. The fixation of rate at Rs.2,800/- on the basis of work slip No.1, dated 31.3.2001, which has not 8 Com.A.S.105/2018 been considered by the Arbitrator and unilateral fixation at the rate of Rs.2,800/- per cubic meter is incorrect. The reason assigned by the arbitrator is incorrect. Learned Arbitrator relied upon satisfaction of the final bills passed by the defendant and signature found in the final bill and that itself is incorrect to come to conclusion that the plaintiff has accepted the claim. Learned Arbitrator has not considered the Judgment of the Apex Court in answering the claim of the plaintiff. Further, the rejection of claim No.9 towards the price variation and illegal deduction of Rs.3,33,085,440/- is completely incorrect and contrary to the law and also contrary to clause No.13 of ITB. The defendant has not furnished the calculation sheet by applying clause No.13 of ITB. Learned Arbitrator has not properly considered the evidence and documents placed by the plaintiff. Learned Arbitrator has not considered the delay in payment of bills and loss caused to it, in connection with sand and other materials, which is in excess of work entrusted. Learned Arbitrator is incorrect in 9 Com.A.S.105/2018 denying the interest on the claim No.10. The observation of the learned Arbitrator is that the plaintiff is not entitled to overhead charges is incorrect and illegal. Learned Arbitrator ought to have been granted proper interest on all the claims by allowing the claim. Accordingly, it has prayed for allowing the application.
4. The defendant has not filed objection statement and the order sheet dated 1.3.2019 reveals that the written statement was taken as not filed. Since, it is a petition under Sec. 34 of Arbitration and Conciliation Act, 1996, non-filing of objection statement will have no much bearing on the case of the defendant, in view of the decision in the case of Fiza Developers and Inter Trade Private Limited Vs. AMCI (India) Private Limited and another, reported in (2009) 17 SCC 796.
5. Heard learned counsel for the plaintiff and defendant.
10
Com.A.S.105/2018
6. Now, the points that arise for my consideration are:-
1. Whether the plaintiff proves that the arbitration award, dated 21.9.2018, as amended, so far as it relates to denial of claim Nos.2, 3, 9, 10,11, 13, 14 and partly allowing the claim No.7 is against the terms of the contract?
2. Whether the plaintiff proves that the above said award is erroneous and illegal for non-
consideration of materials placed before it and as such, it is an error apparent on record ?
3. What Order ?
7. My findings on the above Points are as under:
Point No.1 :- In the Negative.
Point No.2: In the Negative Point No.3 :- As per the final Order for the following reasons.
REASONS
8. POINT NO.1 : Learned counsel for the plaintiff would argue that he has challenged the above award of the Arbitrator denying the claim Nos. 2, 3, 11, 13,14 and partly 11 Com.A.S.105/2018 allowing claim No.7, is against the terms of the contract and erroneous, illegal for the reason that learned Arbitrator has not considered the terms of the contract and also various other aspects urged in the above petition. It is further argued that the defendants in order to execute their object and to create an infrastructure for distribution of electricity, has invited the tender for design, engineering, manufacture, supply, installation and testing of 220 KV 1000 Sq MM Copper single core underground cable for a route length of 4.116 Kms from proposed 220 KV NRS sub- station to the proposed 2 x 150 MVA, 220/66/11 KV substation at Ananda Rao circle near 'A' Station, Bengaluru and also for a route length of 1.35 Kms from the cable terminations tower point to the 220 KV HSR Layout station in Bangalore on turnkey basis and the scope of the work at clause No.1.2 provides that the scope of works under this IFB covers running of three phase single circuit of 220 KV, 1000 Sq mm single core copper XLPE U.G cable and etc., and the salient features of the scope include, but not 12 Com.A.S.105/2018 limited to, (a) over all project management, co-ordination,
(b) surveying of proposed cable route including digging and closing of trial pits, preparation of drawings, finalisation of cable route in consultation with owner's representative, (c) testing the evaluation of soil, resistivity, soil thermal resistivity, PH value of the solid along with the route base on the date final system to be designed. (d) Design the methods of installation of underground cable, cable laying, excavation and back filing of cable trench, supply and installation of associated materials like sand, bricks warning tape, protective slabs, pipes route indicators etc., in the duct inclusive of all Civil works. (e) design manufacture, testing at works/test house, supply, storage, installation, testing at site and commissioning of 220 KV XLPE U.G cables with accessories like joints and terminations, (f) design, supply, erection, testing and commissioning of the surge voltage limiters, grounding switches, link boxes for earthing, (g) design, supply and erection of cable termination structures at all the 220 KV 13 Com.A.S.105/2018 stations and cable terminating points, (h) obtaining clearances from forest, BDA, BWSSB, BBMP, PTCC, Railways and other agencies wherever required. Since, the plaintiff is having techno commercial qualification, it offered its bid for the said proposal and its bid was accepted and letter of intent was also issued, which discloses the value of the contract as Rs.7,23,37,448/- for supply of indigenous material for erection portion and a sum of Rs.9,894,89,015.54 for civil portions of the work. All the necessary documents were executed and the plaintiff accepted the letter of Intent and Bank Guarantees were given, for a sum of Rs.4,93,83,571/-, Rs.2,46,91,786/, Rs.69,08,060/-, Rs.34,54,030/-, Rs.98,49,802/- and Rs.49,24,901/-. After furnishing of Bank Guarantees, the main concern of the plaintiff is that the Letter of Intent which was issued to the plaintiff was not according to the bid documents as the prices of import material were not properly reflected and therefore, the plaintiff requested the defendant to correct those 14 Com.A.S.105/2018 arithmetical errors in the Letter of Intent. Thereafter, the plaintiff requested the defendant to issue detail work award, after correcting LoI, but inspite of issue of letter, dated 8.5.2009, the defendant did not issue detail work award containing the approved unit price and the total quantity required for the execution of work. He would further argue that the entire work was required to be completed within 12 months from the date of the original Letters of intent subject to defendant fulfilling their reciprocal obligations under the terms of agreement. The defendants failed to fulfill their obligations, issue of detail work award mentioning of correct amount in the LoI. After almost 140 days from the date of first Letter of Intent by letter dated 20.5.2009, the defendant, issued amended LoI and since there was additional price for quantity, the plaintiff was requested to furnish additional performance security matching 15% of the performance security for entering into the agreement with the plaintiff. In total, the plaintiff has furnished Bank Guarantee to the tune of 15 Com.A.S.105/2018 Rs.11,10,64,041/-. After mobilising the resource required for execution of the project work, he had also instructed the LS cables, South Korea for manufacturing of the underground cables for implementing the project work and dedicated workers were appointed for the project. However, the defendants failed to provide necessary assistance by obtaining statutory approval from the various departments for laying of underground cable. Since, the work involved required more than 12 months on account of failure on the part of the authority, i.e., BBMP to provide road cutting permission and the same is attributed to the defendant as they failed to file application for road cutting permission, though, initially it is the responsibility of the plaintiff to pay such fee to the BBMP. There was in ordinate delay in issuing DWA and obtaining road cutting permission and approval of road profile in respect of work 'B' on account of the objection of Lake Dew Residency Layout owners Association in 3rd Phase/3rd Section of the laying of underground cable, removal of obstruction with the help of 16 Com.A.S.105/2018 police force and approval of 220 KV double circuit gantry structure work by the defendants. Delay in obtaining of permission from lake development authority, etc., are the main reasons for delay and same has been attributed to the defendant. He would further argue that there was a delay in payment of running account bills, affecting the cash flow for execution of the project work and defendant failed to pay unit rate for the supply of sand and earth waste disposal of the quantities over and above the DWA quantity and there was delay in reimbursement of the statutory clearances from BBMP. Further, there was delay in approval of quantity variation and approval of final closure of the project. So, since, the delay is on account of the defendant, the claim of the plaintiff was restricted by the Arbitrator, which according to learned counsel for the plaintiff is incorrect. Regarding delay in issue of detailed work award, he would argue that the detailed work award is essential for execution and completion of the project work within stipulated time and that there being detailed 17 Com.A.S.105/2018 work award, no bills will be honoured by the defendant and it is essential part of the contract to commence the work, since, the contract involved supply, erection and civil portion of the work impose contractual on the part of the defendant to issue detailed work award containing approval price schedule and schedule quantity, which are essential for commencement of project work. The clause No.11 of the letter of Award provides for detail work and responsibility of the defendant to provide the same. After letter of intent, on 17.3.2009, the plaintiff wrote a letter to the defendant to issue DWA to start the work and there is delay of 212 days from the date of original Letter of Intent to issue DWA which was issued on 30.9.2009. The letter of Intent was issued after 71 days from the date of issue of first LoI. Further, as far as road cutting permission is concerned, there is inordinate delay in obtaining permission from the BBMP and without road cutting permission no work could be commenced. The clause No.2.3 of SCC imposes the contractual obligation on the 18 Com.A.S.105/2018 part of the plaintiff to obtain necessary approval before execution of the work. The defendant after 3 months 4 days, filed an application for seeking road cutting permission from the BBMP and it was the responsibility of the plaintiff to pay the required fee and to claim the same from the defendant. Initially, the BBMP vide communication, dated 6.8.2008, refused to grant of permission for open trench method and it granted permission only on 2.9.2009 with various conditions. Since, the defendant was not stated about the priority project there was delay in obtaining road cutting permission and which cannot be attributed to the plaintiff. The other delay is due to obstruction by the Lake Dew Owners Association, they prevented the plaintiff from carry out the work in their area and subsequently, that was settled and due to which there was delay and the plaintiff had to incur more money for completion of the work. Since, there has been continuous obstruction by the residents of locality, the plaintiff had to file complaint to the 19 Com.A.S.105/2018 police and with the help of the police, plaintiff had to complete the work in their area. Another delay is relating to approval of 220 KV double circuit gantry structure work. The plaintiff had to raise gantry structure work at the cable termination point for floating the energy, as per instruction of the defendant, the plaintiff had to construct 220 KV DC Gantry Structure to close the cover to the underground cable to be charged for supplying of electricity by using underground cable commissioned by the plaintiff. The defendant insisted for drawings of the said construction and therefore, there was some delay attributed to the defendant. Since, there was lake, it was necessary to obtain permission letter from Lake Development Authority to put up, raise gantry structure and even after submitting of detail drawings on 9.8.2011, there was delay attributed to the defendant and ultimately after delay of 29 days, the fabrication drawings were approved with minor corrections. After obtaining approval of fabrication drawings, the plaintiff was required to place an order with the approved 20 Com.A.S.105/2018 vendor to fabricate the gantry structure and kept ready for inspection. The approved vendor manufactured the gantry structure and kept ready for inspection and issued the dispatch instruction to the defendant. The plaintiff called upon the defendant to inspect the prototype manufactured to assemble at Hyderabad before final approval and it was accepted and approved by the defendant on 23.11.2011 at Hyderabad. Further, there was delay in issue of work slip by the defendants, regarding gantry structure for final approval and also to transport the materials from Hyderabad to the project site. There was inordinate delay in approving the work slip, by the defendants and said work slip is essential for commencement of work and the same is attributable to the breaches committed by the defendant. There was delay in shifting of gantry structure for want of dispatch instruction by the defendant and there was delay of 46 days in issuing the same.
9. Further, the delay has been caused for providing action plan which was not adhered to by the defendant and 21 Com.A.S.105/2018 there was serious dispute about dismantling of existing structure and installation of new DC gantry structure by the Private Layout Owners Association referred above and the defendant was required to procure the materials from BESCOM, such as cables, poles for doing the work of Lake Dew Owners Association. On 6.5.2013, the plaintiff requested the defendant to procure the necessary materials from BESCOM and the delay is in obtaining materials and further, at the time of completion of termination the plaintiff had to bring technician from South Korea and delay was due to the said reason also. Further, the delay was also due to permission from Lake Development Authority and therefore, the said delay cannot be attributed to the plaintiff. The Lake Development Authority took 3 months to give such permission. Further, there was delay in payment of running account bills which actually affected the cash flow for executing the project work. As per clause No.8.5 of special conditions of contract stipulates that the defendant shall make the payment of running account bill 22 Com.A.S.105/2018 within a period of 15 days from the date of passing of the bill, which is considered as an essential condition of terms of agreement. If, there is any delay, then, defendant shall pay the same with interest at 6% per annum. Further, clause No.34.3 of GCC provides that the plaintiff shall prepare and submit bills for the approval of the Engineer and the Engineer will have to pass the bill for making payment. The bill will have to be submitted in prescribed Anenxure-4 and submit the same for the payment of the bill and the same has to be submitted in a standard form as per clause No. 34.4. Since, there is inordinate delay in payment, it is nothing but, committing a fundamental breach of agreement and therefore, learned arbitrator, while rejecting claim has not considered the same. Further, the defendant has not paid the unit rate for the supply of sand and earth waste disposal of the quantities and in fact the plaintiff from the site to a far away place, which is situated invariably about 35 to 40 Kms from the centre of the city. Further, it had to incur more money for back filling of the 23 Com.A.S.105/2018 trench, which is an additional work and though the plaintiff has quoted a sum of Rs.8,082.46 per cubic metre for the supply of sand, but, the defendant has not made good the amount towards use of the sand as claimed in the petition and clause No.24.1 provided for discrepancy in quantities indicated in the drawings and that specified in price schedule, actual quantities indicated in price schedule to be followed. During the execution of the contract, the owner reserves the right to increase or decrease the quantities of items under the contract, but, without any change in unit price or other terms and conditions. Such variations unless otherwise specified in the accompanying special conditions of contract and or technical specification, shall not be subjected to any limitation for the individual items but, the total variation in all such items under the contract shall be limited to as percentage of contract price as specified in the special conditions of contract. The clause No.22 deals with the quantity variation, clause No.1.11 deals with contract price and clause No.2 deals with 24 Com.A.S.105/2018 contract documents and according to learned counsel for the plaintiff, the bidding documents, proposal submitted by the plaintiff agreed minutes of the meeting, Letter of Intent, quantity plan for manufacturing or the contract document, which has not been properly considered by learned Arbitrator. He would further argue that non-payment of amount relating to price variation pertaining to sand is against the terms of the contract and therefore, there is an error committed by the arbitrator, while dismissing the claim and partly allowing the claim. Further, learned arbitrator has not referred to the cross-examination, available in question No.97 to 115 of RW1, which substantiate the claim of the plaintiff. Further, there is delay in reimbursement of the statutory clearances and amount spent by the plaintiff to obtain the clearance and approval of the quantity variation and final closure of the project. Further, the defendant has illegally recovered the liquidated damages without there being loss sustained by it. In fact, the defendant has deducted a sum of 25 Com.A.S.105/2018 Rs.3,07,33,463/- as liquidated damages from the running account bills on different dates. So, according to learned counsel for the plaintiff, learned Arbitrator has allowed the claim No.7 and denied claim Nos.2, 3, 9, 10, 11, 13 and 14, is against the record and terms of the contract. He took the Court to the statement of claim at page No.41, which shows that the BBMP has changed the depth of sand, which is the main reason for plaintiff losing huge amount. The plaintiff had to fill the trench with sand having 1500 mm. Therefore, it had to get more sand for the said purpose, which is nothing, but, variation of terms of the agreement and for which it is entitled to compensation, entitled to refund of price variation, Arbitral Tribunal has not taken note of. The clause no. 22 and 23, provides for bid security amount and also period of validity of bids, etc. and according to learned counsel, the Award is contrary to the express language of the agreement. The clause No. 24.1 of the condition of the contract, provides for any discrepancy in quantities indicated in the drawings and that specified in 26 Com.A.S.105/2018 price schedule, actual quantities indicated in the price schedule to be followed. The clause No.22.1 provides for power to alteration, amendment as stated therein. So, the clause No. 24 of the contract agreement provides for change of quantity, during the course of contract and therefore, the arbitrator is not correct in rejecting the claim. As far as claim No.2 is concerned, learned counsel for the plaintiff took the Court to page No.65 of the claim statement, filed before the Arbitral Tribunal, wherein, the plaintiff has categorically contended that as per the earlier agreement, the original depth of the sand filling to the trench of 1000 mm, but, BBMP insisted for the depth of sand, to an extent of 1800 mm, which led the plaintiff to incur huge loss and it supplied total quantity of 6591.44 Cubic meter for both the works and the unit price fixed by the defendant at Rs.2,800/- per cubic meter is contrary to the express terms in the contract and further balance quantity of 1672 Cubic meter in works 'B', the defendants have not paid any rate, neither DWA rate nor the Work fixed rate, even there 27 Com.A.S.105/2018 is provision to make the payment. The clause No.22 of Special conditions of the contract, specifically provides that the claimant is required for supply over and above detail award quantity to any extent, the claimant is entitled to the unit rate mentioned in the detailed work award which is binding agreement between the claimant and defendant. The unit rate mentioned in the Detailed Work Award for supply of sand is Rs.8,082.46 per cubic meter, but, against the same defendants have fixed Rs.2,800/- per cubic meter for supply of sand and removal of earth by mixing the same, which is against the express terms of the contract. The defendants in their written statement at page 159, have stated that have denied the allegation of the plaintiffs regarding payment towards sand and transportation of earth waste and it is specifically mentioned in para No. 48 of the written statement filed before the Arbitral Tribunal that "However during the time of seeking approval for road cutting permission from BBMP and other authorities, the concerned authorities insisted on the total depth of 28 Com.A.S.105/2018 excavation to be 1500 mm, with sand fill for a depth of 920 mm and the remaining depth of 580 mm of road to be restored with granular sub base course, wet mix macadum and bituminous macadum as against the original quantities mentioned in the Detailed Work Award". The modification in the civil works and variations in quantities on account of the same are due to revised procedure of BBMP subsequent to calling for tender. So, when there is admission on the part of the defendant about variation in quantity of sand on account of permission granted by the BBMP, then, who has to indemnify the plaintiff. Further, in para (E) of the written Statement filed before the Arbitral Tribunal, the defendant admits about issue of Official Memorandum, dated 15.4.2010 and accord approval for payment of Rs.2,800/- per cubic meter inclusive of all applicable taxes for riddled/sieved sand for back filling the trench including disposal of earth for excess quantities over and above the DWA quantities in accordance with the prevailing KPWD SR rates. This itself is incorrect, which is 29 Com.A.S.105/2018 nothing but, going against the express terms of the contract. Thereafter, he referred to Ex.P174, which is available in Volume No.5, i.e., Official Memorandum, dated 15.4.2010, fixing the charges of Rs.2,800/- per cubic meter and it is specifically stated in para X, that in accordance with above tender clauses, the agency is insisting for payment of rate as quoted by them for sand and disposal of earth for the above four enquiries for the additional quantities also. By the said Official Memorandum, they have fixed only Rs.2,800/ per cubic meter, which includes both sand as well as removal of earth waste. Thereafter, he referred to the Official Memorandum, dated 31.3.2011, i.e., Annexure 'D' 175, which speaks about the amount fixed for various works, particularly, erection portion, supply portion, civil portion, etc. and approval accord to the Work slip- 1 forwarded by the Chief Engineer, Electricity transmission zone, vide letter dated 29.3.2011, for the excess amount as noted towards supply, erection, civil and total amount. So, in view of the above fact, when there is 30 Com.A.S.105/2018 clear decision taken by the defendant about payment towards excess work done, learned Arbitrator has not considered the same. Thereafter, he would argue about the evidence given by the Mr. K Venkateshwar Rao as PW1 and cross-examination of said PW1, at para No.72 to 74 of cross-examination of DW1 at question No. 97 to 115, which disclose certain admission regarding unit price fixed for sand at Rs. 8,082.46 and also the obligation on the part of the plaintiff to supply additional quantity and other aspects. When, DW1 admits about additional work done by the plaintiff and when the contract stipulates for payment of 8082.46 cubic meter for the sand and removal of earth, then, the arbitrator has committed error in appreciating the evidence and denying the claim. With this background, he took the Court to running page No.138, at para No. 8.83, learned arbitrator having held that the payment are legitimately due to the plaintiff and they are bound to pay or else to have negative impact on the overall project, in para No. 8.84 has elaborately discussed about the delay in 31 Com.A.S.105/2018 nonpayment of unit rate for supply of sand and disposal of debris for extra quantity. Learned Arbitrator though discusses about the case of the claimant, with reference to clause No. 24.43 of GCC and clause No.22.1 of SCC has come to the conclusion that the claimant has accepted the Official Memorandum fixing the comparative rate of Rs.2,800/- per cubic meter by conduct and in para No. 8.14, learned arbitrator by holding that since, the claimant has signed the RA bill, it is nothing but, accord and satisfaction, therefore, it is nothing, but, claiming excess amount, according to learned counsel for the defendant is incorrect and accord and satisfaction is contrary to the express terms of the contract and therefore, learned Arbitrator ought to have discussed the same in his Award. The evidence of RW1 does not disclose about accord and satisfaction, and there is no pleadings by the defendants also. So, in a situation like this, whether accord and satisfaction would affect the plaintiff from claiming excess amount, has been discussed by the Apex Court in the case 32 Com.A.S.105/2018 of State of Rajasthan Vs. Ferro Concrete Constructions Pvt Ltd., reported in (2009) 12 SCC 1, wherein, it is held at para 55 that:
55. "While the quantum of evidence required to accept a claim may be a matter within the exclusive jurisdiction of the arbitrator to decide, if there was no evidence at all and if the arbitrator makes an award of the amount claimed in the claim statement, merely on the basis of the claim statement without anything more, it has to be held that the award on that account would be invalid. Suffice it to say that the entire award under this head is wholly illegal and beyond the jurisdiction of the arbitrator, and wholly unsustainable".
10. Further, he has cited one more decision in the case of R.L Kalathia & Co., Vs. State of Gujarat, reported in (2011) 2 SCC 400, wherein, it is held at para No.13 that:
13. "From the above conclusions of this Court, the following principles emerge:
(i) Merely because the contractor has issued "no-
dues certificate", if there is an acceptable claim, the court cannot reject the same on the ground of issuance of "no-dues certificate".
(ii) Inasmuch as it is common that unless a discharge certificate is given in advance by the contractor, payment of bills are generally delayed, 33 Com.A.S.105/2018 hence such a clause in the contract would not be an absolute bar to a contractor raising claims which are genuine at a later date even after submission of such "no-claim certificate".
(iii) Even after execution of full and final discharge voucher/receipt by one of the parties, if the said party is able to establish that he is entitled to further amount for which he is having adequate materials, he is not barred from claiming such amount merely because of acceptance of the final bill by mentioning "without prejudice" or by issuing "no-dues certificate".
11. So, with the help of the above decisions, he would argue that though there is acceptance of the R.A bills, will not affect the right of the plaintiff as decision of the Arbitrator has to be based on the document and terms of the contract.
12. After referring to claim Nos. 2 and 3, he would argue about claim No.7 i.e., partial allowing of claim No.7 and in the said regard, he would argue that the Award of Rs.5,00,000/- towards duration of work is contrary to material documents produced before learned Arbitrator. Learned Arbitrator, has relied on Ex.C207, which 34 Com.A.S.105/2018 categorically states that, the defendant themselves have claimed the amount of Rs.88,85,060/- from BMRCL, but, when the defendant has claimed Rs.88,85,060/-, how could the arbitrator reduce it to Rs.5,00,000/-, which is erroneous and illegal. In the said regard, he took the Court to Ex.C207, which is available in Vol.5, page 903, i.e., letter dated 9.3.2010, addressed to BMRCL, requesting them to pay Rs.88,85,060/- towards deviation of the cable route, but, learned Arbitrator has not considered which is against the settled principles of law relating to arbitration. The Award at ink page 164 speaks about the discussion relating to claim made towards deviation of works 'A' due to intervention of BMRCL and learned Arbitrator has referred to Ex.C207 also, but, while granting, he has restricted the same to Rs. 5,00,000/- which is against the document.
13. As far as, claim No.9 is concerned, learned Arbitrator at para No. 9.41 has stated by referring to the case of the plaintiff that the contract was required to import 220KV UG cable from South Korea and therefore, had 35 Com.A.S.105/2018 quoted the price in US$, that it had quoted 4,84,789 US$ for supply of 1 Km of UG Cable under the contract, claimant was required to quote, the price in US$ though the payment was required to be made in Indian rupees as per the formula specified, that the cable was transported under the bill of lading, dated 30.6.2009 and received on 24.7.2009, that as per contract the relevant price formula was to be applied on 30.6.2009, when the prices of copper and lead had increased, etc. Though, the defendant agreed to pay contractual rate of 4,84,789 US$ per Km to 3,07,000 US$ per Km and deducted Rs.3,33,84,440/- from the amount payable to the claimant. He refers to Tax invoice submitted by the plaintiff at Ex.C-91, which is in US$ for 43,60,040 US $ relating to supply of material as per the enclosed invoice and another invoice at Ex.C-92, which also discloses the invoice issued pertaining to material purchased. Now, clause No.13, stipulates, how the bills have to be prepared and there is a reference in the Award at Para No.9.43 regarding preparing the bill by 36 Com.A.S.105/2018 referring to the formula etc. The clause No.13 of ITB, the bidders will have to quote the price keeping in mind, the price prevailing and variable. If, there is increase in the price, the defendants are required to increase the price, if there is a decrease in price, the plaintiff is entitled to lesser price. The formula is also provided, I am of the view that it is not necessary to state in the present Judgment as learned Arbitrator has clearly stated about it. The prices shall be firm and fixed as on the next working day of London Metal Exchange, after 15 days, from the date of yellow price to award the work to the successful tenderer. Thereafter, he referred to Ex.R13 available in Volume-2, i.e., the circular issued by the defendant, dated 13 th May 2008, to the effect that the bills should be submitted on time, with date and a direction is given to the Executive Engineer to make entry of the receipt of the bill, so as to process the same for disbursement of the amount. Having paid the amount, they have deducted on the ground of variation, which is not correct. So, regarding this aspect, 37 Com.A.S.105/2018 he took the Court to Award, reasons given by learned Arbitrator to claim No.9 by referring to the decision in the case of Walchandnagar Industries Ltd., Vs. Cement Corporation of India reported in (2012) Arb LR 219 (DB) and State of Madhya Pradesh Vs. Raja Balbhadra reported in AIR 1964 MP 231 (internal page No.84 of the Award) and rejecting the claim of the plaintiff under claim No.9. According to learned counsel for the plaintiff, the plaintiff though submitted bills for supply of underground cable as per the unit rate mentioned in DWA and the defendants have made payment in respect of works 'A' and 'B' and on the date of said payment, the rate of copper and lead was not reduced. Therefore, reduction of the amount by the defendant is incorrect. The defendants issued Official Memorandum on 3.12.2012 after lapse of 1182 days from the date of supply, adopting the negative price variation inter-alia stating that the prices of copper, lead and other materials used for manufacturing of the underground cable is reduced. The calculation adopted by 38 Com.A.S.105/2018 the defendants have not been disclosed and there is no reason why they have reduced the amount to 3,07,000 US $ per Km against the DWA unit rate of 4,84,744.79 US $ per Km. Learned Arbitrator has not properly assigned reason and it calls for interference. The plaintiff stated the same in para 86 to 89 of the claim statement and assigned reason, why it is entitled for 4,84,744.79 US $ per Km against one fixed by the defendant and learned Arbitrator has not considered it. Even, in the evidence of CW1, at question No.185, though, it is admitted that the negative price variation has not been calculated as per the formula mentioned in the tender document, then, how the Arbitrator could say no to the claim. The letter produced at Annexure C215, dated 3.12.2012 by the defendants disclose about the formula to be adopted and in para No.2, it is stated that the prices are variable in accordance with the relevant KPTCL declared price variation formula and indices for 220 KV XLCE UG cable as per clause No.13.0 of Section ITB and 33.0 of Section GCC of bid document and 39 Com.A.S.105/2018 the base date applicable for price variation is 22.02.2008 i.e., the date of Techno Commercial Bid opening as detailed in clause No. 4 of DWA and it is opined that the variation is negative. He has also referred to the question put to RW1 and the answer given by the RW1 during the cross- examination, admission about submission of bills at Ex. C91 and 92 and payment made on respective dates and it is also admitted for question No. 130 that as per the predetermined formula mentioned in clause No.13 of ITB for the base price of copper as per London Metal Exchange. However, the defendants have not produced any documents to show the base price at Rs.3,07,000/- US $, then, how could the Arbitrator deny claim of the plaintiff regarding variation.
14. Now, coming to claim No.10, interest on retention money, there is proper pleadings in the claim statement and also denied by the defendants and the Arbitrator having held that the delay has been attributed to the defendants, then, the plaintiff is entitled to interest from 40 Com.A.S.105/2018 the date of retention of the money. The denial of interest of claim No.10 for the entire amount of Rs.4,42,27,714/-, even after finding that there is no dispute as to total amount of money deducted from running account bills and denying the balance interest on balance retention money is illegal in law. Learned Arbitrator having recorded a clear finding that the total amount of Rs.4,42,27,714/-, deducted from the running account bills is not in dispute and denial of the same by learned Arbitrator is against the express terms of the contract and there is no denial by way of suggestion by the defendants regarding the amount deducted, therefore, the order of the Arbitrator is completely erroneous and illegal in law. The denial of overhead charges and loss of profit is also erroneous and illegal in law. Since, the period of contract is extended beyond the original period of the contract and the defendants themselves have admitted on account of reasons given by them are beyond their control, the time was extended without paying liquidated damages and 41 Com.A.S.105/2018 therefore, plaintiff is not responsible for the delay. During the period of contract, the interest could be awarded 6%, but, after completion of the work, the plaintiff is entitled to interest that could be granted in the market and denial of cost of arbitration proceedings is also erroneous and illegal and the plaintiff was made to run from pillar to post for the denial of various amount due to it as contended in earlier paras. So, the main crux of the argument of learned counsel is that the denial of the certain claims by the Arbitrator and partial awarding claim No.7 is against the basic notions of law and therefore, liable to be set aside.
15. Now, coming to the decision quoted by learned counsel for the plaintiff, he refers to the decision in the case of Union of India Vs. V. Pundarikakshudu and Sons, reported in 2003 8 SCC 168, to the effect that, the delay and who is responsible for delay and the Arbitrator attributing the delay on both the sides is incorrect and having failed to consider the same, it amounts to illegal, misconduct. He has cited another decision in the case of 42 Com.A.S.105/2018 Food Corporation of India Vs. Chandru Constructions and another, reported in (2007) 4 SCC 697, which deals with the aspect that if Arbitrator ignores the specific terms of the contract, it would be a question of jurisdictional error on the face of the Award falling within the ambit and legal misconduct which would be corrected by the Court. So, with the help of above decisions, he would argue that learned Arbitrator has not considered that defendant has reduced the price variation against the DWA and agreed rate, but, failed to consider in the impugned order, therefore, it amounts to jurisdictional error.
16. Next decision is in the case of Durga Charan Rautray Vs. State of Orissa, reported in (2012) 12 SCC 513, to the effect that, even after payment of the final bill, it was opened to the party to seek re-agitating of dispute by way of Arbitration, even though, he has not raised any objection. By referring to the decision in the case of Bharat Coking Coal Ltd., Vs. Annpurna Construction, reported in (2003) 8 SCC 154, wherein, it is held that while 43 Com.A.S.105/2018 accepting the payment of the preparation of the final bill, he would not raise any further claim. As such, we are satisfied that Judgment rendered in Bharat Coking Coal Ltd., leads to irresistible conclusion that despite receipt of payment on preparation of the final bill, it was still open to the appellant to raise unsatisfied claim before the Arbitrator under the contract agreement.
17. The next decision is in the case of Associate Builders Vs. Delhi Development Authority reported in (2015) 3 SCC 49, which deals with when the Arbitration Award can be set aside and there is no dispute about this fact.
18. Next decision is in the case of State of Bihar Vs. Tata Iron and Steel Company Ltd., reported in (2019) 7 SCC 99, relating to payment of interest and it is specifically stated, how the deed has to be construed to give a proper meaning. The decision in the case of Dyna Technologies Private Ltd., Vs. Crompton Greaves Ltd., reported in 44 Com.A.S.105/2018 (2019) 20 SCC 1, which also deals with the fact that the power vested under Section 34 (4) to cure the defect can be derived, where the Arbitral Award does not provide any reasoning or if the award has some gap in the reasoning or otherwise and that can be cured, so as to avoid a challenge.
19. Next decision is in the case of Patel Engineering Ltd., Vs. North Eastern Electric Power Corporation Ltd., reported in (2020) 7 SCC 167 to the effect that when an arbitral award can be set aside and what is patent illegality, etc., and when the Arbitrator fails to express opinion on the basis of the terms of the contract, then, it amounts to patent illegality, by referring to the decision in the case of Associate Builders Vs Delhi Development Authority reported in (2015) 3 SCC 49 and also Ssangyong Engineering & Construction Co. Ltd., Vs. National Highway Authority of India, reported in (2019) 15 SCC 131 45 Com.A.S.105/2018
20. Last decision is in the case of PSA SICAL Terminals Pvt. Ltd., Vs. Board of Trustees of V.O. Chidambaram Port Trust Tuticorin, reported in 2021 SCC Online SC 508, wherein, it is held at para No.81 that :
81. "However, ignoring the stand of TPT, by the impugned Award, the Arbitral Tribunal has thrust upon a new term in the agreement between the parties against the wishes of TPT. The royalty payment method' has been totally substituted by the Arbitral Tribunal, with the 'revenue-sharing method'.
It is thus, clear, that the Award has created a new contract of the parties by unilateral intention of SICAL as against the intention of TPT".
21. When the Arbitral Tribunal has created a new contract for the parties by applying the said unilateral circular and by substituting the workable formula, it amounts to breach of fundamental principles of justice and in such case, the award is liable to be set aside. So, the main crux of the case of the plaintiff is that, the Arbitral Tribunal has not considered the documents, the express terms of the contract and to apply the terms of the contract 46 Com.A.S.105/2018 to decide the price variation and return of liquidated damages and other claims regarding interest etc., then, it amounts to an error apparent on record, and therefore, the award is liable to be set aside.
22. Per contra, learned counsel for the defendant would argue that the impugned award is contrary to the provisions of the contract between the parties, particularly, clause No. 34, 34.1, 34.3, 34.4 of GCC, 8.0, 8.21, 8.3, 8.5 of SCC, which envisages the procedure for submission of RA bills. As far as claim No.1 is concerned, it is policy based on internal communication, hence, contrary to the law laid down by the Hon'ble Supreme Court in Union of India and another Vs. Karthik Chandra Mondal and another reported in (2010) 2 SCC 422 and State of Bihar and others Vs. Karipalu Shankar and others, reported in (1987) 3 SCC 34. The first decision has come under the service and administrative law to the effect that the internal communication, which are relying upon by the defendant and which were also referred by the Tribunal as well as 47 Com.A.S.105/2018 by the High Court explicitly, the aforesaid communication exchanged between the officers at the level of Board Hierarchy only and by referring to the earlier decision in the case of State of Bihar and others Vs. Karipalu Shankar and others, it is held that "internal communication while processing a matter, cannot be said to be order issued by the competent authority unless, they are issued in accordance with the law. Similarly, he has cited the decision in the case of Kamal Prashar Vs. Airport Authority of India and another, reported in (2015) 17 SCC 519 which also deals with internal communication cannot be made basis for any decision. Therefore, according to learned counsel for the defendant, the learned Arbitrator by relying upon various Official Memorandums has based his Award, which is contrary to the law laid down by the Supreme Court and therefore, against fundamental policy of India.
23. Further, as far as claim No. 4 is concerned, which is contrary to the admission of plaintiff's witness PW1. As 48 Com.A.S.105/2018 far as claim Nos. 5 and 6 are contrary to the evidence on record and which is contrary to basic notions of justice and morality, as the findings of the Tribunal have to effect of altering the provisions of contract, the Arbitral Tribunal has reasoned the contract, which is against the law laid down in the decision in the case of Ssangyong Engineering & Construction Co. Ltd., Vs. National Highway Authority of India, reported in (2019) 15 SCC 131. He further refers to various stages of contract right from the notice inviting bid on 31.12.2008, till letter of acceptance and work be completed on 30.4.2014. According to learned counsel for the defendant, plaintiff caused initial delay by committing mistake in the bid. The amended LoI was issued on 20.5.2009, by the plaintiff at the instance of defendant. After rectification of those discrepancies, the revised Letter of Intent was submitted by the plaintiff only on 18.6.2009 and revised Bank Guarantees were submitted on 14.7.2009. Within 10 days of the contract was executed i.e., on 24.7.2009, the DWA were issued on 30.7.2009, 49 Com.A.S.105/2018 therefore, no mistake can be attributed to the defendant. He refers to Ex.R33, which is a letter by the defendant requesting the plaintiff to rectify the error committed by it. The chain of event indicates that there is absolutely no delay on the part of the defendant in issuing DWA. Further, another delay was caused by the plaintiff on account of revised LoI submitted on 18.6.2009, which also ought to have been submitted on or before 27.5.2009. Learned Arbitrator has completely ignored pleadings and cross-examination of RW1 at page No.379 and relying upon the internal committee report, is highly incorrect. Regarding delay in obtaining permission for road cutting, he would argue that the contractual provisions i.e., clause No. 1.2 (h) of information for bidders, clause No. 15.5 (d) of erection condition of contract and clause No. 2.3 of special conditions of contract makes it clear that the obligation to procure statuary clearance to resolve right of way is cast on the plaintiff. The obligation of the defendant is only to a assist him. However, the defendant submitted 50 Com.A.S.105/2018 application for seeking permission and plaintiff has caused delay in submission of caution deposit for road cutting permission. Therefore, the delay cannot be attributed and very observation made by the learned Arbitrator attributing delay on the part of defendant is incorrect. Further, regarding route profile, according to learned counsel for the defendant, there is a delay of 6 months in submission of the route drawings. The route drawings were submitted by the defendant only on 19.11.2009 as per Ex.R4, whereas the same was required to be submitted on or before 20.5.2009. There was delay in submitting PERT chart by two months and further delay regarding gantry structure etc.
24. Regarding delay on account of obstruction caused by the association of private layout owners, he would argue that clause No.2.3 of SCC, right of way must be resolved by the claimant. No action is taken by the plaintiff on delaying act also and no line clearance is required as work is to be carried out underneath the existing corridor of over head 51 Com.A.S.105/2018 lines. However, this aspect cannot be accepted for the reason that since the size of the cable was so big which could not have been dumped by way of machinery and therefore, it was resolved to go for open trench for laying of the cable.
25. He would further argue about, the cross- examination of CW1 and there is an admission that there is no document to show about obstruction made by the private layout owners.
26. Regarding gantry structure, he would argue that the construction of gantry structure is not an additional work. The scope of the work in the subject contract involves design, supply, and erection of cable, termination, at 220KV station and cable termination point and CW1 has admitted about the work relating to gantry structure that it did not carry out any work. Further, the plaintiff has not submitted design of gantry structure, even after 16 months and work slip was issued for the additional work and not 52 Com.A.S.105/2018 for the purpose of payment and not for quantity of any other party.
27. Regarding delay in obtaining permission from Lake Development Authority, it is only on account of the delay caused by the plaintiff and he should have filed application seeking permission and therefore, the same should not have been attributed to the defendants and delay in processing of RA bill etc., he would argue that the clause No.12.2 (ii) and (v) of ITB and 8.6 of SCC imposed duty on the plaintiff to deduct at source certain statutory levy and to be paid in full by the owners to the respective departments. The plaintiff has paid interest on that amount also which is incorrect. The plaintiff did not furnish requisite documents or particulars in support of the claim and therefore, there was delay. Further, Ex.C 84, 88, 92 and 94, it is evidence that the plaintiff submitted the aforesaid bills even before the dispatch instruction were given and it has deliberately engineered the RA bills in a manner to wrongfully claim interest.
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28. Regarding delay on account of nonpayment of unit price for sand and excavation of waste excess quantity he would argue that after negotiation with defendants only, price was fixed at Rs.2,800/- per Cubic meter and same is in the light of clause No.22.5 of GCC and therefore, the defendant cannot raise any dispute regarding the same. The plaintiff having accepted the same, submitted the bill and therefore, now, he cannot have any say about it.
29. Regarding delay in reimbursement of way bill charges paid to statutory clearance charges and road cutting charges etc., the plaintiff is required to restore and asphalt the road cutting to its original position to the satisfaction of the BBMP and therefore, the defendant is not answerable to it. Since, the BBMP imposed certain conditions, for which the defendant is not liable.
30. Regarding delay in approval of quantity variation over and above DWA quantity and clause No.4 relating to final variation executed over and above DWA quantity and 54 Com.A.S.105/2018 interest and right of FQV executed over and above DWA quantity, it is the plaintiff who had to submit final quantity variation statement duly indicting actual quantities of various items of work executed. The plaintiff is also required to sign in measurement book and while receiving the final settlement has signed the measurement book, expressing his accord and satisfaction and therefore, he cannot claim once again the same claim. However, regarding recovery of liquidated damages, he would argue that the documents relied upon by the plaintiff to claim the refund of liquidated damages received by the defendant, the time was extended from time to time, but, defendant has failed to complete the work and took more time and when contract provides for liquidated damages, then, the plaintiff cannot have any say about it.
31. As far as claim No. 7 is concerned, he would argue that the claim has arisen due to deviation suggested by BMRCL and the defendant has written a letter to BMRCL claiming reimbursement of Rs.88,85,060/- and 55 Com.A.S.105/2018 learned Arbitrator has granted Rs. 5,00,000/- without there being any reason, therefore, it is against the terms of the contract. Regarding compensation/price escalation, he would argue that two extensions were given on 31.3.2011 and 26.3.2013 and the plaintiff failed to complete the work within time, therefore it is not entitled to any compensation for price variation. Regarding claim No.9 for nonpayment of proper price variation, he would argue that the rate of copper and lead is governed by the rate of London Metal Exchange on a day-to-day basis and the plaintiff is seeking rate of the lead and copper, at the rate more than prevailing in the London Metal Exchange.
32. The defendant, after verification of the documents and as per clause No.13 of ITB has considered price variation at the rate of minus 11.02% and same has been determined as per the price variation formula. Regarding claim No.10 for interest on retention money, he would argue that, there is no reason for claiming more. Regarding claim No.11, i.e., Overhead charges and loss of profit, he 56 Com.A.S.105/2018 would argue that the plaintiff failed to establish a site office and did not depute any dedicated personnels to look into the present project work, which is the main reason for causing delay and it has adopted Emden formula to determine overhead charges and loss of profit, but, there is no proof for the same. Regarding claim No. 12 i.e., cost of Bank Guarantee etc., he would argue that the documents produced by the plaintiff do not demonstrate the claim of commission charges and Ex.C225 has been denied by the defendant and therefore, no cogent material is placed to demand the said expenses met by the plaintiff and regarding claim No.13 i.e., cost of legal proceedings, the claim is said to be exorbitant and unsubstantiated and therefore, when we read the entire Award along the documents, learned Arbitrator has awarded in all Rs.10,73,94,411/- by allowing the claim in part and allowing of Rs.3,44,76,994/- towards refund of liquidated damages and Rs.3,07,73,463/- with interest Rs.37,43,531/- is highly incorrect and the award of 57 Com.A.S.105/2018 Rs.1,10,088/- towards price variation and award of Rs.1,79,96,615/- towards final quantity variation and Rs.33,03,070/- towards interest at 6%, grant of 1,06,77,149/- towards interest at 6% on delayed period payment and Rs.16,61,565 towards interest on reimbursement on road cutting charges. Rs.5,00,000/- towards deviation of works-A, Rs.4,00,00,000/- towards price variation and Rs.20,00,000/- towards cost incurred in keeping Bank Guarantees etc., is arbitrary, without any basis and learned Arbitrator has exceeded the jurisdiction and therefore the award is liable to be set aside. He would further argue that the said award is reviewed by the learned Arbitrator upon application filed by the plaintiff under Section 33 of the Act and as per the review, it is stated out of aforesaid sum of Rs.10,73,94,411/-, the defendant shall be entitled to retain a sum of Rs.3,33,85,440/- only, in case, the defendant has already not retained or deducted the said amount.
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33. In support of his contention, he has cited the decision in the case of Ssangyong Engineering & Construction Co. Ltd., Vs. National Highway Authority of India and Associate Builders Vs Delhi Development Authority reported in (2015) 3 SCC 49 regarding scope of inquiry under Section 34 of Arbitration Act, to contend that the award passed by the Arbitrator is against the public policy and passing of award by travelling beyond the terms of the contract or grant of lump-sum amount without there being any document is an error apparent on record committed by the Arbitrator and therefore, the Award is liable to be set aside.
34. Further, he has cited the decision in the case of Dyna Technologies Private Limited Vs. Crompton Greaves Ltd., reported in (2019) 20 SCC 1, to the effect that furnishing of intelligible and adequate reason in an award is a mandate under Section 13(3) of the Arbitration and Conciliation Act and manner in which the Arbitrator has granted certain claim in a lump-sum manner without 59 Com.A.S.105/2018 there being any reason is against the decision and amounts to an award opposed to public policy of India. Regarding damages, grant of compensation he would cite the decision in the case of Maula Bux Vs Union of India reported in 1969(2) SCC 554, and Union of India Vs. Rampur Distillery and Chemical Co. Ltd., reported in (1973) 1 SCC 649 Fateh Chand Vs. Balkrishan Dass reported in AIR 1963 SC 1405 to the effect that the actual damages must be proved by the parties claiming compensation and according to him, the defendant is a Government undertaking and in view of the Award passed by the learned Arbitrator without there being proof of damages sustained by the plaintiff it has made the defendant to suffer huge loss, on account of the Award and therefore, according to learned counsel for the defendant, the grant of compensation is without following the provisions of laws, particularly, Section 73 of Indian Contract Act, and therefore, non-consideration of the provisions of substantial law also amounts to patent illegality. 60
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35. He would further argue that when the Court is unable to assess the compensation, the sum claimed by the by the parties, if it is recorded as genuine estimation may be taken into consideration as the measure of reasonable compensation, but, not if, the sum claimed is in the nature of penalty. Where, the loss in terms of money can be determined, the parties claiming compensation must prove the loss suffered by him, but, learned Arbitrator has not considered it.
36. Regarding accord satisfaction, he would argue that when the plaintiff has signed the final RA bills stating that by satisfying the same, then, he cannot raise dispute about the bill and claim more money as held in the decision in the case of ONGC Mangalore Petrochemicals Limited Vs. ANS Constructions Limited and another reported in (2018) 3 SCC 373, Cauvery Coffee Traders, Mangalore Vs. Hornor Resources (International ) Company Limited reported in (2011) 10 SCC 420 and National Insurance Company Limited Vs. Bhoghra Polyfab Private Limited 61 Com.A.S.105/2018 reported in (2009) 1 SCC 267. Ofcourse, all the decisions speak about accord and satisfaction and when there is accord satisfaction by the plaintiff, then, he cannot re- agitate the same after claiming the final bill. To this aspect, learned counsel for the plaintiff has also cited the some of the decisions before this Court and sum and substance of the decisions would say that when there is accord and satisfaction, then, there cannot be any further claim, regarding bill or price variation etc. He would argue that where the obligation under the contract are fully performed and discharge of the contractor by performance is acknowledged by a full and final discharge voucher, nothing survives with regard to such discharge contract. Now, with this background, Court has to see whether Arbitrator has committed an error in accepting the claim, which has been allowed or rejecting the claim, as contended by the plaintiff. When the entire award is read, it goes to show that learned Arbitrator, who to the best of its ability, by giving cogent reasons, has disposed of the 62 Com.A.S.105/2018 matter by allowing certain claims, particularly, claim No.7 and denial of claim Nos.2, 3, 9, 10, 11, 13 and 14 and claim No.1 came to be allowed for Rs.3,44,76,994/- and claim No.2 relating to supply of sand over and above came to be rejected by assigning reasons and claim No.4 came to be partly allowed by assigning proper reasons by referring to various documents and claim No.5 regarding interest on delayed payment of RA bill is allowed partly to the tune of Rs.1,06,77,149/- by assigning every reason by referring to various documents and RA bills. As far as claim No.6 is concerned, the claim was partly allowed for Rs.16,61,565/- and regarding claim No. 7 for deviation of work by referring to various documents, particularly Ex. C207, Ex. C189 and Ex. C212 to 214 and by referring to the decisions in the case of K.N. Sathyapalan (Dead) By Lrs vs State Of Kerala & Anr and P.M. Paul Vs. Union of India and Food Corporation Of India Vs. M/S A.M. Ahmed & Co. And Anr and also Oil & Natural Gas Corp Vs. M/S Wig Brothers Builders & another and also referring to various 63 Com.A.S.105/2018 clauses, particularly, clause No.40.1, 40.2 of GCC has allowed the claim to the tune of Rs.4,00,00,000/- and the main grievance of the defendant is that a lump-sum amount of Rs.4 crores is awarded, which is against the contractual document, but when we read entire award regarding the said claim, learned Arbitrator has based his reasons on the various documents and this Court cannot find fault with it under Section 34 of the Act. As far as claim No.9 is concerned, i.e., regarding nonpayment of price variation and illegal deduction of Rs.3,33,85,440/- for the supply of UG cable again learned Arbitrator has referred to Ex. 215 Official Memorandum dated 3.12.2012, price basis available under clause No. 13 of ITB clause No. 33 of GCC and Ex. 215 and allowed, the said claim of Rs.3,33,85,440/- which was detained by the defendant, absolutely, there is no reason to interfere and no grounds are made out under Section 34, how it is against the public policy of India or patently illegal or against the terms of the contract. When the parties have adduced evidence and 64 Com.A.S.105/2018 proper opportunities were given to the parties to prove their respective case and upon consideration of those materials, learned arbitrator being the chosen Judge has given proper reason and therefore, I find no illegality committed by the Arbitrator or it cannot be held that he has travelled beyond the terms of the contract. Next, coming to claim No. 14.10, that is, interest on retention money, it is also based upon the contract terms of the agreement, etc., and learned Arbitrator has referred to the decision in Bharat Coking Coal Ltd., Vs. L K Ahujua and also the Hudson Formula , after referring to various documents and the decision cited by the parties were taken note of relating to Emden formula to compute the damages and ultimately rejected the claim No.11. Therefore, it is also based upon the proper reasons. Regarding cost of Bank Guarantees, a sum of Rs.20,00,000/- was paid, though, sufficient materials were placed to show that the plaintiff has incurred cost of Rs.1,17,96,274/- and this cannot be found fault with by substituting another view by this Court which is not 65 Com.A.S.105/2018 permissible under Section 34 of the Act. So, as far as rejection of claim No. 13 and 14 are concerned, they were rejected by giving reasons that relates to charges for legal proceedings and interest at 18% and by referring to contract and the fact that there is some delay in completion of the work, learned Arbitrator has awarded interest at 6%, which according to me is correct and in view of the decision in the case of Ssangyong Engineering & Construction Co. Ltd., Vs. National Highway Authority of India and Associate Builders Vs Delhi Development Authority reported in (2015) 3 SCC 49 and the latest decision in the case of The Project Director, National Highways Authority of India Vs. M. Hakeem and others absolutely there are no grounds to interfere with the award passed by the Arbitrator. Whatever the claim allowed by the Arbitrator, are based upon the reasons, documents. We cannot expect the Arbitrator to pin point each and every document and give his opinion on those documents, just because, the parties are otherwise aggrieved by the award. 66
Com.A.S.105/2018 He cannot expect the arbitrator to pin point each and every evidence, particularly, cross-examination, to have a different opinion, it is known fact that this Court under Section 34 of the Act cannot decide the case like appeal and it has no power to re-appreciate the evidence and adopts its view in the place of view expressed by learned Arbitrator. So, when the parties have failed to show that the award is against the terms of the contract or it is patently illegal and against the public policy or that learned Arbitrator has not followed the substantive law relating to the contract, etc., then, this Court cannot certainly interfere. Since, the scope is very limited, I am of the view that no grounds are made out by the plaintiff to interfere the award and as such, I answer point Nos.1 and 2 in the negative.
37. Point No.3: For the above said reasons, I proceed to pass the following.
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Com.A.S.105/2018 ORDER The petition filed by the plaintiff under Section 34 of the Arbitration & Conciliation Act, 1996, is hereby dismissed. No costs.
(Dictated to the Stenographer, typed by him, corrected and then pronounced by me in open Court on this the 10th day of December, 2021).
(CHANDRASHEKHAR U), LXXXVII Addl.City Civil & Sessions Judge, (Exclusive dedicated commercial Court) Bengaluru.
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