Bangalore District Court
Sri.P.Mahadeva vs ) The Union Of India on 4 August, 2020
IN THE COURT OF THE VI ADDL. CITY CIVIL & SESSIONS JUDGE
AT BENGALURU CITY
(CCCH.11)
Dated this the 4th day of August, 2020
PRESENT: Sri.Rama Naik, B.Com., LL.B.,
VI Addl.City Civil & Sessions Judge,
Bengaluru City.
A.S.NO:15/2012
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A.S.No: 18/2012
PLAINTIFF SRI.P.MAHADEVA,
S/o.Sri.Putta Setty,
[In AS.15/2012] Aged about 54 years,
R/at No.6, 'G' Block,
Ramakrishna Nagar,
Mysore -570 023.
[By Pleader Sri.Shankar.D]
/Vs/
DEFENDANTS 1) THE UNION OF INDIA
Reptd. by its Chief Signal
[In AS.15/2012] Telecommunication Engineer/
(Construction)/Contonment,
Bengaluru.
[By Pleader Sri.Abhinay.Y.T]
2) Sri.DUBEY,
Presiding Arbitrator
CBE/UBL. At Present CE/CM/UBL
South Western Railway,
Keshavapur, Club Road, Hubli - 23.
3) Sri.C.R.Kalsi, Co-Arbitrator,
Ex.GM/CORE,
White House, Friends Colony,
Saloh Road, Nawanshahar - 144 514.
Punjab.
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AS.No.18/2012
4) Sri.A.Selvaraj,
Co-Arbitrator,
FA& CAO/I/CN/SR/MS
At present : FACO/G/SR/MAS,
Southern Railway, Park Town,
Chennai - 600 003.
[Arbitrators]
PLAINTIFF UNION OF INDIA
Reptd. by its Deputy Chief Signal
[In AS.18/2012] Telecommunication Engineer/
South Western Railway, Bengaluru.
[By Pleader Sri.K.Patel Mune Gowda]
/Vs/
DEFENDANTS 1) SRI.P.MAHADEVA,
No.6, 'G' Block,
[In AS.18/2012 Ramakrishna Nagar,
Mysore -570 023.
[By Pleader Sri.Shankar.D]
2) Sri.DUBEY,
Presiding Arbitrator
CBE/UBL. At Present CE/CM/UBL
South Western Railway,
Keshavapur, Club Road,Hubli - 23.
3) Sri.C.R.Kalsi,Co-Arbitrator,
Ex.GM/CORE,
White House, Friends Colony,
Saloh Road, Nawanshahar - 144 514.
Punjab.
4) Sri.A.Selvaraj,Co-Arbitrator,
FA& CAO/I/CN/SR/MS
At present : FACO/G/SR/MAS,
Southern Railway, Park Town,
Chennai - 600 003.
[Arbitrators]
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AS.No.18/2012
COMMON JUDGMENT
Suit in AS No.15/2012 is filed by Plaintif
[Claimant before the Arbitral Tribunal] under Section
34 of the Arbitration and Conciliation Act, 1996, for
setting aside the arbitral award, dated 21.10.2011,
passed by Arbitral Tribunal, in respect of Claims
No.4, 5, 6(a) and 7 to 11 arising out of Agreement
No.W/93/1/KCS/SC/CN/Contd./OD/MAQ-SKLR, dated
31.03.2003.
2) Suit in AS No.18/2012 is filed by Plaintif
[Respondent before the Arbitral Tribunal] under
Section 34 of the Arbitration and Conciliation Act,
1996, for setting aside the arbitral award, dated
21.10.2011, passed by Arbitral Tribunal, in respect
of Claims No.2 and 3(b) in favour of Claimant
arising out of Agreement No.W/93/1/ KCS/SC/ CN/
Contd./OD/MAQ-SKLR, dated 31.03.2003.
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3) Since both suits arise out of common award
dated 21.10.2011, they are taken together for
passing common judgment.
4) For the sake of convenience, parties are
referred to as 'Claimant' and 'Respondent' as they
were referred to in arbitral proceedings.
5) In brief, Claimant's case is that, Respondent
called for tender for laying and jointing of OFC
Telecommunication cable arrangements between
Sakleshpur-Mangalore section in connection with
gauge conversion, vide Agreement
No.W/93/1/KCS/SC/CN/Contd./OD/MAQ-SKLR, dated
31.03.2003. Total cost of the work is
Rs.2,33,73,627/-. Work completion period is 10
months. After receipt of letter of acceptance,
Claimant started work. Since completion of work
was delayed by Respondent, certain disputes arose.
Hence, Claimant was forced to invoke arbitration
clause. Impugned award came to be passed by
Arbitral Tribunal.
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AS.No.18/2012
6) Being aggrieved by the award, Claimant has
challenged the award on the following grounds :
(1) Arbitral Tribunal has failed to apply
the legal proposition enunciated by the
Hon'ble Supreme Court.
(2) Arbitral Tribunal has failed to
consider Sections 28(3), 27 and 31 of the
Arbitration and Conciliation Act, 1996.
Also failed to consider Section 73 of the
India Contract Act.
(3) Arbitral Tribunal has acted contrary
to terms of contract and trade usage.
Findings of Arbitral Tribunal are contrary
to documents and pleadings placed
before it.
For these reasons, prays for setting aside
the award.
7) Respondent has filed its statement of
objections to the suit filed by Claimant. Grounds
urged by Respondent in challenging the award in
Suit No.18/2012 filed by it and grounds set-forth in
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objections to the suit filed by Claimant are akin to
each other.
8) Briefly, Respondent's case is that, the work
was to be completed by Claimant on or before
15.10.2003. Since Claimant failed to complete the
work within the stipulated time, currency of
contract was extended twice from 16.10.2003 to
14.04.2004 and 16.04.2004 to 31.12.2004 under
Clause-17A of GCC without levying any liquidated
damages. After completion of extended currency
period, Claimant did not want to complete the
work. 7 days' notice got issued to Claimant on
06.06.2005 and thereafter, 48 hours' notice issued
on 15.06.2005 as per terms of contract. On
initiation of arbitral proceedings by Claimant,
Arbitral Tribunal awarded a sum of Rs.36,53,554/-
to Claimant. Respondent has paid a sum of
Rs.16,45,719/- out of the award amount. Award
passed in respect of Claims No.2 and 3(b) is against
the terms of contract. Hence, same is challenged.
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9) Being aggrieved by the award, Respondent
has challenged the award on the following
grounds :
(1) Contract is governed by Special
Conditions of Contract [SCC] and General
Conditions of Contract [GCC]. Without
taking into consideration of the terms of
contract, Arbitral Tribunal has passed the
award for release of Security Deposit
under Claim No.2 in favour of Claimant.
(2) Arbitral Tribunal ought not to have
allowed Claim No.3(b), which is against
the terms and conditions of the contract.
10) Heard argument of learned Counsels for
Plaintifs. Perused the written arguments filed by
them. Also perused the records.
11) Points that arise for my consideration are :
(1) Whether Plaintiffs in both
Suits have made out any of
the grounds as enumerated
in Section 34 of the
Arbitration and Conciliation
Act, 1996, to set aside the
impugned award?
(2) What Order?
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12) My answer to above points are :
Point No.1 - In the Negative;
Point No.2 - As per final order, for
the following :
REASONS
13) Point No.1 : Claimant has challenged the
award in respect of Claims No.4, 5, 6(a) and 7 to 11,
which were disallowed by Arbitral Tribunal, whereas,
Respondent has challenged the award in respect of
Claims No.2 and 3(b) passed in favour of Claimant.
14) Claims No. 2, 3(b), 4, 5, 6(b) and 7 to 11 read
as follows :
" Claim No.2 : Payment of Security Deposit -
Rs.11,83,484 or actual.
Claim No.3(b) : Rs.17,77,439 for
increased cost of working.
Claim No.4 : Compensation for idling
payment idling establishment including
watch and ward.
Claim No.5 : Compensation for
Proprietor's unproductive expenditures -
Rs.3,50,000/-.
Claim No.6(b) : Re-trenching for 25 Kms -
Rs.2,50,000.00.
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Claim No. 7: Compensation towards loss
of profits on works contract (15% on
contract value - Rs.2,33,73,627) -
Rs.35,06,044/-.
Claim No.8 : Compensation of loss of
earning on above claims (not quantified)
Claim No.9 : Interest on all above claims
@ 24% from 16.10.2003.
Claim No.10 : Payment of Equivalent
amount of claims for an equivalent period
of the actual blockage of the working
capital from 01.01.2004 - Not quantified.
Claim No.11 : Cost of correspondences,
Consultation Charges, Legal Charges etc., -
Rs.1,50,000/-. "
15) Having gone through the award, it makes it
clear that, Arbitral Tribunal awarded a sum of
Rs.36,54,024/- in favour of Claimant towards
payment of final bill, security deposit, compensation
for staggered working, re-trenching, identifying
damaged locations, payment for making duct and
chiseling hard rock under Claims No.1, 2, 3(a) and
(b), 6(b), (d) and (e). Respondent accepted the
award in respect of Claims No.1, 3(a), 6(b), (d) and
(e) and complied the same. Respondent's challenge
to the award is in respect of Claims No.2 and 3(b)
relating to Security Deposit and compensation. On
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the other hand, Claimant's challenge to the award
is in respect of Claims No.4, 5, 6(a) and 7 to 11
relating to idling, compensation for unproductive
expenditure, compensation for advance amount,
loss of profits, loss of earning, interest on claims,
equivalent amount and cost of correspondences,
which Claims have been disallowed by the Arbitral
Tribunal.
16) Respondent's first contention is that, award
for release of security deposit amount under Claim
No.2 is in violation of agreed terms and conditions
of GCC and SCC. Respondent has placed reliance
on Clause 29.4 of SCC. It reads as follows :
" 29.4 In support of this guarantee, the
contractor shall furnish a Bank guarantee
for the value of the security deposit from a
nationalised Bank fully indemnifying the
Railways as against all losses incurred by
the Railway during the guarantee period. If
the security deposit is furnished in the form
of Bank Guarantee as prescribed in clause
16 of the General Conditions of Contract,
the same Bank Guarantee shall be valid to
cover not only the whole period of supply
and installation of the equipment on order
but also to cover a period of guarantee for
twelve months from the date of issue of
completion certificate. If the security
deposit is paid in cash or in the form of
Government Securities, the same shall be
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paid to the contractor after the expiration
of the period of maintenance as specified
above and after the contractor furnished
Bank guarantee for the value of the
Security Deposit of the contract amount to
cover the period of Guarantee for twelve
months from the date of issue of
completion certificate."
17) Findings of Arbitral Tribunal regarding Claim
No.2 towards payment of security deposit are as
follows :
" Deliberation and award: This claim
represents the total amount of Security
Deposit lying with the respondent. This
Security Deposit amount becomes payable
to the contractor on satisfactory
performance and on the lapse of the
maintenance period.
The agency categorically made out
after 31.12.2004, is not willing to perform
at the agreed rate and sought revision of
rate, the respondent did not accept and or
made out any adhoc relief to the claimant.
The respondent restored to unilateral
termination of the contract when no
currency existed. Further the claimant
sufficiently show caused that he has not
committed any breach of contract.
Admittedly the respondent has not
taken any step to adopt risk and cost
tender to complete the balance work. The
work done by the claimant has
satisfactorily passed over the maintenance
period. Hence in the interest of justice,
this arbitral tribunal award release of
Security Deposit Rs.11,68,681/- or actual
be paid to the claimant.
Amount of Award : Rs.11,68,681/-. "
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18) It is necessary to have regard to the Clauses
16 and 47 of GCC. They read thus :
" 16. (1) Earnest Money and Security
Deposit
The Earnest Money deposited by the
Contractor with his tender will be retained
by the Railways as part of security for the
due and faithful fulfillment of the contract
by the Contractor. The balance to make
up the security deposit, the rates for which
are given below, may be deposited by the
Contractor in cash or in the form of
Government Securities or may be
recovered by percentage deduction from
the Contractor's 'on account' bills.
Provided also that in case of defaulting
contractor the Railways may retain any
amount due for payment to the Contractor
on the pending 'on account' bills so that
the amounts so retained may not exceed
10% of the total value of the contract.
(2) Unless otherwise specified in the
special conditions, if any, the rates for
deposit of security amount by contractors
will be as under :
(i) For contracts upto Rs.1 lakh 10% of the value of the
contract
(ii) For contracts more than Rs.1 10% of the first Rs.1 Lakh
lakh and upto Rs.2 lakh and 7½ % of the balance.
(iii) For contracts more than Rs.2 10% of the first Rs.1 Lakh,
lakh upto Rs.2 Crore 7½% of the next Rs.1 Lakh
and 5% of the balance,
subject to the maximum of
Rs.10 Lakh.
The amount over and
above Rs.3 Lakh to be
recovered from the
progressive bills of the
contractors @ 10% till it
reaches the required
value.
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(iv) For contracts above Rs.2 5% of the contract value.
Crore The amount over and
above Rs.3 Lakh to be
recovered from the
progressive bills of the
contractors @ 10% till it
reaches 5% of the contract
value.
(3) No interest will be payable upon the
Earnest Money and Security Deposit or
amounts payable to the Contractor under
the contract, but Government Securities
deposited in terms of Sub-Clause (1) of
this clause will be payable with interest
accrued thereon."
" 47. Maintenance of works
The Contractor shall at all times during
the progress and continuance of the works
and also for the period of maintenance
specified in the Tender Form and after the
date of passing of the certificate of
completion by the Engineer or any other
earlier date subsequent to the completion
of the works that may be fixed by the
Engineer be responsible for and
effectively maintain and uphold in good,
substantial, sound and perfect condition
all and every part of the works and shall
make good from time to time and at all
times as often as the Engineer shall
require, any damage or defect that may
during the above period arise in or be
discovered or be in any way connected
with the works, provided that such
damage or defect is not directly caused by
errors in the Contract Documents, act of
providence or insurrection or civil riot, and
the Contractor shall be liable for and shall
pay and make good to the Railway or
other persons legally entitled thereto
whenever required by the Engineer so to
do, all losses, damages, costs and
expenses they or any of them may incur
or be put or be liable to, by reason or in
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consequence of the operations of the
Contractor or of his failure in any respect."
19) Clause 16(1) authorizes the Respondent to
retain the Earnest Money paid by Contractor as part
of Security Deposit and also authorizes to make up
the balance security deposit amount from
Contractor's bill as stated in Clause 16(2) of GCC.
Moreover, Clause 16(1) permits the Respondent to
retain 10% of contract value on pending bill of
contract in case Contractor defaults. Clause 16(3)
goes to show that, Contractor is not entitled to any
interest on security deposit. Clause 47 deals with
maintenance of work. Under the said clause, the
Contractor is liable for perfect condition of the work
during the maintenance period.
20) Further, Clause 29.4 of SCC makes it clear
that, security deposit furnished under Clause 16 of
GCC is for indemnifying the Respondent against the
losses incurred by it.
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21) From the above clauses of GCC and SCC, it is
clear that, security deposit can be forfeited by the
Respondent for the default of Contractor in
execution of the work assigned to him under the
contract, if it resulted loss or damages to
Respondent, then only, Respondent can retain
security deposit, which is deducted from the
Contractor's bill. In the instant case, Arbitral
Tribunal has come to the specific conclusion that,
after completion of fixed period for work, Claimant
is not willing to perform the work at the agreed rate
and he sought for revision of rate. It has been
observed that, Respondent did not accept the
revision of rate sought for by Claimant and resorted
to unilateral termination of contract when no
currency period existed. It has been further
observed that, Respondent has not taken any steps
to adopt risk and cost tender to complete the
balance work and work done by Claimant has
satisfactorily passed over the maintenance period,
hence, Claimant is entitled to security deposit.
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When no fault finds on the part of Claimant,
question of retaining security deposit by
Respondent does not arise. Findings of Arbitral
Tribunal are in accordance with the terms of
contract. Arbitral Tribunal, having considered the
terms of contract, passed the award for release of
security deposit under Claim No.2 in favour of
Claimant. There is no perversity in passing the
award under Claim No.2, which agrees with the
terms of contract. In that view of the matter, it has
to be said that, Respondent's challenge to Claim
No.2 is merit-less.
22) Next contention of Respondent is that, award
for compensation under Claim No.3(b) is against
Clause 17A of GCC. Clause 17A(ii) relied upon by
Respondent is as follows :
" 17A(ii) Extension for delay not due to
Railway/Contractor
If in the opinion of the Engineer the
progress of work has any time been
delayed by any act or neglect of
Railway's employees or by other
contractor employed by the Railway
under Sub-Clause 94) of clause 20 of
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these conditions or in executing the
work not forming part of the contract
but on which Contractor's performance
necessarily depends or by reason of
proceedings taken or threatened by or
dispute with adjoining or to
neighbouring owners or public authority
arising otherwise through the
Contractor's own default, etc or by the
delay authorised by the Engineer
pending arbitration or in consequences
of the Contractor not having received in
due time necessary instructions from
the Railway for which he shall have
specially applied in writing to the
Engineer or his authorised
representative then upon happening of
any such even causing delay, the
Contractor shall immediately give notice
thereof in writing to the Engineer within
15 days of such happening but shall
nevertheless make constantly is best
endeavours to bring down or make good
the delay and shall do all that may be
reasonably required of him to the
satisfaction of the Engineer to proceed
with the works. The Contractor may also
indicate the period for which the work is
likely to be delayed and shall be bound
to ask for necessary extension of time.
The engineer on receipt of such request
from the Contractor shall consider the
same and shall grant such extension of
time as in his opinion is reasonable
having regard to the nature and period
of delay and the type and quantum of
work affected thereby. No other
compensation shall be payable for works
so carried forward to the extended
period of time, the same rates, terms
and conditions of contract being
applicable as if such extended period of
time was originally provided in the
original contract itself."
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23) It is also relevant to mention Clause 17A(iii)
of GCC. It reads thus :
" 17A(iii) Extension of time for delay
due to Railway
In the event of any failure or delay by
the Railway to hand over the Contractor
possession of the lands necessary for the
execution of the works or to give the
necessary notice to commence the works or
to provide the necessary drawings or
instructions or any other delay caused by
the Railway due to any other cause due
whatsoever, then such failure or delay shall
in no way affect or vitiate the contract or
alter the character thereof or entitle the
Contractor to damages or compensation
therefor but in any case, the Railway may
grant such extension or extensions of the
completion date as may be considered
reasonable."
24) Findings of the Arbitral Tribunal regarding
Claim No.3(b) are as follows :
" 3(b) From above it is evident that the
claimant was forced to execute during th
extended period due to failure of
respondent's responsibility. Regarding
compensation for increased cost of work
during the extended period i.e. beyond
15.10.03 and upto 15.04.04 and upto
31.12.04 the claimant has submitted full
details including invoices for purchase of
various materials vide their submission
dated 14.08.2010, 06.04.2011 and
17.06.2011. From the documents
submitted it is evident that the cost of
major materials such as RCC Pipe, GI Pipe,
HDPE and all other materials has increased
on various percentages ranging from 40%
to 80% apart from annual general
escalation on manpower and fuel etc.
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Therefore Tribunal is inclined to
compensate the higher input cost during
extended period. However the claim of
20% on the value of work done is not
acceptable though there exists merit for
compensation. Tribunal considers in the
interest of justice (I) @ 6% on the value of
work done during second working period
October 2003 to July 2004 i.e. Rs.3,86,909
and (ii) @ 12% on the value of work done
during third working season I..e August
2004 to December 2004 as reflected in CC
Bills No.6 to 8 i.e. Rs.4,52,245/-.
Amount of Award : Rs.8,39,154/-."
25) From the award, it has been clear that,
compensation awarded under Claim No.3(b) is in
respect of increasing in cost of major materials.
Arbitral Tribunal has found that, the cost of major
materials like RCC pipe, GI pipe, HDPE and other
materials has increased on various percentages
ranging from 40% to 80% apart from annual
general escalation on manpower and fuel. Having
considered these aspects of matter, Arbitral
Tribunal awarded 6% increased cost on the value of
the work done during second working period and
12% increased cost on the value of the work done
during the third working season. Arbitral Tribunal
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has come to the specific conclusion that, progress
of the work has been hindered due to non-supply of
6 quad and OFC cable and request for their
immediate supply was negated by Respondent.
Findings of the Arbitral Tribunal throw light on the
hindrance to the work caused by Respondent.
"..... The above quantum of work and
claimant's letter dated 10.07.03 clearly
indicated that even with (-) 19.31% they
have executed 95 km trench and only 75 km
cable have been supplied. They had
mobilized 300 labourers, engineers and
supervisors and purchased 120 km HDPE
pipe and arranged for other jointing works
and was working as per schedules but not
able to show further progress due to non-
supply of 6 quad and OFC cable and
requested for immediate supply. The
respondent has not replied and negated to
the problems brought to the knowledge of
respondent then and there made by the
claimant relating to the hindrance faced at
work site, the respondent have not negated
and replied then and there, in fact the
respondent have not addressed any letter to
the claimant of slow progress either in the
original contract period or in the extended
currency period. Further the respondent are
not in a position even to confirm how that
they have supplied required cable in time
and no other hindrance was caused for
which reasoning the claimant has
satisfactorily canvassed. Thus Tribunal finds
that since the work is trenching and
simultaneous laying of cable and other
jointing work could have been completed by
the Claimant in time, if full length of cable
and clear site was arranged. ......"
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26) Clause 17A(iii) states that, if delay is caused
by Respondent, such delay shall not afect or vitiate
the contract or entitle the Contractor to claim
damages or compensation, however, Respondent
may extend the completion date. From the award,
it has been clear that, delay in completion of the
work was caused by Respondent. As per terms of
contract, the Claimant is entitled for extension of
time and he cannot claim damages or
compensation. It is to be noted that, Arbitral
Tribunal while awarding the increased cost in
materials, has taken into consideration of the
submission of Respondent that Claimant quoted
less rate. This submission of Respondent has been
viewed by the Arbitral Tribunal in a perspective
manner. Arbitral Tribunal held that, "In open tender
it is up to the tenderer to quote their rate. If the
rate is extremely lower respondent should have
rejected and awarded to the tenderer who quoted
reasonable rate. Tribunal's finding is that with the
manpower mobilized, the claimant could have
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completed the work within working season
provided respondent complied their obligation in
time". As admitted by Respondent, Claimant
quoted less rate, which is not reasonable rate.
Possibility of completion of the work on the quoted
rate is also one of the factors to be considered by
Respondent. Certainly, this is not the purpose of
the contract. Award is to be viewed in that context.
In the light of the findings of the Arbitral Tribunal, it
can be said that, award for compensation under
Claim No.3(b) is within the purview of the contract.
27) Claimant contends that, Arbitral Tribunal has
failed to consider Sections 28(3), 27 and 31 of the
Arbitration and Conciliation Act [for brevity
'Arbitration Act, 1996] and Section 73 of the Indian
Contract Act.
28) Section 28(3) of the Arbitration Act, 1996
mandates that, while deciding and making the
award, the Arbitral Tribunal shall, in all cases, take
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into account the terms of the contract and trade
usages applicable to the transaction. Section 27 of
the Arbitration Act, 1996 allows the Arbitral
Tribunal and party to arbitral proceedings to apply
to the Court for assistance in taking evidence.
Section 31(3) of the Arbitration Act, 1996
mandates that the arbitral award shall state the
reasons upon which it is based.
29) Purpose of relying on Section 27 of the
Arbitration Act, 1996 by Claimant and necessity of
considering Section 27 of the Arbitration Act, 1996
by Arbitral Tribunal are not explained by Claimant.
It is not at all the case of Claimant that, without
the approval of Arbitral Tribunal, he could not have
filed application to the Court for assistance in
taking evidence. First of all, it is not known
whether Claimant has made any such attempt in
the arbitral proceedings. Without substantiating all
these facts, simply said that Arbitral Tribunal has
not considered Section 27 of the Arbitration Act,
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1996. There is no pith and substance in the
contention of the Claimant.
30) Question remains is that, whether Arbitral
Tribunal has not taken into consideration of the
terms of contract while making the award and
whether award is not supported by reasons. To
assail these points, it is relevant to mention the
findings of the Arbitral Tribunal regarding Claims
No.4, 5, 6(a), and 7 to 11. They read as follows :
"Claim No.4: Compensation for idling
payment idling establishment
including watch and ward :
Deliberation and award :
The Arbitral Tribunal heard the submission
and arguments of both the parties and
also gone through the records submitted
before Arbitral Tribunal. Arbitral Arbitral
find that 4(a) and 4(b) are of idling of
establishment which is well covered in the
claim No.3(a) and 3(b) submitted by the
claimant. Therefore the Arbitral Tribunal
do not find any justification for these
claims and accordingly Arbitral Tribunal
gives NIL Award".
" Claim No.5 - Compensation for
Proprietor's unproductive
expenditures -
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Deliberation and award :
After careful examination of arguments
and counter arguments of both the parties
the tribunal is of the opinion there is no
need to consider this claim since claim
no.3 has taken care of this claim. This
claim is rejected and NIL award given".
" Claim No.6 - Compensation for other
losses :
(a) Firm Advance commitments to
complete balance works not recouped
- Rs.18,50,000.00.
Deliberation and award :
The Arbitral Tribunal in regard to claim
6(a) are of the opinion that claimants
submission and respondent remarks has
no base and substance and reached to the
conclusion that this claim 6(a) falls
beyond the ambit scope of consideration
and agreement and gives finding in
negative and therefore awarded NIL
amount against this claim".
"Claim No.7 : Compensation towards
loss of profits on works contract (15%
on contract value - Rs.2,33,73,627) -
Rs.35,06,044/-
Deliberation and award :
Arbitral Tribunal after careful examination
of argument and counter argument and
also relaying on the case laws submitted
by claimant and said case laws not
countered by respondent, in the interest of
justice the Arbitral Tribunal finds this claim
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partially affirmative since no breach of
contract and negligence has been
established on the claimant side, whereas
the regards placed before the tribunal
including the extension of time granted by
respondent are an account of non supply of
6 Quad cable, OFC, hindrance from
engineering department etc.
Any how the claimant has co operated and
executed the work up to 31.12.2004 to an
extent of Rs.1,63,25,446.70 as against the
agreed contract value of Rs.2,33,73,127/-.
Hence, the extent of work done the claim is
not entitled to loss of profit and whatever
his losses sustained is made good vide
other claims in the award.
Award for this claim : N I L ".
"Claim No.8 : Compensation of loss of
earning on above claims (not
quantified) :
Deliberation and award :
Arbitral Tribunal decided that in view of the
respondent that no money was kept
blocked on account of the respondent, as
such asking for compensation for the loss
for the earning of the blocked money is not
justified. Therefore Arbitral Tribunal give
NIL award for his claim."
"Claim No.9 : Interest on all above
claims @24% from 16-10-2003 :
Deliberation and award :
Arbitral Tribunal pointed out that as per the
agreed Terms & Conditions vide GCC 16(2)
and 64.5 interest is not payable even on
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the Award by the Arbitral Tribunal. As such
the claim is not considered as justified and
NIL award for this claim."
"Claim No.10 : Payment of Equivalent
amount of claims for an equivalent
period of the actual blockage of the
working capital from 01-01-200 - not
quantified.
Deliberation and award :
Arbitral Tribunal agrees with the views of
the Respondent that the claim is not
sustainable and as such give NIL award for
this claim."
"Claim No.11 : Cost of
correspondences, Consultation
Charges, Legal Charges, etc., -
Rs.1,50,000/-
Deliberation and award :
Arbitral Tribunal noted that the cost of
Arbitration is equally to be born by both
the parties as per the agreed Terms &
Conditions as provided in the GCC, as such
it is unable to award any claim against
this, as such give NIL award for this claim."
31) From the award, it is crystal clear that,
Arbitral Tribunal has come to the specific conclusion
that Claims No.4, 5 and 7 are covered under Claim
No.3. Regard being had to the non-arbitrability of
the claim, Claim No.6(a) has been disallowed.
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Having regard to the payment of bills in time,
Arbitral Tribunal made 'Nil' award for Claims No.8
and 10. Considering Clauses 16(2) and 64.5 of GCC
and other terms of the contract, claims for interest
under Claim No.9 and cost of correspondences
under Claim No.11 have been rejected by the
Arbitral Tribunal.
32) Clause 17A(iii) of GCC referred to above
specifically states that, Contractor shall not entitle
to any damages or compensation in the event of
any failure or delay by the Railway for the execution
of the works or to give necessary notice to
commence the works or to provide the necessary
drawings or instructions or any other delay caused
by the Railway. In such cases, Railway may extend
the completion date.
33) Clause 17A(ii) of GCC also bars the
Contractor to claim other compensation for the
work so carried forward to the extended period of
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time. Being thus the terms of contract, despite this,
Arbitral Tribunal made an award for compensation
under Claim No.3(a) having regard to the facts that
quoted rate for the work was extremely low and
increase in cost of various materials during the
extended period. Admittedly, original currency of
contract was expired on 15.10.2003, thereafter,
same was extended twice till 31.12.2004.
Thereafter, Claimant sought for revision of rate,
which was not accepted by Respondent. Hence,
further extension does not take place. On account
of delay caused by Respondent, time for
completion of the work was extended twice by
Respondent in view of Clause 17(ii) and (iii) of GCC.
Under the said Clauses, Claimant is specifically
barred from claiming other compensation except
extension of time to complete the work. Arbitral
Tribunal, having due regard to the above terms of
contract, passed the award. Award makes it clear
that award is based on reasons. Under such
circumstances, there is no reason to contend that
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award passed by the Arbitral Tribunal is in
contravention of the Arbitration Act, 1996 or in
contravention of the terms of contract or in
contravention of substantive law as envisaged in
Section 73 of the Contract Act.
34) In Associate Builders vs. Delhi
Development Authority [(2015) 3 SCC 49],
the Hon'ble Supreme Court was pleased to hold
that :
"33. When a court is applying the "public
policy" test to an arbitration award, it does
not act as a court of appeal and consequently
errors of fact cannot be corrected. A possible
view by the arbitrator on facts has necessarily
to pass muster as the arbitrator is the
ultimate master of the quantity and quality of
evidence to be relied upon when he delivers
his arbitral award. Thus an award on little
evidence or on evidence which does not
measure up in quality to a trained mind would
not be held to be invalid on this score. Once it
is found that the arbitrators approach is not
arbitrary or capricious, then he is the last
word on facts."
35) A substantial reading of the award makes it
clear that, Arbitrators' approach is not arbitrary or
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capricious. View expressed by the Arbitral Tribunal
is a possible view, which does not require
interference by this Court. Grounds urged by
Claimant and Respondent in challenging the award
cannot be made applicable to the award on hand.
Award passed by the Arbitral Tribunal is based on
reasons and within the terms of contract. There is
no reason to interfere with the reasoned award.
Award can be set aside only on the grounds as
enumerated in Section 34 of the Arbitration and
Conciliation Act, 1996. Claimant and Respondent
have failed to prove the grounds as set out in
Section 34 of the Arbitration and Conciliation Act,
1996, much less, the grounds mentioned in plaints.
Accordingly, I answer the above point in the
negative.
36) Point No.2 : In view of the foregoing
discussion and answer to Point No.1, I pass the
following :
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ORDER
(1) Suits in AS.No.15/2012 and AS.No.18/2012 filed by Plaintiffs under Section 34 of Arbitration and Conciliation Act, 1996 to set aside the impugned award dated 21.10.2011 passed by Arbitral Tribunal ; are hereby dismissed.
(2) No order as to costs.
(3) Keep the original of this judgment in AS.No.15/2012 and copy in AS.No.18/2012.
[Dictated to the Judgment Writer directly on computer, typed matter corrected and then pronounced by me in open court, on this 4th day of August, 2020.] [RAMA NAIK] VI Addl.City Civil & Sessions Judge Bengaluru City AS.No.15/2012 33 C/w AS.No.18/2012 AS.No.15/2012 34 C/w AS.No.18/2012