Bangalore District Court
Sri. A. Mohan Babu vs Union Of India Represented By on 22 February, 2022
IN THE COURT OF THE LXXXIII ADDITIONAL CITY CIVIL
AND SESSIONS JUDGE AT BENGALURU CITY [CCH-84]
:Present:
Ravindra Hegde,
M.A., LL.M.,
LXXXIII Addl. City Civil & Sessions Judge,
Bengaluru
Dated on this the 22nd day of February 2022
COM.A.S.No.14/2016
Plaintiff Sri. A. Mohan Babu,
S/o Sri. A. Bhaskar Rao,
aged about 54 years,
residing at 1/P, Oilmol,
Ramanath Colony,
Sao Jose Areal (VP)
Salcete, Goa.
(By Sri.S.B, Advocate)
// versus //
Defendants Union of India represented by
1. The Chief Administrative Officer(Con.)
2. The Chief Engineer (Const.)
3. The Deputy Chief Engineer(Con./HQ)
All are at:
South Western Railway,
No.18, Millers Road,
Bengaluru-560046.
4. The General Manager,
South Western Railway,
Club Road, Keshwapur,
Hubli-31.
Now at:
2
CT 1390_Com.A.S.14-2016_Judgment.doc
General Manager Office Building
Gadag Road, Hubli-31.
5. Hon'ble Justice Mohammed Anwar,
Former Judge,
High Court of Karnataka,
No. Cross, Judicial Layout,
Yelahanka, Bengaluru.
Sole Arbitrator.
(D.1 to D.4 by Sri.Y.J.A, Advocate.
D.5 - learned Arbitrator)
Date of Institution of the : 19/01/2016
suit
Nature of the suit : Arbitration Suit
Date of commencement of :
recording of the evidence
Date on which the : 22/2/2022
Judgment was pronounced.
: Year Month/ Day/s
Total duration /s s
06 01 03
JUDGMENT
This Arbitration suit under Section 34 of the Arbitration & Conciliation Act is filed by the plaintiff challenging the award passed by the learned Arbitrator - defendant No.5 in respect of all the issues other than claim No.6, issues 16 and 17 and praying to set aside this award dated 4/11/2015, in respect of the same.
3CT 1390_Com.A.S.14-2016_Judgment.doc
2. Plaintiff was the claimant before the learned Arbitrator and is the contractor. The defendants No.1 to 4 were the respondents before the learned Arbitrator and are Employers. Defendant No.5 is the learned Arbitrator.
3. The case of the plaintiff in brief is as under:
The plaintiff was awarded the work pertaining to construction of Earthwork in platforms, construction of S&T accommodation, construction of passenger platforms, platform pavings, yard drainage, dismantling of exg. Platforms, passenger amenities and TRS type platform shelter/FOB and dismantling the exg. FORB and other connected works at Channapatna, Settihalli, Maddur, Hanikere and Mandya stations in connection with Ramanagaram - Mysore section doubling project through acceptance letter dated 29/2/2012. Agreement was entered into on 11/6/2012. In terms of acceptance letter the initial value of the work was Rs.7,05,95,406/- and work was to be completed in six months from the date of acceptance letter, i.e., by 28/8/2012. Due to abnormal delay in furnishing the necessary drawings, designs and handing over the site, line blocks, caution orders etc. the work could not be completed and defendants granted extension at the first instance upto 30/5/2013 and then upto 31/7/2013 without penalty and extension with penalty upto 31/8/2013 from 1/8/2013. The plaintiff objected the extension with penalty. The delay was on account of non availability of clear site, non availability of approved drawings for platform and FOB and plaintiff on a 4 CT 1390_Com.A.S.14-2016_Judgment.doc number of occasions requested the defendants to issue approved drawings, but defendants have not replied. The defendants without discharging their obligation have issued 7 days notice on 2/8/2013, threatening to terminate the contract if plaintiff do not make good the shortfalls. There were no shortfalls and delay in completing the work was due to breach of contract committed by the defendants. Plaintiff filed application u/s 9 of the Arbitration & Conciliation Act in A.A.No.642/2013 and order was passed on 5/9/2013 restraining the defendants from taking any penal action. 3 rd defendant issued 48 hours notice on 22/8/2013 which was replied and thereafter contract was terminated on 30/8/2013 and the plaintiff was directed to witness the final measurement. The defendants have instructed the Railway Protection Force on 20/9/2013 not to permit the plaintiff or his men to enter the railway premises. The main dispute is interpretation of the specification regarding steel to be used in fabrication and erection of FOB. The other disputes are with regard to the latches committed by the defendants in not handing over the site, not taking appropriate decisions at appropriate time, not furnishing the necessary drawings, which constitute breach of contract. Since the defendants were not permitting the plaintiff to proceed with work, he sought constitution of arbitral tribunal to resolve the disputes, which was rejected by the 1 st defendant. Then plaintiff approached Hon'ble High Court with CMP and Hon'ble High Court has appointed defendant No.5 as sole 5 CT 1390_Com.A.S.14-2016_Judgment.doc Arbitrator and same was challenged unsuccessfully before the Hon'ble Supreme Court by the defendants. Before the learned Arbitrator issues were framed and after hearing, learned Arbitrator allowed only claim No.6 in part and rejected the claims No.1 to 5, 7,9 to 12 as excepted matters.
4. Being aggrieved by this award, plaintiff has filed this Arbitration suit under Section 34 of the Arbitration & Conciliation Act, challenging award on different grounds. Plaintiff has contended that the award of the learned Arbitrator is contrary to the pleadings, evidence and law laid down by the Apex Court and the learned Arbitrator has committed grave error not considering the evidence placed before him including the admissions made by the Engineer. It is stated that the learned Arbitrator has failed to appreciate the terms of the agreement in proper prospective and committed error in deciding the issues No.1 and 2 in favour of defendants without considering the documents placed. It is stated that the learned Arbitrator without there being any pleadings in the objections or in the arguments, relied heavily on the terms of agreement without correlating the same with that of the correspondence and the conduct of the parties which has resulted in miscarriage of justice. It is also contended that the learned Arbitrator grossly erred in holding that the GAD contained all the required details and is in itself a complete drawing and the same is contrary to the evidence of RW.1 who stated that the GAD did not contain the required 6 CT 1390_Com.A.S.14-2016_Judgment.doc drawings and FOB cannot be erected. It is also contended that the learned Arbitrator did not consider terms of agreement in proper prospective and has misunderstood clause 3.1 pertaining to procurement of steel and the specification which has adversely affected the finding with regard to structural steel. It is also stated that the learned Arbitrator has erred in holding that M/s. Vijetha Profiles was a steel manufacturer where as it was only an authorized dealer of SAIL, RINL etc. who were the prime manufacturers as required under clause 3.1 of the agreement. It is also stated that the learned Arbitrator failed to note that the defendants in their documents as well as in the evidence admitted that Ex.C.2 agreement did not contain the details of each of the work in each of the five stations which was the crux of the matter. It is also stated that the learned Arbitrator has erred in holding that the plaintiff has failed to furnish the detailed programme as per the agreement conditions which was not possible in the absence of details of work to be executed in each of the five stations. It is also contended that the learned Arbitrator has failed to note that Ex.C.19 is not a decision rendered in appeal as per clause 22.5 and the claim of the plaintiff cannot be brought within the ambit of excepted matters. It is also contended that the learned Arbitrator erred in holding that the termination of contract is proper without considering the relevant facts that were brought to his notice during the arbitral proceedings. It is also contended that the learned Arbitrator has ignored the decisions cited and has 7 CT 1390_Com.A.S.14-2016_Judgment.doc wrongly applied the decisions cited by the other side. It is also contended that the learned Arbitrator has erred in holding that the plaintiff did not deploy sufficient manpower entirely relying on a document produced by defendants which was not admitted by the plaintiff. The learned Arbitrator has failed to note that as plaintiff himself was supervising the work, non examination of qualified personal is not an impediment. It is also contended that the learned Arbitrator has failed to note that the defendants have extended the currency of contract due to reasons not attributable to the plaintiff. It is also contended that having held that there was no final decision as required under clause 22.5 the same could not have been held to be an excepted matter under clause 63 of GCC. It is also contended that the learned Arbitrator has erred in recording his finding in respect of issue No.6, 8 and 10 that since the contract was terminated, nothing prevented the plaintiff from removing material from the site forgetting that the said material was brought for the specific purpose of Ex.C.2 and same cannot be used elsewhere and may have to be sold as scrap. On all these grounds the finding of the learned Arbitrator on all the claims and issues, except claim No.6, issues No.16 and 17 is prayed to be set aside.
5. The defendants No.1 to 4 have filed statement of objection and stated that the plaintiff is not entitle to the relief prayed and grounds urged in the petition do not meet 8 CT 1390_Com.A.S.14-2016_Judgment.doc any of the conditions as mentioned in Section 34 of the Arbitration & Conciliation Act. It is also stated that ince certain disputes arose between the parties, in respect of the contract work entrusted to plaintiff, which was terminated on 30/8/2012, plaintiff sought adjudication through arbitration and also filed CMP. It is stated that in CMP No.149/2013, present defendants filed objection stating that dispute sought to be referred to arbitration were "excepted matters" and therefore non arbitrable. It is stated that the Hon'ble High Court in its order dated 2/9/2014 has specifically stated that the question as to whether the dispute raised is not arbitrable and is excepted matter is also to be decided by the learned Arbitrator. It is stated that the learned Arbitrator has considered all the facts and circumstances of the case and on appreciation of evidence has passed an award which is as per established law and precedent. The defendants have stated that the plaintiff is seeking re-appreciation of evidence which is impermissible under the provisions of the Act and this court cannot re-appreciate the evidence or examine the correctness of the conclusion arrived at by the arbitrator. It is also stated that the court cannot sit in appeal over findings of fact recorded by the arbitrator or interpretation placed upon the provisions of the contract, particularly when such an interpretation is a plausible and possible one. It is also stated that the matter relating to construction and interpretation of the contract falls within the domain of the Arbitrator and the role of this court while examining the 9 CT 1390_Com.A.S.14-2016_Judgment.doc validity of the award is extremely limited under Section 34 of the Act. It is stated that the learned Arbitrator has carefully considered the facts and has found that the termination of contract is proper and this reasoning is based on facts of the case and same cannot be questioned. It is stated that Ex.R.27 is a document admitted by the plaintiff and this document discloses the manner in which the plaintiff discharged his work. On all these grounds this arbitration suit is prayed to be dismissed with costs.
6. Now the points that arise for consideration of this court are:
1) Whether the plaintiff has made out any grounds under Section 34 of the Arbitration & Conciliation Act to set aside the award dated 04/11/2015 passed by the learned Arbitrator in AC No.104/2014 ?
2) What order?
7. Heard both the counsels. Both the counsels have filed written arguments also. Perused the records.
8. My answer to the above points are :
POINT No.1 : In the Negative.
POINT No.2 : As per final order for the following:
REASONS
9. POINT No.1 : Plaintiff who was the claimant before the learned Arbitrator has initiated arbitration in respect of the dispute in connection with the contract dated 11/6/2012 bearing No.UCC73482 executed between the 10 CT 1390_Com.A.S.14-2016_Judgment.doc plaintiff and defendants for different works of Railway stations at Channapatna, Settihalli, Maddur, Hanikere and Mandya. The value of contract work was Rs.7,05,95,406 and period for completion of the contract work was six months i.e. till 28/8/2012. Contract work could not be completed in time and even within extended time due to various reasons. Plaintiff finds fault with defendants and defendants found fault with plaintiff for delay and slow progress of the work. Both parties have made allegations against each other and also exchanged correspondence regarding the lapses on the part of other party. Finally, defendants terminated the contract on 30.8.2013. Claimant-plaintiff alleging breach and illegal termination of the contract by the defendants has initiated arbitration and the defendant No.5 was appointed as learned Arbitrator by the Hon'ble High Court.
10. Before the learned Arbitrator, plaintiff had made claim for Rs.66,71,83,032.55 with interest @14% per annum and had claimed this amount under claim No.1 to 11. The claim petition was opposed by the defendants and they also made two counter claims. Learned Arbitrator has framed totally 18 issues. Both parties have lead their evidence. For plaintiff, Cws.1 and 2 were examined and Ex.C.1 to Ex.C.88 documents were marked. For the defendants, RW.1 to 4 were examined and Ex.R.1 to Ex.R.28 were marked. A commissioner was appointed by the learned Arbitrator to visit the spot and the Commissioner was examined as CW.1 and 11 CT 1390_Com.A.S.14-2016_Judgment.doc Ex.A.1 and A.2 with annexures were marked through him. Thereafter, learned Arbitrator after hearing the parties has passed final award on 4/11/2015 and rejected claim No.1,2,3,4,5,7,9,10, 11 and 12. In respect of claim No.6 and claim No.9 the learned Arbitrator has partly allowed the claim and awarded total amount of Rs.19,27,428.75 to the claimant with interest @12% per annum from the date of award till realization. The learned Arbitrator has rejected the counter claims made by the defendants. Being aggrieved by this award this arbitration suit is filed by plaintiff-claimant by contending that the award is against the public policy of India. The defendants have opposed the same and defended the award.
11. Jurisdiction of the court to set aside an arbitral award is limited to the grounds set out in Section 34 of the Arbitration & Conciliation Act 1996. Even if a contrary view based on the facts before the Arbitral Tribunal is possible, in the absence of any compelling reasons, court cannot interfere with the view taken by the learned Arbitrator. Grounds on which the award of learned Arbitrator can be set aside by court is clearly mentioned in Section 34(2) and 34(2A)of the Arbitration & Conciliation Act. Since any of the grounds mentioned in Section 34(2)(a) and 34(2)(b)(i) of the Act are not urged, challenge to the present award of the Arbitral Tribunal would be under Section 34(2)(b)(ii) and 34(2A)of the Act. Award could be set aside if it is against public policy of India or is patently illegal. It is also well established principle that 12 CT 1390_Com.A.S.14-2016_Judgment.doc the court sitting U/S.34 of the Act is not supposed to go for re-appreciation of evidence or impose its view as against the view of learned learned Arbitrator and the power of the court is only to set aside the award, if it is coming under one of the grounds mentioned in the said section. In the presence of these basic principles, grounds urged by the plaintiff and the award of the learned Arbitrator are to be looked into.
12. On going through the petition, objection and the records, admitted facts of the case are that the plaintiff was awarded work of Railway stations at Channapatna, Settihalli, Maddur, Hanikere and Mandya stations through acceptance letter dated 29/2/2012. As per the contract work was to be completed within 6 months i.e. by 28/8/2012. It is an admitted fact that the work is not completed by the contractor within the said period or even thereafter. It is an admitted fact that the time was extended by Ex.R.7 subsidiary agreement dated 30/4/2013 till 30/5/2013. Again by Ex.C.24 letter dated 22/6/2013 the period was extended upto 31/7/2013 without penalty and it was also extended with penalty from 1/8/2013 to 31/8/2013. Imposing penalty was opposed by plaintiff. It is also an admitted fact that there were several correspondences exchanges between the parties regarding the shortcoming in execution of the work on either side. On 2/8/2013 the defendants have given 7 days notice as per Ex.C.31 and thereafter on 22/8/2013, 48 hours notice was given as per Ex.C.35 and subsequently termination order dated 30/8/2013 was issued as per Ex.C.40 by the 13 CT 1390_Com.A.S.14-2016_Judgment.doc defendants. Agreement entered between the parties was marked before the learned Arbitrator as Ex.C.2 and it contains the schedule 'A' to 'E' in which item of contract work has been mentioned. Learned Arbitrator found that no work was done by the claimant at the railway station of Maddur and Mandya. This finding is not disputed by either party and arbitrator has even mentioned that it is an admitted fact. Therefore out of five stations, work in Channapatna, Settihalli and Hanikere Railway stations were only done, but admittedly work was not completed as on the date on which the contract was rescinded by the defendant by its order dated 30/8/2013 as per Ex.C.40.
13. In Ex.C.40-termination order, different grounds under which the contract is terminated have been mentioned. Defendants have claimed that the contract is terminated under clause 62(1) of GCC and it was contended before the learned Arbitrator that for the default of the contractor under Clause 62(1) (vi)(vii)(viii) and (ix), defendants have terminated the contract. Though value of the work as per the contract is Rs.7,05,95,406/-, Tribunal has noted that Bill No.I, II and III paid to the claimant/plaintiff are for totally Rs.3,55,82,417/-. Tribunal has noted that though claim in respect of CC bill No.III dated 9/9/2014 is made, out of CC Bill No.III for Rs.1,70,33,162/- after deducting various amounts as permitted, Rs.1,19,12,512/- has been paid to the claimant.
The total of three bills amount is shown to be 14 CT 1390_Com.A.S.14-2016_Judgment.doc Rs.3,55,82,417/- which make up 50% of the value of the contract work. This payment is even admitted by the plaintiff as could be seen in the written arguments submitted. Before the learned Arbitrator, defendant had contended that all the claims made by the claimant/ contractor are excepted matters and not subject to arbitration. The tribunal has considered clause 63 of the GCC as per which, matters for which provision has been made in clause 8, 18, 22.5, 39, 43(2), 45(a), 55, 55(A)(5), 57, 57(A), 61(1), 62(2) and 62(i) to
(xiii) of the GCC, shall be deemed as excepted matters which are not arbitrable and these excepted matters stand specifically excluded from arbitration.
14. Validity of the termination of the contract by the defendants by order dated 30/8/2013 was considered in issue No.2 and 14, wherein claimant contractor contended that the termination is illegal and void and the employer contended that it is valid and also contended that as the termination is as per clause 62(1) of GCC it is even excepted matter as mentioned in clause 63 of GCC. Arbitral Tribunal has considered these contentions in detail in issue No.2 and 14 and considered contention of both the parties and has also made elaborate discussion from page 24 to 101 of the award and has held that, the claimant contractor is guilty of breach of contract and termination is valid and that termination order dated 30/8/2013 as per Ex.C.40, is on the grounds coming within the purview of clause 62(1) (vii) and (ix) of the GCC and is even excepted matters as per clause 63. On the 15 CT 1390_Com.A.S.14-2016_Judgment.doc validity of termination which is main issue of the case, learned Arbitrator has made exhaustive discussion and has considered each and every terms of contract whivh is relied by either party.
15. Among the documents produced by the contractor at Ex.C.1 to Ex.C.88, Ex.C.2 is the agreement and Ex.C.1 is the letter of acceptance. Subsequent documents from Ex.P.3 to Ex.P.58 are the correspondences had between the parties. All these letters exchanged between the parties and even some more correspondence produced by the Employer are also considered by the tribunal in detail. As per the terms of contract, from the date of letter of acceptance dated 29/2/2012, work was to be completed within 6 months i.e. before 28/8/2012. This date is extended without penalty on two occasions upto 31/7/2013 and with penalty upto 30/8/2013. Contractor/claimant had made several allegations by contending that full scope of work was not given, line blocks, caution orders are not given to execute the work, clear site was also not given and detailed approved drawings was also not given by the employer and due to all these lapses on the part of the employer, work could not be proceeded as planned and the lapses are on the part of the employer and the contractor was always ready to perform his part of the contract. Interestingly, though these lapses are now alleged by the contractor about not giving clear site, not giving detailed approved drawing, line blocks and caution 16 CT 1390_Com.A.S.14-2016_Judgment.doc order and even not giving full scope of the work etc., among the documents produced by the plaintiff before the learned Arbitrator, first correspondence itself is dated 14/2/2013 produced as Ex.C.3. In this letter, for the first time the claimant appears to have raised in writing, certain issue and difficulties in proceeding with the work. The tribunal has considered this point and found that, if these lapses alleged by the contractor was present from the beginning, contractor would have informed the difficulties faced to the Employer and to sort it out as required in the contract. As per clause 17-A(ii) of GCC, whenever any difficulty arise in implementing the project it is the duty of the contractor to approach the Engineer to resolve the issue. However, among the documents produced by the claimant the first letter is dated 14/2/2013 which is after expiry of 6 months initial period fixed for completion of the work.
16. Even on the merits of the allegations made by the plaintiff/contractor is considered by the Tribunal. Tribunal has noted the first allegation of the plaintiff that full scope of work was not given. Tribunal found that Letter of acceptance Ex.C.1 itself provides the scope of work. Though work to be executed at each Railway stations among five is not separately mentioned in LOA Ex.C.1, schedule in LOA clearly gave item of contract work and also describe the works to be executed. Tribunal has noted that even CW.1 in his evidence has admitted that scope of contract was as stated in Ex.C.1 17 CT 1390_Com.A.S.14-2016_Judgment.doc and Ex.C.2. Ex.C.1 LOA and clause 29(3) of GCC provides that it is an obligation of the contractor to furnish programme of work in advance to the Railway Department. The employer defendant has contended that the contractor has not submitted the programme of work in advance as required. Clause 29.12 of GCC provides that within 15 days of LOA the programme of work is to be furnished and on failure the contractor is even liable for penal action including penalty upto Rs.50,000/-. Even clause 29.13 of GCC provides that the contractor shall furnish construction programme in advance to the Railway Engineer. Clause 19.3 of GCC which provides for furnishing a detailed programme of work within 30 days is also referred by the learned Arbitrator. By considering the records, learned Arbitrator has found that the claimant in fact refused to furnish programme chart, inspite of letters at Ex.C.11 dated 1/4/2013, Ex.C.12 dated 5/4/2013, Ex.C.13 dated 15/4/2013, Ex.C.15 dated 23/5/2013 and Ex.C.17 dated 27/5/2013. In Ex.C.18, plaintiff though agreed to give programme of work, he has put certain condition stating that such programme of work will be furnished subject to clearance and if the commitment is given by the employer. Tribunal has considered that furnishing programme of work in advance is the duty of the contractor and he cannot in turn put condition on the employer. The tribunal by noting that in Ex.C.1, full scope of work was given and the contractor was aware of the work to be executed and he was required to furnish programme of work in advance, 18 CT 1390_Com.A.S.14-2016_Judgment.doc has found that the contention of the contractor plaintiff is not acceptable.
17. The tribunal has also noted that even in respect of complaint about not giving line block and caution order, as the programme chart was not given, as per clause 11.3 of the GCC and 29.12 of SCC and para 7 of the letter of acceptance, it was not possible for the employer to fix the date for line block and for caution order. The tribunal has noted that the witness CW.1 of the plaintiff had clearly admitted that he have to address letter to the respondent seeking caution order. It was the duty of the claimant to seek caution order and line block. Arbitral Tribunal has considered all the records and found that there is not even a single letter showing that the claimant plaintiff had sought for particular caution order or even the line block. Tribunal has also noted by looking to the evidence of RW.1 and RW.2, that caution orders were given on three occasions at Hanikere Railway Station. The tribunal has also noted that there was no definite request was made for line block which was necessary for erection of the FOB at the time of erection of beem or gangway above the track. Therefore, contention of the plaintiff that there was failure on the part of employer defendant in providing line block and caution order is also considered by the learned Arbitrator in detail by referring to evidence that has been placed before it and also the document that are produced.
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18. With regard to the complaint of not giving clear site, tribunal has noted that as per clause 7.1 of SCC at Ex.C.2, contractor was expected to inspect the site of work and to ascertain the factual situation at the spot before entering into contract. Therefore, the obstacle that are found at the site would be known to the contractor at advance and only after knowing the same, contractor would have entered into contract and has found that the contractor was aware of the hurdles at the site and cannot now complain that a clear site was not given.
19. The tribunal has considered the contention of the plaintiff that due to non supply of necessary drawings, work of erection of PF shelters and FOB has affected. RW.1 in his cross examination has admitted that department was responsible to furnish the approved drawings to the claimant for execution of the work. The tribunal has noted that as per the evidence of RW.4 the required drawings for the construction work at Hanikere Railway Station like gate lodge drawing, pre-cast platform units drawings, pre-cast coping slabs drawings, platform shelters foundation drawings, FOB foundation drawings and GAD and other two connected drawing of FOB were given to the contractor. Even the plaintiff in his cross examination admitted that the plan of Hexagonal type gate lodge mentioned at Sl.No.1 of the entries dated 13/4/2012 in first page of Ex.R.3 was given to the contractor and five plans were appended to Ex.R.3. Ex.R.3 which is Site order book of the contract work at Hanikere 20 CT 1390_Com.A.S.14-2016_Judgment.doc Railway Station maintained by the respondent contained 5 plans/drawings and even CW.1 has admitted the receipt of the instructions partially and stated that he has signed Ex.R.3, but he could not write his remarks. This Ex.R.3 and the admission of CW.1 and the contention of the employer clearly show that the drawings which were required were given to the contractor as noted by the Arbitral Tribunal. Apart from this, in Ex.C.6 letter dated 12/3/2013 the defendant No.3 has stated that for construction of FOB necessary drawing was issued, but the work is yet to commence. The tribunal has considered all this evidence that was placed and found that the contention of the plaintiff that the drawings were not furnished for proceeding with the work is also not acceptable.
20. Moreover, if there are such lapses as contended by the plaintiff, the plaintiff would have immediately brought it to the notice of Engineer in charge. As stated above, till 14/2/2013 no such issue appears to have been raised by the claimant/ plaintiff before the defendants. If there are lapses on the part of the defendant and the same is brought to the notice of the defendant and still same is not corrected, then plaintiff can blame the defendants. Same is is not done, which show that plaintiff had no such difficulty to proceed with the work. As per clause 17(A)(ii) of the GCC if any instruction from the Railway is necessary for due execution of the work by the contractor, he shall write to the Engineer or the authorized representative to provide him the specific 21 CT 1390_Com.A.S.14-2016_Judgment.doc instruction to avoid delay in completion of the work on time. This clause also provides that on happening of any such event causing delay, contractor shall immediately give notice in writing to the Engineer within 15 days of such happening, but shall nevertheless make constantly his best endeavor 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 work. It also provides that 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. Therefore, as per this clause, after noticing the lapses and non furnishing of the instruction by the employer, it was the duty of the contractor to give notice in writing to defendant. It is not the case of the plaintiff that such notice was gby given to defendants seeking any line block, caution order, relevant drawings in respect of any particular work at a specified period. By noting all these, Learned arbitrator found that, allegations, complaints, lapses alleged by plaintiff contractor are not well founded and are not acceptable.
21. In the award, learned Arbitrator has even considered the contention of the defendant/employer that the structural steel was found to have not been procured from the producers as mentioned in the special conditions of contract. Clause 3.1 of SCC relating to procurement of steel is contended by the plaintiff to be applicable only in respect of re-enforcement steel and not to structural steel. As it is 22 CT 1390_Com.A.S.14-2016_Judgment.doc mentioned in Clause 3.1, that all steel for construction shall be procured from main reputed producers such as SAIL, TISCO, IISCO, RINL, Learned arbitrator has not accepted the contention of the plaintiff that this clause relating to procurement of steel from particular producers is not applicable to structural steel and that for the structural steel only IS2062 is sufficient. The learned Arbitrator has noted that as per clause 3.1, if steel is supplied from any other source and used in specific circumstances with approval of the Chief Engineer Incharge, for such steel used payment will be 85% of the agreed amount subject to such steel passing the requirement of relevant steel specification. The claimant/ plaintiff had contended that Seel which was obtained from Vijetha Profiles was tested and test approval is obtained from Karnataka Material Testing & Research Centre, Hubli and certificates are produced as Ex.C.58B1 to Ex.C.58B4. However the tribunal noted that as per clause 3.2 the cash memo and necessary certificate is to be produced and the same was not produced. The Tribunal has also found that though the test approval is obtained by the plaintiff, same was submitted with letter to the defendant only on 16/9/2014 and by that time, contract was already terminated. The Tribunal has also noted that the approval of the Chief Engineer Incharge was not taken as mentioned in clause 3.1 of the SCC for procuring the steel from some other source. By considering all these materials and terms of the 23 CT 1390_Com.A.S.14-2016_Judgment.doc contract, Tribunal found that the plaintiff has violated the specification in obtaining the steel from particular producers.
22. The Tribunal has also noted that in Ex.C.18 letter dated 29/5/2013, plaintiff had contended that the clause in the contract gave liberty to the plaintiff for procuring any steel manufactured by any company which meet IS2062, but by considering clause 3.1 Tribunal has held that this contention of the plaintiff cannot be accepted and it is against the contract terms. By Ex.C.17 dated 17/5/2013 the defendant No.3 had raised the issue of not complying with clause 3.1 of SCC in procuring the steel and for which Ex.C.18 letter was given by the plaintiff which was found to be against the terms of the contract. This Ex.C.18 letter which was addressed to defendant No.2 is considered as appeal under clause 22.5 of GCC and for this, defendant No.2 has also given decision as per Ex.C.19 and rejected the claim of the plaintiff and found that the steel procured by the plaintiff of some other producers or of some other brand is not permissible and without approval of the Chief Engineer Incharge the same cannot be used. Therefore, in respect of use of the steel of the specified producers, relevant clause in the contract is found to have been violated by the contractor.
23. The respondent had even contended about the sub standard water pipe alleged to have been used in laying the water pipe line in Hanikere Railway Station yard in contravention of schedule A of Ex.C2. Tribunal by considering the evidence has found that the pipe was already 24 CT 1390_Com.A.S.14-2016_Judgment.doc laid and payment was also made in CC II bill after measurement and such payment already made confirms that the pipes are of the standard prescribed in schedule A of Ex.C.2 and as such no fault could be found with claimant in execution of this work of water pipe and has held in favour of the plaintiff and negatived the contention of the defendants.
24. The defendants who are the employers have terminated the contract with effect from 30/8/2013 by termination order as per Ex.C.40. It is shown in Ex.C.40 that the ground on which the contract is terminated is for poor execution of the contract work, in adequate progress in the execution of the work and failure on the part of the claimant to attend various items of structural steel pending to be executed as pointed out in various letters of the defendant. The Arbitral Tribunal has also noted that before this termination order, 7 days notice dated 2/8/2013 as required under clause 62.1 was issued and the same was replied by the plaintiff as per Ex.C.33 on 7/8/2013. The Tribunal has also noted that as required under the contract, 48 hours notice was also issued as per Ex.C.35 on 22/8/2013 and termination of the contract is stated to be as per clause 62.1 of GCC. A letter as per Ex.C.41 was also issued on 30/8/2013, wherein, the reasons for the termination are also clearly stated. Learned arbitrator has considered all these letters and even other correspondence that are exchanged between the parties and noted that respondent has contended that the contract is terminated under clause 62.1 (vi), (vii), 25 CT 1390_Com.A.S.14-2016_Judgment.doc
(viii) and (ix) out of 13 grounds appearing in clause 62.1 of GCC which deal with determination of contract owing to default of contractor. 62.1(vi) which is abandoning the contract is found to be not applicable as even after termination of the contract, plaintiff has made effort to do the work and the contention of abandoning the work was not established. The Tribunal has noted that the contention that persistently the contractor has disregarded the instruction of the Engineer and controverted provisions of the contract and also failed to remove material from the site or failed replace work after receiving notice from the Engineer are established.
25. To arrive at this conclusion, tribunal has noted the contention of both the parties wherein the claimant had contended that due to not providing of full scope of the work line block, caution order clear site and not proper drawing the work could not be proceeded and also considered the contention of the respondent that the plaintiff has failed to follow the instructions and has contravened the provisions of the contract and even after direction to remove the steel which was not of the specified quality and was not answering to the condition in the SCC, contractor has not removed the same and also that the contractor has failed to submit programme of work within 15 days or even thereafter which is essential for further plan of executing contract and also which is necessary for providing caution order and line block. Tribunal has noted that in respect of the steel, when defendant No.3 has informed the plaintiff that he is not using 26 CT 1390_Com.A.S.14-2016_Judgment.doc the structural steel as per the specification, plaintiff has replied stating that for obtaining steel from the approved producer six months time is required and defendants have to wait and also that they may have to pay extra amount etc and found that this contention is not supported by any documents and that at the time of entering into the contract, plaintiff was aware of these conditions in the contract and therefore he cannot blame the defendants.
26. Learned arbitrator has also noted that even in respect of engaging technical staff and mobilizing resources there are lapses on the part of the plaintiff. Tribunal has even noted that witness CW2 who was examined as Supervisor in support of the plaintiff's case was not proved to be working as Supervisor at any site of work and the name of the Supervisor found at the spot at the time of inspection was different.
27. After considering allegations and counter allegations of each party and on considering evidence placed by the parties and also by considering the provisons of the contract, Tribunal has finally found that the employer is fully justified in terminating the contract by its termination order dated 30/8/2013 as per Ex.C.40. By detailed consideration of the evidentiary material, Tribunal came to the conclusion that the contractor is guilty of breach of contract. For breach of contact by the contractor, termination is permitted under clause 62.1 of GCC. Tribunal has also noted that even other clause like clause 25, 27 are also violated by the contractor and even clause 26 requiring efficient and competent staff 27 CT 1390_Com.A.S.14-2016_Judgment.doc appointment is also not followed and the contractor has even violated the duty of employing proper managerial and technical personnel possessing adequate experience as provided in clause 14.1. The Tribunal has noted that the plaintiff instead of doing work has went on complaining and making allegation against the defendants. Though as per clause 17(A)(ii) he is required to seek information if there is doubt, he has not followed the same and due to lapses on the part of the contractor, Tibunal found that, work has not completed. By considering all these, Tribunal has found that the termination of contract under clause 62(1) of the GCC is justified. As stated above as per clause 63 of the GCC clause 62(1)(i) and (xiii) of the GCC is deemed to be excepted matter and the matters which are not arbitrable. The Tribunal by considering the evidence has found that the termination by Ex.C.40 is in compliance with clause 62.1 (vii) and (ix) and as per clause 63 it will be excepted matters and is not arbitrable. Therefore, validity of termination of the contract for the default of the contractor as per clause 62.1 of the GCC is not an arbitrable dispute at all and as such there was no scope for the Arbitral Tribunal to consider the validity of such termination. Inspite of that, Arbitral Tribunal by considering several documents that are placed before the Tribunal has rightly held that the contractor has committed breach of contract and the defendants are justified in terminating the contract by termination order Ex.C.40 dated 30/8/2013 and 28 CT 1390_Com.A.S.14-2016_Judgment.doc termination of the contract under clause 62(1) of GCC is valid.
28. After answering issue No.2 and 14, learned arbitrator has considered issue No.4. Issue No.4 is in respect of claim in respect of portion of the work done by the contractor of the value of Rs.63,08,262.15/-. Learned arbitrator found that this claim is coming under clause 45(a) of the GCC and is an excepted matter as per clause 63 of the GCC and is not an arbitrable issue. The tribunal while answering issue No.4 has observed that clause 45 of the GCC governs the procedure for measurement of the work done by the contractor and as per clause 45(a) within 7 days of the measurement, contractor can take objection and thereafter any re-measurement if taken by the Engineer in the presence of the contractor same becomes final and the tribunal has found that there is no proof that the claimant had complied with requirement mentioned in clause 45(a) by raising specific objection to record any measurement of classification within 7 days and the tribunal thereby answered issue No.4 as not arbitrable as is excepted matter.
29. After answering issue No.2 and 14, Tribunal in issue No.3 and 5 which are with regard to refund of security deposit amount and return of performance guarantee amount, tribunal found that as per clause 16(1), bank guarantee was given and security deposit was also given and as per clause 4.3(iv) of SCC it is an excepted matter and therefore it is not arbitrable. Moreover, since there are lapses 29 CT 1390_Com.A.S.14-2016_Judgment.doc on the part of the contractor in performing the work, bank guarantee given for performance and the security deposit have been forfeited and the said order is within the employer's power and it is held that correctness of the same cannot be considered by the Arbitral Tribunal.
30. On issue No.5 which was in respect of value of 30.09 MT of structural steel amounting to Rs.25,91,445/- and fabricated by him as per CC II Bill, by considering that, contention of the defendant that steel used by the claimant in the foundation of the platform shelters was the reinforcement steel for which the claimant has been paid under CC Bill II and no structural steel was used for any work by him and therefore question of making payment do not arise and this contention is not controverted by the claimant, tribunal has answered issue No.5 in the negative.
31. Issue No.6 and 8 before the Tribunal were with regard to structural steel lying unused at the Railway yard and value of other construction material such as sand, 20mm metal and stone lying unserved at the work site. Rs.6,72,000/- said to have been incurred by him towards monthly payments made to his employees to keep watch over his said construction materials kept at the site is covered in Issue No.10. The Tribunal has considered invoices that are produced by the claimant and found that they are not from the specified producer and and has found that the plaintiff was entitled to take away these unused construction material from the Railway yard, instead of allowing the same lying idle.
30CT 1390_Com.A.S.14-2016_Judgment.doc Therefore the tribunal found that the claimant is not entitle for these claims towards value of meterials lying idle and expenses incurred to keep watch for the same.
32. In issue No.7 which is based on claim No.6 the tribunal has found that the claimant is entitle for Rs.18,77,428.75 and this finding is not challenged in the present arbitration suit. In issue No.9 the tribunal has found that as per the interim award passed by the Tribunal, after deducting certain amount, payment of Rs.1,44,23,646/- has been made by withholding balance of Rs.1,79,856/-, in which Rs.50,000/- was deducted on the head of liquidated damages which was found to be not correct and the tribunal has ordered for payment of Rs.50,000/- in the final award. This finding on claim No.8 also appears to have not been challenged by the plaintiff.
33. In issue No.11 the claim is for compensation of Rs.2.80 crores. Tribunal has considered that the termination is legal and the contractor has breached the conditions of contract and is not entitle for compensation and has answered the issue in the negative. The issue No.12 which is with regard to interest is also answered in the negative based on the finding on other issues. Similarly the issue No.13 regarding costs has been answered by the Tribunal. Regarding issue No.16 and 17 which are with regard to the counter claims, the tribunal has rejected these counter claims and the same is not challenged in the present case.
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34. On looking to the entire award, tribunal has exhaustively considered issue No.2 and 14 which are the main issues. The Tribunal has considered each and every document that is placed and the evidence that is led by the parties and has also considered the decisions that are cited. The tribunal has found that the termination as per clause 62(1)(vii) and (ix) is established and the same is valid and also found that such termination for the fault of the contractor as provided in clause 62.1 of GCC is even excepted matter and is not arbitrable. Still as the other claims like compensation of Rs.2,80,00,000/- etc were to be decided, termination has considered validity of the termination and found that the termination is legal and then answered other issues and has awarded Rs.18,77,428.75 in claim No.6 and Rs.50,000/- balance which was deducted illegally in claim No.8 and in total awarded Rs.19,27,428.75 with interest @12% per annum from the date of award. On looking to the written arguments and also the petition averments the plaintiff has contended that the award is contrary to the pleadings, evidence and the law laid down by the Hon'ble Supreme Court and the learned Arbitrator has committed grave error and has not properly appreciated the terms of the contract and also the evidence that has been led etc. On looking to the award, as discussed above, tribunal has considered each and every point and has referred to different clauses of the contract including GCC and SCC and also considered the evidence that has been led before the Tribunal and referred almost 32 CT 1390_Com.A.S.14-2016_Judgment.doc every document that has produced before the Arbitral Tribunal.
35. As discussed above, the learned Arbitrator has considered each and every point and the main issue exhaustively and then came to the conclusion based on the facts and law and even by applying the terms of contract and this award which is based on evidence, facts and terms of contract entered between the parties and the applicable law, is just and proper and absolutely there are no ground to interfere with such an award. It is well established principle that even if court on facts could have a different view than that of the Arbitrator, still court cannot impose its view as against view of Arbitrator unless view of Arbitrator is not even a possible view. On looking to the award, this court also cannot come to a different conclusion and cannot have a different view than that of the learned Arbitrator. It is contended by the plaintiff that the learned Arbitrator has not considered the evidence and the cross examination and also not properly interpreted the contract etc. However, the award show that the evidence has been properly appreciated and court, under Section 34 of the Arbitration & Conciliation Act cannot re-appreciate the evidence.
36. The learned counsel for the plaintiff has relied on the decision of Hon'ble Supreme Court reported in AIR 1979 Supreme Court 720 (M/s. Hind Construction Contractors by its sole proprietor v. State of Maharastra) in which the Hon'ble Supreme Court has considered about contract in 33 CT 1390_Com.A.S.14-2016_Judgment.doc which time is essence of the contract. The Hon'ble Supreme Court has found on the facts of the case that, as the contractor was allowed to do some work after expiry of the period though at his risk, it held that the time cannot be held to be essence of the contract. The decision cited is not applicable on any point of the present dispute. In the present case the time was fixed in the contract, it was extended, further extended and further extended with penalty etc and finally the contract was terminated for the fault of the contractor and not for the reason that the work was not done within time or that the time was essence of the contract. In the present case contract is terminated under clause 62(vii) and (ix) of the GCC. Hence, this decision is not applicable.
37. The learned counsel has also relied on the decision of Hon'ble Supreme Court reported in (2015) 3 SCC 49 (Associate Builders v. Delhi Development Authority) in which the Hon'ble Supreme Court has considered the various grounds on which the Arbitral Award could be set aside by the court under Section 34 of the Arbitration & Conciliation Act. Hon'ble Supreme Court has considered as to what is fundamental policy of Indian law and what is patent illegality and what is interest of India and also on what grounds the award of the tribunal could be set aside under Section 34 of the Arbitration & Conciliation Act. The Hon'ble Supreme Court in this decision has held that even disregarding order passed by the Superior Court in India could also be contravention of fundamental policy of Indian law. On going 34 CT 1390_Com.A.S.14-2016_Judgment.doc through the decision and on considering the facts of the present case, no grounds as mentioned in this decision has been made out to set aside the award passed by the learned Arbitrator and to interfere with the award.
38. As rightly argued by the learned counsel for the defendants, as held in the decision of Associate Builders, construction of terms of contract is primarily within the domain of arbitrator to decide and interference by court is permitted only when arbitrator construes the contract in such a way that no fair minded or reasonable person could do. The award cannot be interfered in the present case, as no such situation requiring interference with the award is made out. Learned counsel for the defendants has relied on the decision reported in (2015) 5 SCC 698 (Navodaya Mass Entertainment v. J.M.Combines). In this decision in para 8 the Hon'ble Supreme Court has held as under:
"In our opinion, the scope of interference of the court is very limited. The court would not be justified in reappraising the material on record and substituting its own view in place of the arbitrator's view. Where there is an error apparent on the face of the record or the arbitrator has not followed the statutory legal position, then and then only it would be justified in interfering with the award published by the arbitrator. Once the arbitrator has applied his mind to the mater before him, the court cannot reappraise the matter as if it were an appeal and even if two views are possible, the view taken by the arbitrator would prevail."35
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39. He has also relied on decision reported in (2009) 10 SCC 63 (Steel Authority of India Limited v. Gupta Brother Steel Tubes Limited) in which in para 18 the Hon'ble Supreme Court has considered the grounds of interference in the award and held as under:
"18. It is not necessary to multiply the references, Suffice it to say that the legal position that emerges from the decisions of this Court can be summarised thus:
(i) In a case where an arbitrator travels beyond the contract, the award would be without jurisdiction and would amount a legal misconduct and because of which the award would become amenable for being set aside by a court.
(ii) An error relatable to interpretation of the contract by an arbitrator is an error within his jurisdiction and such error is not amenable to correction by courts as such error is not an error on the face of the award.
(iii) If a specific question of law is submitted to the arbitrator and he answers it, the fact that the answer involves an erroneous decision in point of law does not make the award bad on its face.
(iv) An award contrary to substantive provision of law or against the terms of contract would be patently illegal.
(v) Where the parties have deliberately specified the amount of compensation in express terms, the party who has suffered by such breach can only claim the sum specified in the contract and not in excess thereof. In other words, no award of compensation in case of breach of contract, if named or specified in the contract, could be awarded in excess thereof.
(vi) If the conclusion of the arbitrator is based on a possible view of the matter, the court should not interfere with the award.36
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(vii) It is not permissible to a court to examine the correctness of the findings of the arbitrator, as if it were sitting in appeal over his findings."
40. In the present case the plaintiff has failed to make out that the award is without jurisdiction or that the award is erroneous on the face of the record and as held in this decision, when the conclusion arrived by the Arbitrator is based on possible view of the matter, court cannot interfere with the award and the court cannot examine the correctness of the finding of the arbitrator as if it were sitting in appeal over the finding. Learned arbitrator has considered all the issues raised, claims made and counter claims contended and has considered the evidence, documentary and oral and considered the provision of the contract, interpreted the terms of contract and has applied the decisions cited and has come to a decision based on the facts and held that the termination is valid and in terms of clause 62(1) of GCC and has also answered other issues and allowed the claim petition partly and awarded Rs.19,27,428.75 with interest to the claimant plaintiff. The award of the learned Arbitrator is just and proper and there are no grounds to setaside the award. Accordingly, point N.1 is answered in the negative.
41. POINT No.2 : For the discussion made on above point, following order is passed:
37CT 1390_Com.A.S.14-2016_Judgment.doc ORDER This Arbitration suit filed under Section 34 of the Arbitration & Conciliation Act challenging the award dated 04/11/2015 passed by the learned Arbitrator in AC No.104/2014 is dismissed with costs.
[Dictated to the Judgment Writer; transcript thereof corrected, signed and then pronounced by me, in the Open Court on this the 22nd day of February 2022] [Ravindra Hegde] LXXXIII Additional City Civil Judge.
BENGALURU.
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