Jharkhand High Court
The State Of Jharkhand Through ... vs M/S Himachal Construction Com. Pvt. Ltd on 10 December, 2024
Author: S. N. Pathak
Bench: S.N. Pathak, Anubha Rawat Choudhary
IN THE HIGH COURT OF JHARKHAND AT RANCHI
Commercial Appeal No. 5 of 2022
The State of Jharkhand through Executive Engineer, Minor
Distribution Division No. 3, Swarnrekha Multipurpose Project, Water
Resources Department, Dimna, P.O., P.S.: Jamshedpur, Jamshedpur,
District East Singhbhum
... ... Respondent/applicant /Appellant
Versus
M/s Himachal Construction Com. Pvt. Ltd. 11, H.I.G. Adarsh Nagar
Sonari, P.O. & P.S.: Jamshedpur, Dist: East Singhbhum, Jamshedpur-
831011 through Sri B.N. Dikshit, Managing Director, M/s Himachal
Construction Com. Pvt. Ltd. 11, HIG Adarsh Nagar, Sonari, P.O., P.S.
Jamshedpur, District- East Singhbhum
... ... Claimant/Respondent/ Respondent
---
CORAM : HON'BLE DR. JUSTICE S.N. PATHAK
HON'BLE MRS. JUSTICE ANUBHA RAWAT CHOUDHARY
---
For the Appellant : Mr. Sachin Kumar, AAG-II
: Mr. Ravi Prakash Mishra, Advocate
: Mr. Karamdeo, Advocate
: Ms. Surabhi, Advocate
For the Respondent : Mr. Ajit Kumar, Senior Advocate
: Mr. Indrajit Sinha, Advocate
: Mr. Shresth Gautam, Advocate
: Mr. Rahul Anand, Advocate
---
C.A.V. on 19th September 2024 Pronounced on 10th December 2024
Per, Anubha Rawat Choudhary, J.
1. This appeal has been filed for setting aside the judgment dated 07.02.2020 passed in Original Suit No. 07 of 2018 arising out of Miscellaneous Arbitration Case No. 8 of 2016 whereby the petition filed under section 34 of Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act of 1996) challenging the award dated 07.12.2015 has been dismissed by learned District Judge-I cum Commercial Court, East Singhbhum, Jamshedpur. The Arbitral award has been passed by the sole Arbitrator who is a retired Chief Engineer of Road Construction Department, Government of Jharkhand namely Shri Suresh Mishra.
2. The foundational background regarding the contract. The case arises out of agreement no. 3/SMC/88-89 dated 17.01.1989 for excavation of residual work of Chandil Left Bank Main Canal from km 22.555 to km 25.481. The work relates to the minor distribution division no. 3 (previously minor distribution division no.
5) of the State of Jharkhand.
The background of the case is that the Government of India received credit from International Development Association for Subarnarekha Multipurpose Project, Bihar (now Jharkhand). Tenders were invited by the Chief Engineer, Subarnarekha Multipurpose Project through Tender Notice dated 02.09.1988. Pursuant to the tender notice, respondent - M/s Himachal Construction Company Private Limited (hereinafter referred to as the claimant) successfully participated and contract was approved for acceptance in favour of the claimant vide memo dated 06.01.1989 issued by Chief Engineer (Subarnarekha Multipurpose Project), Chandil Complex. The agreement was signed on 17.01.1989 between the Executive Engineer, Subarnarekha Canal Division, Haludbani representing the then Government of Bihar and the director of the claimant. The contract was on item rate basis. In terms of the agreement the claimant was required to do all that was needed to complete the excavation work of the aforesaid Chandil Bank Main Canal to the extent of the kilometers mentioned above and if required, was also to carry out work beyond listed items and quantities for which they were entitled to be paid by taking them as "extra items" and "contract variation" as per General Conditions of Contract.
The estimated cost of work as per tender notice was Rs. 131.56 lakhs and the agreement was valued at Rs. 1,20,11,200.00. The work as per the written order was to commence on 17.01.1989 and the completion period was 6 months from the written order and accordingly, the work was to be completed by 16.07.1989.
3. Extension of time for completion of work The extension of time for completion of work was granted in phases upto 30.06.1992. The work could not be completed within the period of extended time i.e. by 30.06.1992 and the letter granting extension 2 of time till 30.06.1992 was issued by the Chief Engineer, which was letter no. 980 dated 20.05.1992.
4. The Cause of action for the dispute and the developments thereafter till dismissal of petition filed before the learned Arbitrator under Section 16 of the Act of 1996 vide order dated 09.05.2005.
a. The clauses of the contract relevant for this issue are clause nos. 50 and 51 which are quoted as under:
"50. SETTLEMENT OF DISPUTES:
If the Contractor considers any work demanded of him to be outside the requirements of the contract, or considers any drawings, record or ruling of the Executive Engineer on any matter in connection with or arising out of the contract or carrying out of work to be unacceptable, he shall promptly ask the Executive Engineer in writing for written instructions or decision. Thereupon the Executive Engineer shall give his written instructions or decision within a period of thirty days of such request.
Upon receipt of the written instructions or decision the Contractor shall promptly proceed without delay to comply with such instructions or decision.
If the Executive Engineer fails to give his instructions or decision in writing within a period of thirty days after being requested, or if the Contractor is dissatisfied with the instructions or decision of the Executive Engineer, the Contractor may within thirty days after receiving the instruction or decision appeal to Superintending Engineer, who shall afford an opportunity to the Contractor to be heard and to offer evidence in support of his appeal. This officer shall give a decision within a period of sixty days after the Contractor has been given the said evidence in support of his appeal.
If the Contractor is dissatisfied with this decision, the Contractor within a period of thirty days from the receipt of the decision shall indicate his intention to refer the dispute to arbitration, failing which the said decision shall be final and conclusive.
51. ARBRITRATION:
All the disputes or difference in respect of which the decision has not been final and conclusive shall be referred for arbitration to a sole arbitrator appointed as follows:3
Within thirty days of receipt of notice from the Contractor of his intension to the dispute to arbitration of Chief Engineer, Subernarekha Multipurpose Project, Jamshedpur shall send to the Contractor a list of three officers of the rank of Superintending Engineer or higher, who have not been connected with the work under this contract. The Contractor shall within fifteen days of receipt of this list select and communicate the Chief Engineer the name of one officer from the list who shall then be appointed as the sole arbitrator. If Contractor fails to communicate his selection of name, within the stipulated period, the Chief Engineer shall without delays select one officer from the list and appoint him as the sole arbitrator. If the Chief Engineer fails to send such a list within thirty days, as stipulated, the Contractor shall send a similar list to the Chief Engineer within fifteen days. The Chief Engineer shall then select one officer from the list and appoint him as the sole arbitrator within fifteen days. If the Chief Engineer fail to do so the Contractor shall communicate to the Chief Engineer the name of one officer from the list, who shall than be the sole arbitrator.
The arbitration shall be conducted in accordance with the provisions of the Indian Arbitration Act, 1940 or any statutory modification thereof. The decision of the sole arbitrators shall be final and binding on the parties thereto. The arbitrator shall determined the amount of cost of arbitration to be awarded to either parties, performance under the contract shall continue during the arbitration proceedings and payments due to the Contractor shall not be with-held unless they are the subject matter of arbitration proceedings.
All awards shall be in writing and in case of awards amounting to Rs. 1.00 lack and above, such awards shall state the reasons for the amount awarded.
Neither party is entitled to bring a claim to arbitration if the arbitrator has not been appointed before the expiration of thirty days after defects liability period."
b. It was the case of the claimant that extension was granted without imposition of any liquidated damages as the extension was primarily on the ground of non-clearance of forest land in the alignment of canal, non-shifting of utility services like high- tension electric towers, presence of Jaida (worship place) on the alignment and scarcity of fund for timely payment on account of bills which was evident from the letters of recommendation 4 of extension of time by the concerned officers. The scarcity of fund was also evident from the fact that no payment of work done could be made beyond 13th running on account bill. c. It was further case of the claimant that it was not unusual for large projects not being completed within time as pre-requisites like land acquisition, mandatory permission from concerned ministries, shifting of utility services and fund flow required for timely payment of bills are not arranged by the employer in advance. Under the tender notice in paragraph no. 6, the status of the project was mentioned and it was stated therein that the land was already acquired partially and forest land acquisition was in progress. It was the case of the claimant before the learned Arbitrator that the transfer of forest land could not be made till the progress of the work was going on. d. It was the case of the claimant before the learned Arbitrator that after expiry of the last extension of time upto 30.06.1992, the agreement was neither closed/foreclosed/rescinded nor the claimant was asked to demobilize the plant and machinery from the site and to submit the final bill for payment. On the contrary, the claimant was asked to extend the validity of bank guarantees. Further it was the case of the claimant that the State issued various correspondences assuring the claimant that allotment of fund was expected from Government of Bihar and the portion of the work involved would fall under priority zone and a letter dated 18.04.1992 was issued to this effect by the executive engineer asking the claimant to mobilize plant and machinery. A review of the progress was held in the chamber of Hon'ble Minister of Irrigation of the then State of Bihar on 18.11.1992 and it was decided to take necessary action regarding closure of such contracts which are not in the interest of the project, but to ask those contractors to go ahead with the work slowly which was in the interest of the project. A newspaper report dated 15.12.1993 wherein it was published that work at Subarnarekha Multipurpose Project was to begin in 5 a period of six months gave a ray of hope to the claimant regarding restart of the unfinished work. Another meeting of the officials of the Subarnarekha Project and Builders' Association of India (Jamshedpur Centre) was held on 12.08.1998 which was for the purpose of finding out ways and means to restart the balance work on priority basis as allotment of a sum of Rs. 40 crores was expected during the financial year. In the said meeting between the officials of Subarnarekha Multipurpose Project and Builders' Association of India certain points of agreement were entered into:-
i. Attempts would be made to get the balance work completed by existing contractors and if they are not interested, after due notice final measurement would be taken jointly in presence of existing contractors. ii. On the request of Builders' Association to give allowance for silt accumulated during the period of suspension of work almost for 8 to 10 years, it was agreed that due allowance will be considered after the final measurement is taken by September 1998.
iii. Extension of time will be granted before the balance work is started for which the Chief Engineer was competent.
iv. After invitation of tender for balance work, if the old contractors are ready to do the work as per terms and conditions, at lower rate under the new tenders, there would be no objection in awarding the work to contractors who have executed the work.
e. It was further case of the claimant that as a follow-up of the aforesaid meeting, the executive engineer issued a letter dated 27.08.1998 and informed the claimant that their work has been put under 2nd priority and sought consent from the claimant as to whether they were ready to do the balance work at their old rate. It is further case of the claimant that the claimant wrote a letter to the Executive Engineer stating that "since the work has 6 been put under second priority and its date of recommencement is not fixed, he, therefore, will be able to do the work at schedule of rate prevailing at the time of execution of work". In the meantime, the Government of Bihar through the Joint Secretary (Irrigation) issued letter dated 11.12.1998 with a direction that if the cost of balance work at the time of invitation of tender for balance work at "1998 schedule of rate"
was more than the cost of balance work as per existing contract rate including price escalation up-to-date, old contracts may be revived.
f. The cause of action for the claimant arose when the Executive Engineer invited fresh tender for the remaining work on 17.09.2000. The grievance of the claimant was that the tender was invited without ascertaining whether the estimated cost of balance work as per 1998 schedule of rate is less than the cost of balance work as per the old contract rate including price escalation upto 1998 as directed by the aforesaid letter of the department dated 11.12.1998. It was their case that the Government had issued the direction that if the cost as per old agreement including price escalation is less than the estimated cost as per 1998 schedule of rate, old agreement may be revived to avoid any future litigation. It was their further grievance that the existing contract with the claimant was not finalized before inviting fresh tender for balance work.
g. It was further case of the claimant that the engineers who were responsible for taking final measurement were not present on the various dates and time fixed for the purpose and under such circumstances, a legal notice for attending final measurement ought to have been published in the newspaper. Thus, final measurement as agreed by both the parties was never taken nor any effort was made to ascertain the quantities of silt accumulated in the canal during the period of stoppage of work from 30.06.1992 to the date of measurement taken by the group of engineers authorized for taking final measurement.7
h. The fresh tender for balance work was sent to the Secretary, Water Resources Department vide letter dated 11.01.2001 who reviewed the tender and observed "since most of the tenders relate to balance work of subsisting contracts which have not been finalized/closed or rescinded, the chances of litigation and court cases are there". Hence the Chief Engineer was directed vide letter dated 14.05.2001 to finalize the subsisting contracts, close the agreements and report and only thereafter, the fresh tender could be considered. By referring to aforesaid communications, the claimant contended that the tender for balance work was invited without finalizing the subsisting contract with the claimant and the contract was not finalized even till 14.05.2001. However, in the meeting of tender committee held on 28.08.2001 the balance work with regard to agreement was allotted to one Bihar State Construction Corporation at the cost of Rs. 1,35,16,985/- on the condition that the final bill of the work done by previous agency must have been finalized by 28.08.2001 as per the rule before the new agency takes up the work.
i. In the aforesaid background, the claimant filed a writ petition before this Court being W.P.(C) No. 5408 of 2001 which was also subject matter of consideration in LPA No. 312 of 2002 and ultimately, vide order dated 15.07.2002 liberty was granted to the claimant to invoke arbitration clause as per the agreement, if so desired.
j. Consequently, the claimant invoked clause 50 of the General Conditions of Contract dealing with 'settlement of disputes' on 16.10.2002 before the Executive Engineer, Minor Distribution Division No. 5 who rejected all the claims on 13.11.2002 against which the claimant preferred appeal before the Superintending Engineer on 04.02.2003 under Clause 50 of the General Conditions of Contract.
k. It is further case of claimant that the Superintending Engineer remained silent for more than 4 months and consequently, the 8 claimant gave notice to the Chief Engineer in terms of Clause 51 of the General Conditions of Contract vide letter dated 08.04.2003, but the Chief Engineer did not abide by the provisions of Clause 51 and did not send panel of 3 prospective arbitrators to the claimant within 30 days for selection of one arbitrator amongst the three. The claimant exercised their right and sent a panel of 3 arbitrators vide letter dated 12.05.2003. Having no reply from the side of the Chief Engineer, the claimant communicated one name out of the list of 3 engineers sent earlier to the Chief Engineer who would be the sole arbitrator vide letter dated 29.05.2003 which according to the claimant was in accordance with the provisions of Clause 51 of the General Conditions of Contract. Thus, the arbitral tribunal was constituted appointing the learned Arbitrator and the letter dated 30.06.2003 was issued by the claimant to the learned Arbitrator with a request to convene preliminary meeting and issue necessary directions.
l. Pursuant to such letter, a preliminary meeting was convened on 26.08.2003 but the executive engineer vide letter dated 26.07.2003 raised objection regarding appointment of sole arbitrator. Thereafter, the executive engineer filed a petition challenging the jurisdiction of the learned Arbitrator vide letter dated 27.09.2003 which was followed by hearing of the objection in terms of section 16 of the Act of 1996. A date of hearing was fixed on 10.01.2004 on which day, the executive engineer or his counsel did not appear. The claimant appeared and filed a rejoinder.
m. By way of last indulgence, the date was fixed on 20.03.2004 and on that day also, nobody appeared on behalf of the executive engineer, however, they sent a time petition dated 17.03.2004 mentioning that Miscellaneous Case No. 3 of 2004 was filed in the Court of Sub-Judge-I, Jamshedpur and sought adjournment, which was objected by the claimant by filing a petition dated 20.03.2004.9
n. The learned Arbitrator ultimately gave another chance by way of last chance to the State to make submission on 27.05.2004 and on that day, it was reported that the Miscellaneous Case No. 3 of 2004 was finally heard on 25.05.2004 and the order was reserved. Consequently, the matter was adjourned. The Miscellaneous Case No. 3 of 2004 was dismissed by the learned Sub-Judge- I, Jamshedpur vide order dated 29.05.2004. Subsequently, it was reported that a civil revision petition was filed against the order of the sub-judge. The civil revision petition being Civil Revision No. 139 of 2004 was decided vide order dated 09.02.2005 by the High Court and the order passed by the learned Sub-Judge was affirmed and civil revision was dismissed.
o. Ultimately, vide order dated 09.05.2005 the petition under section 16(i)(ii) and (iii) of the Act of 1996 was dismissed by the learned Arbitrator and with the consent of parties, the next date of hearing was fixed as 16.08.2005.
5. The Claim The claimant filed statement of claim on 05.03.2006. The claimant filed revised claim on 04.06.2012. The claims were primarily in three compartments, that is, claim relating to the work done, claim on account of delay and damages and miscellaneous claims like cost of arbitration etc.
6. The chart relating to the claim/modified claim and awarded amount is as under:
Claim Briefs of claims In Org. Claim In Mod. Claim Awarded Amt.
No. in C-1 on in C-16 on (Rs.)
05.03.2006 04.06.2012
PART - 1 (for work
done)
1 Work done by 76,25,494.90 1,82,90,280 61,26,290.00
Claimant beyond 13th
R/A bill
2 Outstanding interest 19,64,828 NIL
amount due upto
29.05.2003 against
payment already made
3 Claim against short 3,70,248 2,22,281.00
payment made in
different on account
bills which have not
10
been paid yet
4 Claims for Extra items 1,282,600 NIL
of work as per clause
30 and 31 of General
conditions of contract
5 Claim for refund of 2,50,355.00 2,50,355.00
deductions made for
EoT but not refunded
even after sanction of
Extension of Time by
competent Authorities
6 Short payment made in 5,290 Withdrawn by
13th on account bill for Claim
lack of payment
Total 76,25,495 2,21,63,601 65,98,926
Interest on due amount 13% per annum from 01.10.1992 (3 months after
the last date of extension of time of completion i.e. 30.06.1992) till date of award.
PART - 2 (delay damages) A1 Claim due to Overhead 1,35,32,618.00 1,24,11,574.00 82,40,000.00 losses A2 Demand due to need to 41,67,312.90 49,86,273.00 12,60,000.00 restructure rates during extended time of completion A3 Loss due to profit not 37,73,485.85 28,84,821.00 Rejected earned at appropriate time as on 31.03.1990 A4 Loss due to 14,79,81,600.00 1,34,06,740.00 69,30,000.00 underutilised tools and (period plants and machineries changed to 33 (Annual rental value of months) P&M @ Rs.65,94,960/-) as full rate
a) Underutilization period from 18.09.89 +1,97,84,880 +51,80,000.00 to 30.06.92 (till last EoT) at full rate (33 months)
b) Idle period @ 30% of full rate from 3,31,91,650 1,21,10,000.00 01.07.1992 to 31.08.1998 (74 months) A5 Loss of productivity 21,36,946.08 No detail Rejected furnish A6 Opportunity losses 62,05,786.67 5,204,854 Rejected A7 i) Loss due to As per actual 1,28,55,949.00 i)Rs.5,64,392 Additional cost of BG of Rs. 657800.00 for performance Guarantees upto 27,37,630.00 ii) Rejected 27.12.08
ii) Loss due to additional cost of BG 11 for security Deposit of Rs. 543800.00 revalidated upto 21.6.09 A8 Loss due to Blocked 11,55,928.00 No detail Rejected Material cost furnish A9 Loss due to delay in As per actual No detail Rejected payments of O/A bills furnish Claim for Price 71,60,789.00 Rejected A10 Adjustment 8,14,33,510.00 2,16,10,000.00 +A7(i)Rs.
5,64,392.00 (Interest to be calculated separately) B1 Interest Losses As per actual 1,03,99,28,319 To be calculated separately B2 Cost of Arbitration As per actual 14,25,000.00 1,87,500.00 Interest On Rs. 2,16,10,000.00 interest @ 12% per annum from 26.08.2003 (date of 1st Arbitration meeting) till date of award.
On Rs.5,64,392.00 interest @13% per annum from 28.12.2008 till the date of award.
On cost of arbitration of Rs. 1,87,500.00 interest @ 15% per annum from the date of award.
Future interest @ 15% on "the awarded amount together with interest" from the date of award till the date of actual payment.
7. The State filed counter claim which has been rejected as follows:
Description of Claimed Amount (Rs.) Amount
Recovery suggested Awarded
by the Respondent (Rs.)
Recovery of Excess 62,45,870.00 Rejected
payment made to
Claimants on the
basis of so-called 14th
& Final bill
8. Under part-I, claim no. 5 has been fully allowed and claim nos. 1 and 3 have been partly allowed totaling to Rs. 65,98,926.00. So far as delay damages under part -II are concerned, claim no. A1 (claim due to overhead losses) has been partly allowed to the extent of Rs.
1282,40,000.00. Claim no. A2 (Demand due to need to restructure rates during extended time of completion) has been partly allowed to the extent of Rs. 12,60,000.00. Claim no. A3 (loss due to profit not earned at appropriate time as on 31.03.1990) has been rejected. Claim no. A4 (loss due to underutilised tools and plants and machineries) has been partly allowed to the extent of Rs. 1,21,10,000.00. Apart from the aforesaid, loss due to additional cost of bank guarantee relating to performance guarantee upto 27.12.2008 has been partly allowed to the extent of Rs. 5,64,392.00. Further cost of arbitration has also been allowed to the extent of Rs. 1,87,500/-. Interest as mentioned above has also been allowed.
9. Following issues were framed by the learned Arbitrator:
"1. Are the claims barred by limitation?
2. Are the claims submitted by claimants Arbitrable?
3. Are the claims maintainable under agreed terms of contracts and as per the provision of contract Act?
4. Who is responsible and liable for non-completion of work under the agreement, the claimants or the Respondents?
5. Whether the Respondents is entitled to recover a sum of Rs.62,45,870.00 with interest thereon at appropriate rate from the due date from the claimants?
6. Is there merit in various claims of claimants?
7. Interest
8. Cost of arbitration"
10. From perusal of the arbitral award, all the issues were dealt from paragraph 48 onwards and all the issues were decided in favour of the claimant but the claims were allowed only to the extent indicated above.
11. The petition under section 34 of the Act of 1996 filed by the State has been dismissed. The learned Court after considering the materials and the grounds raised in the petition filed under Section 34 of the Act of 1996 recorded that the claimant had invoked arbitration clause at pre-mature stage; the appointment of Arbitrator was unilateral and against the clause of the agreement; without any measurement excess amount was paid to the claimant by the department till 13th R/A bill; the Arbitrator did not consider the counter-claim properly which was based on the final measurement 13 being 14th R/A bill whereby a minus bill of Rs. 62,45,870/- was raised; the Arbitrator did not consider that against the agreement value of Rs. 1,20,11,200.00, the claimant received Rs. 1,01,82,309/- as 13th R.A. Bill on 16.11.1991 and balance work was only to the extent of Rs. 18,28,891/- then under what circumstances, the claimant claimed that the work done beyond 13th R.A. bill was to the extent of Rs. 1,82,90,280/- as per modified claim and the learned Arbitrator awarded Rs. 61,26,290/- under the head work done by the claimant plus amount of Rs. 2,22,281/- was also awarded under the head short payment made in different on account bills. However, the learned Court refused to set-aside the award by observing that as per the judgments "even if two views are possible, reappraisal of material on record by the court and substituting its own view in place of Arbitrator's view is not permissible in absence of perversity." The Court observed that once the arbitrator has applied his mind to the matter, the court cannot reappraise the same as if it were in appeal. The learned court in paragraph 15 of the impugned order held that the court is not required to re-appreciate and re-evaluate the findings given by the Tribunal and refused to interfere with the award. Paragraph 14 and 15 of the impugned judgment is quoted as under: -
"14. Although I find that some merit in the contention of learned counsel of the applicant/ respondent is that (a) the Opp. party has invoked Arbitration Clause 51 at pre-mature stage (b) the appointment of Arbitrator Er. Suresh Mishra, Retired Chief Engineer, R.C.D., Govt. of Jharkhand is unilaterally by the claimant/OP against the Clause of the Agreement. (c) Without measurement excess amount was paid to claimant/ Op by the Applicant department till 13th R/A bill.
(d) Not properly consider by Ld. Arbitrator counter claim of department of final measurement 14th R.A minus bill Rs.
62,45,870/-.(e) last not least that agreement value Rs. 1,20,11,200/- OP received Rs. 1,01,82,309/- as 13th R.A bill, on 16-11-1991 having balanced amount of work of Rs.18,28,891/- then how the claimant/ OP claim on the head of work done by claimant beyond 13th R.A. Bill by his Modified claim of Rs.1,82,90,280/- and ld. arbitrator surprisingly awarded Rs 61,26,290/- and further awarded 2,22,281/- short payment made in different account of bills, but in view of the judgment refereed above by the claimant/ OP in which Hon'ble court held that "even if two views are possible, reappraisal of 14 material on record by the Court and substituting its own view in place of Arbitrator's view is not permissible in absence of perversity. Once the Arbitrator has applied his mind to the matter before him, Court cannot reappraise the said matter as if it were in appeal'. Further relying upon M/s. Associated Construction Versus Pawanhans Helicopters Pvt. Ltd, Navodaya Mass Entertainment Limited Vs. J.M. Combines, Sutlej Construction Limited Vrs. Union Territory of Chandigarh, Rastriya Ispat Nigam Limited Vrs. Diwan Chand Ramsaran, Associate Builders Versus Delhi Development Authority, Sangyong Engineering & Construction Co. Ltd. Versus National Highways Authority of India (NHAI) (Supra) the Hon'ble Apex Court has held an award cannot be set aside. The arbitrator is a Judge chosen by the parties and his decision is final. The court is precluded from reappraising the evidence. Even in a case where the award contains reasons, the interference therewith would still be not available within the jurisdiction of the court unless, of course, the reasons are totally perverse or the judgment is based on a wrong proposition of law' The Honb'le Apex Court further observed that "the jurisdiction is not appellate in nature and an award passed by an arbitrator cannot be set aside on the ground that it was erroneous. It is not open to the court to interfere with the award merely because in the opinion of the court, another view is equally possible. It is only when the court is satisfied that the arbitrator had misconducted himself or the proceedings or the award has been improperly procured or is otherwise invalid that the court may set aside such award." The Hon'ble Apex Court further observed that " It must also be borne in mind that a court does not sit as one in appeal over the award of the arbitrator and if the view taken by the arbitrator is permissible, no interference is called for on the premise that a different view was also possible." The Hon'ble Apex Court further observed that "Even if on the assessment of material, the court while considering the objections under section 34 is of the view that there are two views possible and the Arbitral Tribunal has taken one of the possible views which could have been taken on the material before it, the court would be reluctant to interfere."
15. Hence this court is not required to re-appreciate and re- evaluate the findings given by the Tribunal. Therefore, in view of the above said discussion and after considering the contentions of the learned counsels for the parties and in view of the authoritative pronouncements discussed above and also as this court is not sitting in appeal against the impugned award the court is not required to re-appreciate or re-evaluate the evidence led before the Arbitral Tribunal, I find that the Respondent/ Applicant herein has failed to make out a case for 15 any interference with the impugned award dated 07-12-2015 passed by the Arbitral Tribunal, U/s. 34 of the Arbitration and Conciliation Act."
12. Submission of the State.
Learned counsel for the State (appellant) has referred to sections 7, 8, 16, 23, 34 and 37 of the Act of 1996 and also Article 137 of the Limitation Act, 1963 to submit that these provisions would fall for consideration by this Court in this appeal. It is also submitted that the learned Commercial Court has failed to duly exercise its power under section 34 of the Act of 1996. He has submitted that in order to challenge the arbitral award, inter alia, following grounds were raised under section 34 of the Act of 1996 but were not properly considered by the learned Commercial Court: -
Jurisdiction of learned Arbitrator.
(i) The very appointment of the learned Sole Arbitrator was illegal and arbitrary and contrary to the terms of the contract and the procedure which was to be followed for the dispute resolution under the contract between the parties. Further, the appointment of the Arbitrator could only be made under the terms of the Contract and with the consent of the parties, which was not the case at hand. The State had filed an application under Section 16 of the Act of 1996 before the Sole Arbitrator challenging its jurisdiction and composition of the Sole Arbitrator which was contrary to Clause 50 & 51 of General Conditions of contract and accordingly, appointment of the Arbitrator was by itself illegal and contrary to the contract containing arbitration clause between the parties.
Claims barred by limitation
(ii) The claims of the Claimant were barred by limitation. The Original Claims of the Claimant made in the year 2002 and the modified claims filed in the year 2012, both were barred by limitation as more than 3 years had passed from the date of cause of action concerning those claims. However, the learned Arbitrator, despite the fact that the claims were barred by limitation and objection was also filed by the State in its written statement before the learned Arbitrator, allowed the claims which were hopelessly barred by limitation. Reliance has been 16 placed on the judgment passed in the case of "Bharat Sanchar Nigam Limited Vs. Nortel Networks" reported in (2021) 5 SCC 738 and also the judgment in "Binod Bihari Singh Vs. Union of India" reported in (1993) 1 SCC 572 to submit that the bar of limitation may be considered if such plea has not been specifically raised. Limitation Act is a statute of repose and bars a cause of action in a court of law, which is otherwise lawful and valid, because of undesirable lapse of time under the limitation Act, is a well-accepted principle of jurisprudence and public policy.
(iii) It has been submitted that the learned Sole Arbitrator has not examined the claims and has recorded a general finding concerning the claims being not barred by limitation instead of analyzing each and every claim as to when its cause of action arose and whether the each and every specific claim thereupon would be barred by limitation.
(iv) A specific plea of limitation was raised before the learned Arbitrator concerning the original claims filed in 2002 by the Claimant being barred by limitation. It is further submitted that since the original claim being barred by limitation, any further modification of the claims and filing of additional claims allowed under section 23(3) of the Act of 1996 is also illegal and all and any such additional claims filed by the Claimant in 2012 would also be barred by the plea of limitation as taken by the State before the learned Arbitrator concerning the claims filed originally in the year 2002.
(v) The last time extension was granted till 30.06.1992. Thereby, the cause of action between the parties concerning the dispute arose in the year 1991 (when the last payment of bill was made) or when the last extension expired between the parties. The claimant submitted its claims in the year 2002, thereby its claims are completely barred by limitation.
(vi) The claimant made no efforts to finalize the contract and submitted no bills after the period of 1991-1992 and thereby its claims were barred by limitation.17
(vii) The Executive Engineer's letter no. 713 dated 27.08.1998 asked the claimant whether they were willing to complete the work at the agreement rate which the claimant refused, thereby marking a complete end of contractual relationship between the parties.
(viii) The State in its Written Statement/ Statement of Defence, in addition to aforesaid objection regarding jurisdiction and limitation, disputed all the claims and also their basis stating that the claim was not based on contract between the parties and there was no evidence or documentary data including bills of expenditure incurred to support any of the evidence to support the Claims and the aforesaid submissions were made before the learned Commercial Court while challenging the award under Section 34 of the Act of 1996 .
(ix) The Sole Arbitrator awarded the Claimant high rates of interest, without any basis for the same, whatsoever, being recorded in the Arbitral Award.
(x) The Arbitral Award is liable to be set aside by this Court as the same is patently illegal and has been passed in contravention of 'public policy of India' as the findings are based on no evidence at all and the claims have been allowed by placing reliance on irrelevant materials and assumptions of losses suffered by the Claimant despite no evidence or bills or documents to support or prove the aforesaid losses by the Claimant.
(xi) The Claims of the Claimant suffer from substantial overlap of claims which have been allowed on the basis of no evidence to support those claims and only on the basis of the presumption of loss made by the Arbitrator on a document i.e. the Report of Rates and Cost Committee published by Ministry of Power and Irrigation, Central Water Power Commission, which is in no way or form can be used for calculating losses or presumption of losses, but rather it is a guideline concerning how estimates of project cost are to be calculated and has no application in the facts and circumstances of the instant case.
Rejection of counter claim- all payments are advance payments, subject to clearance of final bill as per clause 32 of the conditions of contract.
18(xii) The rejection of the counter claims of the Claimant has been done by the Sole Arbitrator in the most mechanical manner and without assigning any reasons for the same. The work awarded to the claimant could not be completed despite the grant of extension due to the Claimant's negligence, laches, incapacity and mismanagement which was evidenced from the various correspondences made by the Executive Engineer. The State was entitled to recover a sum of Rs. 62,45,870.00 with interest as excess payment made to the Claimant. Further, the claim of recovery was rejected despite such claim being evident from the records of correspondence and section measurement taken of the work done in presence of the parties. The state was entitled to recovery of the excess payment made earlier to the claimant in view of the Clause 32 of the Contract between the parties i.e. 'Payments and Certificates' wherein all interim payments are to be treated as advance payments, subject to clearance of final bill. Award in breach of clause 32 of the general conditions of contract.
(xiii) Clause 32 of the Contract deals with 'Payment and Certificates' and it provides that payment will be made at monthly intervals. Accordingly, the claimant was required to submit bills for the work done to the executive engineer on or before the last day of the month which the claimant in the present case failed to submit. While considering the claims, the learned Arbitrator ignored the aforesaid fact and allowed the claims with escalation (Claim No. A2 concerning demand due to restructure rates during extended time of completion) and considered the bills submitted after much delay although the claimant had breached the terms of the contract.
(xiv) Claim No. 1 concerning the amount due for work between the period from 16.11.1991 till the last EOT i.e. 30.06.1992 amounting to a sum of Rs 1,82,90,280 (Award allowed for a sum of Rs 61,26,290.00) which was modified and claimed in 2012, Claim No. 3 concerning short payments of bills, Claim No. 5 concerning Claim for refund of deductions made for extension of time (EOT) in 1992 and Claim No. 6 concerning Short payment made in 13th on Account Bill, all constituting Part -I of the Claims awarded in Award under challenge 19 in Commercial Appeal No. 5 of 2022, amounting to a total sum of Rs 65,98,926.00/- were all completely and hopelessly barred by limitation as the cause of action had arisen long back in the period between 1988-1992. Further, the modification of claims whereby these claims and amount claimed therein was allowed to be added and submitted in 2012 was illegal and arbitrary and the same was allowed in violation of section 23(3) of the Arbitration Act, 1996 and is liable to be set aside.
Award of delay damages.
(xv) Part (b) of the award concerning the 'Delay Damages' i.e. Claim No. A1 concerning 'Overhead losses for underutisized and unutilised overheads', Claim No. A2 concerning demand due to restructure rates during extended time of completion, Claim No. A3 concerning 'Loss of profit not earned at appropriate time' and Claim No. A4 concerning 'Loss due to underutilised and unutilised tools, plant and machineries' suffer from substantial over-lap of claims and have been allowed by the Sole Arbitrator in contravention of the Act of 1996 as well as the Hon'ble Supreme Court rulings in "Batliboi Environment Engineers Vs. Hindustan Petroleum Corporation Ltd and another" reported in (2024) 2 SCC 375 and also in "M/s Unibros Vs. All India Radio"
reported in (2023) SCC Online SC 1366 and settled principles of considerations when claims concerning delay damages are to be awarded. The same has been allowed without any relevant evidence whatsoever for the aforesaid losses actually being suffered but rather by indirectly applying the 'Hudson Formula' in the guise of placing reliance on the Article 2.36.1 of the report of Rates and Cost Committee published by Ministry of Power and Irrigation, Central Power Commission. There has been no evidence or discussion concerning the actual losses suffered on any of the claims and the same has been allowed by the Sole Arbitrator merely on the basis of calculations and indirect application of the Hudson Formula and the entire claims concerning the delay damages are liable to be set aside.20
(xvi) The learned counsel has referred to paragraphs 16 and 20 to 27 of the aforesaid judgment passed in Batliboi Environment Engineers (Supra). He has also referred to paragraphs 15 and 16 of the aforesaid judgment in M/s Unibros (Supra). It is submitted that the principles in connection with 'delay damages' have been settled by the aforesaid judgments. It has also been submitted that the learned Sole Arbitrator had allowed multiple claims of same nature or specifications of losses that too without any evidence in support of such claims. (xvii) It has been submitted that while deciding the claim, Article 2.36.1 of the Report of Rates and cost committee published by Ministry of Power and Irrigation, Central Water Power Commission has been relied upon by the learned Arbitrator by stating it to be a trade practice. It has been submitted that such approach is entirely wrong and erroneous. It has been further submitted that the aforesaid report concerns calculation of estimates for projects and has no basis whatsoever to allow claim for 'delay damages' and accordingly, the learned Arbitrator has relied upon irrelevant material. Such approach of the learned Arbitrator is patently illegal and is against the public policy of India. It has been reiterated that the claims have been allowed which are based on no real evidence to support the losses and irrelevant document has been relied to make assumption of losses suffered by the claimant despite there being no evidence to support such losses. It has also been reiterated that overlapping claims on account of 'delay damages' under each heading of losses have been allowed in a most mechanical manner without any evidence whatsoever.
Scope of interference in arbitral award.
(xviii) With regard to the scope of interference in Arbitral Award, reliance has been placed on the judgment passed by the Hon'ble Supreme Court in the case of "Ssangyong Engineering & Construction Company Ltd. Vs. NHAI" reported in (2019) 15 SCC 131 (paragraphs 40 and 41) and also the judgment in the case of "DMRC Ltd. Vs. Delhi Airport Metro Express (P) Ltd." reported in (2024) 6 SCC 357 (paragraphs 33 to 42).21
(xix) Apart from the aforesaid judgments, the learned counsel for the state has also relied upon following two judgments:
"Binod Bihari Singh Vs. Union of India" reported in (1993) 1 SCC 572 (paragraph 10) "J.C. Budhraja Vs. Chairman, Orissa Mining Corpn. Ltd." reported in (2008) 2 SCC 444 (paragraphs 20, 21, 25, 26, 29 & 34).
13. Submissions of the Claimant.
Scope of interference I. The application under consideration is one filed under Section 37 of the Act of 1996. Therefore, it has to be tested on the touchstone of section 37 and no more. Section 37 of the Act of 1996 lays down certain grounds which have to be proved by the party who intends to have the arbitral award set aside. II. The Award has been passed by the learned Arbitrator after perusal of several documents consisting of thousands of pages submitted by either party during the Arbitral proceedings which continued for numerous sittings wherein both the parties were represented by their Counsels. Arguments were also advanced by the Executive Engineers and Assistant Engineers representing the case of the State.
III. The learned Arbitrator has dealt with the matter in details based on the evidences, records and pleas produced before him by both the parties, as the arbitrator is a Retd. Chief Engineer of the Government of Jharkhand as such he is an expert of this field and having special knowledge, has either accepted or rejected the claims within his jurisdiction after application of his mind which has been disclosed in the outcome of the Award which in no ways can be termed as perverse.
IV. The claimant in the written submissions has also referred to the judgment of the Hon'ble Supreme Court delivered on 20.09.2024 in Civil Appeal Nos. 3981-3982 of 2024 in the case of "OPG Power Generation Private Limited Vs. ENEXIO 22 Power Cooling Solutions India private Limited" and has referred to paragraph 68 of the said judgment. Limitation V. The first ground so taken by the State is with regards to the fact that the claims of the Claimant are for work executed in the year 1989-92 whereas the section 21 notice invoking arbitration was sent in the year 2003.
VI. The Claimant has filed all detailed list of dates and from perusal of the same it can be verified that the claimant had invoked clause 50 of the agreement on 16.10.2002 and clause 51 containing Arbitration clause on 08.04.2003 whereas the dispute had arisen on 17.09.2000 when the State issued a fresh tender without closing the contract.
VII. As such the period for limitation vis-à-vis arbitration would arise only from the date of dispute that is 17.09.2000. Reference has been made to the judgment of the Hon'ble Supreme Court in the case of "Major (Retd.) Inder Singh Rekhi Vs. Delhi Development Authority" reported in (1988) 2 SCC 338.
VIII. At paragraph 48 of the arbitral award, while dealing with the issue of limitation it has also been noted that on 14.12.2008 the counsel for the state had admitted that the claimants were well within the right to refer the dispute for arbitration and it has been held that the agreement between the parties was very much alive on the date of pressing the claims and demand on 16.10.2002 as it was neither finalized nor foreclosed as per terms of Agreement. The work was kept in abeyance and the contractor was asked to extend the validity of bank guarantee. Further, an ancillary argument has also been made to the effect that a part of the claims was modified on 04.06.2012 which were hit by limitation. Before addressing to the issue, no response/objection was ever filed by the State before the learned Arbitrator in this regard.23
IX. At paragraph 48 of the Award, the learned Arbitrator has taken note of Clause 34 and Clause 51 of the Agreement for release of claims. As per Article 137 of Limitation Act the right to apply occurred after the balance work was put to tender without having finalized the contract of claimant.
X. The claimant has also relied upon the judgment passed by the Hon'ble Supreme Court reported in (2016) 1 SCC 530 (Vasant Balu Patil and others Vs. Mohan Hiranchand Shah and others) to submit that once an amendment is made and no objection is made to such amendment and the same is allowed without any precondition, then under the concept of relation back the relief added/amended shall relate back to the date of filing of the case, that is, in the present case the date of invocation of arbitration under section 21 of the Act of 1996. XI. As such, both factually and legally the amendments were made and none of the claims is hit by the laws of limitation. XII. The learned Arbitrator has negated the issue of limitation.
Section 16 of the Act of 1996 XIII. During the course of the arbitration proceeding, the appellant had filed the application under section 16 of the Act of 1996 challenging the jurisdiction of the learned Arbitrator. XIV. Clauses which govern invocation of arbitration and the ground for challenge are clauses 50 and 51 of the general conditions of contract which provide for arbitration.
XV. The grounds so taken by the Appellant are as under:-
(a) Appeal before the Superintending Engineer was not preferred within 30 days of the decision of the Executive Engineer;
(b) Without waiting for the decision of the Superintending Engineer in appeal the arbitration clause was invoked; and
(c) The Sole Arbitrator was appointed unilaterally by the claimant.
XVI. Clause 50 of the conditions of contract speaks that on emergence of four types of grievances, the contractor shall ask 24 for written decision/instructions from the Executive Engineer and upon the decision of the Executive Engineer being still unsatisfactory, the contractor would prefer an appeal before the Superintending Engineer within 30 days. In the present case the Executive Engineer's decision came on 17.11.2002 which was received by the claimant on later date and the appeal was preferred on 04.02.2003. The filing of appeal before the Superintending Engineer beyond 30 days was not challenged before the learned Arbitrator and as such it cannot be raised for the first time before this Hon'ble Court. Such plea is barred under section 4 of the Act of 1996 and as interpreted by the Hon'ble Supreme Court in the case of "Narayan Prasad Lohia Vs. Nikunj Kumar Lohia and others" reported in (2002) 3 SCC 572. Clause 51 of the agreement was invoked on 08.04.2003 praying for appointment of arbitrator. The appeal under clause 51 of the agreement was made on 04.02.2003 along with evidences, sixty days expired on 04.04.2003 but no communication was received from Superintending Engineer inviting any further evidence or offering any opportunity of hearing till 04.04.2003 and the learned Arbitrator has given a finding that the Superintending Engineer kept mum over the appeal for more than four months and asked for evidence only on 18.06.2003 after being aware of the fact that the sole Arbitrator has been appointed by the claimant and Arbitral Tribunal has been constituted on 29.05.2003 which has been recorded in the award at page 28 and 29.
The Chief Engineer in terms of Clause 51 of the agreement did not send a list of three prospective arbitrators within 30 days of the receipt of notice invoking arbitration vide Claimant's letter dated 08.04.2003. Then the Claimant in terms of Clause 51 sent a list of three prospective arbitrators to the Chief Engineer to select one. The Chief Engineer failed to select one out of three names proposed by the claimant within 15 days, therefore, the 25 claimant was entitled to finalize one of them, and that is what has happened in this case. It is submitted that there is no challenge set up either under section 16, section 34 or under section 37 of the Act of 1996 claiming that this procedure was incorrect.
XVII. Further, similar clauses have been interpreted by Jharkhand High Court in Arbitration Appeal no. 14 of 2007 holding that clause 51 (in this case clause 50) of the agreement is independent to clause 52 (in this case clause 51). XVIII. In light of the aforesaid facts, the learned Arbitrator had decided this issue vide an order dated 09.05.2005.
Claims
XIX. Claimant claimed in 2 parts:
i. Claim Part-1 deals with claims against work done but not paid.
ii. Claim Part-2 deals with claims which relate to damages under the heads: -
a. Overhead losses b. Escalation (demand due to need to restructure rates during extended time of completion) c. Idling of plant and machinery d. Bank Guarantee charges XX. In regards to the claim of escalation it has been stated that the said claim was also made in Commercial Appeal No. 4 of 2022 but the same was negated by the learned Arbitrator on the ground that the contract had an inbuilt escalation clause of price adjustment. Whereas in this case there was no price adjustment clause as such escalation has been allowed on the basis of cogent evidence of finding of fact in regards to the inordinate delay on the part of the state.
XXI. There are two issues to be dealt with while dealing with claims relating to 'delay damages' which are -
(i) whether the claims are overlapping, and 26
(ii) whether there are any evidences which could have been relied upon by the learned Arbitrator while awarding under this very head?
(iii) whether there is any scope for interference in the matter of award of escalation?
XXII. The claim for overhead has been partially allowed. The claimant had claimed overheads @ 10% of the value of job in light of the trade practices so published by the Government of India in regards to similar irrigation project works. Section 73 of the Indian Contract Act, 1872 talks about two components i.e. "damages" and "compensation". 'Compensation' means to make good the actual loss whereas the word 'Damages' can include a component which might not be in form of loss but which a person might have gained (e.g. expected profit). The judgment of the Hon'ble Supreme Court in the case of Batliboi Environment Engineers (Supra) had the occasion to discuss the concept of damages and compensation. In the aforesaid judgment at paragraph 10 it was mentioned as under:
"10. BEEL had, as observed above, accepts the position that the loss towards overheads and profits/profitability has to be arrived at by applying the percentage formula, variant with the execution of the work. Thus, in our opinion, the loss towards overheads and profits/profitability is to be computed on the payments due for the unexecuted work, and should exclude the payments received/receivable for the work executed. In other words, based on the value of the work executed by BEEL, the proportionate amount has to be reduced for computing the damage/compensation as a percentage of expenditure on overheads, and damages for loss of profit/profitability. Damages towards expenditure on overheads and loss of profit are proportionate, and not payable for the work done and paid/payable. Delay in payment on execution of the work has to be compensated separately."
The learned Arbitrator took note of aforesaid proposition of law and excluded the period during which work was done for the purposes of computation for overhead costs. The concept of profit from unexecuted work and loss of profit owing to 27 delay is required to be understood in terms with paragraph 10 of the judgment in the case of Batliboi Environment Engineers (Supra). In the aforesaid paragraph, it has been provided that for the unfinished work on the basis of the remaining quantum of work, loss of overhead and profit can be granted. In the present case the claim of loss of profit has been denied.
XXIII. It is submitted that the State has also argued that the claim of overhead so allowed is virtually under the Hudson's formula which is factually not correct for the following reasons:
a) Award in the present case does not carry the element of profit percentage (as taken in Hudson Formula).
b) Award in the present case is on the basis of the sum paid for total work and against work done but not paid. (which means not on the basis of contract sum as taken in Hudson Formula)
c) In the present case, the learned Arbitrator on the basis of total work done (total work paid and award against work done but not paid) has considered the total effective utilization of Claimant's resources which is in terms with the judgment in Batliboi Environment Engineers (Supra).
d) Award in the present case is on the basis of work load as per Contract. (not on the basis of Contract period as taken in Hudson Formulae)
e) Award in the present case for computation of losses has been categorized in 3 parts and not on the basis of total period of delay in a straight line as taken in Hudson Formulae.
(f ) For demand of Overhead losses, neither Loss of Profit has been pleaded nor awarded.
The learned Arbitrator has taken all due care in order to avoid any kind of overlapping in any form and it can be safely said that the learned Arbitrator has not computed and awarded losses of overhead on the basis of Hudson Formulae and the award has been passed upon attendant facts & circumstances which is 28 within the domain and decision of the arbitrator. The method of computation is within the sole jurisdiction of the learned Arbitrator as held in paragraph 15 of the judgment in Batliboi Environment Engineers (Supra).
XXIV. As such now coming into the issue of evidence in support of this claim of overhead which has been allowed by the learned Arbitrator.
Trade usage or industrial practice have all along been considered as a valid form of evidence.
In order to support Trade usage in form of evidence, documents of Government of India for the purpose of component of Overhead in an irrigation project was brought before the learned Arbitrator by the Claimant which were never objected by the State. The said documents were:
a. Report of rates and cost committee.
b. Report of committee of cost control of river valley
projects.
These documents so produced in form of evidence are in common trade usage while executing this kind of irrigation work and for computation of overhead @ 10% value has been taken note of. This is an estimate for executing the kind of work which was allotted to the claimant/respondent. An estimate by the government agency shows a trade practice which was adopted by the Government while issuing these kinds of tender. The learned Arbitrator has given a finding that based on the trade practice as also exhibited vide the report of Rates and Cost Committee published by Ministry of Power and Irrigation, Central Water Power Commission, submitted by Claimant, it is stated under Article 2.36.1 that allowance of 10% could be considered adequate for contractor's actual expenses on Supervisory establishment, field Office and share of Head office charges, Travelling expenses etc. Further finding has been recorded by the learned Arbitrator to the effect that taking 10% is a general government practice. Trade practices is a way of 29 doing business that is commonly used in particular industry and have all along been considered to be as a piece of evidence and the same also finds mention in section 28 (3) of the Act of 1996. It is further submitted that in a similar matter taking note of this very trade practices in form of evidence for computing overhead expenses to the tune of 5% of the Contract, the learned Arbitrator in the case of "Associate Builders v. DDA"
had allowed the claim of overhead. The Division Bench of the Hon'ble Delhi High Court had taken a note of this very fact with regards to claim no. 15. While dealing with this claim, the Division Bench had negated the stand of the arbitrator taking 5% as a trade usage for grant of overhead expenses which finds mention at paragraph 12 of the said judgment. Finally, the Division Bench had set aside the award and modified the same negating trade usage and evidence of 5% under the head of overhead expenses. Matter was then challenged by the claimants i.e. Associate Builders in Civil Appeal No. 10531 of 2014 before the Hon'ble Supreme Court who negated the findings holding therein that while dealing with appeal under section 37 of the Act of 1996, the scope of interference is quite restrictive and the division bench had exceeded its jurisdiction by re-appreciating the quantity and quality of evidence which was impermissible in eye of law. Finally, accepting the evidence so relied upon by the Arbitrator in form of trade usage for taking note of 5% as overhead values in such contract, the said claim was allowed in the appeal and the award of the Arbitrator involved in the said case was restored. It is submitted that it is no more res-integra that trade usage forms part of an evidence which can be taken note of while allowing the claim for overheads.
XXV. The attempt was made by the government to evolve a comprehensive standard schedule of rates for major items which largely constitute major portion of project estimate. Clause 6.01 of the Report of Committee on Cost Control of River Valley 30 projects provides "needless to say that due to diversity of existing construction practices there is bound to be some variation between prevailing practice and provisions in standard schedule of rates" as such even in the committee's report it has been opined that on the basis of the prevailing practices the rates might fluctuate but the basic rates would be nearly the same and as such the same is required to be considered as a trade usage.
Further, the next document i.e. Report of the Rates and Cost Committee which is again a Government of India formed Committee provides that the Government of India considered it necessary to evolve comprehensive standard schedule of rates including detailed analysis of such rates which can be used for basic schedule for all projects.
Both the aforesaid reports suggest that in similar kind of work it is expected that the overhead cost would be 10% of the value of work as such the same forms part of trade usage or industrial practices which has been accepted all along by the Contract Act, 1872 under section 1 as well as under section 28 of the Act of 1996. Further, trade usage has also been accepted in the aforementioned judgment of Batliboi Environment Engineers (Supra) at paragraph 44. Acceptance of trade usage also find mention in the latest judgment of the Hon'ble Supreme Court in the case of "DMRC Ltd. Vs. Delhi Airport Metro Express (P) Ltd." reported in (2024) 6 SCC 357 at paragraph 35. The learned Arbitrator has taken a plausible view and need not be interfered under section 34 or section 37 of the Act of 1996.
XXVI. In regards to the claim of idling of plant and machinery, the learned Arbitrator has reduced the claim into half. Further, the learned Arbitrator has reduced the claim by 15% for major repairs and depreciation and thereupon has granted only 25%, as only 25% of the work was left to be completed. As such, this award under this very head is strictly in terms of the judgment of the Hon'ble Supreme Court in the case of Batliboi 31 Environment Engineers (Supra). Only for such portion of remaining work i.e. 25 %, 1/3rd of the remaining claim has been allowed under this head. The evidence under this claim are the documents enclosed with C-7 and C-11, that is, list of plant and machineries and their evaluation. The learned Arbitrator has taken note at paragraph 111 of the award that the State admitted in para 13 of their written statement that the state was not liable for extra expenditure on Plant & machineries after expiry of the Extended time of Completion (30.06.1992). As such the learned Arbitrator has mentioned that the State had admitted that some tools, plants and machineries were deployed at site of work by the claimant but had asserted that the claimant is not at all entitled for the above amount after expiry of the extended time of completion (30.06.1992).
Minus bill.
XXVII. This issue has been dealt in detail by the learned Arbitrator under issue no.5. By virtue of this final bill itself negative bill has been raised which is the counter-claim. The learned Arbitrator has further recorded the detailed reasons why the final bill cannot be considered. The State has admitted that the measurement recorded upto 13th RA bills are true and correct and the final bill has not been checked and passed as per provision. The correctness of the findings of the learned Arbitrator has neither been challenged either before the learned Arbitrator or before this Hon'ble Court.
14. Findings of this Court 14 (A). Scope of interference in arbitral award. 14(A)(i) In the present case, the petition under section 34 of the aforesaid Act of 1996 has been filed after coming into force of the Arbitration and Conciliation (Amendment) Act, 2015 and in view of judgment of Hon'ble Supreme Court in "Ssangyong Engg. & Construction Co. Ltd. vs. NHAI"
(2019) 15 SCC 131, the case will be governed by the law which existed post 2015 amendment regarding the permissible grounds for setting aside an arbitral Award. Since the matter is governed by the Arbitration and 32 Conciliation (Amendment) Act, 2015, it would be useful to compare the provisions relevant for the purposes of this case as it stood prior to the 2015 amendment and post 2015 amendment in the Act of 1996 for appreciating the scope of section 34 in the facts and circumstances of this case.
Pre amendment Post amendment 34. Application for setting aside 34. Application for setting aside arbitral Award - (1) ......... arbitral Award - (1) ..............
(2) An arbitral award may be set aside by (2) An arbitral award may be set aside by the Court only if - the Court only if-
(a) ............................ (a) ..............................................
(b) the Court finds that - (b) the Court finds that-
(i) the subject matter of the dispute is not (i) the subject matter of the dispute is not capable of settlement by arbitration under capable of settlement by arbitration under the law for the time being in force, or the law for the time being in force, or
(ii) the arbitral Award is in conflict with (ii) the arbitral Award is in conflict with the public policy of India. the public policy of India.
Explanation.- Without prejudice to Explanation 1.- For the avoidance of the generality of sub-clause (ii) of clause any doubt, it is clarified that an Award
(b), it is hereby declared, for the is in conflict with the public policy of avoidance of any doubt, that an award is India, only if, - in conflict with the public policy of India (i) the making of the Award was if the making of the award was induced induced or affected by fraud or or affected by fraud or corruption or was corruption or was in violation of in violation of section 75 or section 81. section 75 or section 81; or
(ii) it is in contravention with the fundamental policy of Indian law; or
(iii) it is in conflict with the most basic notions of morality or justice.
Explanation 2. --For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.
(2A) An arbitral Award arising out of 33 arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the Award is vitiated by patent illegality appearing on the face of the award:
Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.
14(A)(ii) Prior to coming into force of the 2015 amendment, the Hon'ble Supreme Court in the judgment in "ONGC Limited vs. Saw Pipes Limited"
(2003) 5 SCC 705, held that an Award contrary to substantive provisions of law or the provisions of Arbitration and Conciliation Act, 1996 or against the terms of the contract would be patently illegal, and if it effects the rights of the parties, it would be open to interference by the Court under section 34(2) of the aforesaid Act of 1996. By another judgment in "ONGC vs. Western Geco International Ltd." (2014) 9 SCC 263, the Hon'ble Supreme Court, by further expansion of the phrase "public policy of India" contained in section 34 of the Act of 1996, added three other distinct and fundamental juristic principles which were to form part and parcel of the fundamental policy of Indian law. It was held that without meaning to exhaustively enumerate the purpose of the expression 'fundamental policy of Indian law', three distinct and fundamental juristic principles must necessarily be understood as a part and parcel of the fundamental policy of Indian law which are absence of 'judicial approach', violation of the principles of natural justice and so irrational that no reasonable person would have arrived at the same. It was also held that it was neither necessary nor proper to attempt an exhaustive enumeration of what would constitute the fundamental policy of Indian law. In "Associate Builders v. DDA" (2015) 3 SCC 49, the head "public policy of India" was considered as falling into following heads and subheads:
a. Fundamental policy of Indian Law-34
i. Compliance with statutes, Judicial Precedents orders of superior courts in India. (para 27) ii. Need for judicial approach- decision be fair, reasonable and objective. (para 29) iii. Natural Justice compliance- Audi alterem partem rule.
(para 30) iv. Wednesbury reasonableness- Perversity or irrationality. (para 31) b. Interest of India. (Para 35) Related to foreign powers of India c. Justice or morality (para 36), and d. Patent illegality-
i. Contravention of substantive law of India.
ii. Contravention of Arbitration and Conciliation Act, 1996.
iii. Contravention of terms of contract.
Perversity has been considered in the following terms:
"31. The third juristic principle is that a decision which is perverse or so irrational that no reasonable person would have arrived at the same is important and requires some degree of explanation. It is settled law that where:
(i) a finding is based on no evidence, or
(ii) an Arbitral Tribunal takes into account something irrelevant to the decision which it arrives at; or
(iii) ignores vital evidence in arriving at its decision, such decision would necessarily be perverse.
32. A good working test of perversity is contained in two judgments. In Excise and Taxation Officer-cum-Assessing Authority v. Gopi Nath & Sons [1992 Supp (2) SCC 312], it was held: (SCC p. 317, para 7) "7. ... It is, no doubt, true that if a finding of fact is arrived at by ignoring or excluding relevant material or by taking into consideration irrelevant material or if the finding so outrageously defies logic as to suffer from the vice of irrationality incurring the blame of being perverse, then, the finding is rendered infirm in law."
In Kuldeep Singh v. Commr. of Police [(1999) 2 SCC 10 : 1999 SCC (L&S) 429] , it was held: (SCC p. 14, para 10) "10. A broad distinction has, therefore, to be maintained between the decisions which are perverse and those which 35 are not. If a decision is arrived at on no evidence or evidence which is thoroughly unreliable and no reasonable person would act upon it, the order would be perverse. But if there is some evidence on record which is acceptable and which could be relied upon, howsoever compendious it may be, the conclusions would not be treated as perverse and the findings would not be interfered with."
Justice has been considered in the following terms -
"36. The third ground of public policy is, if an award is against justice or morality. These are two different concepts in law. An award can be said to be against justice only when it shocks the conscience of the court. An illustration of this can be given. A claimant is content with restricting his claim, let us say to Rs 30 lakhs in a statement of claim before the arbitrator and at no point does he seek to claim anything more. The arbitral award ultimately awards him Rs 45 lakhs without any acceptable reason or justification. Obviously, this would shock the conscience of the court and the arbitral award would be liable to be set aside on the ground that it is contrary to "justice".
Patent illegality: Again sub-divided into:
a) Para 42.1- contravention of substantive law of India
b) Para 42.2 - contravention of the Arbitration Act itself.
c) Para 42.3 - arbitrator deciding outside the terms of the contract 14(A)(iii) The expanding nature of the interpretation of the term 'fundamental policy of Indian law' in order to set aside an Award under section 34 of the Act of 1996 was noticed and was followed by law commission recommendations which ultimately culminated in an amendment of the aforesaid Act of 1996 vide Amendment Act 2015. The entire background and the purpose of the Amendment Act 2015 in the aforesaid Act of 1996 have been fully narrated and explained in the judgment in "Ssangyong Engg. & Construction Co. Ltd." (2019) 15 SCC
131. The expansion of "public policy of India" in "ONGC Ltd. v. Saw Pipes Ltd." (2003) 5 SCC 705 ["Saw Pipes"] and "ONGC Ltd. v. Western Geco International Ltd." (2014) 9 SCC 263 ["Western Geco"] has been done away with and a new ground of "patent illegality" with inbuilt exceptions have been introduced through 2015 amendment.36
14(A)(iv) The judgment passed by the Hon'ble Supreme Court in the case of "Ssangyong Engg. & Construction Co. Ltd." (supra) has considered the impact of the 2015 amendment in the Act of 1996 and summarised in paragraph nos. 35 to 41 of the report. Some of the points relevant for the purposes of this case are as under:-
A. The ground for interference insofar as it concerns the "interest of India" has since been deleted.
B. In paragraph 35 it has also been held that the ground for interference on the basis that the award is in conflict with justice or morality is now to be understood as a conflict with the "most basic notions of morality or justice". This again would be in line with paragraphs 36 to 39 of Associate Builders. Para 36 of Associate Builders deals with 'justice' to hold that only such arbitral awards that shock the conscience of the Court that can be set aside on this ground being against justice. C. In paragraph 37 it has been held that insofar as domestic awards made in India are concerned, an additional ground is now available under sub-section (2-A), added by the Amendment Act, 2015, to Section 34. Here, there must be patent illegality appearing on the face of the award, which refers to such illegality as goes to the root of the matter but which does not amount to mere erroneous application of the law. In short, what is not subsumed within "the fundamental policy of Indian law", namely, the contravention of a statute not linked to public policy or the public interest, cannot be brought in by the backdoor when it comes to setting aside an award on the ground of patent illegality. D. Reappreciation of evidence, which is what an appellate Court is permitted to do, cannot be permitted under the ground of patent illegality appearing on the face of the award. E. para 42.1 of Associate Builders, namely, a mere contravention of the substantive law of India, by itself, is no longer a ground available to set aside an arbitral award.
F. The change made in Section 28(3) by the Amendment Act really follows what is stated in paras 42.3 to 45 in Associate Builders, namely, that the construction of the terms of a contract is primarily for an arbitrator to decide, unless the arbitrator construes the contract in a manner that no fair-minded or reasonable person would; in short, that the arbitrator's view is not even a possible view to take. Also, if the arbitrator wanders outside the contract and deals with matters not allotted to him, he commits an error of jurisdiction. This ground of challenge will now fall within the new ground added under Section 34(2-A). Para 42.3 to 45 of the 37 judgement passed in the case of Associate Builders (supra) are quoted as under:-
"42.3. (c) Equally, the third subhead of patent illegality is really a contravention of Section 28(3) of the Arbitration Act, which reads as under:
"28. Rules applicable to substance of dispute.-- (1)-(2) * * (3) In all cases, the Arbitral Tribunal shall decide in accordance with the terms of the contract and shall take into account the usages of the trade applicable to the transaction."
This last contravention must be understood with a caveat. An Arbitral Tribunal must decide in accordance with the terms of the contract, but if an arbitrator construes a term of the contract in a reasonable manner, it will not mean that the award can be set aside on this ground. Construction of the terms of a contract is primarily for an arbitrator to decide unless the arbitrator construes the contract in such a way that it could be said to be something that no fair-minded or reasonable person could do.
43. In McDermott International Inc. v. Burn Standard Co. Ltd., this Court held as under: (SCC pp. 225-26, paras 112-13) "112. It is trite that the terms of the contract can be express or implied. The conduct of the parties would also be a relevant factor in the matter of construction of a contract. The construction of the contract agreement is within the jurisdiction of the arbitrators having regard to the wide nature, scope and ambit of the arbitration agreement and they cannot be said to have misdirected themselves in passing the award by taking into consideration the conduct of the parties. It is also trite that correspondences exchanged by the parties are required to be taken into consideration for the purpose of construction of a contract. Interpretation of a contract is a matter for the arbitrator to determine, even if it gives rise to determination of a question of law. [See Pure Helium India (P) Ltd. v. Oil and Natural Gas Commission and D.D. Sharma v. Union of India.]
113. Once, thus, it is held that the arbitrator had the jurisdiction, no further question shall be raised and the court will not exercise its jurisdiction unless it is found that there exists any bar on the face of the award."
44. In MSK Projects (I) (JV) Ltd. v. State of Rajasthan, the Court held:
(SCC pp. 581-82, para 17) "17. If the arbitrator commits an error in the construction of the contract, that is an error within his jurisdiction. But if he wanders outside the contract and deals with matters not allotted to him, he commits a jurisdictional error.
Extrinsic evidence is admissible in such cases because the dispute is not something which arises under or in relation to the contract or dependent on the construction of the contract or to be determined within the award. The 38 ambiguity of the award can, in such cases, be resolved by admitting extrinsic evidence. The rationale of this rule is that the nature of the dispute is something which has to be determined outside and independent of what appears in the award. Such a jurisdictional error needs to be proved by evidence extrinsic to the award. (See Gobardhan Das v. Lachhmi Ram, Thawardas Pherumal v. Union of India, Union of India v. Kishorilal Gupta & Bros., Alopi Parshad & Sons Ltd. v. Union of India, Jivarajbhai Ujamshi Sheth v. Chintamanrao Balaji and Renusagar Power Co. Ltd. v. General Electric Co.)"
45. In Rashtriya Ispat Nigam Ltd. v. Dewan Chand Ram Saran, the Court held: (SCC pp. 320-21, paras 43-45) "43. In any case, assuming that Clause 9.3 was capable of two interpretations, the view taken by the arbitrator was clearly a possible if not a plausible one. It is not possible to say that the arbitrator had travelled outside his jurisdiction, or that the view taken by him was against the terms of contract. That being the position, the High Court had no reason to interfere with the award and substitute its view in place of the interpretation accepted by the arbitrator.
44. The legal position in this behalf has been summarised in para 18 of the judgment of this Court in SAIL v. Gupta Brother Steel Tubes Ltd. and which has been referred to above. Similar view has been taken later in Sumitomo Heavy Industries Ltd. v. ONGC Ltd. to which one of us (Gokhale, J.) was a party. The observations in para 43 thereof are instructive in this behalf.
45. This para 43 reads as follows: (Sumitomo case, SCC p.
313) '43. ... The umpire has considered the fact situation and placed a construction on the clauses of the agreement which according to him was the correct one. One may at the highest say that one would have preferred another construction of Clause 17.3 but that cannot make the award in any way perverse. Nor can one substitute one's own view in such a situation, in place of the one taken by the umpire, which would amount to sitting in appeal. As held by this Court in Kwality Mfg.
Corpn. v. Central Warehousing Corpn. the Court while considering challenge to arbitral award does not sit in appeal over the findings and decision of the arbitrator, which is what the High Court has practically done in this matter. The umpire is legitimately entitled to take the view which he holds to be the correct one after considering the material before him and after interpreting the provisions of the agreement. If he does so, the decision of the umpire has to be accepted as final and binding.'"
G. A decision that is perverse as understood in paragraphs 31 and 32 of Associate Builders, while no longer a ground for challenge 39 under "public policy of India", would certainly amount to a patent illegality appearing on the face of the award. Thus, a finding based on no evidence at all or an award that ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on the ground of patent illegality. Paragraphs 31 and 32 of the judgement passed in the case of Associate Builders(supra) are quoted above. 14(A)(v) In "Sutlej Construction Limited Vs. Union Territory of Chandigarh" (2018) 1 SCC 718, it has been held that when the Arbitrator has taken a reasonable view on the basis of a plausible view there is no scope of reappreciation of evidence and substitute its view unless the view taken by the Arbitrator shocks the conscience of the Court. 14(A)(vi) The judgement of Hon'ble Supreme Court delivered on 20.09.2024 in Civil Appeal Nos. 3981-3982 of 2024 in the case of "OPG Power Generation Private Limited Vs. ENEXIO Power Cooling Solutions India private Limited" has held in para 68 as under -
"Scope of interference with an arbitral award
68. The aforesaid judicial precedents make it clear that while exercising power under Section 34 of the 1996 Act the Court does not sit in appeal over the arbitral award. Interference with an arbitral award is only on limited grounds as set out in Section 34 of the 1996 Act. A possible view by the arbitrator on facts is to be respected as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon. It is only when an arbitral award could be categorized as perverse, that on an error of fact an arbitral award may be set aside. Further, a mere erroneous application of the law or wrong appreciation of evidence by itself is not a ground to set aside an award as is clear from the provisions of sub-section (2-A) of Section 34 of the 1996 Act."
14(B). Jurisdiction (objection under section 16 of the Act of 1996) a. The order dated 09.05.2005 passed by the learned Arbitrator whereby the objection under section 16 of the Act of 1996 was dismissed has been placed on record.
b. It was the case of the State before the learned Arbitrator that the claimant submitted their claim to the Executive Engineer vide letter dated 16.10.2002 which was rejected. The claimant 40 preferred appeal before the Superintending Engineer who in turn was to give his decision within a period of 60 days only after the claimant had offered evidence in support of appeal and the claimant had been heard by the Superintending Engineer. It was their case that the period of 60 days for giving decision by Superintending Engineer commences from the date when the claimant has been heard and offered evidence in support of the appeal. It was their further case that vide letter dated 18.06.2003 the Superintending Engineer had directed the claimant to produce evidence in support of the appeal and a reminder was also given vide letter dated 10.07.2003 and thereafter, the Chief Engineer vide letter dated 21.08.2003 directed the claimant to produce evidence in support of appeal, but no evidence was produced. It was their specific case that in absence of decision of Superintending Engineer, the claimant had no right under the agreement to invoke arbitration clause for appointment of arbitrator. It was their further case that ultimately the Superintending Engineer had rejected the claims of the claimant vide letter dated 31.01.2004 and the claimant had not indicated their intention to refer the alleged dispute to arbitration, hence the decision in appeal by the Superintending Engineer had become final and conclusive and the arbitration was beyond the scope of submission to arbitration and consequently, the learned Arbitrator had no jurisdiction to consider, arbitrate and decide the alleged dispute raised by the claimant.
c. On the other hand, it was the case of the claimant at the stage of petition under section 16 of the Act of 1996 before the learned Arbitrator that the petition was misconceived. It was submitted that the claimant had communicated the name of sole arbitrator to the respondents vide letter dated 29.05.2003 which was duly received by them on 29.05.2003/30.05.2003. A reference was made to the order dated 29.05.2004 passed by the learned Sub- Judge in Miscellaneous Case No. 3 of 2004 wherein it was 41 observed that the miscellaneous case was a device to delay the disposal of the arbitral proceedings.
d. The attention of the learned Arbitrator was also drawn by the claimant to the order dated 09.02.2005 in Civil Revision No. 139 of 2004 arising out of Miscellaneous Case No. 3 of 2004 whereby the High Court observed that the order of the Sub- Judge did not suffer from any infirmity or improper and illegal exercise of jurisdiction, warranting interference by the High Court.
e. It was the further case of the claimant before the learned Arbitrator that the appointment of sole Arbitrator was done in accordance with the arbitral agreement between the parties which was preceded by the order passed by the High Court dated 15.07.2002 in LPA No. 312/313 of 2002. It was their case that the claimant submitted their demand before the executive engineer which was rejected without any germane reason. Consequently, the claimant preferred appeal before the Superintending Engineer enclosing all documentary evidence of correspondences with respect to dispute and statement of demand (dues and damages). However, the Superintending Engineer, instead of fixing a date of hearing, chose to sleep over the matter and did not fix a date of hearing within stipulated 60 days nor gave any decision in the matter of appeal despite all documentary evidence on which settlement of dispute rested was submitted by the claimant. It was their case that the Superintending Engineer should have afforded an opportunity to the claimant to be heard and offer additional evidence in support of appeal, if at all required.
f. It was further case of the claimant that on account of no response from the Superintending Engineer, a notice was given to the Chief Engineer in terms of Clause 51 of the agreement vide letter dated 08.04.2003 and even the Chief Engineer did not abide by the provision of Clause 51. Upon expiry of period of 30 days for sending a panel of prospective arbitrators, the 42 clamant in exercise of their right to send the panel within 15 days, submitted a list of 3 eminent engineers vide letter dated 12.05.2003 and having received no reply from the Chief Engineer, the claimant communicated the name of one of the officers to the Chief Engineer from the list who would be the sole arbitrator as per clause 51 of the agreement vide letter dated 29.05.2003.
g. It was their case that the claimant had acted strictly in terms of the provisions under the agreement and the time-frame recorded in clause 51 of the agreement to ensure that the period of limitation i.e. 15 days given to the contractor (claimant) may not expire.
h. It was further case of the claimant that the letter written by the Superintending Engineer after expiry of the time prescribed under the agreement was an afterthought to cover up the lapses/laches to save the authorities concerned after appointment of the sole arbitrator. It was also submitted on behalf of the claimant that it was incorrect on the part of the State to say that the decision of the Superintending Engineer by which claim had been rejected vide letter dated 31.01.2004 had become final and conclusive and it was equally wrong to argue that the arbitration was beyond the scope of arbitration. The arbitral tribunal was constituted on 29/30.05.2003 and the authorities had no jurisdiction to write any letter to the claimant and the Superintending Engineer was not competent to reject the claim of the claimant vide alleged letter dated 31.01.2004. i. After having recorded the submission of respective parties, the learned Arbitrator has recorded his finding as follows:
"Perused the record and considered the arguments made on behalf of both the parties. I find that the only grievance of the Respondents is that before the decision was taken by the Superintending Engineer, the appointment of Er. Suresh Mishra as Arbitrator is illegal. I also find that the matter has gone to Hon'ble High Court in L.P.A. No. 312/313 of 2002 and in pursuance to the said order steps were taken by the Claimants resulting in appointment of Er. Suresh Mishra as Sole Arbitrator. I find that Arbitral Tribunal has 43 been constituted on 29/30-5-2003 and thereafter many correspondences have been made by the authorities concerned. It has been fairly conceded by the Special G.P. appearing on behalf of the Respondents that appeal was preferred before the Superintending Engineer on 04/2/2003 and the Superintending Engineer directed the Claimants vide annexure 8 and 9 i.e. letter No. 1101 dated 18/6/2003 to produce evidence in support of his appeal. The Superintending Engineer did not fix a date of hearing for about five months. He should have afforded opportunity to the Claimants to produce evidence in support of Appeal if at all required. Rightly when the Claimants did not get any response in pursuance of said Appeal from the Superintending Engineer, proceeded with the terms of Arbitration Agreement resulting in constitution of Arbitral Tribunal. The Claimants have established beyond doubt that the Arbitral Tribunal has been constituted legally and lawfully following the terms of Agreement between the parties. I do not find any force in the submissions made by the Special G.P. appearing on behalf of the Respondents and hence the Petition dated 10/4/2005 filed by the Respondent U/S 16(i), (ii) and (iii) of the Arbitration and Conciliation Act, 1996, is hereby dismissed.
Next date of hearing is fixed on 16/08/2005 at 11.30 A.M. at the same venue (MIG, B/21, Harmu Housing Colony, Ranchi - 834012) and both the parties are hereby directed to submit their respective Claims / Counter-Claims on the date fixed."
j. The learned Arbitrator while giving the final award again considered the point regarding arbitrability and maintainability of claim vide issue Nos. 2 and 3 and again recorded the sequence of events in connection with taking of steps by the claimant and the stage relating to clause 50 and 51 of the General Conditions of Contract and also recorded the specific stand of the State that the claimant did not act in pursuance of clause 50 of the General Conditions of Contract on the basis of which it was argued that the claims were not arbitrable and not maintainable under the agreed terms of contract. The learned Arbitrator again considered the submissions in paragraph 49 of the impugned award and recorded its finding as under: -
"Replying the argument made by the counsel for respondents the learned counsel for claimants submitted that the issues in question (issue no 2 & 3) have attained their finality as this 44 Arbitral Tribunal has given its verdict in this 10th sitting on 19.05.2005 which has never been challenged by Respondents (State of Jharkhand) and prior to that misc case of 2004 has been discussed by learned sub judge-I, Jamshedpur as well as the Hon'ble High Court of Jharkhand respectively. After the Arbitral Tribunal was constituted on 29.05.2003, the Superintending Engineer directed the claimants through his letter no. 1101 dated 18.06.2003 tο file evidences in support of his appeal which was filed on 04.02.2003. He submitted that the issues raised by the learned counsel has no force of law as the Superintending Engineer did not act upon the appeal for more than four months.
Considering the arguments made on behalf of both the parties, I find that the only grievance of Respondent is that before the decision on appeal was taken by the Superintending Engineer, the appointment of Er. Suresh Mishra as Sole Arbitrator is illegal. The issue of appointment of Sole Arbitrator was discussed in detail and verdict on 09.05.2005 in the 10th sitting of Arbitral Tribunal which has never been challenged by the Respondents. I also find that the matter has also gone to Hon'ble High court in LPA No. 312 of 2002 and in pursuance of the order dated 15.10.2002 of the Hon'ble High Court in this case, steps were taken by the claimants resulting in appointment of Er. Suresh Mishra as Sole Arbitrator. I find that the A.T. has been constituted on 29.05.2003 and thereafter correspondence have been made by the authorities concerned. It has also been fairly conceded by the Special Govt. Pleader appearing on behalf of Respondents that appeal was preferred by the claimants before the Superintending Engineer on 04.02.2003 and the Superintending Engineer directed the claimants for the first time on 18.06.2003 after a lapse of 134 days to produce evidences in support of appeal. Thus the Superintending Engineer did not fix a date of hearing on the basis evidences submitted with the appeal. The Superintending Engineer should have at least provided an opportunity to claimants to be heard at the earliest and to produce additional evidences in support of appeal if at all required. The question arises, how long the claimants should have waited for any response and opportunity to be heard by the Superintending Engineer with regard to his appeal specifies if the contractor is dissatisfied with the decision of the Executive Engineer he may within 30 days appeal to Superintending Engineer, who shall afford an opportunity to the contractor to be heard and to offer evidence in support of his appeal. This officer shall give decision within a period of 60 days after the contractor has given evidences in support of appeal. But the Superintending Engineer kept mum over the appeal for more than four months and asked for evidence on 45 18.06.2003 after being aware of the fact that the sole Arbitrator has been appointed by the claimants and Arbitral Tribunal has been constituted on 29.05.2003. Rightly when the claimant was not afforded even an opportunity to be heard, he proceeded with the terms of Arbitration Agreement contained in clause -51 of general condition of contract resulting in constitution of Arbitral Tribunal after the Chief Engineer also did not act upon the issue of appointment of sole arbitrator as per clause -51. Thus, the constitution of Arbitral Tribunal has been made legally, lawfully and as per terms of Arbitration laid down in the Agreement.
The claimants have established beyond doubt that the Arbitral Tribunal has been constituted legally and lawfully adhering to the terms of Agreement between the parties.
Thus, Arbitral Tribunal therefore, does not find any force in the arguments of Respondent's counsel challenging the Arbitrabitity and maintainability of claim under the agreed terms of contract, hence the submission urged on behalf of Respondents on the issue of arbitrability and maintainability of claims under agreed terms of contract between the parties under issue no. 2 and 3 are squarely rejected. It is held that the Claims of the Claimants are arbitrable and maintainable under the terms of the agreement."
k. Upon considering the materials on record, the learned Arbitrator clearly held that although clause 50 of the General Conditions of Contract specifies that if the contractor is dissatisfied with the decision of the Executive Engineer, he may within 30 days appeal before the Superintending Engineer, who shall afford an opportunity to the contractor to be heard and to offer evidence in support of his appeal, but the Superintending engineer kept mum over the appeal for more than 4 months and asked for evidence only on 18.06.2003 after being aware of the fact that the sole Arbitrator has been appointed by the claimant and Arbitral Tribunal has been constituted on 29.05.2003. The learned Arbitrator also held that when the claimant was not offered even an opportunity to be heard by the Superintending Engineer, he proceeded with the terms of contract contained in clause 51 of the General Conditions of Contract resulting in constitution of the Arbitral Tribunal and after having held that the Chief Engineer also did not act upon the issue of 46 appointment of sole Arbitrator as per clause 51 of the General Conditions of Contract, the learned Arbitrator decided the issue Nos. 2 and 3 in favour of the claimant by holding that the claims were arbitrable and maintainable.
Consideration of the Findings of the learned Commercial Court on this point.
l. This Court finds that the learned commercial Court, while observing in the impugned judgement that the claimant had invoked arbitration at pre-mature stage, has not at all considered the findings recorded by the learned Arbitrator while deciding the issue Nos. 2 and 3 as framed by the learned Arbitrator regarding arbitrability and maintainability of the claims and also has not at all considered the decision of the sole Arbitrator on 09.05.2005 by which the petition filed under Section 16 of the Act of 1996 was rejected. However, the learned Court has refused to interfere with the award even after holding that the claimant had invoked arbitration at pre-mature stage by observing that even if two views are possible, reappraisal of materials on record is not permissible.
m. This Court is of the considered view that the said observation of the learned Commercial Court has been passed without any deliberation and without taking care of the findings recorded by the learned Arbitrator on 09.05.2005 while rejecting the petition under Section 16 of the Act of 1996 and also without considering the finding recorded in the arbitral award whereby issue Nos. 2 and 3 as framed by the learned Arbitrator regarding arbitrability and maintainability of the claim was decided in favour of the claimant. However, the fact remains that the learned commercial court has refused to interfere with the findings in connection with arbitrability and maintainability of the claims by stating that there is no scope for reappreciation of the materials on record and to come to a different finding. This Court has discussed the findings of the learned Arbitrator as recorded while disposing the petition filed under section 16 of 47 the Act of 1996 and also the decision of the learned Arbitrator on issue nos. 2 and 3 on the point of arbitrability and maintainability of the dispute and finds no scope for interference in the limited jurisdiction as the findings are backed by reasons and based on appreciation of materials on record.
n. In the judgment passed by this Court in Arbitration Appeal No. 14 of 2007 decided on 17.03.2023 wherein similar clause 51 and 52 of the agreement (in the present case the relevant clauses are clause 50 and 51 of the agreement) were subject-matter of interpretation, this Court has recorded that it was the specific case of the appellant-State that the claimants having not exhausted appellate remedy under clause 51 of the agreement could not invoke clause 52 of the agreement to appoint an Arbitrator. In the facts and circumstances of the said case and considering the judgment passed by the concerned commercial Court, this Court held in the said case that the claimants were entitled to invoke clause 52 of the arbitration clause without resorting to remedies provided under clause 51 of the agreement. This Court is of the considered view that the interpretation given to clause 51 and 52 of the agreement involved in Arbitration Appeal No. 14 of 2007 may not have any bearing in this case in view of the fact that the learned Arbitrator in the present case has held while deciding the petition under Section 16 of the Act of 1996 and also in the final award while deciding issue Nos. 2 and 3 that the procedure prescribed under clause 50 as well as 51 of the agreement were duly followed by the claimant.
o. Considering the scope of interference in the arbitral award as discussed above, this Court finds that the order dated 09.05.2005 passed by the learned Arbitrator rejecting the petition under section 16 of the Act of 1996 and also the decision of issue no. 2 and 3 deciding the point regarding arbitrability and maintainability of the claims are well reasoned 48 and did not call for any interference under section 34 and now under section 37 of the Act of 1996.
p. The point regarding jurisdiction of the learned Arbitrator dealing with arbitrability and maintainability of the claims is decided against the State and in favour of the claimant. 14 (C). Limitation I. The point of limitation was decided by the learned Arbitrator vide paragraph no.48 of the award.
II. The learned Arbitration referred to Article 137 of the Limitation Act and observed that the period of limitation is 3 years which commences from the date when the right to apply accrues and the question when such right to apply accrues will depend on the facts and circumstances of each case. The learned Arbitrator referred to clause 34 of the General Conditions of Contract and quoted the same and observed that it relates to release of claims. Clause 34 as quoted in the award and not disputed by the parties is as under: -
"After completion of work and prior to final payment, the contractor shall furnish to the Executive Engineer, a release of claims against the Govt. arising out of contract, other than the claims specifically described, evaluated and excepted from the operation of release by the contractor."
III. The learned Arbitrator also referred to clause 51 of the General Conditions of Contract and observed that as per the said clause neither party is entitled to bring claims to arbitration if the arbitrator has not been appointed before the expiration of 30 days after defects liability period. Thus, the learned Arbitrator referred to Article 137 of the Limitation Act as well as different clauses of the Contract to deal with the point of limitation. IV. Thereafter, the learned Arbitrator dealt with the point as to when the right to apply accrued in the case and observed that the original time of completion was extended from time to time and last extension was granted up to 30.06.1992. Thereafter, the extension of time was not granted to claimant beyond 30.06.1992 perhaps due to stoppage of world bank credit. It was further 49 observed by the learned Arbitrator that if the respondents wanted to close/foreclose or rescind the contract, the Executive Engineer ought to have given notice in writing as per clause 44 of General Conditions of Contract and ought to have asked the claimant to submit final bill. The learned Arbitrator recorded that the claimant could have been asked to demobilize the plant and machinery from the site of work, instead the work was kept in abeyance and the contractor was asked to extend the validity of bank guarantee.
V. Thereafter, the learned Arbitrator referred to the various correspondences which would reveal that the agreement was neither closed nor foreclosed/rescinded beyond 30.06.1992. The learned Arbitrator referred to the letter dated 18.04.1992 whereby the Executive Engineer wrote to the claimant that his portion of work falls under priority zone fixed by the department and allotment of funds is expected during the period 1992-93 and a request was also made to mobilize the plants and machinery. The learned Arbitrator further recorded that a review of progress of work was held on 18.11.1992 in the office chamber of the concerned Minister which revealed that various actions were contemplated to get the balance work completed and the regional officers were directed to review all cases and report; a reference was also made to a high level meeting held on 12.08.1998 and various options to restart the work were discussed keeping in mind the expected allotment of fund of Rs. 40,00,00,000/- (rupees forty crores) from Water Resources Department and it was also decided in the said meeting that attempt would be made to get the work done by the existing contractor.
VI. The learned Arbitrator, after referring to the aforesaid communications to show that the matter was still under consideration, referred to the action of the Executive Engineer on 17.09.2000 who invited tender for balance work without finalizing the subsisting agreement of the claimant. This action was followed by filing of a writ petition by the claimant being 50 W.P. (C) No. 5408/5465 of 2001 which was also subject matter of consideration in L.P.A. No. 312/313 of 2002 before the High Court and finally vide order dated 15.07.2002 liberty was granted to the claimant to invoke arbitration. Consequently, the claimant filed their claims vide their letter dated 16.10.2002 addressed to the Executive Engineer with a request to pay the dues and compensation within 90 days failing which it would be construed that the dispute will be required to be adjudicated as per conditions of contract. The learned Arbitrator ultimately recorded his finding that the agreement was alive on the date of pressing the claims and demands on 16.10.2002 and the fresh tender was issued to complete the balance work without finalizing the subsisting contract and the State failed to substantiate their argument by showing any definite date as to when the cause of arbitration arose. The learned Arbitrator also observed that even the measurement of the work done by the claimant was not finalized and therefore there could not have been any frozen dispute between the parties and ultimately held that the claim was not barred by limitation. Paragraph 48 of the award is quoted as under: -
"From the details mentioned above, it is apparent that, the agreement between the parties was very much alive on the date of pressing the claims and demands on 16.10.2002 as it was neither closed/foreclosed nor finalized as per terms of Agreement. The counsel for the Respondents Shri C.S.P Sinha, Special Govt. Pleader during his argument on the issue on 14.12.2008 could not substantiate that the claimants were not within their right to refer their disputes to Arbitration on 16.10.2002.
Also clause 34 at Page 11 of General Condition of Contract deals with release of claims as below: "After completion of work and prior to final payment, the contractor shall furnish to the Executive Engineer, a release of claims against the Govt. arising out of contract, other than the claims specifically described, evaluated and excepted from the operation of release by the Contractor".
As per Clause-51 of General Condition of Contract "Neither party is entitled to bring a claim to Arbitration if 51 the Arbitrator has not been appointed before the expiration of 30 days after defects liability period".
As per Article 137 of Limitation Act the right to apply occurred after the balance work was put to tender without having finalized the contract of claimants. The Respondents have also failed to substantiate any definite date as to when cause of action for Arbitration arose. In fact even the measurement for the work done by Claimants were not finalized by the Respondents, therefore, there could not have been any limitation in respect of dispute between the parties.
Therefore, in view of the facts mentioned above (the Statement of the Respondents) in the written statement that the claims of the claimants are barred by limitation and also raised under issue no.1 has only got to be rejected and it is held that the Claims of the Claimants are not barred by limitation."
VII. Upon perusal of the discussions made by the learned Arbitrator with regard to the point of limitation, this Court finds that there is no specific or separate discussion with regard to the limitation of the amended claim but the limitation with regards to the claims /amended claims has been discussed in totality in the light of the clauses of the contract and correspondences between the parties and also the materials placed on record. The State even failed to satisfy the learned Arbitrator as to when the cause of action in terms of the contract arose to raise the claim. The claim was filed before the learned Arbitrator on 05.03.2006 and the claimant had modified their claim on 04.06.2012. The learned Arbitrator has specifically recorded in paragraph 80 of the award that the claimant had modified their claims on 04.06.2012 depending upon the materials brought on record by the respondents. The number of claims had increased on submission of copy of measurement books containing running account bills showing kept back amounts and items paid at reduced rate. The claims have increased only in such cases where on submission of documents by the respondent during argument, the records have revealed that the items of works were paid at reduced rate due to 52 indecision at proper level. The aforesaid finding of the learned Arbitrator is quoted as under: -
"83) At this stage, I only wish to state that as the hearing proceeded, the claimants modified their claims depending upon materials brought on record by Respondents after they submitted copies of O/A payments made alongwith detailed measurements entered in Measurement books, which shows kept back amount for checking by Executive Engineer, items paid at reduced rates, amount kept back for EOT but not refunded even after sanction of EOT by competent authorities.
All these claims have been detailed in modified claims by claimants in Ann.C16 submitted on 04.06.2012 before the Arbitral Tribunal with copy to Respondent. The number of claims have increased after records revealed a number of kept back quantities, reduced rates, deduction on account of EOT and indecision at proper level. The claimant was not aware of these under-payments as the measurements of all O/A bills for payments were taken by Respondents (JE, AE & EE) and the claimant was not given copies of bills prepared by Respondent even after being requested by the claimants. During the argument, the Respondent had to concede the correctness of increased claims as there was concrete evidence in support of claims."
VIII. It is further not in dispute that the point of limitation was raised by the State when initial claim was filed but there was no separate plea taken when the modified claim was filed on 04.06.2012 and it appears that on account of such reason, there is no specific discussion with regard to the point of limitation with respect to the modified claim dated 04.06.2012 while dealing with issue No. 1. However, the learned Arbitrator while considering the claims has recorded the case of the claimant explaining the reasons of filing modified claim. It has been recorded while dealing with claim no.1 that payment of 13 th R/A bill was made amounting to Rs.76,25,494.00. But, after the copies of MB's relating to 1st to 13th R/A bills and so-called 14th & final bill was submitted to Arbitral Tribunal with copies to the claimant by the respondents, the claimant submitted modified claim in Ann. C/16 (from P/1 to P/37) on 04.06.2012 on the basis of details of payment actually made to the claimant. According to claimants, all the bills relating to O/A payments were prepared by 53 Respondents and copies of bills were not made available to claimant in spite of several requests. As such, they were not aware of details of payment made to them and hence, it necessitated the need to submit modified claims by way of computation and there was no change in the basis of claims. IX. This Court finds that the learned Arbitrator has sufficiently applied his mind on the point of limitation with regards to the original claim as well as the modified claim even though he has not dealt with the point of limitation with respect to the modified claim separately. The learned commercial court has not discussed this point separately and has refused to interfere with the award by stating that there is no scope for interference in the arbitral award by re-appreciating the evidences.
X. Considering the scope of interference in the matter of arbitral award as discussed above and considering the aforesaid discussions made on the point of limitation and also the findings recorded by the learned Arbitrator with regard to entire claim, this Court is of the considered view that the learned Arbitrator has cited the reasons to entertain the claim and modified claim and has certainly taken a possible view which is reasoned and based on materials on record and therefore the findings of the learned Arbitrator on the point of limitation did not call for interference under limited jurisdiction under section 34 of the Act of 1996 and now also does not call for interference under section 37 of the Act of 1996. The point of limitation is accordingly decided against the State and in favour of the claimant.
15. Examination of claims in the limited jurisdiction under the Act of 1996.
Claims have been allowed in two major parts, they are: (I) for work done under claim nos. 1, 3 and 5 and (II) for delay damages, extension of bank guarantee, cost of arbitration.
Original claim Modified Claim 1] - Work done by Claimant 1]- Outstanding dues of the Claimant 54 beyond 13th R/A Bill - Rs. upto 13.05.1992.
7,625,494.90 Claimed amount is Rs. 1,82,90,280.00
3] - No Claim. 3]- Claim against short payment made
in different on account bills which
have not been paid yet-
Rs. 3,70,248/-
5]- No Claim. 5]- Claim for refund of deductions
made for EoT but not refunded even
after sanction of Extension of Time by
competent Authorities - Rs. 2,50,355/-
A-1] A-1]
OVERHEAD LOSSES OVERHEAD LOSSES
The total contract value was Rs The Overhead cost constitute the
1,20,11,200.00 and the job was to following elements of expenditure :-
be done in 6 months. The work (a) Establishment charges including load contracted was worth Rs those for the Head Office and the field:
20,01,866.67 per month. The (i) Salaries (technical and non-
amount of work done is Rs. technical) including leave & other 1,78,07,884.00. Therefore, the charges effective Time of Contract is 9 (ii) Stationary, printing, postage &
months only. The total stay on job telephone charges has been 153 months and therefore (iii) Staff cars and travelling the idle stay on job is 31 months allowances and idle period in suspension is (iv) Entertainment and publicity 122 months. The overheads (v) Housing, medical & other welfare provided in this highly skilled facilities industry is about 10% of the job (vi) Legal expenses amount, i.e. @ Rs. 2,00,186.70 per (vii) Contingencies month and 3% of the job amount (b) Consultant's Fees during idle period in suspension (c) Audit Charges i.e. @ 60,056.00 thus we have lost (d) Other hidden expenses overheads amounting to Rs.1,35,32,618.00 and this amount The total contract value was Rs may please be paid to us. 1,20,11,200.00 and the job was to be done in 6 months The work load contracted was worth Rs 20,01,866.67 per month. The amount of work done is Rs. 2,88,48,207.00. Therefore, the effective Time of Contract is 14.41 months say 14 months only. But due to late hand over of a portion of site, non-
shifting of electric transmission tower, long time taken in dewatering of previously accumulated water, frequent local problems, harassment by the forest department, objection by villagers, non-payment of monthly 55 bill, the progress of work badly suffered and the Claimants' had to stay for a very long period. The total stay on job has been 160 months and therefore the underutilised/underemployed stay on job is 26 months and idle period in suspension is 120 months. Though the actual overhead expenditure is much more than 10% of the work value, the Claimants have charged only 10% of the job value in this highly skilled project ie. Rs. 2,00,186.70 per month and 3% of the job, i.e. @ Rs.
60,056.00 per month on idle period in
suspension. Thus, Claimants have lost
overheads amounting to Rs.
1,24,11,574.20 [(2,00,186.70 x 26 +
60,056.00 x 120) = 52,04,854.20 +
72,06,720.00 = 1,24,11,574.20] and
this amount may please be paid to the
Claimant with due interest.
A-2] A-2]
DEMAND DUE TO NEED TO DEMAND DUE TO NEED TO
RESTRUCTURE RATES RESTRUCTURE RATES DURING
At the end of our contracted EXTENDED PERIOD:
period i.e. 16-07-1989, we have At the end of the contracted period i.e.
done work worth Rs.39,16,841.00 16/07/1989, the Claimants have done
and the balance work remained to work worth Rs.39,16,841.00 and the
be executed. On this work, we balance work remained to be executed.
charge 30% extra to account for The Respondents have categorically
abnormal price rise, in addition to admitted this aspect in many letters. usual escalation. We, therefore, On this work, the Claimants charge demand an additional amount a 20% extra to account for abnormal sum of Rs.41,67,312.90 on work price rise, in addition to usual done beyond 16-07-1989 which is escalation. We therefore, demand an to a tune of Rs.1,38,91,043.00. additional amount, a sum of Rs.49,86,273.20 on work done beyond 16/07/1989 (Rs.2,49,31,366.00). The work beyond 16/07/1989 and specially during the Gulf War (Iraq) was executed during the period with abnormal rise in prices of Diesel, Lubricants, Spares etc. The National economy during this period was in a very bad shape with abnormal price-
rise.
A-4] A-4] LOSS DUE TO UNDER- 56 LOSS DUE TO UNDER- UTILISED TOOLS, PLANTS AND UTILISED TOOLS, PLANTS MACHINERIES: AND MACHINERIES: The Claimants have submitted the list We had at the site deployed tools, of tools, plants and machineries and plants, machineries whose the same has been categorized as C-7, collective rental value or Hire- perusal of which indicates that the charges amount to Rs. 9,67,200.00 Claimants own large no. of dumper, per month. As computed, total idle Hydraulic Excavator, Drill Machine, period is 153 months. We have Air compressor, Dozer, Tractor, car, therefore, lost Rs. 14,79,81,600.00 Jeep, truck etc. worth Rs. worth Rental/Hire charges. 1,61,13,491/- ownership and price indications have also been filed . besides Tax Token and Insurance receipts. The Claimants had to pay very substantial amount to the bank as interest as the tool, plants and machineries were purchased after obtaining loan from the bank. The Claimants had utilized those tools, plants and machineries in the execution of the work result of which was very positive in nature. The losses occurred due to Respondent's fault are categorized as follow:- Ref.: C-11 Page - 17 (i) The under utilized period from 01/04/1990 for 26 months i.e. upto 13/05/1992 (ii) The remaining idle period of 120 months i.e. upto 20/05/2002 (upto 20/05/2002, the effective idle period including underutilised is 146 months from 31/03/1990) Annual rent per year is Rs.65,94,960.00 -C-11 - Page-17. (iii) During the idle period of 120 months the rental losses per year incurred by the Claimants have been taken @30% of the annual rent in normal conditions. A-7] ADDITIONAL COST A-7] OF INSURANCE, BANK ADDITIONAL COST OF BANK GUARANTEES ETC.: GUARANTEE, ROAD TAX, During extended period, we have INSURANCE ETC.: C-10 had to service insurance and Bank During extended period, the Claimants Guarantees, which was not had to service Insurance, Road Tax and contemplated. We shall submit Bank Guarantees. The Bank actual figures of expenses so Guarantees have been extended with 57 incurred till such time that the their validity at the instance of the
department kept the facilities due Respondents for execution of the to their failure to have the job work. The Performance Guarantee of completed as per actual. Rs.6,57,800.00 has been extended upto 27/12/2008 to execute the work whereas the Security Deposit of Rs.5,43,500.00 in the shape of B.G. has been revalidated upto 21/06/2009.
The Insurance and Road Tax etc for the equipments were served upto 20/05/2002 at the cost of the Respondents. Also, these are mandatory. At the cost of repetition, it is submitted that the Claimants performed the work in full swing upto May, 1992 but due to several problems, hindrances, monetary constraints, for which the Claimants were not at all responsible and only the Respondents were at fault, the work could not be completed during stipulated period and the duration was extended. The Claimants had to keep the facilities idle at the site due to Respondent's failures and actual figures of expenses so incurred by the Claimants till such time are being submitted.
(i) BANK GUARANTEE (Performance) On Rs. 6,57,800.00 Compensation till 27/12/2008 be paid.
(ii) BG COMMISSION on above (i) Rs.2,00,783/- for which compensation be paid
(iii) SECURITY DEPOSIT:
Rs.5,43,500.00 Total commission paid Rs.65,220.00 for average: 3 Years 1 month losses on this be compensated.
(iv) ROAD TAX & INSURANCE:
Road Tax & Insurance paid for the period 1988-89 TO 2002-03 Need not be considered for payment as these expenses have been taken care of while computing the losses due to underutilized/Idle Tools, Plants and Machineries (A-4) 58
16. Claim no.1 - claim for work done by the Claimant beyond 13th R/A Bill With respect to Claim No.1 dealing with amount of work done after 13th R/A Bill, the learned Arbitrator recorded that 13 th R/A bill was paid on 16.11.1991 for work measured up to 15.05.1991 and the time for completion of work was extended till 30.06.1992 and the initial claim under this head was for Rs.76,25,494.00. After the copies of measurement books relating to 1st to 13th R/A Bills and so-called 14th and final bill submitted by the State to the learned Arbitrator with copies to the claimant, the claimant modified the claim on 04.06.2012 on the basis of details of payment actually made to the claimant. The claimant had submitted modified claim for quantity of work done up to 30.06.1992 and also considering 15 % of silt deposit and disposal of excavated materials and deducting the quantity of work done by the previous agency (BAPL) as per the details mentioned in the measurement book. The response of the State was also duly recorded by the learned Arbitrator wherein the State disputed the claim.
17. With respect to silt deposit, the objection was raised that the percentage which was adopted by the claimant was totally unpractical and hypothetical and quantity of silt, if any, can be decided by the direct measurement only at the time of starting further work. It was asserted that it could be considered average 50 cm depth in Bed portion only and the quantity as per state was 13,610.90 m3 only. It was also asserted that at the time of measurement, 15 cm of depth of silt is automatically accounted for in the measurement due to obvious reasons and the calculation of the measurement as per the State was also recorded.
18. As per the calculation of the State, there was excess payment to the claimant to the extent of 50,000 m3. It was also asserted that however, 47,376.00 m3 of excess quantity of earthwork was previously reported by the respondent State vide letter dated 11.01.2001. A negative bill prepared by the department was termed as 14th and final bill. The learned Arbitrator recorded that the 14 th and 59 final bill was neither signed by the group of Engineers authorized to take final measurement nor signed by the Executive Engineer in charge of Division.
19. The learned Arbitrator referred to the documents and in particular by referring to letter of the Executive Engineer of the State dated 11.01.2001 held that the quantity of work comes to 6,36,875 m 3 without considering the silt deposit and also observed that with respect to silt deposit during no work period, there was huge difference between the quantity shown by the claimant under letter dated 06.12.2000 and the aforesaid letter dated 11.01.2001.
20. The learned Arbitrator considered the various documents and recorded its finding in connection with balance work to be paid without considering the silt deposit as under:
Total work done by BAPL & HCC 6,36,875.00 m3 (without considering silt) Less work done by BAPL on the (-) 4,23,613.00 m3 basis of deduction in O/A bills Total work done by claimant (without 2,13,262.00 m3 considering silt deposit) Deducting quantity of work paid upto (-) 1,97,534.00 m3 13th R/A bill in all categories of excavation Balance work to be paid without 15,728.00 m3 considering silt deposit during 9 years of idle period
21. After having come to the conclusion that quantity of the balance work to be paid without considering silt deposit during 9 years of idle period to be 15,728.00 m3, the learned Arbitrator took into consideration similar work of the same canal having similar features and calculated the quantity of silt for 9 years in the following manner:
-
Length of Canal after deducting gaps = 2.627 km. Idle period = 9 years (monsoons) Qty. of silt deposit = (27.453.00 x 2.627 x 9) / (1.062 x 8) = 76,397.00 m3
22. Thereafter held that the total quantity of balance work of excavation done by the claimant was 92,125.00 m3: -
60"Therefore, total quantity of work in excavation of all categories of earth work done by Claimant = 15,728.00 + 76,397.00 = 92,125.00 m3"
23. After having quantified the total quantity of work of excavation, the learned Arbitrator quantified the amount with respect to the claim under claim no.1 vide paragraph no.98 of the award as under:
"98) In the 13th O/A bill almost all the quantity of earth in excavation for which payment was made by the Respondents was under the category of Soft Rock with blasting but, I am allowing only 50% of the quantity under Soft Rock with blasting and balance 50% quantity under Soft Rock without blasting the rate of which is lesser.
Taking 50% of this quantity as soft rock with blasting and 50% as per excavation of soft rock without blasting, cost of the same including disposal of excavated material may be calculated as following: -
For soft rock with blasting Excavation 46,062.00 m3 x Rs.70/ m3 Rs.32,24,340.00 Disposal with 1-2 km lead 46,062.00 m3 @ 19/ m3 Rs.8,75,178.00 For excavation without blasting Excavation 46,063.00 m3 @ 25/ m3 Rs.11,51,575.00 Disposal with 1-2 km lead 46,063.00 m3 @ 19/ m3 Rs.8,75,197.00 Total Rs.61,26,290.00 Therefore, I award an amount of Rs.61,26,290.00 against claim no.1 for which a sum of Rs.76,25,494.00 has been claimed by claimants in original claim. Interest @ 13% per annum will be paid separately from 01.10.1992 till the date of award as also charged from contractor on the amount of advances as per clause 8 of General condition of contract at P/4."
24. This Court finds that the learned Arbitrator has passed a well
-reasoned award on this point and there was no scope for interference in the award under this head under the limited scope for interference under section 34 and now under section 37 of the Act of 1996.
25. Claim no.3: Claim against short payment made in different on account bills which had not been paid yet.
The claim no. 3 has been considered by the learned Arbitrator vide paragraph 100 of the award and upon going through the records the learned Arbitrator held that the payment made in 11th, 12th and 13th on account bills showed that certain deductions were made or certain quantities which were withheld by citing reasons. The short payment 61 was recorded to be Rs. 1,47,967.00 due to void measurement and ultimately, the learned Arbitrator calculated that an amount of Rs. 2,22,281.00 was payable and awarded interest @13% per annum on the awarded amount from 01.10.1992 (3 months after last extension date) till the date of award as also charged from the contractor on the amount of advance as per clause 8 of the General Conditions of Contract. The amount of interest was directed to be calculated in the interest claim along with other awards.
26. This court finds that the learned Arbitrator has passed a well - reasoned award on this point and there was no scope for interference in the award under this head under the limited scope for interference under section 34 and now under section 37 of the Act of 1996.
27. Claim no. 5 was claim for refund of deductions made for EoT (Extension of Time) but not refunded even after sanction of Extension of Time by competent Authorities. This related to the amount deducted from 4th, 5th, 7th, 8th, 9th, 10th and 11th RA bills amounting to Rs.2,50,355/-. The learned Arbitrator recorded that the extension of time was sanctioned by the Chief Engineer lastly upto 30.06.1992 and therefore, the claimant was entitled for payment of Rs.2,50,355/- deducted for want of extension of time (EOT) on 11.12.1989, 04.01.1990, 29.05.1990, 27.12.1990, 31.12.1990, 25.02.1991 and 31.03.1991 for which the extension of time was granted on 20.05.1992 up to 30.06.1992.
28. The learned Arbitrator has passed a well -reasoned award on this point and there was no scope for interference in the award under this head under the limited scope for interference under section 34 and now under section 37 of the Act of 1996. Delay damages
29. Under the heading of 'Delay Damages', the learned Arbitrator allowed the claim under claim nos. A1, A2 and A4. Under each head, the claim was partly allowed as projected in the aforesaid chart. The learned Arbitrator analyzed the various claims of 'delay damages' from paragraph 107 onwards of the award.
62i. Claim no. A1 was relating to overhead losses related to idle or underutilised overheads.
ii. Claim no. A2 was related to Demand due to need to restructure rates during extended period.
iii. Claim No. A4 was on account of loss due to underutilised and unutilised tools, plants and machineries.
Claim no. A2 -'demand due to need to restructure rates during the extended period'
30. Finding of learned arbitrator on this point is as under: -
"109) SUB CLAIM NO. A2:- Demand due to need to restructure rates during Extended period.
The claimants in the original claim (Annex C1) at p/17 have mentioned that the work done upto original date of completion (16.07.1989) amounts to Rs. 39,16,841.00 but, they had to continue the work upto 30.06.92 at their agreemented rate and hence, they have claimed 30% extra to account for work done beyond 16.7.89 due to abnormal price rise in addition to usual escalation for the work done beyond 16.7.89. Therefore, they have demanded (claimed) an amount of Rs. 41,67,312.00 on above amount of work done as extra for work done beyond original date of completion.
Again, in modified claim (Annex C16) they have calculated the amount of work done beyond original date of completion (16.7.89) after receipt of copies of MB's made available to Arbitral Forum with copy to claimant, as Rs. 2,49,31,366.00. The claimants have claimed 20% extra for abnormal rise in prices due to price escalation which is not included in the agreement and also due to abnormal rise in price of Diesel, Lubricants, Spares and other related items due to Gulf war in Iraq which badly affected the National Economy. Thus, they have revised their demand of claim to Rs. 49,86,273.00 @ 20% of work done during this period.
While arguing on the issue of need to restructure the rates during extended period, the claimants drew the attention of Arbitral Forum to case cited at AIR 1980, Delhi between Delhi Metro Electric Company vrs Delhi Development Corporation, New Delhi where the claimants argued that any provision in fixed rate or no escalation would apply to contract that was executed during the agreed initial period of completion (6 months i.e. upto 16.7.89). The claimants also invited the attention to (1984) 2 Sec 680, Tarapore & Co. vrs. Cochin Shipyard and argued that in the event of facts related to contracts, the agreement to that extent would become OTIOSE and the said judgement mentions 63 that contractors claim for compensation for excess expenditure incurred due to price rise cannot be turned down on ground of absence of price escalation clause in regard to contract. The claimants also cited case AIR 1989 SC 1034 for P.M. Panl vrs. Union of India where it has been observed that delay would require damages to be compensated.
The Respondents have argued that there is no provision of price adjustment clause under the agreement and therefore, the claim of contractor is not at all tenable. But, at the same time, they could not show any provision in creating a bar to evaluate the claim. The question which arises from consideration is whether in absence of any price adjustment clause as well as in absence of any reasonableness as to the period of extension whether the rates to be valid for three and half (3 1/2 ) years (17.1.89 to 30.6.92) that was to be completed within 6 months. However, the admitted fact is that the work was going on slowly with breakage in continuity due to indecision on the part of Respondent, decision on the issue of classification of excavated material as mentioned earlier, the rate can be considered for restructuring by way of compensation under delay damages to the extent of 10% of actual work done beyond the original date of completion, which comes to Rs. (16536250.00- 3916841.00) = Rs. 1,26,19,409.00. As analyzed before, after considering award amount, on application of indices published by Reserve Bank, the escalation when applicable may have cumulative rise of 50% during this long period.
I consider the amount of Rs. 12619409.00 as work done beyond 16.07.1989 for the need to restructure the rates/grant of escalation/rationalizing the price over this long period when contract continued to be operated. The amount of Rs.12,60,000.00 is awarded against the claim amount of Rs. 47,86,273.00 as per modified claim by the claimants.
This is based on the fact of having examined work done during the original period, work done since then, the escalation as would have been payable as also on consideration of entitlement and reasonability of this amount over and above the bill at contracted rate. This claim is essentially considered on the basis of delay not attributable to claimants resulting in damages to be compensated."
31. Upon perusal of the discussion made in connection with claim no. A-2 this Court finds that the amount was claimed in connection with work done beyond 16.07.1989 (the agreed initial date for completion of work), on account of abnormal price-rise in addition to usual escalation. The claim was termed as 64 'demand due to need to restructure rates during the extended period'. The initial claim was for 30% extra to account for the work done beyond 16.07.1989. However, in the modified claim the percentage was reduced to 20%. It was stated that the claim was on account of abnormal rise in prices due to price escalation not included in the agreement and also abnormal rise in price of diesel, lubricants, spares and other related items due to Gulf war in Iraq. The revised claim was for an amount of Rs. 49,86,273.00 @ 20% of work done in the said period. It was asserted that any provision of fixed rate or no escalation would apply to contract that was executed during agreed initial period of completion i.e. 6 months upto 16.07.1989. The claimant also relied upon the judgment passed by the Hon'ble Supreme Court reported in (1984) 2 SCC 680 to say that in the event of facts relating to contracts the agreement to that effect would become OTIOSE and the contractor could claim compensation for excess expenditure incurred due to price rise which cannot be turned down on account of absence of price escalation clause.
32. On the other hand, the State had argued that there is no provision for price adjustment clause under the agreement.
33. The learned Arbitrator posed a question as to whether in absence of any price adjustment clause as well as in absence of any reasonableness as to the period of extension, whether the rates to be valid for three and half (3 ½) years i.e. 17.07.1989 to 30.06.1992 that was to be completed within six months. The learned Arbitrator was of the view that rate can be considered for restructuring by way of compensation under delay damages to the extent of 10% of actual work done beyond the original date of completion which comes to Rs. 1,65,36,250.00 - Rs. 39,16,841.00 = Rs. 1,26,19,409.00. Thereafter, the learned Arbitrator referred to the indices published by Reserve Bank of India and observed that the escalation when applicable may have cumulative rise of 50% during this long period. This court finds that in the entire award, except at this place there is neither any discussion regarding indices published by Reserve Bank nor any of the parties had relied upon such indices before the learned Arbitrator. This Court further finds that there was no evidence with respect to the escalated price claimed by the claimant.
34. The learned Arbitrator thereafter considered the aforesaid amount of work done beyond 16.07.1989 at Rs. 1,26,19,409.00 and awarded escalation of Rs.
6512,60,000.00 [about 10% of Rs. 1,26,19,409.00] as against claim of Rs. 49,86,273.00. The entire discussion in connection with claim no. A-2 is based on no evidence and an ad-hoc amount of Rs. 12,60,000.00 has been awarded which comes to 10% of the value of work done beyond the scheduled date of completion of work i.e. 10% of Rs. 1,26,19,409.00.
35. This Court finds that till the date of doing work beyond the extended period of contract, none of the parties had repudiated the contract and admittedly there is no clause in the agreement regarding price adjustment or escalation and the agreement was on item rate basis which included both labour and material component. In such circumstances, the grant of escalation is ex- facie beyond the terms of the contract. Further, on account of so-called abnormal rise in prices of material due to gulf war, the claimant never pleaded frustration of contract and continued to work and claimed escalation though there was no clause in the agreement enabling the claimant to claim escalation or price adjustment. Thus, the award on account of demand due to 'need to restructure rates during the extended period' under claim no. A-2 was on the face of the award not only without any evidence, but was also beyond the terms of the contract.
36. This Court further finds that the agreement value of the work was Rs. 1,20,11,200.00 and as per the learned Arbitrator, the total value of work done was Rs. 1,65,36,250.00 out of which the value of work done beyond the original date of completion was Rs. 1,26,19,409.00. The learned commercial court has recorded and it is not in dispute that upon payment of 13 th running on account bill on 16.11.1991 the remaining work was only to the extent of Rs. 18,28,891/- and the learned Arbitrator awarded Rs. 61,26,290/- for the work done beyond 13th running on account bill under claim head 1. The escalation has been allowed under claim no. A-2 'need to restructure rates during the extended period' to the extent of Rs. 12,60,000.00 for the work done beyond 16.07.1989 that too without any evidence. However, the learned Commercial Court did not scrutinize the components of allowed claims and as to how the learned Arbitrator has arrived at his findings and allowed the claims under various heads.
37. This Court is of the view that the award of escalation under claim no. A-2
-'demand due to need to restructure rates during the extended period' is 66 based on 'no evidence' and accordingly, the award to this extent suffers from patent illegality and is perverse which is fit to be set-aside even under the limited scope for interference under section 34 and now under section 37 of the Act of 1996. The award on this count is clearly severable from the rest of the award.
claims under claim nos. A-1 and A-4 [A-1 - overhead losses due to underutilised and unutilised period and A-4 - losses for underutilised and unutilised tools, plant & machineries]
38. The claim under claim nos. A-1 and A-4 are based on common computation of underutilised and unutilised period, therefore such computation of period is dealt first.
Computation of underutilised and unutilised period for claim no. A-1 and A-
4.
39. Claim no. A-1 was relating to idle and underutilised overheads for which the claim was for an amount of Rs.1,24,11,574.00. It was argued that the overhead which were provided in the price bid and actually spent and deployed was @10% of the value of job which amounted to Rs.20,01,867.00 per month. The claimant computed the period and claimed that the job remained idle for 120 months as per revised claim. For the same idle and underutilised period, the claimant made revised claim for tools, plant and machineries under claim no. A-4. The computation for the idle or underutilised period is the same for both A-1 and A-4.
40. Some of the salient points with regard to the work have been recorded in paragraph 108 of the award as under: -
1 Date of Agreement 17.1.1989 2 Stipulated date of completion 16.7.1989 3 Total work done excluding price 2,88,48,207.00/-
Adjustment 4 Original cost of work as per 1,20,11,200.00/-
Agreement 5 Period of completion 6 months up to 16.7.89 6 Cost of work done under stipulated Rs. 39,16,841.00/-
period 7 Work Load as per contract Rs. 20,01,867.00/- per month 8 Total period of work done 41 months (17.1.89 to 67 30.6.92) 9 Total period on job suspension 119 months (01.7.92 -
20.5.2002) Keeping the operation absence 10 Underutilized period of work 41-14 = 27 months (17.3.90 to 30.6.92) 11 Total period on job including active 160 months (17.1.89 to period + Underutilized period + 20.5.2002) idle period 12 Amt of work done beyond 16.7.89 Rs. 2,49,31,366.00/-
and till date of suspension
13 Expected work of 2,88,48,207.00/- would have been done in
14.41 months i.e. by 31.03.1990
14 Idle period when the job was under 119 months (30.6.92 to
suspension awaiting fund 20.05.2002)
th
15 Date of Entry of 13 R/A 13.05.1991
16 Date of Underpayment 16.11.1991
17 Date of work order to successor 20.05.2002
Agency
18 Total Excavation quantity in 2,65,130.0m3
claimants' Agreement
19 Total disposal quantity in 1,90,630.0m3
claimants' Agreement
20 Date of suspension of work due to 30.06.1992 (EOT)
paucity of fund
N.B.: Some of the above figures which were based on certain assumptions, have been revised later on, with the change in quantity/amount of actual work done.
41. The learned Arbitrator arrived at following breakup of delay: -
1 Delay attributable to Respondents 33 Months with full idle resources of claimants 2 Delay attributable to Respondents 74 Months with skeletal or fractional resources.
3 Concurrent delay when both the 45 Months parties were in dormant state (No compensable delay to the party) Although the claimant claimed under-utilised period as 26 months but the learned Arbitrator has considered the under-utilised period as 33 months 68 without any explanation. This has resulted in grant of more relief than claimed for under-utilised period, both under claim no. A-1 and A-4.
Modified claim Awarded overhead loss was @10% for 26 overhead loss was @8% for 33 months when partial work was going months when partial work was going on and @ 3% for 120 months the on and @ 2% for 74 months the period when no work was going on at period when no work was going on at the site which comes to the site which comes to Rs.
Rs.1,24,10,582/- (Rs. 2,00,187.00 x 26 82,40,000/- (Rs. 1,60,000.00 x 33 + + Rs. 60,056 x 120) Rs. 40,000.00 x 74)
42. After having dealt with idle and underutilised period which is common for both overhead losses and on account of tools, plant and machineries, the modified claims under heads A-1 (overhead losses) and A-4 (tools, plant and machineries) are further considered as follows:-
Further points regarding claim head A-1 (overhead losses)
43. The different component under overhead losses as mentioned in the modified claim are as follows:
Salaries (technical and non-technical) including leave and other charges;
Stationary, printing, postage and telephone charges; Staff cars and traveling allowances;
Entertainment and publicity;
Housing, medical and other welfare facilities; Legal expenses;
Contingencies;
Consultation fee, audit charges and other hidden expenses.
44. Although no evidence was led with regards to actual amount spent on overheads as claimed under different sub-heads mentioned above, but before the learned Arbitrator the claimant relied upon so called trade practice exhibited vide the report of the year 1956 on estimate of Rates and Cost Committee published by the Ministry of Power and Irrigation, Central Water Power Commission, and referred to Article 2.36.1 thereof to submit that the allowance of 10% could be considered adequate for contractor's actual 69 expenses on Supervisory establishment, field office and share of Head Office charges, Travelling expenses etc. Said Article 2.36 is quoted as under: -
"2.36. CONTRACTORS' OVERHEADS AND PROFITS 2.36.1. Overheads - An allowance of 10 per cent would be adequate for the contractor's actual expense on supervisory establishment, field office and share of head-office charges, travelling expenses, publicity, interest and insurance of damage to plant and injury to labour.
2.36.2. Profits- We believe that in normal circumstances an allowance of 10 per cent of the prime cost as contractor's profit is reasonable."
45. The claimant had prayed for damages on loss of overheads by applying a fixed percentage based on the value of contract calculated per month taking period of contract as 6 months (10% for under-utilised period of 26 months and 3% for unutilised period of 120 months) and the learned Arbitrator has also allowed the claim on percentage basis @8% per month for period of under- utilization taken as 33 months and @2% per month for unutilised period taken as 74 months. The claimant also advanced their arguments before the learned Arbitrator on the basis of Hudson's and Eichley's formula. The award was made on percentage basis; 8% of value of monthly allocation of work calculated by dividing value of contract as awarded by period of 6 months till expiry of extended period of contract for under-utilised period and 2% for unutilised period. This was without any evidence on actual loss suffered and reference was made only to Government method of preparation of estimate which as mentioned above provided for 10% for loss of profits and 10% on overheads. The claim for Loss of Profit was rejected by the learned Arbitrator. The findings of the learned Arbitrator with regards to the overhead losses are as under: -
"Looking at rate of progress, the overhead could not be considered as exceeding 8% of job, although the prevailing practice is to allocate 10% as seen by documents brought before the Arbitral Forum and also as admitted to be the practice in Government method of preparation of estimate. Accordingly, considering the anticipated work load of Rs. 20,01,867/- Month (contract value Rs. 1,20,11,200.00) it would be Rs. 1.60 lac per month @ 8%. As explained above, for idle period of 33 months against the claimed idle period of 152 months, I award a sum of Rs. 52,80,000/- @ 1.60 lacs/month. In addition, overhead loss @ Rs. 40000/- per month @ 2% only is admitted for period of 74 months when no site work was 70 executed but, extended Head Office overhead and Skeletal site office remained i.e Rs. 29,60,000/-. For remaining period of 45 months, no compensation is awarded.
Total compensation awarded under this claim comes to (33 x Rs.160000.00) Rs.52,80,000+ 29,60,000(74 x Rs.40000.00) =Rs. 82,40,000/-, I award a sum of Rs.82,40,000/- against claim No. A1."
46. Admittedly, no evidence has been led with regard to claim on account of overhead expenses from the side of the claimant. The claimant admittedly did not produce any books of accounts, bills, vouchers, etc. to substantiate its claim for overhead expenses. However, reliance was placed on section 28(3) of the Act of 1996 that the Arbitral Tribunal has to decide the case not only in accordance with terms of the contract but has also to take into account the usage of trade applicable to the transaction. The only material which has been relied upon by the claimant and also by the learned Arbitrator is Report of Rates and Cost Committee and the Report of Committee on Cost Control of River Valley projects published by Government of India which was said to be the norms for preparation of estimate for issuance of government tenders, as quoted above.
47. It has been rightly pointed out by the learned counsel appearing on behalf of the State that Article 2.36.1 of the Report of Rates and cost committee published by Ministry of Power and Irrigation, Central Water Power Commission which concerns calculation of estimates for projects is an irrelevant material to allow delay damages on account of overhead expenses. This Court is of the considered view that such approach of the learned Arbitrator and reliance on such material dealing with preparation of estimates for projects goes to the root of the matter and by no stretch of imagination the same can partake character of trade usage much less trade usage pertaining to the transaction. The term used in section 28(3) of the Act of 1996 is trade usage pertaining to the transaction. When seen in the light of the aforesaid judgments regarding scope of interference in arbitral award, this Court is of the view that the award of delay damages on account of loss of overheads is ex- facie perverse being based on no evidence and by taking into consideration irrelevant material in the name of 'trade usage' as explained above. This Court is of the considered view that no fair minded or reasonable person would adopt 71 such a course and is not even a possible view which could have been taken by the learned Arbitrator.
48. It is not in dispute that upon payment of 13 th running on account bill on 16.11.1991 the remaining work was only to the extent of Rs. 18,28,891/- and the learned Arbitrator awarded Rs. 61,26,290/- for the work done beyond 13th running on account bill under claim head 1. Huge amount has been awarded on account of losses due to overhead expenses for underutilised and unutilised period.
49. The law laid down by the Hon'ble Supreme Court in the case of "Batliboi Environment Engineers Vs. Hindustan Petroleum Corporation Ltd and another" reported in (2024) 2 SCC 375 vide Paragraphs 10, 15, 16 and 23 is put in points as follows: -
a) When the loss towards overheads and profits/profitability has to be arrived at by applying the percentage formula, variant with the execution of the work, such losses are to be computed on the payments due for the unexecuted work, and should exclude the payments received/receivable for the work executed.
b) Based on the value of the work executed, the proportionate amount has to be reduced for computing the damage/compensation as a percentage of expenditure on overheads, and damages for loss of profit/profitability.
c) Damages towards expenditure on overheads and loss of profit are proportionate, and not payable for the work done and paid/payable.
d) Delay in payment on execution of the work has to be compensated separately.
e) Sections 55 and 73 of the Contract Act, 1872, which deal with the effect of failure to perform at fixed time in contracts where time is of essence, and computation of damages caused by breach of contract, respectively, these sections neither lay down the mode nor how and in what manner computation of damages for compensation has to be made. As computation depends upon attendant facts and circumstances and methods to compute damages, how the quantum thereof should be determined is a matter which would fall within the domain and decision 72 of the arbitrator. This is without doubt, a sound legal and correct proposition.
f) However, the computation of damages should not be whimsical and absurd resulting in a windfall and bounty for one party at the expense of the other. The computation of damages should not be disingenuous. The damages should commensurate with the loss sustained.
g) In a claim for loss on account of delay in work attributable to the employer, the contractor is entitled to the loss sustained by the breach of contract to the extent and so far as money can compensate. The party should to be placed in the same situation, with the damages, as if the contract had been performed.
h) The principle is that the sum of money awarded to the party who has suffered the injury, should be the same quantum as s/he would have earned or made, if s/he had not sustained the wrong for which s/he is getting compensated.
i) Ordinarily, when the completion of a contract is delayed and the contractor claims that the contractor has suffered a loss arising from depletion of income from the job and hence turnover of business, and also for the overheads in the form of workforce expenses which could have been deployed in other contracts, the claims to bear any persuasion before the arbitrator or a court of law, the contractor has to prove that there was other work available that he would have secured if not for the delay, by producing invitations to tender which was declined due to insufficient capacity to undertake other work. The same may also be proven from the books of accounts to demonstrate a drop in turnover and establish that this result is from the particular delay rather than from extraneous causes.
j) If loss of turnover resulting from delay is not established, it is merely a delay in receipt of money, and as such, the builder/contractor is only entitled to interest on the capital employed and not the profit, which should be paid.
Thus, it has been held by the Hon'ble Supreme Court that a percentage formula can be applied for award of damages on account of expenditure on overheads, loss of profit/profitability but same has to be computed taking 73 into account the payments due for the unexecuted work and should exclude the payments received/receivable for the work executed. It has also been held that the computation of damages should not be whimsical and absurd resulting in a windfall and bounty for one party at the expense of the other; the computation of damages should not be disingenuous and the damages should commensurate with the loss sustained so that the party should to be placed in the same situation, with the damages, as if the contract had been performed. The principle is that the sum of money awarded to the party who has suffered the injury, should be the same quantum as she/he would have earned or made, if she/he had not sustained the wrong for which she/he is getting compensated. Paragraphs 10, 15, 16 and 23 of the judgment passed by the Hon'ble Supreme Court in the case of Batliboi Environment Engineers (Supra) are quoted as under:
"10. BEEL had, as observed above, accepts the position that the loss towards overheads and profits/profitability has to be arrived at by applying the percentage formula, variant with the execution of the work. Thus, in our opinion, the loss towards overheads and profits/profitability is to be computed on the payments due for the unexecuted work, and should exclude the payments received/receivable for the work executed. In other words, based on the value of the work executed by BEEL, the proportionate amount has to be reduced for computing the damage/compensation as a percentage of expenditure on overheads, and damages for loss of profit/profitability. Damages towards expenditure on overheads and loss of profit are proportionate, and not payable for the work done and paid/payable. Delay in payment on execution of the work has to be compensated separately."
15. McDermott International Inc. refers to Sections 55 and 73 of the Contract Act, 1872 (for short "the Contract Act"), which deal with the effect of failure to perform at fixed time in contracts where time is of essence, and computation of damages caused by breach of contract, respectively, and states that these sections neither lay down the mode nor how and in what manner computation of damages for compensation has to be made. As computation depends upon attendant facts and circumstances and methods to compute damages, how the quantum thereof should be determined is a matter which would fall within the domain and decision of the arbitrator.
16. This is without doubt, a sound legal and correct proposition. However, the computation of damages should not be whimsical and absurd resulting in a windfall and bounty for one party at the expense of the other. The computation of damages should not be disingenuous. The damages should commensurate with the loss sustained. In a claim for loss on account of delay in work attributable to the employer, the contractor is entitled to the loss sustained by the breach of contract to the extent and so far as money can compensate. The party should to be placed in the same situation, with the damages, as if the contract had 74 been performed. The principle is that the sum of money awarded to the party who has suffered the injury, should be the same quantum as s/he would have earned or made, if s/he had not sustained the wrong for which s/he is getting compensated.
23. Ordinarily, when the completion of a contract is delayed and the contractor claims that s/he has suffered a loss arising from depletion of her/his income from the job and hence turnover of her/his business, and also for the overheads in the form of workforce expenses which could have been deployed in other contracts, the claims to bear any persuasion before the arbitrator or a court of law, the builder/contractor has to prove that there was other work available that he would have secured if not for the delay, by producing invitations to tender which was declined due to insufficient capacity to undertake other work. The same may also be proven from the books of accounts to demonstrate a drop in turnover and establish that this result is from the particular delay rather than from extraneous causes. If loss of turnover resulting from delay is not established, it is merely a delay in receipt of money, and as such, the builder/contractor is only entitled to interest on the capital employed and not the profit, which should be paid."
50. In the aforesaid judgement passed by the Hon'ble Supreme Court in the case of Batliboi Environment Engineers (Supra), in paragraph 10 [which has been heavily relied upon by the learned counsel for the claimant] the claimants accepted the position that the loss towards overheads and profits/profitability was to be arrived at by applying the percentage formula, variant with the execution of the work.
51. In the present case also the claimant had prayed for damages on account of loss of overheads by applying a fixed percentage based on the value of contract calculated per month taking period of contract as 6 months (10% for under-utilised period of 26 months and 3% for unutilised period of 120 months) and the learned Arbitrator has also allowed the claim on percentage basis @8% per month for period of under-utilisation taken as 33 months and @2% per month for unutilised period taken as 74 months.
52. Since the claim on account of overheads has been allowed on percentage basis, the learned counsel for the claimant by relying upon paragraph 10 of the aforesaid judgement Batliboi Environment Engineers (Supra), has submitted that the learned Arbitrator has taken note of aforesaid proposition of law and excluded the period during which work was done for the purposes of computation for overhead costs. It has been submitted that in the aforesaid paragraph of the judgement, it has been provided that loss of overhead and profit can be granted for the unfinished work on the basis of the remaining 75 quantum of work. This Court finds that the award of damages on account of loss of overheads has not been passed in tune with paragraph 10 of the judgement in Batliboi Environment Engineers (Supra). The part of the period during which work was done has been included for the purposes of computation of Overhead expenses in the shape of overhead expenses for under-utilised period on percentage basis that too without any evidence of actual Overhead expenses and without any evidence to the extent of utilisation/ non-utilisation.
53. This Court also finds that the learned Arbitrator while computing the value of monthly allocation of work for the purposes of computation of loss of overheads per month has taken into consideration the scheduled period of work of 6 months (17.01.1989 to 16.07.1989) and not the extended period of work, that is, 41 months (17.01.1989 to 30.06.1992) and has awarded damages on percentage basis as follows: -
33 months of under-utilised period 8% per month as mentioned above calculated till extended date of completion of contract work.
74 months of unutilised period i.e. @ 2% per month as mentioned from 01.07.1992 to 31.08.1998 [the above.
date on which the claimant refused to complete the work at the contractual rate]
54. In view of the aforesaid findings, the award of delay damages on account of loss on account of overheads is shockingly whimsical and absurd and is patently illegal which could not have been sustained even under the amended provision of section 34 of the Act of 1996. However, having noted the aforesaid figures, the learned commercial court failed to examine the claims even under the limited scope under section 34 of the Act of 1996 and has failed to consider the aforesaid aspects of the matter and has mechanical observed that there is no scope of reappreciation of evidences and an award is to be sustained when the view taken by the Arbitrator, is a plausible view. Further points in connection with Claim no. A-4, i.e. Loss due to underutilised and unutilised Tools, Plant and Machineries.
7655. The findings of the learned Arbitrator are at paragraphs-111, which read as follows: -
" 111) Sub claim No. A4 (loss due to underutilized Tools and Plants and Machineries):-
In respect of Sub claim A4, the same computation of idle period as in case of claim Al would be held valid.
The claimants have stated in their original claim (C1) at page 18 that the collective rental value /hire charges of Tools and plants and Machineries deployed for the work amounts to Rs.9,67,200/- per month. As computed the total idle period is 153 months and therefore, loss of hire charges is Rs. 14,79,81,600/- work Rental value.
But, in modified claim (C16) at page 10 on the basis of list of plants and machineries submitted in Annex C7 and their Rental Value calculated in Annex C11 at page 17, the Annual Rental Value of above Plants and Machineries has been shown as Rs.65,94,960/- per year i.e. Rs. 5,49,580/- per month.
In response to claimants original claim (Annex 1), the Respondent in their written statement (R1) in para-13 have denied the Rental value of Rs. 14,79,81,600/- or any amount claimed by the claimant for plants and machineries at site. The Respondents have not admitted that the Rental Value of Tools and Plants and Machineries at site is Rs. 9,67,200/- per month. The Respondents have not admitted the total idle period of 153 months. Even if, it is admitted that some Tools, Plants Machineries were deployed at the site of work, Respondents are not at all liable for the same after Extended time of completion (30.06.92). Thus, the Respondents have not authenticated the entire list of Tools and Plants and Machineries as listed by claimants in Annex C7 and evaluated in Annex C11.
Before I consider any compensation for Idle Plants and Machineries, it will not be out of reference to mention here that the Arbitration of disputes of two contracts (1/SMC/87-88 dated 24.9.89 and 3/SMC/88-89 dated 17.1.89) of the same Agency are being conducted by me. While going into details of compensation for idle plant and machineries, it has been found that the details of compensation for Idle plant and machineries in both the Agreements are the same bearing the same Registration No., Cost of Purchase and Date of Purchase in both the agreement in Annex C7 which shows that the same Plant and Machineries have been used in both contract agreements. Since, the proceeding of both the disputes are conducted by me, it is imperative on my part to go into details of this issue although no reference with regard to this issue has been made by Respondents. Considering the fact that compensation for the same Idle machineries during the same idle period cannot be awarded in two works presuming that the same plants and machineries have been used in both agreements NO. 1/SMC/87-88 dated 24.9.87 and 3/SMC/88-89 dated 17.1.89 and hence, I am of opinion that only 50% of the cost of Annual Rental Value of Plants and Machineries 77 shown at p/17 of Annex C4 (Agr. No. 1/SMC/87-88) should be taken into consideration in case of 3/SMC/88-89.
Total Rental value of plant and machineries shown in Annex C7 on the basis of calculation comes out to Rs. 59,29,920/- per year as detailed below:-.............................
Taking 50% of Annual Rental Value under this agreement, the annual rental value comes to Rs. 29,64,960.00 i.e. Rs. 2,47,080.00 per month. But, looking at the long period of idle stage of Plant and Machineries, it will have to be reduced by at least 15% for major repairs and depreciation etc and hence, the Rental value per month will come down to Rs. 2,10,018.00/- per month.
Further, on perusal of balance work at the end of last date of extension of time, it is apparent that approximately 25% of Agreemented work was left out and hence it was imperative on the part of claimants to keep maximum 1/3rd of Plants and Machineries beyond this date if at all, it was kept to complete the balance work during completely idle period to mitigate the losses. Hence, the Rental Value beyond 30.6.92 is taken as Rs. 70,000.00 per month only.
Therefore, I award a sum of Rs. 69,30,000.00/- @ Rs. 2,10,000.00/- per month for 33 months of partial idle period and a sum of Rs. 51,80,000/- for completely idle period of 74 months @ Rs 70,000.00 per month awarding a total amount of Rs. 1,21,10,000.00/- under claim No. A4 against claimed amount of Rs. 3,31,91,650.00/-."
56. In the original claim under claim no. A-4, the claim was stated to be in connection with payment of rent for under-utilised and un-utilised tools, plant and machineries, but in the modified claim it was stated that the claimant had purchased the tools, plants and machineries by taking loan from the bank and was paying the hire charges to the bank.
57. In the award, it has been recorded that the claimant had given the same list of tools, plants and machineries for another contract with the State in the same project operative for the same period and consequently the entire claim was considered at 50% by the learned Arbitrator. The learned Arbitrator reduced 15% of hire charges on account of major repairs, depreciation etc. and arrived at the rental value of the tools, plants and machineries at Rs. 2,47,080/- per month. The learned Arbitrator recorded that since till the last date of extension of time (30.06.1992) 25% of total work was left to be done, it was imperative from the doctrine of mitigation of losses to keep maximum 1/3 rd of tools, plants and machineries if at all they were kept at the site to complete the balance work and hence rental value of tools, plants and machineries considering the doctrine of mitigation of losses was assumed to be 1/3 rd of the 78 machines beyond the last date of extension of time (30.06.1992) and thus assumed to be 1/3rd and took the same @ Rs.70,000/- per month .
58. Further since no evidence was produced as to whether the claimant had any other available work where the plant and machineries could have been utilised or whether the claimant was prevented from participating in any other tender where these plant and machineries were required to be utilised, no amount could have been awarded under claim no. A-4. In order to claim damages on account of under-utilisation/ un-utilization of tools, plants and machineries (claim no. A-4) it was incumbent upon the claimant to produce evidence with respect to any other available work where the plant and machineries could have been utilised and because of this contract they could not be used or to produce evidence to the effect that the claimant was prevented from participating in any other tender where these plant and machineries were required to be utilised and because of this contract they could not participate in such tender/contract. Further, it was never the case of the claimant that due to non-availability of tools, plant and machineries for other work/contract/tender they suffered any losses /damages much less any evidence on such point. In view of the aforesaid discussions and in absence of any such evidence as mentioned above, the award on account of losses due to un-utilised or under-utilised tools, plant and machineries is patently illegal based on no evidence to support any loss/damages on this head.
59. This Court is of the view that the award on account of escalation (A-2), under-utilised and un-utilised overheads (A-1) and expenditure on account of under-utilised and un-utilised plant and machinery (A-4) is shockingly disproportionate as the balance value of work to be performed was Rs. 18,28,891/- till the date of payment made under 13th R/A bill when compared to the total value of work and is also contrary to the judgement passed by the Hon'ble Supreme Court in the case of Batliboi Environment Engineers (Supra). The award on account of delay damages under head A-1, A-2 and A-4 is whimsical, absurd and shocking resulting in a windfall and is not at all commensurate to the losses, if any. The award on account of delay damages under head A-1, A-2 and A-4 is patently illegal which could not have been sustained even under the amended provision of section 34 of the Act of 1996.
7960. This Court finds that although the learned Commercial Court has recorded that after the receipt of 13th RA Bill the balance work left to be completed by the claimant was to the extent of Rs. 18,28,891/- and expressed surprise as to how such huge amount was claimed on account of balance work but has completely failed to undertake the scrutiny of the award under various heads under the limited scope under section 34 of the Act of 1996 and has refused to interfere with the award by simply stating that there was no scope of reappreciation of evidence led before the learned Arbitrator. Before this Court the learned counsels have advanced their arguments, records produced and referred during the course of arguments and matter has been considered as above.
61. Accordingly, the award of losses/ damages under the claim nos. A-1, A-2 and A-4 being clearly severable from rest of the award are set-aside. Counter claim of the State.
62. So far as counter-claim of the State is concerned, the same was covered by the issue no. 5 as framed by the learned Arbitrator. The State had claimed that they were entitled to recover a sum of Rs.62,45,870/- with interest from the due date from the claimant. The issue no. 5 has been dealt with by the learned Arbitrator from paragraph 54 to 83 as well as in paragraph 119 of the award.
63. It was the specific case of the State as recorded in paragraph 59 of the award itself that a sum of Rs. 1,01,82,389/- was paid to the claimant upto 13th RA bill but the cost of work done as per final bill, i.e. the 14 th Bill was evaluated to be of Rs. 39,36,520/- only and hence the State was entitled to recover a sum of Rs. 62,45,870/- from the claimant.
64. The learned Arbitrator considered the various materials on record relied upon by the respective parties and recorded in paragraph 59 of the award that during the argument put forth by the State, it was submitted that on perusal of copy of measurement book containing on account bills, all the payments including 13th on account bill were paid on the basis of section measurement duly checked by the engineers in-charge of the work. The learned Arbitrator recorded that there was no justification for reducing or deleting the quantities of item work in 14th and final bill. The learned Arbitrator also recorded that in 51st sitting the pleader representing the Government specifically stated "since no counter claim has been made by the Respondent in this regard nor any 80 claim has been made by the claimants with regard to alleged final bill, it need not be considered."
65. The learned Arbitrator, after hearing both the parties and having gone through the correspondences and copies of on account bills along with detailed measurements submitted by the State and on perusal of the records, recorded his findings in different paragraphs right from paragraphs 61 to 78 and some of such findings are as under:
"61) All on account bill right from 1st O/A to 13th O/A have been paid on the basis of section measurement and also checked by concerned Engineers.
62) No correspondence regarding excess payment has been made by the Executive Engineer during the payment of all O/A bills. Even beyond this period upto the alleged final bill preparation in 2002, no such correspondence regarding excess payment was made with the claimants.
63) The work under the Agreement was stopped after 30.06.1992 for want of fund as the World Bank stopped the credit as a result of which no payment for work done beyond May'91 to June'92 was made for the Project. Even the State Govt. could not arrange fund and the work was kept in abeyance without finalizing the contract. As per MB No.41 (P/1-
15), the entry of final measurement has been recorded on 09.05.2002 without desilting the canal. The claimants have not accepted the final measurement and as such they have not signed the so called final measurement. According to claimants, they were not associated with the process of measurement. As per claimant's statement, it was an imaginary bill having no head and tail.
64) Huge quantity of siltation and debris from the adjoining hilly terrain during the 10 monsoon period from 1992 to 2001 cannot be denied which has not been taken into consideration leading to the huge difference in quantities of excavation paid upto 13th R/A bill and the so called 14th and final bill as also mentioned by Sri Revati Raman Kumar, the then Executive Engineer in his reply with response to Executive Engineer, M.D.D. No. 5 Letter no.500 dated 25.05.2002.
65) From the perusal of 13th R/A bill entered and paid in MB No. 150 P/45-58, it shows that a total quantity of 1,97,534,244 m3 of excavation under the Agreement item nos.1,2 & 3 has been paid for the work done upto 25.05.1991 which has been reduced to 1,34,031.389 m3 in alleged 14th and final bill. It is worth mentioning that no measurement for the work done during the period from 25.05.1991 to 30.06.1992 was taken by the Executive Engineer after payment of 13th R/A bill.
66) From the perusal of all on account bills, it is evident that measurements used to be taken recorded checked and paid by the departmental Engineers concerned and hence, it cannot be assumed that the claimant was paid in excess by the Respondents in the 13th O/A bill.81
The Engineer in charge of recording final measurement has recorded on MB No.41 P/9-11 that there is no N.S.L (Pre-Level) entry for the reach from km.23.651 to 25.408 but, the measurement has been recorded on the basis of one Block level available in sub divisional record. This cannot give the exact quantity executed by the claimants.
57) If such a huge amount of Rs.62,45,870/- was paid in excess of actual work done by the contractor, the department should have taken stringent action against the Engineers in charge for preparation of bills and making payment. But, no action has been reported to have been taken against them.
68) After preparation of so called final bill, the Executive Engineer, M.D.D.no.5 through his letter no.500 dated 25.05.2002 asked explanation from all concerned. Only one reply from the Executive Engineer Sri Revati Raman Kumar making payment of 13th R/A bill has been submitted.
69) In his reply, Sri Revati Raman Kumar has strongly defended the payment made to the claimants upto 13th O/A bill. The explanation of Sri Kumar has been enclosed at P/88-89 Annexure-C6."
66. The learned Arbitrator ultimately recorded that the very basis of final measurement was faulty and erroneous. Further, the final bill was neither signed by the group of engineers especially authorized by the government through letter no. 1916 dated 06.10.1998 nor signed by the concerned executive engineer and hence the 14th bill could not be treated as final bill. Accordingly, the learned Arbitrator held that the State was not entitled to recover a sum of Rs.62,45,870/- from the claimant.
67. Further discussion in connection with the counter-claim was made in paragraph 119 of the award. The learned Arbitrator recorded that although no formal counter-claim was lodged by the State, but they mentioned in paragraph 8 of the written statement that a sum of Rs.62,45,870/- was paid in excess upto 13th RA bill and the same was recoverable from the claimant. The issue has been fully discussed while deciding issue no. 5. The learned Arbitrator also recorded that while arguing the issue the counsel for the State had also agreed that there was no base for reducing the quantities and the amount paid upto 13 th RA bill and that the so-called final bill was not even signed by the Executive Engineer along with the group of engineers especially authorized to take final measurement vide aforesaid letter dated 06.10.1998 and accordingly, the final measurement was not acceptable to the learned Arbitrator.
8268. The learned Arbitrator also recorded that during the argument the State was asked to produce witness in support of their contention of recoverable amount from the claimant, but they did not wish to produce any witness and ultimately, based on the records and arguments advanced by both the parties before the learned Arbitrator, the recovery suggested by the State was rejected.
69. This Court finds that the learned Arbitrator has passed a reasoned order in connection with the rejection of counter-claim by taking into consideration all the facts and circumstances. Learned counsel appearing on behalf of the State has not been able to point out any ground calling for interference in the said findings while rejecting the counter-claim of the State by the learned Arbitrator under section 34 or under section 37 of the aforesaid Act of 1996.
70. This Court also finds that the learned Commercial Court, while considering the petition under section 34 of the Act of 1996, has recorded that counter-claim of the State based on final measurement of 14 th bill was not properly considered. However, there is no discussion in the entire impugned order as to how the learned Court came to such a finding. The fact remains that the learned Court refused to interfere with the award on the ground that there was no scope for reappreciation of evidences on record and coming to a different finding.
71. The learned Arbitrator having considered the materials on record to reject the counter-claim of the State seeking refund of Rs. Rs.62,45,870/- based on so-called measurement being 14th bill/final bill by a well-reasoned findings and therefore, the refusal by the learned commercial court to interfere with the award rejecting the counter-claim of the state did not call for any interference under section 34 of the Act of 1996, much less under section 37 of the Act of 1996.
72. Conclusion The point of limitation and the point of jurisdiction of the learned Arbitrator are decided in favour of the claimant.
Award on account of delay damages under claim nos. A-1, A-2 and A-4 are set-aside. The rest of the award being clearly severable is sustained. The summary is as follows: -
83Claim Heads Decision of this Court Claim no.1 Claim for work done after 13th No interference in the award. RA Bill.
Claim no.3 - short payment in connection with different running on account bills Claim no.5 - deduction made prior to extension of time.
A-1 Set-aside
Overhead losses for underutilised and
unutilised overhead
A-2 Set-aside
demand due to need to restructure rates
during the extended period'- relating to
escalation
A-4 Set-aside
Loss due to under-utilised and un-utilised
tools, plant and machineries.
Counter claim No interference in the award refusing
to allow counter claim
73. This appeal is partly allowed to the aforesaid extent.
74. Pending interlocutory application, if any, is closed.
(Dr. S. N. Pathak, J.) I Agree.
(Dr. S. N. Pathak, J.) (Anubha Rawat Choudhary, J.) Jharkhand High Court, Ranchi Dated: 10th December, 2024 Pankaj A.F.R 84