Bombay High Court
M/S. Ambika Construction Co vs Union Of India on 12 October, 2011
Author: Anoop V. Mohta
Bench: Anoop V. Mohta
1 arbp131.09.sxw
ssm
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO. 131 OF 2009
M/s. Ambika Construction Co.,
Sunswept Building, A-401,
Lokhandwala Complex,
Andheri (W). ......Petitioners.
Vs.
1 Union of India,
acting through
The Executive Engineer,
Mumbai Central Division-VI,
CPWD, New CGO Building,
101, M.K. Road,
Mumbai-400 020.
2 Shri K.K. Varma,
Ld. Sole Arbitrator,
No. 2617, Sector-1,
27th Main, HSR Layout,
Banglaore-560 034. ......Respondents.
Ms. Shilpa Kapil for the Petitioners.
Mr. G Hariharan for Respondent No.1-Union of India.
CORAM :- ANOOP V. MOHTA, J.
JUDGMENT RESERVED ON :- 27 SEPTEMBER 2011
JUDGMENT PRONOUNCED ON :- 12 OCTOBER 2011.
JUDGMENT:-
::: Downloaded on - 09/06/2013 17:50:08 :::2 arbp131.09.sxw ssm The Petitioners who are the original claimants have challenged the award dated 29 September 2008 passed by the learned Arbitrator whereby the part claims have been allowed. Therefore, the present Petition under Section 34 of the Arbitration and Conciliation Act, 1996 (for short, the Arbitration Act) for the remaining claims/amount.
2 The nature of the work was of Construction of Plant Quarantine Laboratory at Sewri, Mumbai. The costs of the work was `37,85,053/-. The work was to commence from 29 August 2002 and supposed to be completed within six months i.e. on or before 28 February 2003. As per the Petitioners-claimants the drawings were given in part. The complete set of drawings was not provided to complete the work in stipulated period. The drawings were amended from time to time. The Respondents delayed the payments also. That delayed the progress of the work. Therefore, for one reason or other and also because of default of both the parties the work could not be completed within the stipulated period. By agreement the time was extended and accordingly the work was completed. However, there arose certain disputes between the parties. Therefore, the Arbitrator was appointed.
::: Downloaded on - 09/06/2013 17:50:08 :::3 arbp131.09.sxw ssm 3 The Petition was filed before the Arbitrator on 30 August, 2006 for 14 claims. Respondent No.1 resisted the claim in every aspect and raised a counter claim of costs of Arbitration amount also. Both the parties agreed and proceeded accordingly to the Arbitration Act which is the governing and binding law, apart from the terms and conditions of the contract.
4 No evidence was led by the parties to support their case/claim.
Based upon the pleadings and documents and the respective submissions the Arbitrator has passed the impugned award.
5 The submission that though the Claimants pressed all the claims, the Arbitrator has wrongly recorded that the Claimants did not press certain claims. This submission, according to me, now cannot be gone into for the first time in Section 34 Petition, though there is a ground raised in the Petition. The Arbitration Act provides and take care of such situation specifically when either party if finds that there is an apparent error on face of record, they can apply to the Arbitrator for such correction. The factual statement recorded by the Arbitrator in ::: Downloaded on - 09/06/2013 17:50:08 ::: 4 arbp131.09.sxw ssm the present case that the Claimants not pressed certain claims and has passed the award accordingly, just cannot be re-opened for the first time, as other side has also contended that the same is rightly recorded. Therefore, if there was any grievance with regard to this, the Petitioners ought to have moved an appropriate application before the Arbitrator to clarify the position, which on inquiry and based upon the documents placed on record, admittedly not done. Therefore, this factual recording, without any contra material on record, just cannot be gone into and cannot be accepted as a ground to set aside the award. The parties even otherwise, are entitled to waive the claim in part or full even before the Arbitrator. This mode is permissible under the law. Having therefore, not pressed the point before the Arbitrator, I am not inclined to accept their submission to remand the matter and/or quash and set aside the matter on this ground. The submission of fair opportunity and the principle of natural justice, as contemplated under the Arbitration Act, are of no assistance in view of specific recording by the Arbitrator that the Petitioners did not press these points and also for the fact that the Arbitration Act recognizes and permits the party to waive their claims in full or in part. The conduct, order and the reasoning so recorded by the Arbitrator with this regard are within the framework of law and the record. The ::: Downloaded on - 09/06/2013 17:50:08 ::: 5 arbp131.09.sxw ssm Award cannot be interfered on this count.
6 It is pertinent to note that the claimants/petitioners have filed an affidavit dated 14 November 2007 at the end of conclusion of the arguments which provides the averments with regard to the points not pressed during the course of hearing. Therefore, as recorded in the Award that the claimants had not pressed the points and in fact withdrawn some of the points is further endorsed in this affidavit.
Therefore, the submission made by the learned counsel appearing for the Petitioners that the Arbitrator wrongly recorded that certain points not pressed during the argument is also unacceptable. On the contrary, it is against their own affidavit and the finding recorded by the learned Arbitrator. Such submission is therefore untenable and impermissible. Following claims, the Petitioners did not press, as recorded in the Award:-
Claim No.3 (Item Nos. 1.1.1, 2.1.2, 2.12, 9.3.2, 10.4, 10.7), Claim No. 5, Claim No.8 was also recorded in the rejoinder dated 13 January 2007. There are other part items/claims as recorded not pressed.::: Downloaded on - 09/06/2013 17:50:08 :::
6 arbp131.09.sxw ssm 7 The Arbitrator, after taking into consideration an affidavit and the document placed on record and as the claimants/petitioners failed to substantiate the affidavit so filed in support of the claims, granted nil award with regard to claim Nos. 3, 4, 5, 6, 8, 10, 11 and 12 by giving detailed and proper reasoning.
8 The second important aspect in the matter is that there was delay and latches on the part of both the parties. The Petitioners, continued to work and completed the project in view of the extension of time granted, by consent of both the parties therefore, unless agreed specifically, are not entitled for any extra amount and/or claim on this count. Such party is estopped from raising and claiming any extra amount or claim because of escalation of prices. It is not the case that the Petitioners were prevented by unforeseen circumstances from completing the work within stipulated period. In the present case, the Petitioners agreed to complete the work on the same terms and conditions without any objection. Therefore, the judgment so relied 1 is of no on K.N. Sathyapalan (Dead) By Lrs. Vs. State of Kerala assistance to support such claims as submitted in the Court.
1 2006(4) Arb.LR 275 (SC) ::: Downloaded on - 09/06/2013 17:50:08 :::
7 arbp131.09.sxw ssm 9 . 2 I In Sahyadri Earthmovers vs. L and T Finance Ltd. And anr have observed as under ;
"6 Section 19 of the Arbitration Act, which is reproduced contemplates when the parties agree on a particular procedure to be followed by the Arbitral Tribunal, all are bound to follow the same, but in its absence, the Arbitral Tribunal is bound to conduct the proceeding in the manner it considers appropriate. It also means that the Arbitrator has power to determine the admissibility, relevance, materiality and weight in evidence though the provisions of the Code of Civil Procedure and/or Indian Evidence Act, are not binding upon the Tribunal."
10 It is also necessary to note that in absence of any specific rule and/or procedure, while awarding the compensation and/or assessing the damages, the Arbitrator needs to follow the basic principles as provided under the Evidence Act. It depends upon the facts and circumstances of each case. No fixed rule or formula to grant loss of profit, overhead charges, compensation for unutilised machineries, labours and such related aspect can be announced or declared.
( Union of India vs. M/s. R.P . Shah 3 ).
11 The burden of proof is normally on the Plaintiff/claimant to 2 2011 (4) Mh. L.J. 200 3 2011 (3) Mh. L.J. 126 ::: Downloaded on - 09/06/2013 17:50:08 ::: 8 arbp131.09.sxw ssm prove the claims/losses. Therefore, if a party fails to discharge the basic burden/onus for want of pleading and evidence and proof, the Arbitrator is not bound to grant any damages to such party.
12 The aspect of mitigating of loss as contemplated under the Contract Act is also a relevant factor while assessing the loss suffered by the aggrieved party if any. Therefore, in the absence of any rules and/or admission of documents or fact, the Arbitrator needs to follow the principles as laid down in the Evidence Act read with Contract Act while assessing the quantum of compensation/damages of any kind. [ Oil & Natural Gas Corporation Limited vs. Oil Country Tubular Limited 4 ).
13 I have in Oil & Natural Gas Corporation Limited vs. Oil Country Tubular Limited , 5 observed with regard to the claim of damages and/or assessment of damages, the importance of evidence/material on record which need to be proved by the claimant.
No fault can be found with the Award so passed in the present case by recording reasons that the claimants/petitioners failed to substantiate the same. The Arbitrator, however, granted/awarded the claims in 4 2011 (5) Bom. C.R. 198 5 2011(5) Bom. C.R. 198 ::: Downloaded on - 09/06/2013 17:50:08 ::: 9 arbp131.09.sxw ssm part, based upon the material so available on record.
14 The Arbitrator in so far as Claim No.1 is concerned, i.e. Working done not included in the final bill, taking note of overall eight components awarded payment for excavation total amount of `3,626/- based upon the measurements and material on record.
15 For disposal of escavated earth, as there was no provision in the agreement which casts obligations on the Respondent to identify the approved municipal area for dumping of earth. The claimants/petitioners had utilized the dumping places as per his own convenience, taking note of his commercial interest, the claim was thereby rightly rejected as not tenable.
16 For the claim of measurement not paid, the Arbitrator has awarded ` 3773/- based upon the material and measurement available on record cannot be stated to be unjust and/or contrary to the record.
17 For extra item not included in the final bill based upon 12 extra items, the Arbitrator has awarded ` 3740/- towards cutting and ::: Downloaded on - 09/06/2013 17:50:08 ::: 10 arbp131.09.sxw ssm disposal of two big trees. For raising height of gully traps the Arbitrator has awarded ` 3463/-. For balance payment for providing M-25 concrete mix, the Arbitrator has awarded for this extra item ` 3805/- and thereby awarded a total sum of ` 11,009/- against claim No.2 by rejecting other claims, as there was no sufficient material placed on record and it was not within the ambit of the terms and conditions.
18 For the rate difference for excess quantity of various items as per claim no.4, the Arbitrator has granted no amount as the claimants failed to submit the supporting material and it was not within the scope of the agreement.
19 So far as the payment under escalation clause as mentioned in claim No.6, based upon clause 10CC, which provides that escalation was admissible only if the stipulated time for completion of work was more than 18 months. Admittedly, the completion period was of six months. The Arbitrator has recorded that there was delay and latches also on the part of the claimants. For this claim, based upon K.N. Sathyapalan (Supra), on facts and circumstances, by providing sufficient reason, not awarded any amount. The Arbitrator has also ::: Downloaded on - 09/06/2013 17:50:08 ::: 11 arbp131.09.sxw ssm recorded that the claimants had not placed any document on record to demonstrate the amount of loss actually suffered by them. There is no evidence on record that payments under duress were made to complete the work. There is a sufficient material on record to show that the claimants/petitioners agreed and proceeded to complete the work inspite of the expiry of the prescribed period of six months. On the contrary, the Arbitrator has granted underutilisation of overhead charges (claim no.9) in favour of the petitioners. There was no counter claim and/or challenge raised by the Respondent on this count. Therefore, the award in this regard, needs no interference.
20 I have already observed in Arbitration Petition No.388/2007- Union of India vs. M/s. Arctic India dated 21-1-2011, based upon the Supreme Court judgment as under :
"47 Even if two views are possible on an interpretation of central clause, that would not be justification in interfering with the Award specially when the view so taken is possible/plausible one and there is no perversity." [State of U.P. vs. Allied Constructions (2003) 7 SCC 396, G Ramchandra Reddy and Company vs. Union of India and anr., (2009) 6 SCC 414, M/s. Sumitomo Heavy Industries Ltd. vs. Oil and Natural Gas Commission of India, 2010 Arb. W.L.J. 449 (SC)]".::: Downloaded on - 09/06/2013 17:50:08 :::
12 arbp131.09.sxw ssm 21 The Arbitrator has granted claim No.7 by holding that there is enough evidence on record to substantiate this claim.
22 The Arbitrator, however, considering the material on record read with the rejoinder dated 13 January 2007 and by recording that the extension of time for a period of 25 months in completion of work was granted without levy of compensation under clause 2 of the agreement, though there was hindrance free site was available but the claimants took 21 months to complete the work as against the stipulated time of six months. The slow progress attributable to the claimants also therefore, ultimately recorded that there was concurrent delays and therefore, in the interest of justice observed that the Respondent as well as the claimants are responsible for delay of 12.1/2 months to determine the amount admissible under this scheme by dividing the total period of 25 months.
23 The Arbitrator has also given reasons that as per the schedule "F" of the agreement, the percentage on cost of material and labour, to cover all overheads and profit is 10 i.e. 7.1/2% as profit and 2 1/2% as overheads and thereby calculated average overheads by further observing that the claimants ought to have taken some steps to ::: Downloaded on - 09/06/2013 17:50:08 ::: 13 arbp131.09.sxw ssm mitigate the loss while working during the extended period and thereby awarded sum of `1,36,181/- against claim No.9. This also, considering the facts and circumstances, needs no interference specifically because there is no counter claim or challenge raised by the Respondent in this regard.
24 The Arbitrator therefore rightly not granted underutilisation of labour force as mentioned in claim no.10. Apart from above, the Petitioners failed to substantiate this claim inspite of repeated direction to bring on record the originals of the "Monthly Muster Book" filed as Exhibits C-262 to C-294. The Arbitrator has also observed that the documents were not prepared during the actual execution of work but were tailor-made for the arbitration proceedings and therefore rightly rejected those documents as having no evidentiary value.
25 The same principle and reasoning, the Arbitrator has extended for underutilisation of machinery as mentioned in claim No.11. The Arbitrator has observed that it was not necessary for keeping these machineries at site right from the stipulate date of commencement till the recorded date of completion, inspite of the fact that the work was ::: Downloaded on - 09/06/2013 17:50:08 ::: 14 arbp131.09.sxw ssm not progressing. The Arbitrator has also recorded mismatch between the hire concrete mixer and the work done with the concrete mixer which makes the claim untenable by further observing that the concrete mixers on hire were easily available on demand. The Arbitrator has also observed that there was no justification for keeping a truck at site for full 31 months and further despite directions, the petitioners/claimants failed to produce the terms and conditions on which the machineries were hired and so also the original bills of hire charges and/or proof of payment of hire charges. The same reasoning therefore rightly utilised by the Arbitrator while rejecting the claim of underutilisation of centering and shuttering as mentioned in claim no.
12. 26 It is well settled that the pre-preference, pendente-lite and future interest are payable if there is no specific provision in the agreement. There is no such bar in the agreement for the work in question. The Petitioners have claimed 24% interest. However, considering overall view of the matter, including clause 25 of the agreement, the Arbitrator has rightly awarded the simple interest of 8% per annum on ` 24,964/- against claim no.12 and 7 from 10 August 2006 till the date of making of this award i.e. 29 September ::: Downloaded on - 09/06/2013 17:50:08 ::: 15 arbp131.09.sxw ssm 2008. The Arbitrator has also awarded future interest at 10% simple on `1,61,155/- from 30 September 2008 till the date of payment of the award. The Arbitrator however not granted future interest by observing that if Award is paid to the claimants within three months from the date of the receipt of the Award.
27 However, if amount is not paid within three months as awarded , the Petitioners are entitled at the rate of 9% per annum on the awarded amount from the date of present Petition till realisation.
[Krishna Bhagya Jala Nigam Ltd. Vgs. G. Harischandra Reddy & anr 6 .] 28 The Arbitrator, in the facts and circumstances, therefore, awarded no costs as the claimants failed to substantiate number of claims and in fact withdrawn number of claims, I see there is no reason even to interfere with the same and also observed that Respondent to bear their own costs need no interference.
29 Taking overall view of the matter as well as the material placed on record including the reasoning given by the Arbitrator, in my view, 6 2007 AIR SCW 527 ::: Downloaded on - 09/06/2013 17:50:08 ::: 16 arbp131.09.sxw ssm there is no case made out to interfere with the same. The award is well within the frame work of law and the record. It needs no interference.
30 Resultantly, the Arbitration Petition is dismissed with the above observation. There shall be no order as to costs.
(ANOOP V. MOHTA, J.) ::: Downloaded on - 09/06/2013 17:50:08 :::