Himachal Pradesh High Court
The Himachal Pradesh State Electricity ... vs M/S Sab Industries Ltd on 10 January, 2019
Author: Sandeep Sharma
Bench: Sandeep Sharma
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA Arb. Case No. 35 of 2006 Reserved on: November 27, 2018 Decided on: January 10, 2019 .
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The Himachal Pradesh State Electricity Board ...Petitioner/Objector Versus M/s SAB Industries Ltd. ...Respondent
-------------------------------------------------------------------------------- Coram:
Hon'ble Mr. Justice Sandeep Sharma, Judge. Whether approved for reporting? 1 Yes.
-------------------------------------------------------------------------------- For the petitioner : Mr. J.S. Bhogal, Senior Advocate with Mr. Suneet Goel, Advocate.
For the Respondent : Mr. P.S. Rana, Advocate.
-------------------------------------------------------------------------------- Justice Sandeep Sharma, Judge.
Present objections under S.34 of the Arbitration and Conciliation Act, 1996 have been preferred by the Himachal Pradesh State Electricity Board (hereinafter, "Board") against the award dated 22.9.2006 made by the learned arbitral tribunal consisting of Mr. S.C. Mahajan, Sole Arbitrator, whereby he has allowed the claim petition filed by the respondent and awarded a sum of `1,35,42,681/- alongwith interest at the rate of 18% per annum on the aforesaid amount from 1.4.2000 till the date of award and interest at the rate of 18% per annum from the date of award till payment. While passing the impugned 1 Whether reporters of the local papers may be allowed to see the judgment?::: Downloaded on - 14/01/2019 23:01:39 :::HCHP 2
award, the learned arbitrator has dismissed the counter claims of the petitioner.
.
2. Undisputed facts, as emerge from the record are that vide contract agreement No. GANWI-II/96 dated 23.12.1996, work of "construction of Trench Weir, Intake Structure, Intake Tunnel, Desiliting Tank and Flushing tunnel of Ganwi Hydel Project" was awarded by the Board in favour of the respondent. Clause 25 of the agreement provides for settlement of disputes between the parties, arising out of the contract, by appointing an arbitrator. The clause provides as under:
"Except where otherwise provided in the contract, all questions and disputes relating to the meaning and interpretation of the terms of contract, specifications, designs, drawings and instructions here in before mentioned, and so to the quality of workmanship or materials used in the work or as to any question, claim, right, matter or thing whatsoever in any way arising out of or relating to the contract, design, drawings, specifications, estimates, instructions, orders or these conditions or otherwise concerning the works or the execution or failure to execute the same whether arising during the progress of work or relating to termination or recession or delay in execution and all consequences thereof of the contract, shall be referred to a sole arbitrator who will be appointed by the HPSEB"::: Downloaded on - 14/01/2019 23:01:39 :::HCHP 3
3. It is further borne out from the record that dispute arose between the parties on presentation of .
29th/final bill to the Superintending Engineer, Ganwi Construction Circle, HPSEB Jeori, vide letter No. SAB/GANWI/2000/703 dated 14.3.2000, which was not accepted by the Board. The Board, vide office order No. 45 dated 13.7.2000, appointed Shri S.R. Khitta, Arbitrator to adjudicate the claim amounting to `1,35,42,681/- plus interest at the rate of 24% per annum on overall amount from 1.4.2000 to the date of award. Later vide order No. 112 dated 25.9.2001, Shri S.C. Mahajan, was appointed as the sole arbitrator. The details of claims put forth by the claimant are given by the learned arbitrator in his award in para No. 3(b). Upon completion of pleadings, the learned arbitrator below framed following issues for determination:
"1. Whether the claims of the Claimant are maintainable, if so, the amount to which the Claimant is entitled in respect of each claim? OPC
2. Whether the counter claims of the respondent are maintainable, if so, the amount to which the Claimant Respondent is entitled in respect of each claim? OPR
3. Whether the claim No 3,4 & 5 where the finality has been bestowed upon the Engineer Incharge are arbitrable under the contract? OPR
4. Whether the Claimant/Respondent are entitled to pendentelite interest on awarded amount of claim/counter claim? If so, rate of interest? OPC/ OPR
5. Whether the Claimant/Respondent are entitled to claim interest from the date of award till actual ::: Downloaded on - 14/01/2019 23:01:39 :::HCHP 4 date of payment? If so, the rate of interest? OPC/OPR
6. Whether the Claimant/Respondent are entitled to any other relief as deemed fit by the Hon'ble Arbitrator? If so, the amount?
.
4. The Board also submitted its counter claim on two counts. For the completion of facts, it may be noticed that regarding supply of documents demanded by the Board, petitioner-Board filed CMPMO No. 9 of 2003 which was dismissed by this court on 21.3.2003. Adverting to the facts of the case, the learned arbitrator held 24 hearings and vide impugned award dated 22.9.2006, allowed the claim filed by the claimant and rejected the counter claim filed by the Board. Feeling aggrieved, the Board has filed instant objections, seeking quashment of the award passed by the learned arbitrator.
5. Mr. J.S. Bhogal, learned Senior Advocate duly assisted by Mr. Suneet Goel, Advocate, appearing for the Board, while inviting attention of this court to the impugned award, vehemently argued that the same is not a reasoned award since the learned arbitrator has failed to give reasons for the findings returned by him and impugned award is against the public policy of India. It is further alleged by the Board in the petition that the learned arbitrator remained biased from the very beginning, due to which Board had to ::: Downloaded on - 14/01/2019 23:01:39 :::HCHP 5 approach this court, thereby seeking permission to be represented through a counsel, which was allowed however, .
second petition filed by it before this court, against requisitioning of the record was rejected and as such, Board was unable to represent its case effectively. It is specifically argued on behalf of the Board that the award under claim No.1 is beyond the scope of reference, which was made for `17,789/- only, which was later amended to `48,322/- by the claimant, and which the learned arbitrator ought not have permitted. It is further argued on behalf of the Board that the learned arbitrator has not even allowed recoveries under Income Tax and Sales Tax, which are statutory in nature, thus, the learned arbitrator has acted in conflict with the public policy of India. It is further argued that the recoveries on account of actual electricity consumption have also not been allowed. Mr. Bhogal, learned Senior Advocate, while pleading on behalf of the Board argued that while allowing claims No. 3 and 4 relating to refund of amount withheld for not achieving milestones and interest on such withheld amounts from the date of withholding the same, till 31.3.2000, the learned arbitrator has failed to appreciate the legal position that such claims were not arbitrable. It is also argued on behalf of the Board that the finding with regard to ::: Downloaded on - 14/01/2019 23:01:39 :::HCHP 6 delay upto 2.6.1999, having been admitted by the Board is factually wrong. It is also wrong that the work was .
completed on 16.9.1999, since competent authority had not issued relevant certificate in this regard. It is further argued that the learned arbitrator has wrongly held imposition of `7,50,000/- as compensation, to be without jurisdiction and award of interest on withheld amounts is also against public policy of India. It is further argued on behalf of the Board that the learned arbitrator, in fact, except noticing the stands of the respective parties, has not dealt them in the Award and has passed the impugned award without giving cogent findings. It is argued by the learned counsel that under Claim No. 7, relating to damages for loss of profit for alleged misrepresentation of tender cost, learned arbitrator has failed to consider the provisions of contract and has given no reasons for disagreeing with the contentions of the Board. It is specifically argued that the impugned award is against the provisions of Clauses 12 and 13 of the agreement between the parties, which entitled the Board to reduce the scope of work and to make alternations in the original specifications, drawings and designs. Similarly, it is also argued on behalf of the Board that award of `25,72,845/- on the basis of 15% loss on account of ::: Downloaded on - 14/01/2019 23:01:39 :::HCHP 7 overheads and profit is perverse since, the claimant, being a company and maintaining accounts, had failed to prove .
even the normal profit which it earned and had not produced its accounts inspite of request having been made by the Board to the learned arbitrator. Lastly, it is argued on behalf of the Board that the learned arbitrator while awarding administrative costs and litigation charges at the rate of 7.5% of total cost has acted in conflict with the principles of jurisprudence since no evidence was led by the claimant in respect of such claims, and, despite having taken note of the fact that no evidence was there in support of such claims, learned arbitrator has proceeded to allow the same. With these submissions, it is prayed on behalf of the Board that the award passed by the learned arbitrator may be quashed and set aside.
6. On the contrary, the claimant, by filing reply to the petition at hand, has pleaded that the award has been passed on the basis of pleadings, claims and counter-claims and evidence, be it ocular or documentary, adduced on record by the respective parties. It is further argued by the claimant that the learned arbitrator is the final judge of both, questions of law and facts and this court has no jurisdiction to sit over the findings of the learned arbitrator, ::: Downloaded on - 14/01/2019 23:01:39 :::HCHP 8 in appeal. It is further argued on behalf of the claimant that choice, selection and appointment of arbitrator was the sole .
prerogative of the Board. It is further argued by Mr. P.S. Rana, learned counsel representing the claimant that the impugned award is perfectly in accordance with the public policy of India. Learned arbitrator is qualified and an expert in the field to adjudicate upon the claims. Fair and sufficient opportunity to lead defence has been afforded by the learned arbitrator to both the parties. While replying to the grounds of objections, it has been specifically denied by the claimant that the learned arbitrator has acted in a biased manner.
Claimant has denied that the award under Claim No.1 is outside the scope of reference. It is argued by the claimant that it had revised the claim from `17,789/- to `48,322/- by giving details, which were not objected to by the Board and as such, learned arbitrator has rightly awarded a sum of `37,626/- under the said claim. It is also argued by the claimant that the learned arbitrator had rightly not allowed the recoveries on account of income and sales taxes since it (Board) had failed to produce any document showing such recoveries deposited by it with the Tax authorities. It is also argued that since on 20.9.1999, the claimant had requested for disconnection of the electricity connection as such, ::: Downloaded on - 14/01/2019 23:01:39 :::HCHP 9 learned arbitrator has rightly disallowed the electricity charges. It is argued on behalf of the claimant that since .
certificate was issued by the Engineer Incharge on 12.10.1999, as such, work is deemed to have been completed on said date, though the date of completion of work in the certificate has been omitted, but the certificate itself is sufficient to show that on 16.9.1999, work had been completed finally. Requirement of issuance of certified by the competent authority was merely a formality and as such, award of `7,50,000/- has been rightly made by the learned arbitrator alongwith interest thereupon. Similarly, it has been argued on behalf of the claimant that award of `4,89,482/- on account of escalation has been rightly made, which definitely is within the purview of arbitration. While arguing on the question of award on account of loss of profit, it is argued by Mr. Rana, learned counsel representing the clamant that the learned arbitrator, after considering the evidence and taking into consideration all the facts and circumstances of the case, has awarded 15% of anticipated profits. Mr. Rana strongly supported the award on account of grant of 7.5% of the total award amount, as litigation and administrative cost since, on account of the dillydallying attitude of the Board, arbitration ::: Downloaded on - 14/01/2019 23:01:39 :::HCHP 10 proceedings could not be completed in time and the claimant had to attend many hearings and had to face .
litigation in this court on account of the petitions filed by the Board. With the aforesaid submissions, Mr. Rana, while espousing the cause of the claimant, prayed for dismissal of the arbitration petition with costs.
7. I have heard the learned counsel for the parties and also gone through the record of the case carefully.
8. Before ascertaining correctness of aforesaid submissions having been made by the learned counsel for the parties vis-à-vis impugned Award passed by the learned Arbitrator, it would be apt to take note of judgment passed by Hon'ble Apex Court in Oil & Natural Gas Corporation Limited versus Western Geco International Limited (2014) 9 Supreme Court Cases 263, wherein Hon'ble Apex Court taking note of the judgment passed by the Hon'ble Apex Court in Oil & Natural Gas Corporation Limited versus Saw Pipes Limited (2003) 5 Supreme Court Cases 705, has held as under:-
"34. It is true that none of the grounds enumerated under Section 34(2)(a) were set up before the High Court to assail the arbitral award. What was all the same urged before the High Court and so also before us was that the award made by the arbitrators was in conflict with the "public policy of India"
a ground recognized under Section 34(2)(b)(ii) (supra). The expression "Public Policy of India" fell for interpretation before this Court in ONGC Ltd. v. Saw Pipes Ltd. (2003) 5 ::: Downloaded on - 14/01/2019 23:01:39 :::HCHP 11 SCC 705 and was, after a comprehensive review of the case law on the subject, explained in para 31 of the decision in the following words: (SCC pp.727-28) "31. Therefore, in our view, the phrase "public policy .
of India" used in Section 34 in context is required to be given a wider meaning. It can be stated that the concept of public policy connotes some matter which concerns public good and the public interest. What is for public good or in public interest or what would be injurious or harmful to the public good or public interest has varied from time to time. However, the award which is, on the face of it, patently in violation of statutory provisions cannot be said to be in public interest. Such award/judgment/decision is likely to adversely affect the administration of justice. Hence, in our view in addition to narrower meaning given to the term "public policy" in Renusagar case 1994 Supp(1) SCC 644, it is required to be held that the award could be set aside if it is patently illegal. The r result would be -- award could be set aside if it is contrary to:
(a) fundamental policy of Indian law; or
(b) the interest of India; or
(c) justice or morality, or
(d) in addition, if it is patently illegal.
Illegality must go to the root of the matter and if the illegality is of trivial nature it cannot be held that award is against the public policy. Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the court. Such award is opposed to public policy and is required to be adjudged void."
35. What then would constitute the 'Fundamental policy of Indian Law' is the question. The decision in Saw Pipes Ltd.
(supra) does not elaborate that aspect. Even so, the expression must, in our opinion, include all such fundamental principles as providing a basis for administration of justice and enforcement of law in this country. Without meaning to exhaustively enumerate the purport of the expression "Fundamental Policy of Indian Law", we may refer to three distinct and fundamental juristic principles that must necessarily be understood as a part and parcel of the Fundamental Policy of Indian law. The first and foremost is the principle that in every determination whether by a Court or other authority that affects the rights of a citizen or leads to any civil consequences, the Court or authority concerned is ::: Downloaded on - 14/01/2019 23:01:39 :::HCHP 12 bound to adopt what is in legal parlance called a 'judicial approach' in the matter. The duty to adopt a judicial approach arises from the very nature of the power exercised by the Court or the authority does not have to be separately or additionally enjoined upon the fora concerned. What must be .
remembered is that the importance of Judicial approach in judicial and quasi judicial determination lies in the fact that so long as the Court, Tribunal or the authority exercising powers that affect the rights or obligations of the parties before them shows fidelity to judicial approach, they cannot act in an arbitrary, capricious or whimsical manner. Judicial approach ensures that the authority acts bonafide and deals with the subject in a fair, reasonable and objective manner and that its decision is not actuated by any extraneous consideration. Judicial approach in that sense acts as a check against flaws and faults that can render the decision of a Court, Tribunal or Authority vulnerable to challenge."
9. It clearly emerges from the aforesaid judgment that the concept of "public policy" connotes some matter which concerns public good and the public interest.
Similarly, award/judgment/decision likely to adversely affect the administration of justice has been also termed to be against "public policy."
10. Reliance is also placed upon a judgment passed by Hon'ble Apex Court in Hindustan Tea Company v. M/s K. Sashikant & Company and another, AIR 1987 Supreme Court 81; wherein it has been held as under:-
"Under the law, the arbitrator is made the final arbiter of the dispute between the parties. The award is not open to challenge on the ground that the Arbitrator has reached a wrong conclusion or has failed to appreciate facts.
Where the award which was a reasoned one was challenged on the ground that the arbitrator ::: Downloaded on - 14/01/2019 23:01:39 :::HCHP 13 acted contrary to the provisions of Section 70 of the Contract Act, it was held that the same could not be set aside."
.
11. Similarly, Hon'ble Apex Court in M/s Sudarsan Trading Company v. The Government of Kerala and another, AIR 1989 Supreme Court 890, has held as under:-
"It is not open to the court to probe the mental process of the arbitrator and speculate, where no reasons are given by the arbitrator as to what impelled him to arrive at his conclusion. In the instant case the arbitrator has merely set out the claims and given the history of the claims and then awarded certain amount. He has not spoken his mind indicating why he has done what he has done; he has narrated only how he came to make the award. In the absence of any reasons for making the award, it is not open to the Court to interfere with the award. Furthermore, in any event, reasonableness of the reasons given by the arbitrator, cannot be challenged. Appraisement of evidence by the arbitrator is never a matter which the Court questions and considers. If the parties have selected their own forum, the deciding forum must be conceded the power of appraisement of the evidence. The arbitrator is the sole judge of the quality as well as the quantity of evidence and it will not be for the Court to take upon itself the task of being a judge on the evidence before the arbitrator."
12. Reference is also made to the judgment passed by the Hon'ble Apex Court in McDermott International Inc. v. Burn Standard Company Limited and others (2006) 11 Supreme Court Cases 181. The relevant paras of the judgment are reproduced as under:-
::: Downloaded on - 14/01/2019 23:01:39 :::HCHP 14"In terms of the 1996 Act, a departure was made so far as the jurisdiction of the court to set aside an arbitral award is concerned vis-a-vis the earlier Act. Whereas under Sections 30 and 33 of .
the 1940 Act, the power of the court was wide, Section 34 of the 1996 Act brings about certain changes envisaged thereunder. Section 30 of the Arbitration Act, 1940 did not contain the expression "error of law...". The same was added by judicial interpretation.
While interpreting Section 30 of the 1940 Act, a question has been raised before the courts as to whether the principle of law applied by the arbitrator was (a) erroneous or otherwise or (b) wrong principle was applied. If, however, no dispute existed as on the date of invocation, the question could not have been gone into by the Arbitrator.
The 1996 Act makes provision for the supervisory role of courts, for the review of the arbitral award only to ensure fairness. Intervention of the court is envisaged in few circumstances only, like, in case of fraud or bias by the arbitrators, violation of natural justice, etc. The court cannot correct errors of the arbitrators. It can only quash the award leaving the parties free to begin the arbitration again if it is desired. So, scheme of the provision aims at keeping the supervisory role of the court at minimum level and this can be justified as parties to the agreement make a conscious decision to exclude the court's jurisdiction by opting for arbitration as they prefer the expediency and finality offered by it.
The arbitral award can be set aside if it is contrary to (a) fundamental policy of Indian law;(b) the interests of India; (c) justice or morality; or (d) if it is patently illegal or arbitrary. Such patent illegality, however, must go to the root of the matter. The public policy violation, indisputably, should be so unfair and unreasonable as to shock the conscience of the court. Lastly where the Arbitrator, however, has ::: Downloaded on - 14/01/2019 23:01:39 :::HCHP 15 gone contrary to or beyond the expressed law of the contract or granted relief in the matter not in dispute, would come within the purview of Section 34 of the Act.
.
What would constitute public policy is a matter dependant upon the nature of transaction and nature of statute. For the said purpose, the pleadings of the parties and the materials brought on record would be relevant to enable the court to judge what is in public good or public interest, and what would otherwise be injurious to the public good at the relevant point, as contradistinguished from the policy of a particular government."
13. It is quite apparent from the aforesaid exposition of law that scope of interference by Court is very limited while considering objections having been filed by the aggrieved party under S.34 of the Act. Award passed by the learned Arbitrator can be interfered with in case of a fraud or bias or violation of principles of natural justice.
Interference, if any, on the ground of 'patent illegality' is only permissible, if the same goes to the root of the case.
Violation should be so unfair and unreasonable as to shock the conscience of the Court. In the judgment referred herein above, it has been held by the Hon'ble Apex Court that what is to be constituted as 'public policy' is a matter dependent upon the transaction and nature of the statute, but the same should be so unfair and unreasonable as to shock the conscience of the Court, as has been observed herein above.
::: Downloaded on - 14/01/2019 23:01:39 :::HCHP 1614. Similarly, there can not be any dispute, as has been repeatedly held by the Hon'ble Apex Court as well as .
this Court that the court, while deciding objections, if any, filed by the aggrieved party under S.34 of the Act, against the Award passed by an Arbitrator, does not sit in appeal over the findings returned by the learned Arbitrator and there can not be any reappraisal of evidence on the basis of which learned Arbitrator has passed the Award. Otherwise also, in terms of S. 34 of the Act, objections, if any, filed by the aggrieved party can be considered by the Court, if the Award is in any manner against the public policy, which certainly has to be liberally interpreted in view of the facts of the case.
15. Now, this court shall proceed to consider the facts of the instant case in light of the law discussed herein above and determine whether the impugned award is against the public policy of India as claimed on behalf of the objectors.
16. Careful perusal of the impugned award passed by the learned arbitrator clearly reveals that the arbitrator has carefully dealt with each and every argument advanced by Mr. Bhogal, learned Senior Advocate before this court.
There is no force in the argument of Mr. Bhogal, learned ::: Downloaded on - 14/01/2019 23:01:39 :::HCHP 17 Senior Advocate that the arbitrator has passed the award in a most cursory manner without looking into the material .
placed before him.
17. Having gone through the award passed by the arbitrator, this court has no hesitation to conclude that the arbitrator has dealt with each and every contention raised by either of the parties. Learned arbitrator, in a most meticulous manner before proceeding to decide the contentious issues between the parties, framed issues for deciding the same on the basis of pleadings adduced on record by the respective parties. Award further reveals that the learned arbitrator before adjudicating the claims and counter-claims filed by respective parties decided the issues and then proceeded to decide the claims and counter-
claims. Though this court having seen the reasoning returned by the learned arbitrator, while accepting the claims of the respondent-claimant and rejecting the counter-
claim filed by the objector-petitioner, sees no reason to elaborate upon the matter any further, but, even if contentions/submissions having been made by Mr. Bhogal, learned Senior Advocate representing the petitioner are tested/analyzed vis-à-vis reasoning assigned by the learned arbitrator in the impugned award, this court is not ::: Downloaded on - 14/01/2019 23:01:39 :::HCHP 18 persuaded to conclude that the award, in any manner, is against the public policy of India, as has been argued by Mr. .
Bhogal, learned Senior Advocate. Mr. Bhogal, strenuously argued that the arbitrator while deciding claim No. 1 travelled beyond the scope of reference and erroneously allowed the claimant to amend its claim, which was originally made for `17,789/- to `48,322/-. If the reasoning assigned by the learned arbitrator for allowing the amendment is perused, this court finds that the claimant in its original claim had reserved right to revise its claim and accordingly, in the rejoinder, claimant revised the claim from `17,789/- to `48,322/-. Though the petitioner-objector took pleas of estoppel and Order 2 Rule 2 CPC before the learned arbitrator but the learned arbitrator, having carefully gone through the record rightly concluded that the objector-petitioner has not proved that amount of `86,831/-
is recoverable from the complainant, whereas evidence in support of claim for an amount of `48,322/- is already on record. Finding returned qua aforesaid claim, further reveals that though the petitioner claimed that the recovery of income tax amount to `15,978/- and sales tax amounting to `14,525 has been done as per tariff and Rules and had denied that these amounts were non-recoverable, however, ::: Downloaded on - 14/01/2019 23:01:39 :::HCHP 19 petitioner was unable to produce any documentary evidence in support of recoveries made by it in the 29th/final bill, and .
as such, learned arbitrator rightly held that recovery of `15,978/- against income tax and `14,525/- against sales tax have been wrongly made and claimant is entitled to receive the said amounts.
18. Mr. Bhogal, learned Senior Advocate further argued that the arbitrator, while allowing claims No. 3 and 4, relating to revision of amount withheld for not achieving the milestones and interest on amounts withheld for milestones till 31.3.2000, failed to appreciate the legal position that such claim was not arbitrable but, aforesaid argument having been advanced by Mr. Bhogal, is wholly untenable in view of the findings returned by the learned arbitrator. It is not in dispute that letter of intent was issued in favour of respondent-claimant vide No. HPSEB/DP/Ganwi-Tender-96-188-189 dated 4.12.1996, whereafter, agreement for a tender cost of `4,23,22,375/-
was executed. It is also not in dispute that time of completion of work was two years and date of completion of work was 6.1.1999. Record reveals that the work could not be completed within the original time period stipulated in the contract agreement, as such, Engineer-in-Chief, granted ::: Downloaded on - 14/01/2019 23:01:39 :::HCHP 20 five extensions of time in favour of claimants from 6.1.1999 to 30.9.1999 and work was actually completed on .
16.9.1999, which fact stands duly proved from the deviation statement prepared by Assistant Engineer, Ganwi Construction Sub Division No. VII, HPSEB, Ganwi.
Moreover, in the deviation statement, the Assistant Engineer has specifically mentioned the date of completion of work as "16.9.1999", which fact has not been contradicted by the Board, as has been categorically recorded by the learned arbitrator, while returning findings qua claims No.3 and 4.
Since provision for extension of time for completion is provided in Clause 5 of the agreement. Clause 5 i.e. "EXTENSION OF TIME FOR COMPLETION" clearly provides that the time allowed for execution of the entire work as laid down in the scope of work/schedule of quantities shall be strictly observed by the contractor and shall be deemed to be the essence of the contract and completion time shall be 24 months to be reckoned after 15 days from signing of the contract agreement. As per Clause 5 b), no extension of time for the completion of work could be claimed by the contractor as a matter of right, however, if the contractor desires extension of time for completion of work on account of unavoidable circumstances, other than due to the default ::: Downloaded on - 14/01/2019 23:01:39 :::HCHP 21 on the part of contractor in the execution of work or due to force majeure, contractor is required to apply in writing to .
the Engineer-in-Charge, within 15 days of the date of such hindrance, on account of which the contractor desires such extension, and the Board, on the recommendation of Engineer-in-Charge, may grant necessary extension of time, if in its opinion reasonable grounds have been shown therefor.
19. In the case at hand, Engineer-in-Charge i.e. Superintending Engineer, Ganwi Construction Circle, HPSEB, Jeori granted provisional time extension from 7.1.1999 to 30.9.1999, whereas, there is no provision in the contract agreement to provide such provisional time extension. Similarly, there is no provision in the contract agreement for granting of provisional extension of time for completion of work nor any rider could be put while granting extension of time. In the letters granting extensions of time, Engineer-in-Charge has nowhere stated that the delay in achieving the first milestone and second milestone was attributable to the contractor, therefore, observations of the Engineer-in-Charge in the letters granting extension of time, to the extent that, provisional extension of time for completion of work is without prejudice to the right of ::: Downloaded on - 14/01/2019 23:01:40 :::HCHP 22 HPSEBL to recover liquidated damages in accordance with the provisions of Clause 2 of the contract agreement, has .
been rightly held to be illegal and without any jurisdiction by the learned arbitrator. Since the learned arbitral tribunal held power of petitioner/objector to recover liquidated damages in terms of Clause 2 of the contract agreement to be illegal and without any jurisdiction, Engineer-in-Charge had no jurisdiction to impose compensation of `7,50,000/-
for not achieving the milestone, as such, learned arbitral tribunal rightly held that it has jurisdiction to go into the question, whether the compensation imposed by the Engineer-in-Charge is legal or not, because, the learned arbitral tribunal/sole arbitrator, while doing so, has not gone into the question of quantum of compensation, rather, he has decided the question, whether the Engineer-in-
Charge had the jurisdiction to impose the compensation.
While returning aforesaid findings. Learned arbitral tribunal has rightly placed reliance upon the judgment reported in M/s Aggarwal and Company vs. State of H.P. 199(3) Shim.
L.C. 94, wherein it has been held as under:
"24. Whet the Apex Court held is that the matter as to amount of compensation to be levied under clause 2 of the agreement cannot be referred to arbitrator. In other words, the quantum of compensation levied ::: Downloaded on - 14/01/2019 23:01:40 :::HCHP 23 under Clause 2 is not Arbitral. However, the competency of the authority imposing and assessing such amount of penalty/compensation can always .
be looked into by the arbitrator before allowing or disallowing such claim. In this regard, the following observations made by the apex court in Vishwanath Sood's case (supra) are noteworthy:-
"... the decision of the Superintending Engineer, it seems to us, is in the nature of considered decision which he has to arrive at after considering the various mitigating circumstances that may be pleaded by the contractor or his plea that he is not liable to pay compensation at all under this clause. In our opinion, the question regarding the amount of compensation leviable under Clause 2 has to be decided only by the r Superintending Engineer and no one else.""
20. Similarly, this court finds no illegality or infirmity in the award made by the learned arbitrator on account of loss of profits for alleged misrepresentation of tender cost, because work was allotted on a tender cost of `4,23,22,375/-, but, admittedly, petitioner got executed work of `2,51,70,072/- from the claimant, as a result of which, claimant suffered loss of ` 42,88,076/- on account of anticipated profits at the rate of 25% of `1,71,52,303/-.
21. Findings returned by the learned arbitrator qua aforesaid aspect of the matter, nowhere compel this court to agree with the contention of Mr. Bhogal, learned Senior Advocate that the contention raised by the petitioner with regard to aforesaid claim raised on behalf of the respondent-
::: Downloaded on - 14/01/2019 23:01:40 :::HCHP 24claimant has not been appreciated, rather, this court finds that the aforesaid claim has been decided by the arbitrator .
in light of the law laid down by this court in the judgment rendered in R.K. Sood vs. Dr. Y.S. Parmar, University of Horticulture and Forestry, 2001 SLC 127.
22. This court is also unable to agree with Mr. Bhogal, learned Senior Advocate that the learned arbitral tribunal, while awarding administrative cost and litigation charges at the rate of 7.5% of the total cost has acted in contravention with the principles of jurisprudence, because the learned arbitral tribunal has held the claimant entitled to 15% of the total claim value contrary to their claim of 20% of the total claim amount. Learned arbitrator, while awarding aforesaid amount has observed that though the claimant has not tendered any documentary evidence pertaining to the claim, yet it has spent a lot of time and money towards submitting documentary evidence and they had to depute senior officers to attend twenty four proceedings held by the learned arbitrator. Learned arbitrator has further held that since the petitioner-objector failed to settle the dispute in normal course and forced the claimant into arbitration proceedings, as such, claimant deserves to be compensated for the expenses incurred on ::: Downloaded on - 14/01/2019 23:01:40 :::HCHP 25 this count. Needless to say, arbitration proceedings have been provided for speedy disposal of the disputes inter se .
parties and in case same are delayed, party responsible for the delay is liable to pay the litigation cost.
23. It would be appropriate to discuss a few of the judgments rendered by Hon'ble Apex Court and this court.
In a judgment rendered by the Division Bench of this court in Madho Singh Ahuja vs. H.P. Housing Board and another decided on 9.5.2012, it has been held that the arbitrator can not assume jurisdiction beyond what has been conferred on him by an agreement and high court has no scope of re-appreciating the evidence.
24. Delhi High Court in Delhi Development Authority vs. M/s. Bhardwaj Brothers, 2014 AIR (Delhi) 147, has held that power to intervene must and should only be exercised sparingly within the framework of the Arbitration and Conciliation Act and it would be neither appropriate nor consonant for the court to lend assistance to a dissatisfied party by exercising appellate function over the arbitral awards. Delhi High Court in yet another judgment in Rakesh Kumar and Company vs. Union of India, FAO(OS) No. 273 of 2014 decided on 15.4.2015, refused to intervene since there was nothing manifest on the ::: Downloaded on - 14/01/2019 23:01:40 :::HCHP 26 face of the award so grave as to move the conscience of the court or resulted in grave miscarriage of justice .
25. Hon'ble Apex Court in P.R. Shah, Shares and Stock Broker (P) Ltd. vs. M/s. B.H.H. Securities (P) Ltd.
and others, (2012) 1 SCC 594 has held that court does not sit in appeal over award of arbitral tribunal by reassessing or re-appreciating evidence. In Swan Gold Mining Ltd. vs. Hindustan Copper Ltd. Civil Appeal No. 9048 of 2014, decided on 22.9.2014, it has been held by the Hon'ble Apex Court that the interpretation of agreement is a matter within the jurisdiction of the arbitrator. It has been specifically held that the court shall not substitute its interpretation for that of the arbitrator. Hon'ble Apex Court in Sutlej Construction vs. Union Territory of Chandigarh, (2018) 1 SCC 718, has held that since the arbitrator is a chosen judge of the parties, High Court is not justified in re-appreciating the evidence.
26. Hon'ble Apex Court in M/s. Hyder Consulting (UK) Ltd. vs. Governor, State of Orissa, (2015) 2 SCC 189, has held that interest on interest is not permissible under sub-section (7) of the S. 31 of the Act and as such, interest on interest cannot be awarded.
::: Downloaded on - 14/01/2019 23:01:40 :::HCHP 2727. Hon'ble Apex Court in State of Goa v. Praveen Enterprises, (2012) 12 SCC 581, has also held that the .
claimant is not bound to restrict its claim to the claims already raised by him in the notice, unless arbitration agreement refers to specific disputes, but, claimant and respondent are entitled to make any claims or counter-
claims and they are also entitled to add or amend the claims and counter-claims provided they are arbitrable and within limitation.
28. Having considered the facts of the case in light of the aforesaid exposition of law, this Court has no hesitation to conclude that the impugned Award, as has been assailed before this Court by way of objections under S.34 of the Act, is neither against public policy nor has been passed in violation of principles of jurisprudence. Perusal of the objections filed by the Board/objector suggests that neither there are any specific allegations that Award is against the public policy nor it has been clarified as to which finding or findings made by the learned Arbitrator is/are against the public policy, save and except general allegations that the Award is against express terms of the contract, unjust, unfair and unsustainable and patently illegal.
::: Downloaded on - 14/01/2019 23:01:40 :::HCHP 2829. In view of the detailed discussion made herein above, this Court sees no reason to interfere in the .
impugned Award, which otherwise appears to be based upon proper appreciation of evidence. Needless to say that jurisdiction of the Courts is limited and Award can be set aside only if it is against public policy of India, but, in the case at hand, neither any material has been placed on record, nor any arguments have been raised on behalf of the objector to substantiate the fact that the impugned Award is against the public policy of India. Question of interpretation of agreement and its terms and sufficient evidence is /was well within domain of the learned Arbitrator as such, no grievance, if any, could be raised qua the same by either of the parties, as such, objections having been filed by the objector deserve to be dismissed being unsustainable in the eye of law.
30. Consequently, in view of above, this Court sees no valid reason to interfere with well reasoned award passed by the learned Arbitrator, as such, present petition is dismissed. Award passed by the learned arbitrator is upheld.
(Sandeep Sharma) Judge January 10, 2019 vikrant ::: Downloaded on - 14/01/2019 23:01:40 :::HCHP