Calcutta High Court
The Board Of Trustees Of The Port Of ... vs M/S. Marino Dredg Co. (P) Ltd on 13 January, 2020
Author: Arindam Sinha
Bench: Arindam Sinha
Judgment IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
AP no.26 of 2004
THE BOARD OF TRUSTEES OF THE PORT OF CALCUTTA
Versus
M/S. MARINO DREDG CO. (P) LTD.
BEFORE:
The Hon'ble JUSTICE ARINDAM SINHA
For KOPT : Mr. Hirak Mitra, Sr. Adv.
Mr. Nilay Sengupta, Adv.
Ms. Swati Agarwal, Adv.
For respondent : Mr. P.K.Das, Sr. Adv.
Mr. Amitava Mukherjee, Adv.
Mr. Rajesh Jana, Adv.
Heard on : Several dates.
Judgment : 13th January, 2020.
Arindam Sinha, J.: This arbitration petition is for setting aside award dated 3rd November, 2003. Parties to the arbitration had entered into agreement for dredging/excavation of approach channel and basin project of shore based pilot station at Sagar Island. The agreement was pursuant to award-debtor having accepted tender of award-holder, for doing said work as to be completed and handed over in satisfactory 1 condition. Work was to be done within 18 calendar months from date of receipt of work order. Consideration payable was provided in the agreement, which included fixed consideration and rates, for construction of fencing, protection and dredging.
Two claims of award-holder stood awarded, along with interest. The first claim is for pending bills and the second, for refund of security deposit. Arbitrator found work had been completed. Award-debtor had admitted receipt of bills under first claim awarded. Award-debtor, at material point of time did not raise any objection regarding those bills. The first claim was awarded on bills due, found to be in respect of work actually executed. The second claim, for refund of security deposit, was awarded on Arbitrator finding, the work had been completed. 10 % interest per annum, from 8th February, 2002 (date of first sitting of arbitration) till date of award, was allowed on aggregate award amount. Rest claims of award-holder were rejected as also counter- claims of award-debtor.
Mr. Mitra, learned senior advocate appeared on behalf of petitioner/award- debtor. He submitted, General Conditions of Contract is part of the contract between parties. He referred to clause 6 therein as terms for payment. All payments made prior to issue of certificate in From G.C.2 shall be treated as mere advances. Respondent/award-holder had not obtained completion certificate in Form G.C.2. He relied on Specifications with Special Conditions, General Issues clause 2.6 to submit, dredging depths were to be maintained at contractor's expense, till date of completion certificate for whole of the work. Extra dredging, due to bank collapse, had to be borne by contractor. There could not have been award made on bills for work done but not completed. Quantum meruit payment is not permissible under the contract. Finding in paragraph 10.5 of impugned award that work was completed, is perverse and patently illegal. The work was not completed prior to 1st July, 2001, on and from which date admittedly contractor had suspended work. Suspension of work can only be of on going 2 work till before completion. He relied on Treitel and Chitty on Contract to submit, where complete performance was obligation on part of contractor, there can be no recovery for partial performance. He cited an English case of Sumpter Vs. Hedges reported in (1898) 1 QB 673, in which it was held that plaintiff could not recover from defendant, in respect of work he had done as upon a quantum meruit, on no evidence of fresh contract to pay for the same when the contract was for the whole.
He elaborated, the agreement made on 25th June, 1999 was pursuant to, inter alia, letter of intent dated 16th June, 1999. With reference to clauses 5.12 and 6.1 in General Conditions, he emphasised, scope of the contract required contractor to obtain certification by Forms G.C.1 and G.C.2. The forms have been disclosed at pages 183 and 184 in the petition. He also drew attention to the correspondence, disclosed between pages 258 to 269 in the petition, culminating in his client having terminated the contract. He pointed out, admitted position is, there was no application made to the engineer for issuance of certificates, even by Form G.C.1.
He relied on judgment of Supreme Court in ONGC Ltd. v. Saw Pipes Ltd. reported in (2003) 5 SCC 705. He submitted, this decision is the authority for deciding the challenge as it was rendered prior to amendment made in year 2015 to Arbitration and Conciliation Act, 1996. The judgment declared, it is settled law that intention of the parties is to be gathered from words used in the agreement. He relied on clauses (A)(1)(iv), (A)(2)(ii)(c) and (A)(3)(d) in paragraph 74.
Mr. Mukherjee, learned advocate led by Mr. Das, learned senior advocate appeared on behalf of award-holder. Mr. Mukherjee referred to letter dated 4th May, 2000 of petitioner. He submitted, it was proposal for extra work pertaining to protection of embankment. This work his client undertook as expression of interest, but work order was not issued. It is this work that was suspended, post contractual work having been completed. He drew attention to the Special Conditions to submit, they supersede 3 the General Conditions of Contract where applicable. Clause 2.7 in Special Conditions says, additional dredging caused due to force majeure or non-compliance of soil characteristic with data supplied by petitioner, will be paid for. Contractual work was completed and the pilot station inaugurated, on approach to the landing site by pilot boat. Maintenance thereafter was extra work, which required additional dredging as in said clause 2.7. His client was maintaining, upon completion and sought payment therefor. On not receiving payment, his client suspended maintenance work. This was extra work and its suspension does not contribute to an inference that contract work was not completed. The Tribunal, inter alia, in paragraphs 10, 10.3 to 10.5 dealt with the contention of petitioner regarding the forms.
The first claim awarded is for actual quantum of dredging computed on the basis of joint recording of pre and post work levels. That itself is indication of the work being for maintenance or extra work. When by letter dated 10th January, 2001 his client said the work was completed and interest shown to undertake maintenance of completed works, there was no response, let alone denial of status of the work as completed. On not being paid for the extra work, his client issued letter dated 3rd July, 2001, of suspension of such work. It is only then there was purported denial regarding completion.
He relied on judgment of Supreme Court in Associate Builders vs. DDA reported in (2015) 3 SCC 49 for scope of challenge to award under section 34, Arbitration and Conciliation Act, 1996.
Petitioner has contended contract was not completed. Per General Conditions of Contract, all payments made are merely recoverable advances. Hence, counter-claims. On these facts the award is patently illegal, as opposed to provisions in Contract and Evidence Acts, 1872, mandated for compliance by section 28 of the 1996 Act. Respondent's contention has been that the work was completed and bills amount was 4 for extra work of maintenance, which was correctly allowed. Clause 2.7 in Special Conditions was also relied upon. Since the work was completed there was award for refund of security.
That contract work was not completed was asserted by petitioner to be a fact, by reliance on omission of award-holder to have applied for and obtained Forms G.C.1 and G.C.2. Form G.C.1 is prescribed certificate to be given by the engineer saying, contract work, in opinion of the engineer, is complete in every respect on dates mentioned, in accordance with the terms of the contract and contractor is required to maintain the work in accordance with clause 62 of the General Conditions, for period specified therein. Form G.C.2 is prescribed certificate of final completion saying that all obligations under the contract have been fulfilled by the contractor. This contention of contract work not having been completed was raised before the Tribunal and dealt with in impugned award.
In Associate Builders (supra) Supreme Court said in paragraph 17 as follows:-
"17. It will be seen that none of the grounds contained in sub-section (2)(a) of section 34 deal with the merits of the decision rendered by an arbitral award. It is only when we come to the award being in conflict with the public policy of India that the merits of an arbitral award are to be looked into under certain specified circumstances."
Public policy of India is to ensure rule of law. In view of petitioner's contention that finding in the award is against provisions in Contract and Evidence Acts, an enquiry into the merits of this contention, as dealt with in the award, has to be made.
It appears, by letter dated 19th July, 2000 petitioner had said, inter alia, the following to award-holder.
"Please refer to the Agreement dated 25.6.99 between Calcutta Port Trust and M/s. Marino Dredgco alongwith Work order no.MRN/NC/279/drg/440/1 5 dated 25.6.99 of Calcutta Port Trust on M/s Marino Dredgco Pvt. for dredging/excavation and protection work for the channel and basin pilot station at Sagar Island.
It has now been found necessary that some additional works will have to be carried out to provide protection against waves to the area cordoned off by piling (to make the 7.5 CD bund as well as spoil dumping area) as per enclosed drawing. The rates for the additional works shall be as follows:
......"
Award-holder by letter dated 10th January, 2001 furnished completion report. The Tribunal found petitioner did not dispute the report at that time. The Tribunal also found, the pilot basin project at Sagar Island was inaugurated by the Chairman of petitioner on 17th April, 2001. The Chairman reached the station by pilot launch and disembarked on the Pontoon Jetty at Sagar Pilot Basin, constructed by award-holder. The station was operated by award-debtor, at least till 6th August, 2001. The Tribunal, relying on clause 2.7 in Special Conditions, General Issues found both contingencies being force majure and non-compliance of soil characteristic with data supplied by award-debtor, had happened requiring additional dredging as admitted in award- debtor's note-sheet dated 8th December, 2000. Hence, award on the bills for dredging. Another look at the dates of inauguration and the note-sheet will show that this dredging became required prior to the inauguration. The dredging was done, then inauguration and operation of the station as aforesaid.
Certification in prescribed form was a situation contemplated by the General Conditions. Bills, meriting award, remained unpaid. Award-holder was working out the contract. Disputes arose on award-holder refusing to continue to dredge on not being paid therefor. As such it is apparent that completion of contract, being certified as contemplated, did not happen. The Tribunal has dealt with the question. Enquiry into merits thereof is thus far and need not be any further.
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The Tribunal having found completion of work, also awarded on refund of security. It was empowered to and awarded on interest as well. Petitioner was unable to demonstrate before the Tribunal that contract work was incomplete. Hence, the Tribunal's rejection of its counter-claims.
In view of aforesaid, the petition is found to be without merit and the same is dismissed.
(ARINDAM SINHA, J.) 7