Himachal Pradesh High Court
The State Of H.P. Through Principal ... vs M/S Himachal Techno Engineers And ... on 15 November, 2022
Author: Ajay Mohan Goel
Bench: Ajay Mohan Goel
1
IN THE HIGH COURT OF HIMACHAL PRADESHSHIMLA
Arb. Case No. 07 of 2008
Date of Decision:15.11.2022
.
The State of H.P. through Principal Secretary
(IPH, Shimla-2 and another ...Petitioners
Versus
M/s Himachal Techno Engineers and another
...Respondents
Coram:
The Hon'ble Mr. Justice Ajay Mohan Goel, Judge.
Whether approved for reporting?1 No
For the petitioners: M/s Sumesh Raj and Dinesh Thakur,
r Additional Advocate Generals with Mr.
Amit Kumar Dhumal, Deputy Advocate
General.
For the respondents: Mr. Sumeet Raj Sharma, Advocate.
Ajay Mohan Goel, Judge (Oral):
By way of this petition filed under Section 34 of the Arbitration and Conciliation Act, 1996, the petitioners have challenged to the award passed by learned Arbitrator-cum- Superintending Engineer, IPH Circle Sundernagar, dated 05.11.2007, in terms whereof the following relief has been granted to the claimants:-
"Claims of the claimant/Contractor S. No. Description of claim Amount Claim demanded Amount demanded awarded
1. Amount for extra earth Rs. 1602.87x350.33 5,61,533/-
work of 1602.87 m3 @ 7,48,2200/-
Rs. 466.80
2 Extra laying of plum RS. 565.20x1420 Rs.8,02,58
concrete 722.20 m3 @ Rs. 1,25,524/- 4/-
1420.00 disposal of
1 Whether reporters of the local papers may be allowed to see the judgment?
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2
surplus earch
3. Carriage of material from Rs. 5,30,200 Nil Rs. Nil
main road to work site
4. Cement 7670 bags @ RS. Rs.92,040/- Nil Rs. Nil.
12/-
5. Amount under 10CC Rs. 3,48,096/- Nil Rs. Nil
price escalation
.
6. Interest @24% per 8.5% per annum Rs.
annum from the date of 1,39,087/-
cause of action
i.e. 25.8.2006 till
the date of ward
i.e. 5.11.2007 on
Sr. No. 1 & 2.
Total Rs.
15,03,204/
-
Counter Claim of the
respondent
1. Recovery for balance Rs.4,97,250/- Recovery made in Rs. Nil.
cement lying with the the final bill.
contractor
2. Cost of Arbitration Rs.50,000/- Nil Rs. Nil
Total r Rs. Nil
2. Brief facts necessary for the adjudication of the present petition are as under:-
According to the petitioner, the work for C/O 5.33 MLD Water Purification Plant in shape of rapid sand filter at Head Works Longni Mathan was awarded to the respondent herein on lump sum basis for Rs.1,04,50,000/- with a time limit of five months. The contractor after receiving the payment of first running bill, started making requests to the department that extra earth work stood carried out in plain water tank. This request of the contractor was not sustainable and accordingly the same was rejected because the work was awarded to the contractor on lump sum basis. As per the petitioner, in the contract agreement, there was a specific clause i.e. Clause No. 25, which provided that the "works" mean the work to be executed in accordance with the contract or parts thereof as the case may be and shall include all ::: Downloaded on - 21/11/2022 20:30:41 :::CIS 3 extra or additional, altered or substituted works as required to for performance of the contract. The request of the contractor was thus rejected by the officer concerned vide letter dated 22.10.2003.
.
The contractor raised a dispute with respect to the execution of the said extra work executed in a lump sum contract and filed a petition in the High Court of Himachal Pradesh and vide order dated 25.08.2006, Sh. P.D. Sharma, retired Chief Engineer was appointed as sole arbitrator by the Court, however, Sh. P.D. Sharma, expressed his inability to enter into the reference, therefore, vide order dated 16.11.2006, the Court appointed Shri O.P. Chauhan, r Superintending Engineer, I&PH Circle, Sundernagar, as sole arbitrator. The sole arbitrator entered into the reference and conducted six hearings in the case and finally passed award dated 05.11.2007, for an amount of Rs.15,03,204/- alongwith interest in favour of the contractor and feeling aggrieved, the petitioners/department has preferred these objections under Section 34 of the Arbitration and Conciliation Act.
3. Mr. Sumesh Raj, learned Additional Advocate General has argued that the award under challenge is not sustainable in the eyes of law as the same is in conflict with public policy of India for the reasons that learned Arbitrator has gone beyond the scope of Clause 65 while adjudicating the reference made to it. He has argued that in terms of Clause 65 of the Contract agreement, except where otherwise provided in the contract, the disputes and questions relating to the meaning of specification, designs, ::: Downloaded on - 21/11/2022 20:30:41 :::CIS 4 drawings and instructions were referable to the arbitration whereas the dispute which has been raised by the contractor is totally different and the award is liable to be set aside on this .
count alone. Learned Additional Advocate General has further argued that the Arbitrator has further committed a grave error in law by ignoring the terms of Clause 25 of the agreement which was a lump sum contract, and therefore also, the arbitrator was not competent to adjudicate the matter as it was specifically provided in the contract that any additional, altered or substituted works, as required for performance of the contract, were to be executed by the contractor within the lump sum amount of the contract. He further submitted that Arbitrator has treated the contract in issue as a scheduled contract which has resulted in great perversity. He has submitted that the lump sum contract is provided by the department as a public policy to avoid any payment of extra work in the total cost of the project with its intents and purposes were notified in the NIT, and therefore, it was the duty of the contractor to inspect the site alongwith contour plans and site conditions and thereafter make a bid for lump sum contract, which includes the entire cost of the project. According to learned Additional Advocate General, the entire site in fact was known to the contractor and this is evident from the fact that though the tentative cost of the project was stipulated as Rs. 71,95,500/-, whereas the contractor, after seeing the contour and site plans, had filed tender for an amount of Rs. 1,04,50,000/-. He further argued that Arbitrator ::: Downloaded on - 21/11/2022 20:30:41 :::CIS 5 has committed grave error in law in awarding an amount of Rs.15,03,204/- on account of extra earth work as the contour plan submitted by the department was not as per the site causing .
increase of extra laying of the plumb concrete to achieve the required level at the site for wash water tank, raw water tank, presetting unit and filter beds respectively. Contractor was very well aware about the site and was also aware about the manner of work which was taken into consideration by the contractor at the time of bidding. As per Additional Advocate General, all these issues have been ignored by the learned Arbitrator, therefore he has mis-conducted himself and this also renders the award to be bad in law. He has further submitted that award of interest by the learned Arbitrator is also bad in law and therefore the award is also liable to be set aside. Learned Additional Advocate General has further argued that in fact a perusal of the award demonstrates that the same was passed on the recommendations of a Committee which Committee was constituted by the learned Arbitrator during the pendency of the arbitral proceedings and this also renders the award to be bad in law.
4. Mr. Sumeet Raj Sharma, learned counsel for the respondent has submitted that a perusal of the award would demonstrate that after taking into consideration the respective contentions of the parties as well as the evidence which was led by the parties in support of their respective contentions, award has been announced by the learned Arbitrator and in view of the fact ::: Downloaded on - 21/11/2022 20:30:41 :::CIS 6 that this Court under Section 34 of the Arbitration and Conciliation Act cannot undertake the exercise of re-appreciation of evidence, the grounds which have been raised by the petitioner .
for challenging the award are not sustainable in law nor they are available to the petitioner to be raised before this Court. Learned counsel has argued that the award besides being a speaking is also a reasoned award and the findings which have been returned by the learned Arbitrator have been so returned after referring to the respective contentions of the parties as also the evidence recorded. Learned counsel for the respondent has submitted that as far as constitution of the Committee by the learned Arbitrator is concerned, this was done by him with the consent of the parties which is evident of the fact that the order in terms whereof the Committee was constituted, was never assailed by the respondent and further no objections were filed against the report of the Committee by the department. Accordingly, he has prayed that the present petition is without any merit and the same also does not falls within the parameters of Section 34 of the Arbitration and Conciliation Act, therefore, the same be dismissed.
5. I have heard learned counsel for the parties and also carefully gone through the award passed by the learned Arbitrator.
6. Before the Court addresses respective contentions of the parties, it is necessary to refer to the scope of interference by this Court in a petition which is preferred under Section 34 of the ::: Downloaded on - 21/11/2022 20:30:41 :::CIS 7 Arbitration and Conciliation Act. Hon'ble Supreme Court of India in UHL Power Company Limited vs. State of Himachal Pradesh, (2022) 4 Supreme Court Cases 116, inter alia has been pleased to .
hold that the jurisdiction conferred on Courts under Section 34 of the Arbitration and Conciliation Act is fairly narrow and when it comes to the scope of an appeal under Section 37 of the Arbitration and Conciliation Act, the jurisdiction of an appellate Court in examining an order, setting aside or refusing to set aside an award is all the more circumscribed. Hon'ble Supreme Court has held that if there are two plausible interpretations of the terms and conditions of the contract, then, no fault can be found, if the learned arbitrator proceeds to accept one interpretation as against the other. Hon'ble Supreme Court has referred to its earlier judgment passed in Dyna Technologies (P) Ltd. Vs. Crompton Greaves Ltd. (2019) 20 SCC 1, in which Hon'ble Supreme Court was pleased to hold that Section 34 of the Act limits a challenge to an award only on the grounds provided therein or as interpreted by various Courts and arbitral awards should not be interfered with in a casual and cavalier manner, unless the Court comes to a conclusion that the perversity of the award goes to the root of the matter without there being a possibility of alternative interpretation which may sustain the arbitral award. Hon'ble Supreme Court further held that Section 34 is different in its approach and cannot be equated with a normal appellate jurisdiction. The mandate under Section 34 is to respect the ::: Downloaded on - 21/11/2022 20:30:41 :::CIS 8 finality of the arbitral award and the parties autonomy to get their dispute adjudicated by an alternative forum as provided under the law. Hon'ble Supreme Court has further held that if the Courts .
were to interfere with the arbitral award in the usual course on factual aspects, then the commercial wisdom behind opting for alternative dispute resolution would stand frustrated.
7. Now in the backdrop of the limitations, domain of interference by this Court under Section 34 of the Act, the respective contention of the parties will be redressed. A perusal of the award demonstrates that claim No.1 before it was with regard to payment due on account of Extra Work. Claim No.2 was with regard to amount payable to under 10CC, Claim No.3 was with regard to interest payable on the amount legally payable to the claimant. Besides this, there was a counter claim raised by the respondent for recovery of balance cement lying with the contractor for a sum of Rs.4,97,250/- as also the cost of the arbitration. It appears that during the pendency of the arbitration proceedings on 28.04.2007, that is the second date of hearing before the learned Arbitrator, a committee was constituted by the learned Arbitrator comprising of Shri S.P. Sen, Assistant Engineer I &PH Sub Division Gohar and Sh. Rajinder Singh Chandel AAE I& PH Sub Division Gohar, to visit the spot and submit their report with regard to claim No.1 i.e. payment due on account of extra work. Now, it is a matter of record that the constitution of the Committee was not objected to by the department. A perusal of ::: Downloaded on - 21/11/2022 20:30:41 :::CIS 9 the award further demonstrates that this Committee after inspecting the site submitted its report and this report was also not objected to by way of filing any petition against the same by the .
petitioner. In this view of the matter, this Court is of the considered view that the contention of learned Additional Advocate General that the award under challenge is not sustainable as the same is passed upon the report of the committee by the learned Arbitrator, is not sustainable in the eyes of law as the petitioner cannot be permitted to blow hot and cold in the same breath and having agreed to the constitution of the committee, now this ground is not available to them. Besides this, the contention of learned Additional Advocate General that the award in issue is not sustainable for the reason that it was beyond the scope of agreement entered into between the parties is also not acceptable in law for the reasons that, as is apparent from the averments made in the petition itself, the reference in the present case was made to the learned Arbitrator for adjudication of the dispute in terms of the orders passed by this Court dated 25.08.2006 and 16.11.2006. Therefore, this contention is also not sustainable in the eyes of law. A perusal of the award under challenge otherwise also demonstrates that while deciding the claims, learned Arbitrator at length has referred to the respective contentions of the parties as also the evidence which was led by the parties in support of their respective contentions and thereafter the findings stand returned thereupon. Now in the absence of power to re- ::: Downloaded on - 21/11/2022 20:30:41 :::CIS 10 appreciate the evidence being fettered upon this Court, it is not possible for this Court to make any observation with regard to these findings as re-appreciation of evidence under Section 34 of .
the Act is not permissible. During the course of arguments, learned Additional Advocate General otherwise also could not point out to any material evidence which was placed on record by the petitioner, which was not taken into consideration by the learned Arbitrator while deciding the claim petition. He has also not been able to substantiate before this Court that the award which has been passed by the learned Arbitrator is either against the mandate of law or against any statutory provisions governing the field. Therefore, in this view of the matter, as this Court finds that the findings returned by the learned Arbitrator are based on the respective contentions of the parties and appreciation of the evidence which was led by the parties, the Court does not finds any merit in the present petition. Even as far as the issue of awarding interest is concerned, Hon'ble Supreme Court in Uhl Power Company Limited vs. State of Himachal Pradesh (supra) has been pleased to hold that even post award interest can be granted by the Arbitrator on the interest amount awarded.
Accordingly, this petition, being devoid of merit, is dismissed. Pending miscellaneous application(s), if any, also stand disposed of accordingly. No orders as to costs.
(Ajay Mohan Goel), Judge.
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