Bangalore District Court
Plaintiffs 1. The Director General vs Defendants 1. Sri. C. Purushothama Raju on 30 March, 2022
IN THE COURT OF THE LXXXIII ADDITIONAL CITY CIVIL
AND SESSIONS JUDGE AT BENGALURU CITY [CCH-84]
:Present:
Ravindra Hegde,
M.A., LL.M.,
LXXXIII Addl. City Civil & Sessions Judge,
Bengaluru
Dated on this the 30th day of March 2022
COM.A.S.No.114/2018
Petitioners/
Plaintiffs 1. The Director General,
Central Power Research Institute
Sir C.V.Raman Road, Sadashivanagar,
Bengaluru-560080.
2. The Engineer In-Charge,
Central Power Research Institute,
Sir C.V.Raman Road, Sadashivanagar,
Bengaluru-560080.
(By Sri.P.M.R.C, Advocate)
// versus //
Respondents/
Defendants 1. Sri. C. Purushothama Raju,
No.32/1, Ashwini Residency,
Seenappa Layout, RMV II Stage,
Bengaluru-560094.
2. Sri. M.V.S. Rao,
Sole Arbitrator,
Former Deputy Director General &
Chief Engineer (IDSE)
No.282, Arakere Gate,
Lakshmi Layout, Bannerghatta Road,
Bengaluru-560076.
2
CT 1390_Com.A.S.114-2018_Judgment.doc
(By Sri.P.H.R, Advocate)
Date of Institution of the : 02/06/2018
suit
Nature of the suit : Arbitration Suit
Date of commencement of :
recording of the evidence
Date on which the : 17/03/2022
Judgment was pronounced.
: Year Month/ Day/s
Total duration /s s
03 09 15
JUDGMENT
This petition under Section 34 of the Arbitration & Conciliation Act 1996 is filed by the plaintiffs praying to set aside the award dated 22/2/2018, correction orders passed under Section 33(3) of the Act on 2/3/2018 and the clarifications dated 28/3/2018 issued by the learned Arbitrator by awarding Rs.4,84,08,273/- to the defendant No.1 and by rejecting the counter claim of the plaintiffs for Rs.7,44,95,583/-.
2. The plaintiffs were the respondents before the learned Arbitrator. The defendant No.1 was the claimant before the learned Arbitrator. Defendant No.2 is the learned Arbitrator. The defendant No.1 is referred to as defendant hereafter for the sake of convenience.
3. The case of the plaintiffs in brief is as under:
3CT 1390_Com.A.S.114-2018_Judgment.doc Central Power Research Institute (CPRI) proposed to establish test facilities for carrying out comprehensive EMI- EMC tests and called for tenders to execute the work of construction of building for establishment of comprehensive EMI/EMC test facility, SH civil work on 22/12/2011. Tender bid submitted by defendant was accepted and work order was allotted on 7/3/2012 and agreement was entered on 9/3/2012. Contract was awarded for a sum of Rs.3,41,91,982/- . The structural and architectural drawings were issued to the defendant on 15/3/2012 through Drawing Registers. The contract was to be executed within the period of 5 months from the date of award and this five months expires on 6/8/2012. The defendant under clause 5 of the agreement submitted a bar chart by covering various activities within 5 months. The work of the defendant from the beginning was very slow and lot of time was wasted on some pretext and could not secure completion of the work within the stipulated date. As it was a prestigious and special case, plaintiffs provisionally extended the period of completion of the contract upto 31/12/2012 and another second extension upto 31/3/2013. The defendant could complete the structural works of the building only upto +5 level, out of the total height of the building which was about 14 m. On oral request of the defendant for grant of further time as a last and final chance on 12/4/2013, extension was given till 31/12/2013. This extension was given without prejudice to the right of the plaintiff for taking action under clause 2 of the 4 CT 1390_Com.A.S.114-2018_Judgment.doc contract. Several correspondences were made by the plaintiff with the defendant about the progress of the work, but the defendant went on raising non issues and invoked arbitration raising four claims and the award has been passed and it is made clear that the statutory period for completion was 5 months only. To cover his mismanagement of the project the defendant has raised one or the other issues. The plaintiffs issued two show cause notices dated 11/6/2013 and 8/8/2013 and afforded opportunity to the defendant to substantiate the delay to the satisfaction of the plaintiff, but defendant miserably failed to show cause as regards delay in performance of the contract and as to how he will ensure completion of the work within 31/12/2013. Completion of the work in time was very essential. Since defendant did not complete the construction of the building within the stipulated time, the imported testing machinery could not be installed as per the announcement of the Ministry of Power, Government of India and the national industries are facing difficulty for evaluating their products and plaintiffs have been losing money in terms of loss of testing revenue to a tune of Rs.2 crores every day. The defendant failed to complete work in time and failed to show requisite commensurate progress. The financial progress achieved was only 27% of the tender value whereas the time elapsed was about 300% more. Thereafter, plaintiff on 17/10/2013 issued termination order and defendant was called upon to come for joint measurements on 1/11/2013 for measuring of 5 CT 1390_Com.A.S.114-2018_Judgment.doc the work. Then, defendant filed Writ petition before the Hon'ble High Court in WP No.48611/2013 challenging the termination order instead of availing the remedy of arbitration provided under the contract. The Hon'ble High Court has passed interim order staying operation of determination of the contract by order dated 17/10/2013 as the extension was earlier given upto 31/12/2013. Even by that time the defendant has not completed the work. In view of the stay order contract was in force till 31/12/2013 and thereafter as there was no extension of contract and since the contract had expired by efflux of time, the defendant had no legally vested right to demand any extension of time. In the writ petition the Hon'ble High Court reserved liberty to the defendant to have his dispute redressed in terms of clause 25 of the contract by resorting to arbitration. The defendant was again called upon to take joint measurement and date was fixed as 26/9/2014. The plaintiff was in urgent need to construct the building to house costly imported equipments. Hence tenders for carrying out balance works of EMI/EMC lab were called. Again the defendant has approached the Hon'ble High Court with writ petition No.44790/2014 praying to stay that tender notice issued by the plaintiffs. The Hon'ble High Court by order dated 18/9/2014 has directed the defendant to attend joint measurement which will be undertaken on 22/9/2014. Accordingly joint measurement were taken place on 22/9/2014. Thereafter, WP was disposed by directing plaintiffs to pass detailed order indicating the extent of work 6 CT 1390_Com.A.S.114-2018_Judgment.doc completed and decide the claim of defendant which is admissible and held that if defendant is aggrieved he can avail the remedy through arbitration. On 7/9/2015 the plaintiffs have passed order giving details of work and the payments to be made by the defendant in terms of the contract. Thereafter the defendant issued notice dated 15/9/2015 disputing this order and stating that it is necessary to invoke arbitration. The plaintiffs by order dated 12/10/2015 appointed Arbitrator and defendant challenged the appointment by filing CMP No.2/2016. The CMP was dismissed and defendant approached the Hon'ble Supreme Court in SLP No.15349/2016. Hon'ble Supreme Court disposed of SLP on 25/7/2016 and advised the defendant to approach the Hon'ble High Court with his grievance and then defendant filed revision petition No.368/2016 and in the said revision petition both the parties came to an understanding for appointment of 2nd defendant as sole Arbitrator. As the dispute identified by the Hon'ble High Court is the one relating to orders dated 7/9/2015 passed by the plaintiff and disputed by the defendant in his notice dated 15/9/2015, dispute relating to final bill was the dispute before the learned Arbitrator. No dispute other than final bill has been referred to the 2nd defendant by the Hon'ble High Court. Before the learned arbitrator, defendant submitted statement of claim along with documents and plaintiffs filed statement of defence against all the claims and made 6 counter claims. The defendant submitted rejoinder. The defendant also submitted 7 CT 1390_Com.A.S.114-2018_Judgment.doc oral arguments and plaintiffs also submitted arguments. Thereafter, learned Arbitrator has passed award on 22/2/2018. Thereafter the learned Arbitrator sue moto issued corrections to the award under the provisions of Section 33(3) of the Act. The plaintiffs sought clarification from the learned Arbitrator and the learned Arbitrator has gave clarification by letter dated 28/3/2018.
4. Challenging this Award, corrections and clarification, Plaintiffs have filed present petition under Section 34 of the Arbitration & Conciliation Act. Correctness of the Award is questioned under Section 34(2)(a)(iv), 34(2)(b)(ii), 34(2A), 31(3) and 28(3) of Arbitration and conciliation Act. It is stated that the award is prima facie illegal, arbitrary, contrary to the terms and conditions of contract, biased, based on erroneous interpretation of facts and opposed to principles of natural justice and is not maintainable. It is stated that the award suffers from non application of mind to the facts on record and the grounds urged by the plaintiffs. It is contended that award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration. It is contnded that the award is against public policy of India and is also patently illegal. It is stated that the learned Arbitrator has merely reiterated the submissions of the parties and has not given any cogent reasons in support of the claims awarded and therefore the award is violative of Section 31(1)(d) of the Act and it is not 8 CT 1390_Com.A.S.114-2018_Judgment.doc based on reasons and is liable to be set aside as violative of Section 31(3) of the Act. The plaintiffs also contended that the award is without appreciation of facts and exhibits of the plaintiffs and is biased and perversely in favour of the defendant and is non reasoned award and is an adjudication without application of mind.
5. The plaintiffs have also contended that on each points of decision, learned arbitrator has erred and has not considered and even not referred to documents of Plaintiffs and finding is without proper application of mind. It is stated that, contract was providing that the contractor shall make his own arrangement of water connection and the department did not guarantee to maintain uninterrupted supply of water. However the plaintiffs have provided water, but the contractor has failed to make preliminary arrangement such as of sump tank for storage of water till 11/4/2012. It is also stated that on few occasions defendant had arranged for water tankers and this cost was also reimbursed by the plaintiffs. It is stated that when clause 31A of the contract was applicable there was no need to invoke clause 32 which provides for borewell by the contractor and there was no supply problem from the plaintiffs and only the storage facilities made by the contractor was poor. It is stated that on issueee of water supply, learned Arbitrator has ignored the documents on record, and has much stresses on issue of digging of borewell which was not necessary.
9CT 1390_Com.A.S.114-2018_Judgment.doc
6. Regarding power supply, plaintiffs contends that clause 5 provides for power supply if available from one point, but, contractor has to make his own arrangements by laying distribution cable lines etc, but the contractor could arrange and fix the required electrical board only on 20/4/2012 that is after 44 days of handing over of site and this lapse on the part of the defendant, evidensed in documents is not considered by the learned Arbitrator.
7. Regarding access to site, the plaintiffs contend that, provision of agreement are very clear with regard to access to the site and the contractor was advised to inspect and examine the site and its surroundings before submitting their tenders and the contractor shall bound to scrupulously follow all the security regulations of CPRI that would be in force from time to time. It is stated that though the defendant was knowing that entry was to be from the main gate only, the defendant sought permission for entry through T & D gate, which was clearly rejected. It is stated that despite this, defendant contractor repeatedly raised this issue drom time to time through his various correspondences. It is stated that as per the provisions of contract agreement, defendant was required to use main gate No.1, but the defendant only to cover up slow progress of work has raised the issue of access to site and learned Arbitrator has considered this non existing issue. It is stated that learned Arbitrator has even referred to his inspection dated 28/12/2017, but in the minutes of inspection there was no such observation about not providing 10 CT 1390_Com.A.S.114-2018_Judgment.doc proper access. It is stated that the observation of the learned Arbitrator that the defendant had taken the nearest gate into consideration, while submitting Tender is totally wrong.
8. Regarding issue of delay in issuing Drawing, it is stated that plaintiffs have produced documentary evidence to prove that there was no such delay. It is stated that though there was delay from the defendant in giving performance bank guarantee, still plaintiffs have allowed him to initiate the work on 5/3/2012 itself. It is stated that required foundation drawings were given in advance as could be seen in daily progress report, based on which defendant started markings for excavation. It is stated that two sets of structural drawings for foundations and plinth and architectural drawings were formally issued to the defendant on 15/3/2012. It is stated that footing layout drawing for earth work excavation was issued on 5/3/2012 and only minor revisions were made subsequently which have not affected the work. It is also stated that PCC for bed concrete was also given on 15/3/2012 itself, but defendant initiated PCC for bed concrete only on 23/4/2012. It is stated that the delay on the part of the defendant in fixing of the electric board for power connection is the reason for the defendant not starting the work. It is stated that even the basic requirements like cement for concreting work was first brought to the site only on 18/4/2012, though he was supposed to commence PCC from 21/3/2012. It is stated that Drawings pertaining to the foundations of the building were issued on 15/3/2012, but 11 CT 1390_Com.A.S.114-2018_Judgment.doc defendant would complete the PCC for footing on 1/5/2012 and delay is attributable to him. It is stated that only a minor revision regarding column stirrups was given and revised drawings pertaining to footing section with minor revision was issued on 3/5/2012 and they have not affected the progress. It is stated that the defendant could not complete activities as per his own activity chart mainly due to poor deployment of work force and delay in procurement of steel by the defendant to cause delay in commencement of footings. It is stated that it was brought to the notice of the arbitrator that department had fixed the plinth level during March-April 2012 itself and even for such minor engineering details, defendant insisted for a revised drawing for height of pedestral above footing and the revision did not affect the progress of the work. It is stated that the defendant had mislead the learned Arbitrator and though defendant could start the concreting of footing only by 21/5/2012 and could complete the column concreting up to plinth level only by 27/6/2012, learned Arbitrator held that the delay is attributable to the plaintiff. It is also stated that in structural shop drawings it was proved with substantial documentary evidence that the defendant even by June 2012 had not completed all the works up to plinth level and structural steel roofing drawings were issued on 7/6/2012 and thereby the defendant has mislead the learned Arbitrator. It is stated that despite issue of approved shop drawings by plaintiffs on 17/7/2012 the defendant could not bring any structural steel material to the site even 12 CT 1390_Com.A.S.114-2018_Judgment.doc by October 2013, inspite of issuing several correspondences. It is stated that the defendant was not even able to plan a simple operation like plinth beams which was programmed to be completed in 9 days and was later revised to 16 days. It is stated that there was no hindrances on account of drawing causing interruption/reworking/demolition etc. for the defendant for raising the columns. Plaintiffs have stated that the learned Arbitrator has failed to note that non deployment of sufficient labour was the main cause for delay. It is stated that the defendant was extremely slow, casual and not committed to his own programs for completing the work. It is stated that the defendant in his attempt to fault the plaintiffs on the issue of delay in release of drawings, has mislead the learned Arbitrator.
9. Regarding Grade of steel, plaintiffs have stated that contract itself is providing use of Fe 500D grade and Fe415D grade TMT bars and it is the prerogative of the designer to decide which grade of steel is to be used and in this design Fe 500D has been chosen by the designer. The plaintiff has stated that structural drawing were issued on 5/3/2012 and 15/3/2012 and these drawings specified use of Fe500D steel for reinforcement, the defendant did not express any problem regarding use of Fe500D steel at this point of time and he had placed his requirements with SAIL, RINL etc for Fe500D as per the correspondence dated 26/3/2012 and he has further confirmed the same in his subsequent correspondence. It is stated that in November 2012, defendant had brought to site 13 CT 1390_Com.A.S.114-2018_Judgment.doc about 3 MT of unapproved brand of steel andf on his request, plaintiffs permitted him to use the steel already brought to site. However, defendant once again brought 3 tonnes of non approved brand of steel, the same was asked to be removed by letter dated 7/2/2013. It is stated that this issue of Grade of Steel was raised miserably at a later date. It is stated that with regard to insistence of use of steel of particular grade and denying the promised choice to the defendant, learned Arbitrator has just reproduced the defendant's version. It is stated that there is no choice given to the contractor for using Fe 415D or Fe500D and the same is not considered by the Arbitral Tribunal. It is stated that the learned Arbitrator has omitted to consider the fact that the original drawings issued were indicating Fe500D steel only and the defendant had sent enquiries to the primary producers for Fe 500D steel only, during the start of the project and had produced Fe 500D steel only during the foundation works and had no problems till November 2021 in use of Fe 500D steel and has taken this contention only at a later stage.
10. Regarding issue of man power, plaintiffs contend that the learned Arbitrator has ignored the poor manpower deployment by the defendant. It is stated that as the contract was to be completed within 5 months and work was costing more than 3.5 crore, labour deployment for the work needed very elaborate planning and minimum labour required at site on any day calculateed based on provisions of clause 10 of contract, would be around 140 numbers. It is stated that 14 CT 1390_Com.A.S.114-2018_Judgment.doc defendant, who was required to obtain license for engaging more than 20 labours under Contract Labour (Regulation and Abolition) Act, has never submitted such license which confirm that labour engaged by him on any working day was less than 20. It is stated that In view of poor deployment of the labour at site, several correspondences were made by the plaintiffs to the defendant and they are ignored by the learned Arbitrator. It is stated that thoug the man power deployment at the site which was reminded to the defendant was brought before the arbitrator, he has not considered the same.
11. Regarding rate of Reinforcement steel above plinth level, it is stated that in earlier arbitration, its admissibility was already decided and dispute in this arbitration was regarding the rate payable which was to be adjudicated. It is stated that only after publication of the award amount becomes payable to the defendant as it is to be decided in the present arbitration. It is stated that the defendant has worked out arbitrary rate of Rs.95.96 per KG and same is not supported by proper market rates and the same was not approved by the department and the defendant has not produced the document from approval of the rate by the CPRI. It is stated that though it was demonstrated that the rate quoted by the defendant was unreasonable, learned Arbitrator recorded that plaintiff has not taken any action till today and not disputed the rate given by the defendant which is wrong.
15CT 1390_Com.A.S.114-2018_Judgment.doc
12. Plaintiffs have serious dispute for learned arbitrator taking in to consideration of hand written note in Ex.R64 which, according to plaintiffs, was only for internal information and did not bear any signature of the contractor and this hand written portion was not a contract document. It is stated that defendant insisted that the hand written portion of R-64 shall be taken on record and the learned Arbitrator has relied on the hand written portion of R-64, despite the same being not a part of formal documents submitted to the arbitrator and thereby blatantly the learned Arbitrator favoured defendant.
13. Plaintiffs also contended that the learned Arbitrator has ignored the mischiefs and tampering of records on the part of defendant as well as the litigant nature of the defendant and it is stated that instead of doing work, defendant went on litigation and has also committed mischief and fraud which are ignored by the learned Arbitrator.
14. Plainiffs have stated that regarding closure of contract, Hon'ble High Court had ordered for stay on termination issued by plaintiff during October 2013 and the stay was vacated on 15/7/2014 and thereafter, defendant sent proposal for closure of contract for which plaintiffs have not commented and asked the defednant to come for joint measurement for finalization of accounts and defendant approached the Hon'ble High Court. It is stated that the learned Arbitrator by accepting the contention of the defendant has held that the plaintiff had agreed to the 16 CT 1390_Com.A.S.114-2018_Judgment.doc proposal for closure of the contract stated by the defendant. It is stated that if the contract was to be closed, same ought to have been on behalf of DG CPRI and closure of the contract if required by the government, is permissible only under clause 13 of the agreement and the said clause has not been operated by CPRI and therefore the contention of the defendant that CPRI agreed for closure of the contract is factually wrong, mischievous and misleading. It is stated that the contract has expired by efflux of time on 31/12/2013 as there was no extension given for the subsequent period and the learned Arbitrator has failed to note that there was no provision for closure of the contract in the agreement.
15. Regarding scaffolding pipes, idling, astronomical costs it is stated that though defendant had only claimed idling for 211 numbers of pipes at Sl.No.5 of table under heading machinery and materials, learned Arbitrator has considered 300 numbers of pipes while working out the claim amount which is grossly immoral and a clear case of illegality appearing on the face of the award. It is stated that the learned Arbitrator without verifying the facts of the case, passed award on fancy claim of the defendant including awarding sum of Rs.1,19,100/- for idling of vibrator. It is stated that the learned Arbitrator has shown prejudice against the plaintiff and has considered the judgment cited selectively and contention of the plaintiff are not even referred in the award. Plaintiffs have stated that the learned Arbitrator after recognising the third extension upto 31/12/2013 and 17 CT 1390_Com.A.S.114-2018_Judgment.doc thereby, currency of contract expiring, still considered that the contract is closed on 22/7/2014 without even going through the facts of the case. It is also stated that the learned Arbitrator has mixed the plaintiff's case with the counter arguments of the defendant to dilute the case of the plaintiff. It is stated that the learned arbitrator has wrongly held that there is wrongly withholding of money of the defendant. It is stated that it was pointed out to the learned Arbitrator that defendant has admitted amount of Rs.18,40,307/- which implied that defendant has accepted the rates worked out by department for extra items. The learned Arbitrator has pre-decided that the termination is unjust and illegal based on the statement of the defendant and also stated that the Hon'ble High Court of Karnataka has given a stay on the work which is totally false. It is stated that learned arbitrator deliberately not considered the submissions of the plaintiffs and relied entirely on the unacceptable submissions of the defendant.
16. Plaintiffs contended that all claims except claim No.4 and 14, which were related to the final bill, were outside the jurisdiction of the learned Arbitrator. Those claims would not come within the terms of submission to the arbitration as per the order of Hon'ble High Court. It is also stated that those claims of the defendant were not within the limitation of 120 days mentioned in clause 25 of the agreement and even the claims made were not within the period of limitation under the Limitation Act and the learned Arbitrator inspite of 18 CT 1390_Com.A.S.114-2018_Judgment.doc submission of the plaintiff has failed to note the same. It is stated that the work was terminated on 17/10/2013 and the defendant ought to have submitted final bill immediately after termination of the contract and even subsequent to joint measurement on 22/9/2014 the defendant could have submitted the final bill, but not submitted. It is stated that on intimation of final bill by CPRI on 7/9/2015, the defendant has not submitted the final bill immediately and in fact no bill was submitted and thereby the defendant has even waived and his right is extinguished as per clause 9 of the agreement. It is stated that the dispute for claims of the defendant arise more than 3 years back and therefore except claim no.4 and 14, all other claims are time barred, still the learned Arbitrator has not considered the same.
17. Plaintiffs also contended that adjudication on levy of compensation by the learned Arbitrator is also illegal. It is stated that the defendant was responsible for a delay of 397 days out of a total of 437 days and the designated authority has levied an amount of Rs.34,29,198/- as compensation on account of delay attributed to the defendant and the same was intimated to the defendant on 22/1/2014. Even when the final bill was prepared on 7/9/2015 the defendant replied on 15/9/2015, but he has not objected to the levy of compensation and even in the arbitration the same was not questioned and the learned Arbitrator without considering the same has adjudicated upon the levy of compensation imposed by the plaintiff for delay, though levy 19 CT 1390_Com.A.S.114-2018_Judgment.doc of compensation was not challenged by invoking clause 25 of the contract.
18. Plaintiffs also contended that the learned Arbitrator has adjudicated on issues beyond the validity of contract period. It is stated that currency of the contract came to an end by 31/12/2013 and during the interim period of stay between 17/10/2013 and 31/12/2013 the defendant had not done any work which show that he was not interested in execution of the work. It is stated that as contract has expired by efflux of time, defendant has no legally vested right to demand any extension of time, but the learned Arbitrator has erroneously passed an award by allowing the claims pertaining to the period beyond the expiry of the period of contract i.e. 31/12/2013, which is beyond the terms of submission to arbitration. It is also contended that the adjudication and finding on the police complaint given by the officials of the plaintiff against defendant is also beyond the scope of arbitration and it was non issue.
19. The plaintiff has also contended that the award hit with illegalities appearing on the face of it and adjudications based on wrong interpretation of court orders and contract clauses, apparent misconduct of arbitrator appearing in the award and the awardis incomplete and vague. It is stated that clause 25 is misinterpreted by the learned Arbitrator.
20. Plaintiffs have stated that during the arbitral proceedings additional claim No.16 was added on 26/10/2017 which was illegal and this claim was made only 20 CT 1390_Com.A.S.114-2018_Judgment.doc on some arguments and it was submitted by the plaintiff that matter regarding service tax was subjudice in view of challenge of the earlier award by the defendant in respect of service tax. It is also stated that regarding clause 2 and 5 of the contract, the learned Arbitrator only reiterated the contention of the defendant, though interpretation of clause 2 and 5 and schedule 'F' was beyond the terms of reference to this arbitration. It is also contended that regarding clause 10CC of contract, learned Arbitrator though noted that the columns of clause 10CC were not filled by the Engineer incharge, who was the authority for filling up the component of materials, labour, POL etc, has held that clause 10CC was applicable.
21. Plaintiffs also contended that regarding signing and supply of documents the award is patently illegal. It is stated that the learned Arbitrator has erred and misdirected himself by holding that the supply of signed contract documents by plaintiffs to defendant is a pre-requisite for starting of work. It is stated that the work order was issued on 7/3/2012 with directions to attend office to complete formal agreement within 15 days and formal agreement was actually signed on 9/3/2012. It is stated that as per the CPWD manual there should be no delay in executing the agreement as soon as tender is accepted by the competent authority. It is stated that the clause 29 (I) of the contract provides that till the claim arising out of or under the contract is determined by the arbitrator, contractor will have no claim for interest or 21 CT 1390_Com.A.S.114-2018_Judgment.doc damages. It is stated that SD and PG forfeited by the plaintiffs under clause 3 could not have been considered for awarding of interest in view of this clause. It is stated that on 2/3/2017 the letter was submitted by the plaintiff questioning as to whether arbitration can commence before termination of earlier proceedings and whether amended act 2015 is applicable and application of clause 25 etc and the learned Arbitrator has passed an order on 5/4/2017, but in the award arbitrator has not taken into account the correspondence of the plaintiff. It is also contended some of the pages of the award are not signed. It is stated that regarding design and drawings of new building, the learned Arbitrator by linking the agreement for the work with design / drawings for the new building has failed to understand issues involved in the submissions made by the plaintiffs and thereby the learned Arbitrator has committed misconduct. It is also contended that the learned Arbitrator has stated that he rejects final bill dated 7/9/2015 and therefore there would be no final bill as per the award and therefore the award is bad for want of finality.
22. Plaintiffs have also challenged the finding of the learned Arbitrator on each claims, including the amount awarded by learned arbitrator on each claim. Regarding claim No.1, with regard to treating the termination as unjust and illegal, learned Arbitrator based on his wrong finding about the issue of drawing regarding water supply, power supply, drawing, access to site etc has given wrong finding. It 22 CT 1390_Com.A.S.114-2018_Judgment.doc is stated that the contention of the plaintiffs that required man power was not used by the defendant were not considered by the learned Arbitrator. It is stated that the learned Arbitrator has not even made reference to the submission made by the plaintiffs. Regarding claim No.2 and 3 which are pertaining to payment of revised equitable rates in respect of items of work executed due to changed circumstances in execution during the period of contract and beyond the stipulated period of contract, it is stated that these claims were outside the purview of the tribunal and as they did not arise before appointment of learned Arbitrator and there is no provision in the contract for payment of revised rate in respect of items of work during contract period. It is stated that for delays beyond control of the contractor, contract provides for extension of time that can be granted to the contractor. It is also contended that, learned Arbitrator, though there was no evidence of any actual damages suffered by the defendant has allosed the claim. Plaintiffs contended that the learned Arbitrator has wrongly concluded that the delay for completion of the work was totally attributable to the plaintiff without assigning any reason and has not given any reason for considering that work was executed under the changed circumstances and therefore finding on claim No.2 and 3 are without any evidence and against the contract terms.
23. Regarding claim No.4 payment of execution of extra items of RCC steel above plinth level the rate 23 CT 1390_Com.A.S.114-2018_Judgment.doc considered by the learned Arbitrator is said to be without any basis. Regarding claim No.5 which pertains to price escalation amount in terms of clause 10cc of the contract, plaintiffs contend that, learned Arbitrator has failed to note that the Engineer-incharge has not filled the relevant claim and thereby clause 10cc was not even applicable. It is stated that as defendant is responsible for delay of 397 days for which levy had been imposed on him under clause 2 of the agreement, no escalation will be admissible to him as per provisions of clause 10cc. It is also stated that the learned Arbitrator has allowed the revised equitable rate during and after contract period under claims 2 and 3 and also awarded the escalation under clause 10cc and this adjudication is gross duplication and therefore illegal. Regarding claim No.6 pertaining to payment of 3rd RA bill amounting to Rs.18,40,307/-, it is stated that plaintiff was levied compensation of Rs. 34,29,200/- and the learned Arbitrator has not given any cogent and coherent reasons and most importantly demonstration of application of his mind while adjudicating the claim and the finding on this claim is also liable to be set aside. Regarding claim No.7 EMD, FSD, bank guarantees forfeited by the plaintiff also the finding of the learned Arbitrator are said to be against the terms of contract and the facts and circumstances of the case. Regarding claim No.8 the plaintiff has stated that the learned Arbitrator has not considered the submission of the plaintiff that the plaintiff was entitled to recover the amount of 1% from the 24 CT 1390_Com.A.S.114-2018_Judgment.doc gross value of each bill towards water supply. It is also stated that the defendant was required to carry out mandatory tests as per prescribed frequencies and such tests carried out by the defendant was short of requirements. The learned Arbitrator has not taken cognizance of the terms and conditions of the contract and a recovery of Rs.2,000/- made for not renewing of the original insurance for labour was justified as per the contract and the same is not considered.
24. With regard to claim No.9 it is stated that the payment of contractor's profit on the balance cost of work, the learned Arbitrator has stated that the defendant was denied the execution of the work to the extent of nearly 2.5 crores and would have earned profit on this amount of Rs.29,70,000/-, but no reasons are given. It is also stated that the learned Arbitrator himself has stated that this award amount worked out to 10 to 12% and profit is not sure as to amount. It is stated that the finding of the tribunal that as as defendant had made tender with premium of 45%, he would have certainly made profit more than 15% is also not based on any reasoning. It is stated that regarding claim No.10 which are with regard to idling charges towards men and machinery of the defendant during the contract period and beyond the contract period, it is stated that learned Arbitrator without application of mind has given the finding and these claims are even time barred. It is also stated that the documents relied by the learned Arbitrator do not show that men and machinery were idling due to want of decisions or 25 CT 1390_Com.A.S.114-2018_Judgment.doc contractual obligations on the part of the plaintiffs. It is stated that as the currency of the work has expired on 31/12/2013 and extension sought by the defendant was refused, the defendant ought to have removed the machinery lying at site immediately and the period of idling beyond contract period of 17/10/2013 to 17/11/2014 are totally without any basis. It is stated that even the defendant has not followed the Doctrine of Mitigating losses which is the duty imposed on the defendant. It is stated that the defendant made first request for taking out the material only on 22/7/2014 i.e. about 8 months after expiry of the contract. It is stated that the learned Arbitrator has made the award based on fancy claim of the defendant including awarding the amount for idling of vibrator. It is also stated that even the amount awarded by the tribunal on this idling are astronomical amounts with regard to many items when compared to the purchase price of such material itself. It is stated that for other items, idling charges awarded are much more than the costs of respective new items itself. It is stated that the defendant was required to maintain register of persons employed on work in the format prescribed under the Central Rules and the same was not followed and still the learned Arbitrator in the absence of such documents and proof of manpower deployed by the defendant adjudicated the claim in favour of the defendant.
25. Regarding claim No.11, towards payment of overhead charges due to avoidable prolongation of stay 26 CT 1390_Com.A.S.114-2018_Judgment.doc beyond the contract period from 7/8/2012 to 22/9/2014 also the award of the learned Arbitrator is seriously challenged. It is stated that the claim is outside the purview of the tribunal and the cause of action arose on 18/10/2013 and the defendant has raised the claim after period of 3 years and it is even time barred. It is also stated that for compensation to be payable, under Section 73 of the Indian Contract Act, loss or damage should have to be arisen as a natural consequence of the breach and it should have been something parties could have reasonably expected to arise. Regarding claim No.12 pertains to payment of avoidable litigation charges, the learned Arbitrator without considering the fact that it was the defendant who had filed many petitions has awarded amount to the defendant instead of awarding the amount to the plaintiff. Claim No.13 towards payment of compensation due to loss in turnover and productivity, the plaintiff has contended that the claim is barred by limitation and the finding of the learned Arbitrator is without evidence and the learned Arbitrator in the absence of any documentary evidence has awarded astronomical amount without any calculation.
26. Regarding final bill in claim No.12 dated 7/9/2015 the plaintiff has contended that levy of compensation of Rs.34,29,198/- was not even challenged by the claimant defendant and still the learned Arbitrator has rejected the final bill of the plaintiff which is beyond the scope of the reference. It is stated that the rejection of the final bill by the 27 CT 1390_Com.A.S.114-2018_Judgment.doc learned Arbitrator and adjudicate on the issue of levy of compensation is highly illegal and perverse. It is also stated that in claim No.15 pertaining to payment of interest the learned Arbitrator has awarded interest as against the provisions of the contract clause 29(i). It is also stated that award of 18% is also exorbitant and is against the binding decision of the Hon'ble Supreme. It is also contended that in claim No.16 which was raised during arbitration proceedings, which is with regard to goods and service tax, finding of the learned Arbitrator is without basis and is against the different clauses of the contract as mentioned in the petition.
27. The plaintiffs has also challenged the finding of the learned Arbitrator with regard to the counter claims of the plaintiff. It is stated that the learned Arbitrator without considering the counter claims on merits has summarily rejected the same. It is stated that the counter claim pertaining to recovery on account of non employment of technical staff, documentary evidence was produced before the learned Arbitrator showing that technical staff were not engaged and the defendant had not followed the required procedure and has not kept proper supervision of the work for which even as per the contract clause 36 the defendant is liable to pay Rs.10,000/- per month and therefore defendant was liable to pay Rs.2 lakhs for 20 months. Regarding counter claim No.2, it is stated that this claim on account of wasteful expenditure on the incomplete building incurred by CPRI, the learned Arbitrator has not considered the 28 CT 1390_Com.A.S.114-2018_Judgment.doc expenditure incurred by the plaintiff and also the documents that were produced, but has straight away rejected the counter claim. It is also stated that the construction made by the defendant at certain portion was found to be below the prescribed standard and all these aspects which were brought to the notice of the arbitrator were not taken into consideration in deciding counter claim No.2. It is stated that in counter claim No.3 on account of loss of revenue, expenditure on insurance, variation in euro charges, storage charges etc also the finding is given without perusing the records. Plaintiffs contended that regarding counter claim No.4 towards settlement of final bill along with interest at 15% etc also the learned Arbitrator has not given reasoned award and has only rejected the counter claim on the ground that on the basis of the finding that delay is attributable to the plaintiff, which is wrong. It is also stated that in counter claim No.5 pertaining to expense incurred by way of professional fees paid to advocates in defending cases in courts, the finding of the learned Arbitrator is not justified and in ignorance of evidence placed before the learned Arbitrator and without considering the submission made by the plaintiff. On all these grounds the plaintiff has prayed for setting aside of Arbitral award.
28. The defendant has filed written statement stating that the arbitration suit filed by the plaintiff is not maintainable and is even barred by limitation. Defendant has stated that even on the merits of the case, none of the 29 CT 1390_Com.A.S.114-2018_Judgment.doc grounds enumerated by the plaintiff are grounds to set aside the award. It is stated that, different sections under which the plaintiff is seeking setting aside of the judgment are not applicable. It is stated that as held in various decisions court cannot interfere in the award and also cannot re-appreciate the evidence. It is stated that the learned Arbitrator was appointed by the Hon'ble High Court by its order dated 9/2/2017 with the consent and no objection of the parties by modifying its earlier order which amounts to setting aside the earlier order. It is stated that plaintiffs after satisfied about the capacity of defendant entrusted the work at 45% above the estimated cost of work and only a stamped paper agreement was executed at the time of issuing work order. It is stated that agreement containing conditions of contract which is mandatory to know and follow the conditions was executed only after 2 ½ years on 25/4/2012 and only then defendant came to know regarding all the conditions and facts and accordingly raised certain issues and submitted to the plaintiff. It is stated that the defendant has submitted bar chart for completion of work with certain conditions which are to be fulfilled by the plaintiffs, but the plaintiffs have totally failed to fulfil their contractual obligations such as issue of correct working drawings in time, water supply, power supply and proper access to site which are the basic needs to start the work. It is stated that none of these contractual obligations were fulfilled by the plaintiff for even two months after issue of work order. It is stated that the 30 CT 1390_Com.A.S.114-2018_Judgment.doc plaintiffs came in the way of performance of the contract in the prescribed period of 5 months and even thereafter and the plaintiffs who should be ready with all the requirements from their side for speedy execution of work, have miserably failed in all the aspects. It is stated that the defendant has replied for show cause notices and disputed clause 3(a)(b), 2 and 5 and the same is suppressed by the plaintiff. It is stated that the plaintiffs were totally responsible for the delay and fault. It is stated that the defendant has suffered huge loss due to the attitude and delays and defaults of the plaintiffs. It is stated that the work was terminated on 17/10/2013 before expiry of extended period and within 15 days of providing the access for heavy longer trailers to transport the structural steel and this forced the defendant to approach the Hon'ble High Court. It is stated that the plaintiffs are responsible for violation in following the procedure prescribed under clause 25 which is examined by the Hon'ble High Court. It is stated that even after making best efforts to continue with the work, after getting stay order from the Hon'ble High Court on termination, plaintiffs have not allowed smooth execution and on the other hand harassed by not allowing the defendant's men and labour to stay at site as done earlier. It is stated that as per the order of Hon'ble High Court, joint measurements recorded on 22/9/2014 and thereafter, plaintiffs have prepared a faulty final bill dated 7/9/2015, which was disputed on 15/9/2015. It is stated that, though defendant had only stated that he will initiate arbitration at 31 CT 1390_Com.A.S.114-2018_Judgment.doc an appropriate time, plaintiffs by ignoring the procedure, appointed arbitrator and defendant was forced to approach Hon'ble High Court and also Hon'ble Supreme Court and thereafter 2nd defendant was appointed as learned Arbitrator with consent of both parties. It is stated that this procedure and litigations were happened due to the negligence and illegality of the plaintiffs. It is stated that the plaintiffs themselves have given no objection and consent for appointment of the Arbitrator and as such following the procedure under clause 25 also do not arise. It is stated that the learned Arbitrator has gone through entire records and has mentioned the same in the awar.
29. Defendant has denied that the learned Arbitrator has reiterated the submission of the parties and has not given any reasons as required under Section 31(1)(d) etc are all denied by the defendant. The defendant has also denied that the learned Arbitrator has decided adjudication of the various issues of claim which are irrelevant to the submission and also denied the alleged buyer and non application of mind by the Arbitrator. The defendant has denied various contentions of the plaintiff with regard to the award passed by the learned Arbitrator and the finding given by the learned Arbitrator for the issue of water supply, power supply, access to site, issue of drawings and grade of steel. It is stated that the plaintiffs have suppressed the agreement clause and are highlighted only clauses which are favourable to them. It is stated that the plaintiffs applied clause 31A (ii) & (iii) for their 32 CT 1390_Com.A.S.114-2018_Judgment.doc convenience where as the clause 31 is the first clause which is applicable to the defendant contractor. It is stated that the plaintiffs were not able to provide water point at site which is evident as per their statement in document R64. It is stated that the signature of the contractor itself taken after lapse of 2 ½ months and delay is totally attributable to the plaintiffs. It is stated that note in R64 itself proved the lapses on the part of the plaintiff. It is stated that the access to the site was one of the major issue which has interupted execution of the work. It is stated that proper access was not provided inspite of request and the same has been noted by the learned Arbitrator. Defendant has stated that the drawing for foundation itself were revised several time upto 6 to 8 months, though the contract period was only 5 months. It is also contended by the defendant that in the grade of steel the contention of the plaintiff is only misleading. It is stated that providing RCC steel is upto plinth level only, but the plaintiff have insisted the defendant to execute the whole work even upto completion stage of height of the building with the same specification and rate which is a breach of contract and the defendant at the first instance itself claimed as extra item above the plinth level by letter dated 28/5/2012 and the plaintiffs have not fixed the rate as per clause 12.2 for extra items which was to be decided within 30 days which amount to breach of contract. It is also stated that the plaintiffs have insisted to procure the steel only from certain manufacturers which was against the condition of contract and thereby the 33 CT 1390_Com.A.S.114-2018_Judgment.doc plaintiffs came in the way of performance of the contract and interpretation in execution of the work. The defendant has also stated that the contention of the plaintiff that manpower deployment was poor is also not acceptable. It is stated that the defendant has submitted the labour license also and at the time of work the plaintiffs have not raised this issue of not producing labour license etc. It is stated that work for some of the items the material cost itself workouts to more than 85% of the amount of the items and total collection of materials, manufactured items and fabricated items can be collected/executed in a month if the plaintiffs were ready with all their contractual obligations. It is stated that as the plaintiffs have caused the delay on different heads they cannot complained about manpower deployment. Objection raised by the plaintiff for considering R-64 by the learned Arbitrator is also disputed. It is stated that the learned Arbitrator has rightly considered note in R-64. The allegation against the defendant for mischief and tampering of records as well as the litigant nature of the defendant as contended in the petition are also denied by the defendant. It is stated that the learned Arbitrator has considered the counter claim made by the plaintiffs and after considering the entire materials has given finding and rejected the counter claim as the delay and default are attributable to the plaintiff. It is stated that the plaintiff gave letter on 22/7/2014 and on 16/9/2014 for joint measurement by stating as for finalization of account. The plaintiff has clearly mentioned for finalization of account 34 CT 1390_Com.A.S.114-2018_Judgment.doc which amounts to closure of contract and therefore the plaintiff cannot dispute the same at a later stage. Defendant has stated that the defendant is not concerned with the Director General or other authority or other than the Engineer Incharge who is the 2nd plaintiff.
30. Regarding the scaffolding pipes idling and awarding astronomical costs as contended by the plaintiffs, defendant has stated that the plaintiff's contention is far from truth and the learned Arbitrator though mentioned 300 numbers of pipes instead of 211 under serial No.5 of the table under claim No.10B the plaintiff has suppressed the fact that by clarification dated 2/3/2018 the same was corrected as 211 instead of 300. The contention that the learned Arbitrator was having prejudice against plaintiffs and has cited the judgment selectively etc are also denied by the defendant. The contention that the learned Arbitrator mixed the plaintiff's case with the defendant's counter arguments to dilute the case is also denied and it is stated that the learned Arbitrator is competent to mention the matters as he deems under any head and any type which cannot be questioned.
31. The defendant has even denied the contention of the plaintiff that except claim No.4 and 14 all the claims made by the defendant are outside the jurisdiction and also the contention that the claims are barred by limitation. The contention of the plaintiff that the defendant has waived his right of objection and right to claim is also denied. It is stated that all the claims raised before or after are eligible to refer to 35 CT 1390_Com.A.S.114-2018_Judgment.doc this arbitration in terms of law. It is stated that in view of Arbitrator being appointed by the order of the court clause 9 and 25 are not applicable to the case. It is stated that as total bill including levy of compensation by the plaintiffs was disputed as per the letter dated 15/9/2015. It is stated that the learned Arbitrator has thoroughly examined a document and the submission made before him and found that the termination is unjust and illegal and therefore levy of compensation do not arise and is automatically treated as illegal and not recoverable and it is stated that the learned Arbitrator has adjudicated the issue beyond the validity of contract period is also denied by the defendant. Defendnat has stated that contention of bar of limitation, non jurisdiction of Arbitrator and waiver of claims are totally false, baseless and irrelevant. The objection raised for considering claim No.16 which was made during pendency of the proceedings is also stated to be not proper. It is stated that the GST was proposed and the Act was enacted by the government after starting of the proceedings of this arbitration and hence it was necessary to amend the statement of claims. It is stated that the plaintiffs themselves have submitted additional documents and on the basis of the same this claim is decided by the learned arbitrator. Defendant has stated that the learned Arbitrator has rightly interpreted the document submitted by the plaintiff and after discussing in detail and after applying the mind and by giving reasons has passed an award. Contention of the plaintiff that 36 CT 1390_Com.A.S.114-2018_Judgment.doc awarding of interest is barred under clause 29(1) of the contract is also considered by the defendant and it is stated that the plaintiff is misleading the court. Consideration of design and drawings of new building defendant by the learned Arbitrator which is seriously objected in the present petition is also referred by the defendant and it is stated that it was required to know about the difference of designs of the two buildings to place the arguments as the building in dispute is not in use as per the statement of the plaintiffs. It is stated that the defendant while executing the work has pointed out the defects of the designs and drawings and accordingly the experts also given opinion stating that the said building cannot take the additional load. It is stated that thereafter the plaintiff proposed a new type of building for a new type of usage only due to the faulty designs of this building.
32. Regarding final bill rejection it is stated that the learned Arbitrator after going through the documents and submissions of the parties, rejected the final bill prepared by the plaintiffs. The other contention like foundation drawings, vagueness of award are also denied by the defendant. Defendant has also filed objection against the contention of the plaintiff on the finding of learned Arbitrator on different claims. The contention of the plaintiffs regarding bar of limitation also the defendant has denied the contention and stated that it is settled law that limitation of 3 years starts only from the date of finalization of the final bill and not any other date. It is stated that the arbitration process has taken 37 CT 1390_Com.A.S.114-2018_Judgment.doc place from 22/2/2017 whereas the final bill date was 7/9/2015 and from this date the arbitration proceeded within 3 years and as such the same is not barred by limitation. The defendant has denied the contention of the plaintiff on each claim and stated that the learned arbitrator has givin finding on each claim by appreciating the documents and the findings cannot be interfered with. Defendant has reiterated lapses on the part of the plaintiffs in the issue of water supply, power supply, access to the site, drawings etc which are the main points on which the lapses on the part of the plaintiffs were found by the learned Arbitrator. It is stated that only after perusing all the documents and submission the learned Arbitrator has passed the award and that none of the claims are time barred and the limitation is applicable only from the date of intimation of the final bill. It is also stated that the letter R-64 clearly established the hindrance due to the act of the plaintiffs and the plaintiffs now cannot make false allegation. It is stated that inspite of request made by the defendant the plaintiff has not released the machinery of the defendant. It is stated that the defendant had brought to the notice of the plaintiffs about the rent and financial loss that will be suffered due to illegal retention of the same and the plaintiffs after lapse of two months rejected the request letter dated 5/9/2014. It is stated that due to lapses on the part of plaintiff, even beyond the contract period the defendant's men and materials were kept idle. Defendant has stated that the dispute raised by the 38 CT 1390_Com.A.S.114-2018_Judgment.doc plaintiffs about the letter dated 16/3/2015 in C-201 it is not a confidential letter as stated by the plaintiffs and this letter replies to the directions by the Minister for power for the representation of the defendant in the interest of work and also to avoid litigations. It is stated that the order of the Hon'ble High Court and Hon'ble Supreme Court also show that the plaintiffs had violated the law and procedure. Therefore they cannot escape from the liability. It is stated that the plaintiffs are not entitle to levy compensation as they are responsible for all the breaches of the contract. It is stated that the defendant has disputed the total final bill which includes compensation levied by the plaintiffs.
33. Defendant has stated that, contention of the plaintiff that defendant should have submitted final bill after joint measurements is totally false and against the order of the Hon'ble High Court of Karnataka dated 18/9/2014, wherein the Hon'ble High Court has directed the joint measurement to decide the entitlement of the payment of the defendant which means that the plaintiffs have to prepare a final bill and intimate the same to the defendant. The contention of the plaintiffs that the claim is beyond the terms of reference is a frivolous statement and it is stated that the claims are within the terms of the petition. Defendnat has stated that for payment of interest, learned Arbitrator is empowered to award interest as per Section 31(7)(a) and the learned Arbitrator awarded only simple interest on the principal amount of award and the learned Arbitrator has 39 CT 1390_Com.A.S.114-2018_Judgment.doc taken all the circumstances of the case and awarded the claim of interest at 18% as against the claim of 24% which is reasonable. Defendant has stated that the court cannot interfere in the award and re-appreciate the evidence, as the learned Arbitrator is the sole judge and has right to entertain and decide the issue and therefore court cannot set aside the award.
34. Defendant has stated that the learned Arbitrator has decided on the counter claim and has given elaborate reasons after going through the documents and submission made before him. It is stated that the plaintiffs have raised the counter claim No.1 to 6 even without raising the same with the defendant as per the procedure and never even attempted to intimate the same to the defendant during execution of the work as did by the defendant for claim. It is stated that counter claims are totally baseless, frivolous and are not in terms of agreement and the condition of contract. It is stated that the learned Arbitrator has given cogent reasons after considering the documents and submission made by the parties. On all these grounds the defendant has prayed to dismiss the petition.
35. Now the points that arise for consideration of this court are:
1) Whether the plaintiffs have made out any grounds under Section 34 of the Arbitration & Conciliation Act to set aside the Award dated 22/2/2018, corrections and clarifications passed by the learned Arbitrator?
40CT 1390_Com.A.S.114-2018_Judgment.doc
2) What order?
36. Heard both the counsels. Both the counsels have filed written arguments also. Perused records.
37. My answer to the above points are :
POINT No.1 : In the Negative.
POINT No.2 : As per final order for the following:
REASONS
38. POINT No.1 : The admitted facts of the case are that the plaintiff has called for tenders to execute the work of construction of building for establishment of comprehensive EMI/EMC Test Facility, SH civil work on 22/12/2011 and defendant had submitted the tender and the same was accepted and work order was allotted on 7/3/2012. Agreement was entered into with the defendant on 9/3/2012 and the contract was awarded for sum of Rs.3,41,91,982/-. The work was to be completed within period of 5 months from the date of award of the contract and this time of five months expires on 6/8/2012. For various reasons stated by both the parties, work was not completed within the period of 5 months as originally stipulated in the contract. Both the parties have alleged that the delay is attributable to the other party. Extension of time was given upto 31/12/2012 initially. Thereafter extension of time was given upto 31/3/2013 and then upto 31/12/2013. However, on 17/10/2013 the plaintiffs passed an order of termination of the contract.
41CT 1390_Com.A.S.114-2018_Judgment.doc Aggrieved by the order of termination the defendant filed Writ Petition No.48611/2013 before the Hon'ble High Court and the Hon'ble High Court has issued an order dated 28/10/2013 staying the operation of the termination of contract. Even thereafter the work has not proceeded. According to the plaintiffs, by 31/12/2013 as there was no further extension of time, the contract has expired by efflux of time. Subsequently, Writ petition filed before the Hon'ble High Court was disposed by order dated 15/7/2014. As the contract came to an end, plaintiffs asked the defendant to come for taking joint measurement on 10/9/2014, but the defendant has not appeared and requested for another date. As the plaintiffs were in urgent need to construct the building plaintiffs called for tender for carrying out balance work. The defendant again approached the Hon'ble High Court with W.P.No.44790/2014 seeking stay of the tender notice. No stay was granted by the Hon'ble High Court, but the Hon'ble High Court by passing an order on 18/9/2014 has directed to hold joint measurement on 22/9/2014. Accordingly joint measurement was taken on 22/9/2014 and subsequently the Writ petition was disposed on 3/8/2015 by directing the plaintiffs to pass detailed order indicating extent of work completed and determine as to whether claim of defendant is admissible. The Hon'ble High Court has also stated that if the defendant is aggrieved by order passed by the plaintiffs, defendant can avail the remedy of seeking resolution of dispute by arbitration. As per this order, on 7/9/2015 42 CT 1390_Com.A.S.114-2018_Judgment.doc plaintiffs passed Order giving the details of work and the payment payable by the defendant in terms of the contract, wherein the plaintiff levied compensation on the defendant. To this order, defendant sent letter dated 15/9/2015 disputing the order dated 7/9/2015 and stating that it is necessary to invoke arbitration process at will be initiated at appropriate time. After this letter, plaintiffs by order dated 12/10/2015 appointed Sri.Ravindranathan as sole Arbitrator. Defendant challenged the appointment before the Hon'ble High Court under Section 11(6) by filing CMP.No.2/2016. On dismissal of the CMP, defendant approached Hon'ble Supreme Court in SLP No.15349/2016 which was disposed on 25/7/2016 and advised defendant to approach the Hon'ble High Court with his grievance. Thereafter, defendant filed review petition No.368/2016 before Hon'ble High Court and Hon'ble High court, by order dated 9/2/2017 recalled the earlier order and with the consent of both the parties appointed the 2 nd defendant Sri.M.V.S.Rao, Former Deputy Director General & Chief Engineer (IDSE) as sole Arbitrator to decide the dispute between the parties.
39. Before the learned Arbitrator, defendant filed statement of claim with 15 claims and during the arbitration proceedings he has raised another claim No.16. The plaintiffs also appeared and filed statement of defence and made counter claim No.1 to 6. Before the learned Arbitrator the parties have produced several documents and submitted 43 CT 1390_Com.A.S.114-2018_Judgment.doc arguments. The learned Arbitrator by his award dated 22/2/2018 has allowed the claim and rejected the counter claim. The learned Arbitrator under different claims made by the plaintiff has totally awarded Rs.4,87,09,501/- and held that in claim No.2 to 11 and 13 the claimant is entitle for interest from the date 18/10/2013 upto the date of award and on claim No.12 defendant is entitle for interest from 9/2/2017 from the date of award and also awarded interest from the date of award @18% per annum. After passing of the award under Section 33(3) of the Act the learned Arbitrator corrected, typographical and computation errors in the award and on the letter of the plaintiffs, learned Arbitrator has also give clarification about the total amount of the claim as Rs.4,84,08,273/- as against Rs.4,87,09,501/- mentioned in para 91 and page 111 of the award. Therefore in view of the clarification the total claim which is awarded comes to Rs.4,84,08,273/-.
40. Jurisdiction of the court to set aside an arbitral award is limited to the grounds set out in Section 34 of the Arbitration & Conciliation Act 1996. Even if a contrary view based on the facts before the Arbitral Tribunal is possible, in the absence of any compelling reasons, court cannot interfere with the view taken by the learned Arbitrator. Grounds on which the award of learned Arbitrator can be set aside by court is clearly mentioned in Section 34(2) and 34(2A)of the Arbitration & Conciliation Act. It is also well established principle that the court sitting U/S.34 of the Act is not 44 CT 1390_Com.A.S.114-2018_Judgment.doc supposed to go for re-appreciation of evidence or impose its view as against the view of learned Arbitrator and the power of the court is only to set aside the award, if it is coming under one of the grounds mentioned in the said section. In the presence of these basic principles, grounds urged by the plaintiff and the award of the learned Arbitrator are to be looked into.
41. In a decision reported in 2018 (1) Arb.LR 12 (SC) (Union of India v. Susaka Private Limited and others) the Hon'ble Supreme Court has held in para 34 as under:
"It is a well settled principle in arbitration law that the award of an arbitral tribunal once passed is binding on the parties. The reason being that the parties have chosen their own arbitrator and given him an authority to decide the specific disputes arising between them must respect his decision as far as possible and should not make any attempt to find fault in each issue decided by him only because it is decided against one party. It is only when the issue decided is found to be bad in law in the light of any of the specified grounds set out in Section 34 of the Act, the court may consider it appropriate to interfere in the award else not. ..."
42. On looking to the contention raised by the plaintiff in the petition and also arguments, Award of the learned Arbitrator is challenged on each and every possible ground. It is contended by the plaintiff that the dispute not contemplated and not falling within the term of submission to arbitration are also decided by the learned Arbitrator which is in violation of Section 34(2)9a)(iv) of the Act. It is also 45 CT 1390_Com.A.S.114-2018_Judgment.doc contended by the plaintiff that the award is in conflict with Public policy of India as appearing in Section 34(2)(b)(ii) and as it is in violation of Section 75 and 81 of the Act and also that it is in conflict with basic notion of morality or justice. It is also contended that the award is patently illegal coming under Section 34(2A) of the Act. It is also contended by the plaintiffs that the learned Arbitrator has not given cogent reasons in support of the claim awarded in the award and nas such it is violative of Section 31(1)(d) of the Act. It is also stated that as the Award is without reasons straightaway liable to be set aside as violative of Section 31(3) of the Act. It is also contended by the plaintiff that the award passed by the learned Arbitrator is even against the terms of the contract and is against Section 28(3) of the Arbitration & Conciliation Act. The main contention of the plaintiffs is also that the learned Arbitrator has not considered and referred to the documents submitted by the plaintiffs. It is also the plaintiff's contention that the award is based on non appreciation of facts and documents of the plaintiffs and is based on perversity and is a non reasoned award and adjudication is without application of mind. It is also its contention that the adjudication is beyond the term of reference and adjudication is of dispute not contemplated by the submission to arbitration and the decision are on matters beyond the scope of arbitration. The plaintiff also contended that the clause 25 of the contract which provides for arbitration is also not followed and many claims which are 46 CT 1390_Com.A.S.114-2018_Judgment.doc made were not raised earlier as required under clause 25 of the contract and on these matters the tribunal had no authority to decide. It is also contended that except claim No.4 and 14 which are with regard to the extra item of RCC steel and pertaining to final bill and third RA bill, all other claims according to the plaintiffs are even barred by limitation. Therefore, plaintiffs contend that the claim which are barred by limitation are also considered by the learned Arbitrator. In the arguments for the defendant and in statement of objections, all these allegations against the Award and also learned arbitrator are denied and findings in the Award are justified.
43. In the presence of serious contention raised by the plaintiffs about the validity of the Award and highlighting various provisions of the contract and also the statute which are said to have been not taken into account while passing of an award, it is necessary to see the award of the learned Arbitrator. On looking to the award, learned Arbitrator has noted the Statement of claim (SOC) and statement of defence (SOD) and referred to the brief history of the case and then considered the contention of the parties and the main grievance of the parties with regard to the reasons for delay in execution of the work. As stated above the contract was entered into on 7/3/2012 and before 6/8/2012 i.e. within 5 months the work was required to be completed. However the work has not progressed as required and as planned for various reasons. There are mutual allegations against each 47 CT 1390_Com.A.S.114-2018_Judgment.doc other. Claimant mainly contended that the delay is caused due to the acts of the Employer with regard to water supply, power supply and not providing proper access and entry point for transportation of material to the site of the work and also the delay in supply of working Drawings. The plaintiffs have denied all these allegations and contended that all the obligations and the contract which are on the employer plaintiff are discharged in time and it was only the plaintiff who has caused delay. In this connection the plaintiff has mainly contended before the learned Arbitrator that the defendant was not ready with work force for executing the work and the number of labours employed by the defendant was far less than required for completing the work within the stipulated time. Even there are several other reasons which are contended by both the parties which are said to have affected the progress of the project. On these contentions that are raised before the learned Arbitrator, he has referred, considered and gave decision in this Award.
44. On looking to the award, learned Arbitrator by considering the SOC, SOD and several documents that are produced, has considered the point of dispute between the parties. Regarding the dispute raised aboout water supply required for the work as per clause 31 of the contract agreement, learned Arbitrator by considering the documents produced has observed that the claimant had requested permission to dig borewell on his own for uninterrupted water supply and for uninterrupted execution of work and had 48 CT 1390_Com.A.S.114-2018_Judgment.doc agreed to handover the borewell free of cost to the employer after the work and this was not accepted by the respondent. Learned arbitrator has noted that the employer plaintiffs undertook responsibility to supply water on its own, but has not supplied as required and many times water was secured from Tankers. Tribunal has found that there is a serious breach of contract on the part of the employer. Regarding power supply also the learned Arbitrator by considering the contention of the parties and also the note found in R-64, in which it was mentioned that the contractor has arranged required material to provide power supply, but EMI have not provided power supply at the location near project site and it was decided to provide temporary connection from CLAR building for which man power was required etc. This note in R-64 is considered by the learned Arbitrator and then the learned Arbitrator by considering the other communication also has found that the breach was on the part of the employer.
45. Consideration of Note in R-64 by the learned Arbitrator is a serious dispute that is raised by the plaintiff. Even before the learned Arbitrator, plaintiff had contended that the note in R-64 cannot be considered as was only an internal communication of the respondent and produced by mistake or like that. However, learned Arbitrator has held that as the document is produced by Employer himself, same cannot be ignored.
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46. Regarding proper access and entry point for transportation of material to the site of work, learned Arbitrator has held that the proper access was not provided and though claimant requested for nearest access the employer has refused and this is one of the reason for the delay. The learned Arbitrator by considering the contention of the parties, as referred in the award, has found that the access which was made available was from Main gate, wherein thee is movement of VVIP and there were several restrictions for the movement of heavy vehicles and the two other gates which were not so restricted were not provided inspite of request. The learned Arbitrator has also stated in the award that even at the time of personal visit this lapse was found by the learned Arbitrator and even on this providing proper access also the learned Arbitrator has found the employer at fault. Even regarding supply of work Drawing which is one more important aspect of which the plaintiffs had serious dispute, finding of the learned Arbitrator is that there are delay caused by the employer plaintiff in providing drawing. The learned Arbitrator has also noted that several revisions have taken place in the drawing pertaining to foundation itself. Even thereafter, Arbitrator found delay in providing drawing for construction and frequent revision of the drawing is also found to have been mainly contributed for the delay and the lapses are on the part of the employer. The learned Arbitrator has found that there is delay in supply of working drawing.
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47. The learned Arbitrator has also observed that in use of particular standard of steel TMT bar also, there are lapses on the part of the employer. The learned Arbitrator has considered the claimants contention that the claimant contractor was required to use TMT bar of Fe415D Grade for RCC work as per clause 8 of additonal terms and conditions and specifications and alternatively, he was permitted to use TMT bars Fe 500 D and the contractor was having option of using either of them. The contention of the claimant that during execution of the work, employer-plaintiff insisted on the use of TMT bar of Fe 500 D Grade only and rejection of the request of the claimant to use Fe 415 D grade and employer issuing drawing and designs for using Fe 500 D Grade are considered by the learned Arbitrator and the learned Arbitrator has found that the insistence for use of Fe 500 D Grade has restricted the claimant's freedom for use of steel as provided in the contract.
48. In the award, contention of the claimant about wrongful withholding of claimant's money like price escalation provided under clause 10cc, non payment of third RA bill are also considered and are answered in favour of the claimant. It was contended for Employer before the learned Arbitrator that clause 10cc with regard to price escalation was not applicable and the same was not filled for that reason. However the learned Arbitrator considered the contention of the claimant that, in schedule F it is not mentioned that 10cc is not applicable and as such clause 10cc is applicable to the 51 CT 1390_Com.A.S.114-2018_Judgment.doc contract and found that price escalation was wrongly withheld. Regarding third RA bill also, learned Arbitrator has found that the third RA bill submitted by the claimant on 17/10/2013 for Rs.17,09,127/- is not honoured by the employer plaintiff.
49. In the award, contention of the employer plaintiff that clause 25 of the contract, which provides for settlement of dispute through arbitration is also not followed is considered. The learned Arbitrator has noted the contention of the claimant that in reply to the communication dated 7/9/2015 the contractor had only stated that the decision of the employer is not satisfactory to him and he would invoke arbitration at an appropriate time and claimant had not referred the matter to Director General and had not given any notice of appointment of Arbitrator as required in the agreement. The learned Arbitrator has considered the contention of the claimant that without such request and compliance of the requirement, plaintiff by letter dated 12/10/2015 intimated the claimant that the Director General has approved the appointment of Arbitrator and defendant can take action to submit the claim being referred to Arbitrator. In this procedure followed, claimant has found the lapses on the part of the plaintiff and the learned Arbitrator appears to have been convinced with the contention of the claimant. The learned Arbitrator has noted that appointment was challenged before the Hon'ble High Court and thereafter matter went to Hon'ble Supreme Court 52 CT 1390_Com.A.S.114-2018_Judgment.doc and then review petition was filed and the learned Arbitrator was appointed and due to this development, that took place, learned Arbitrator has found that clause 25 became redundant and totally irrelevant and found that employer plaintiff has violated the provisions of clause 25 and as the employer has not complied with clause 25 of the contract, claimant could submit all the claims before the learned Arbitrator for adjudication and the employer cannot found fault with the claimant-contractor, in making these set of claims before the learned Arbitrator.
50. In the award, learned Arbitrator has also considered the contention of the claimant about police complaint given against the claimant and filing of 'B' Report by police. Consideration of the same was objected by the Plaintiffs as is beyond the scope of arbitration and learned Arbitrator has found that it was unjust and illegal police case.
51. The contention regarding bar of limitation which was raised before the learned Arbitrator and also before this court, is also considered by the learned Arbitrator in the award. The learned Arbitrator has held that the Arbitrator was appointed as per the order of Hon'ble High Court by a judicial order and clause 25 has been given go-bye by the parties and therefore condition in clause 25 of the contract fixing time limitation of 120 days in respect of any claim referred by the plaintiff will not apply and held that the provision of Limitation Act which goes 3 years back to initiate action would be applicable. Learned Arbitrator has found 53 CT 1390_Com.A.S.114-2018_Judgment.doc that cause of action has arisen to the contractor after preparing of the final bill by the employer on communicating the same on 7/9/2015 and the limitation will start from that date and as the arbitration was initiated within 3 years, there is no bar of limitation. The learned Arbitrator has also referred to the employer letter dated 12/11/2015 in which it is mentioned that there are other claims being worked out separately and they are to be submitted to the tribunal for settlement. The learned Arbitrator has found that the letter dated 12/11/2015 means that the claim to be settled is not only the claim of final bill, but all other claims. The learned Arbitrator has even considered the contention of the employer that the contractor has waived his claims other than claim No.4 and 14 as he has not initiated arbitration by following clause 25 within the prescribed time. The learned Arbitrator has not accepted this contention of the employer. The learned Arbitrator has observed that the claimant after disposal of the writ petition on 15/7/2014 has made a proposal to settle the dispute by continuing the contract or by closing the contract and employer accepted the clause and to finalize the account invited the claimant for joint measurement in his letter dated 5/9/2014 and thereafter again writ petition was filed etc. By considering all these, learned Arbitrator has found that cause of action for all the claims arose on 7/9/2015 only and not on any other date and the same is well within the time of limitation as is made on 23/3/2017.
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52. The learned Arbitrator by considering these major contentions of the parties and the reasons given for the delay in execution of the work and the respective case that was placed before the learned Arbitrator, has found that there are breach of contract affecting the performance of contract and it is the employer-plaintiff who is responsible for the breach of contract and it is the contractor-defendant to whom the loss is caused. The learned Arbitrator has accepted the contention of the claimant that though the work order was issued on 7/3/2012, contract document were signed and given to the claimant only on 24/5/2012 after delay of 2 ½ months. The learned Arbitrator has noted that out of time limitation of 5 months, in first 2 ½ months, even contract document were not signed and given to the contractor. The learned Arbitrator has also observed that no work could start before signing and issuing of contract document to the contractor and this delay of 2 ½ months in signing and supplying of signed documents to the claimant has adversely affected performance of contract.
53. In the award, learned Arbitrator has also considered the aspect of imperfect construction of the contract and non application of contractual provision by noting that the claimant contractor was entitle for suitable rate for use of steel above the plinth level, which was extra item and the employer plaintiff was required to fix the rate as per clause 12.2 of the contract, but the employer has not taken any action inspite of repeated request and the claim amount 55 CT 1390_Com.A.S.114-2018_Judgment.doc regarding the same was not paid and this has also affected the progress of the work and also the financial reinvestment capacity of the claimant and has come in the way of performance of the contract. As stated above the clause 10cc regarding price adjustment amount also, learned Arbitrator has held that the clause is applicable and non payment of this price adjustment amount has also affected the execution of the work along with non payment of amount towards use of steel above plinth level and also non payment of RA bill No.3.
54. Regarding time as essence of the contract, the learned Arbitrator by referring to clause No.5 being deleted in schedule F, has found that as clause stating that the contractor have to pay compensation for delay if he failed to maintain the required progress in terms of clause 5 has been deleted, question of levy of compensation under clause 2 do not arise and also that levy of compensation under clause 2 arise only after termination of the contract. After considering these aspects learned arbitrator found that it is the employer- plaintiff who is responsible for the delay in execution of the contract, which necessitated extension of time and non completion of the work, even during extended time.
55 Learned Arbitrator has considered each of the 16 claims made by the claimant contractor and also the counter claim No.1 to 6 made by the employer plaintiff. Learned Arbitrator after considering the issue of supply of water, supply of power, providing proper access to the site of work, delay in giving Drawings and frequent revisions of drawings 56 CT 1390_Com.A.S.114-2018_Judgment.doc given, supply of contract documents after about 2 ½ months and also other points like employer insisting use of steel of particular Grade as against the contract terms and also withholding claimant's money has found that lapses of the employer on all these issues has affected the progress of the work and opined that delays are not attributable to the contractor. The contention of the plaintiff employer that the contractor has failed to use sufficient work force for the work and was responsible for the delay and the contractor had not prepared himself for execution of the work within the time line etc are also considered by the learned arbitrator, but are found against the Employer.
56. After considering all these, learned Arbitrator has found in claim No.1 that the termination of contract is unjust and illegal. The learned Arbitrator has observed that after extension of time upto 31/12/2013 the employer has terminated the contract on 17/10/2013 which is unjust. The learned Arbitrator in claim No.2 and 3 which are with regard to payment of revised equitable rate in respect of item of work executed due to changed circumstances during the period of contract and beyond the stipulated period of contract i.e. from 7/8/2012 has awarded Rs.27,40,437/- in claim No.2 as against the claim for Rs.43,31,885/- and in claim No.3 awarded Rs.35,38,061/- as against claim of Rs.38,13,673/-. In claim No.4 which is with regard to extra item of RCC steel above plinth level, learned Arbitrator has found that as per clause 12.2 the employer was expected to take action to fix 57 CT 1390_Com.A.S.114-2018_Judgment.doc the rate, but has failed to fix the rates and therefore the employer cannot raise any dispute regarding the rate. The learned Arbitrator by considering the rate of Rs.88/- per KG after deducting overhead charges which was included by the claimant, which is shown as a separate claim has awarded Rs.9,13,856/- as against the claim for Rs.11,46,921/-. In claim No.5 which is with regard to payment of price escalation amount in terms of clause 10cc of the contract, the learned Arbitrator has not accepted the contention of the employer that 10cc is not applicable. The learned Arbitrator by considering that clause 10cc, by making calculation awarded amount of Rs.23,14,327/- as against claim of Rs.25,93,618/-
57. In claim No.6, which is with regard to third RA bill in which the claim was for Rs.18,40,307/-, the learned Arbitrator has considered the contention of the respondent that it had levied Rs.34,29,200/- as compensation, and found the same to be not valid and held third RA bill cannot be adjusted in Final bill. However, learned Arbitrator in the claim amount, deducted Rs.8,438.28/- towards lift charges for steel which is a separate claim and awarded Rs.18,18,633/-. In claim No.7 which is with regard to release of EMD, FSD, bank guarantees forfeited by the Employer, by contending that there is termination of the contract which is held to be wrongful, learned Arbitrator has awarded Rs.21,87,600/- as claimed. In claim No.8 which is pertaining to unjust recoveries made by the employer in RA bill No.1 and 2, the learned Arbitrator by negatived the contention of the 58 CT 1390_Com.A.S.114-2018_Judgment.doc employer that at the time of recovery the contractor has not protested or raised any objection and has awarded Rs.46,352/-.
58. In claim No.9 which is with regard to payment of contractor's profit on the balance cost of work which was denied by the employer to the contractor as against the claim for Rs.37,35,293/-, the learned Arbitrator has awarded Rs.29,70,000/-. The learned Arbitrator has noted that the contractor had submitted tender at premium of 45% to value of the work put to the tender and therefore contractor would have made profit of more than 15% and still, by considering the circumstances, awarded this amount of Rs.29,70,000/- as reasonable by considering that this amount works out to about 10% to 12% on the balance cost of the work left over which is Rs.2,49,00,956/-. In claim No.10 in two part the learned Arbitrator considered the idling charges towards men and machinery of the contractor during the contract period from 7/3/2012 to 6/8/2012 and from 7/8/2012 to 17/11/2014 an award of Rs.13,12,500/- for the period upto 6/8/2012 and Rs.1,08,00,000/- towards the period after 7/8/2012. The learned Arbitrator has noted that during the contract period, due to non supply of water, power, drawing etc the men and machinery of the contractor became idle. It is found that even subsequent to the termination and after contract coming to an end, machinery were lying idle at the site of work as they were not allowed to be lifted. The learned Arbitrator has also noted that in the letter dated 22/7/2014 59 CT 1390_Com.A.S.114-2018_Judgment.doc the contractor had informed the employer that the material which are now sought are taken on rented basis and he is suffering financial loss and this is not disputed by the employer. The learned Arbitrator has noted that the employer has released the material only on 17/11/2014 though the contractor requested the employer to release the machinery and materials earlier. Learned arbitrator found that for these long period, claimant contractor has suffered loss as he was required to pay rent and has suffered loss. Learned arbitrator sepaprtely attached Annexure-3 for the calculation of this idling charges in the award. Regarding claim No.11 which is pertaining to over head charges, as against the claim for Rs.1,44,06,000/-, the learned Arbitrator has allowed the claim for Rs.96,04,000/- which is considered as minimum over head charges.
59. In claim No.12 which is pertaining to payment of avoidable litigation charges inflicted on the contractor due to the default on the part of the employer, the learned Arbitrator has allowed the claim of Rs.20,63,100/- on the basis of the bill of the advocate produced by the contractor received through mail. Even the plaintiff-employer had made a counter claim No.5 towards expenditure incurred by way of professional fee paid to the advocate. This claim of employer is rejected by the learned arbitrator. Learned Arbitrator has found that due to the act of the employer, contractor was forced to involve himself in the litigation and has incurred is litigation expenses.
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60. In claim No.13, which is pertaining to compensation due to loss in turnover, Rs.81,00,000/- is awarded as against Rs.2,06,00,000/- claimed. The learned Arbitrator calculated this amount by considering that within 5 months the turnover of Rs.3.43 crores work was to be completed and contractor had to stay on the work for a period of nearly 31 months upto the date of joint measurement and actual turnover was only Rs.94 lakhs and the proportionate turnover should have been Rs.21.58 crores. By considering such possible turnover through which the contractor would have made turnover profit of about 10%, learned Arbitrator has awarded Rs.81 lakhs, though turnover of 10% as calculated by the learned Arbitrator comes to Rs.10.97 crores.
61. In claim No.14 regarding final bill prepared by the respondent which was to reject the final bill prepared by the employer wherein the employer had levied compensation and had adjusted the same in the final bill amount and asked for payment of the balance amount by its letter dated 7/9/2015, the learned Arbitrator for the reasons stated in other part of the award, by holding that the lapses are on the part of the employer has rejected the same. Claim No.15 is with regard to payment of interest charges and the learned Arbitrator as against the claim for 24% interest has awarded 12% interest on claim No.2 to 11 and 13 from 18/10/2013 upto the date of award and on claim No.12 from 9/2/2017 to the date of award. The learned Arbitrator by contending that the difficulties to which the claimant has been subjected to and 61 CT 1390_Com.A.S.114-2018_Judgment.doc the period involved and by considering that it is a commercial transaction in which the banks charges 14% to 15% interest on the overdraft, compounding monthly which comes to simple interest of 18% to 20% has awarded 18% interest and also directed the employer to pay contractors cost of arbitration of Rs.12,19,250/- with interest and from the date of award interest of 18% is awarded. In claim No.16 which was raised as additional claim which is with regard to goods and service tax by considering additional documents produced by the employer in R-52 to R-112 has held that the service tax and GST is not recoverable on the claim involved in this arbitration as per the document of the employer himself.
62. The learned Arbitrator has also considered the counter claims. Counter claim No.1 is pertaining to recovery of account of none employment of technical staff or representative for the work for which Rs.3,80,000/-. Learned Arbitrator by considered its finding that the lapses are on the part of the employer and found that the employer has failed in his duties and work was never allowed to suffer for want of technical staff and also found that if the work has suffered for want of technical staff, the employer could have appointed any technical staff to supervise the work and recover the amount from the contractor as contended by him. In counter claim No.2 towards wasteful expenditure on the incomplete building incurred by the plaintiff the claim was made for Rs.1,18,62,026/- and the learned Arbitrator has rejected the 62 CT 1390_Com.A.S.114-2018_Judgment.doc entire claim. The contention of the claimant that the design for the building under dispute were not prepared as per the requirement and that the contractor has pointed out the in- adequacy of the design to the department is considered . By considering the rival contention the learned Arbitrator has found that the employer during execution of work and subsequently after termination of the contract at no point of time questioned the quality of work and full rates have been adopted in the third RA final bill, in respect of all items of the work executed and no recoveries towards bad workmen ship had been made and this clearly show that the work has been executed as per the specification to the full satisfaction of the employer and it is totally improper on the part of the employer to raise objections on the quality of work. The learned Arbitrator has also found that the new structure under construction varies substantially in the design and character as contended by the contractor and by considering the document in this regard, learned Arbitrator found that the building in dispute was not according to proposed requirement or else the building would have been completed and used for the purpose proposed and also found that designs in foundation has been revised after contractor pointing out the mistake in the design. By considering these facts, learned Arbitrator rejected the counter claim No.2. In counter claim No.3, on account of loss of revenue, expenditure on insurance, variation in Euro charges, storage charges etc Rs.6,03,23,866/- was claimed as counter claim 63 CT 1390_Com.A.S.114-2018_Judgment.doc and the learned Arbitrator found that it is totally outside the purview of the contract and the employer who has committed breach of contract is not entitle for this. In claim No.4 which is with regard to settlement of final bill along with interest also, on the same finding that the termination of contract is unjust and illegal and the learned Arbitrator has rejected the counter claim. As a consequence counter claim No.6 which is with regard to interest, are also rejected by the learned Arbitrator.
63. Subsequent to this award, on 22/2/2018 the learned Arbitrator under Section 33(3) of the Arbitration & Conciliation Act has corrected some mistake which are arithmetical or typographical has also given clarification on 28/3/2018 on the request of the employer and clarify that the total claim awarded is Rs.4,84,08,273/-.
64. This award of the learned Arbitrator which runs into 129 pages is challenged by the plaintiff. The petition filed by the plaintiff under Section 34 runs into 185 pages. The defendant has filed objection which runs into more than 140 pages. The learned counsel for both the sides have filed the written arguments, synopsis etc which also exceed more than 100 pages on each side. Many decisions of Hon'ble Supreme Court and the Hon'ble High Court are also cited by both the sides.
65. Several objections are raised for considering cliams other than claim No.4 and 14 by the plaintiffs. Clause 25 of the contract agreement is the clause which provides for 64 CT 1390_Com.A.S.114-2018_Judgment.doc resolution of the dispute. According to the plaintiff the requirement of clause 25 itself is not complied in respect of all the claims except claim No.4 and 14. Claim No.4 is with regard to the payment for steel above plinth level and claim No.14 is with regard to final bill prepared by the plaintiff. These two claims according to the plaintiff were arbitrable and remaining claims are outside the purview of this arbitration. Clause 25 states that all dispute relating to specification, design, drawing and instructions and as to the quality of workmenship or materials used on the work order and all questions, claims, matter or thing in any way arising out of or relating to contract, design and drawing shall be dealt with as mentioned in the clause. As per this clause, if the contractor considers that any work demanded from him is outside the requirement of the contract or dispute in drawing or design of the engineer incharge, he have to request the Superintending Engineer within 15 days and then the Superintendent Engineer have to give instructions within one month and on his failure the contractor may within 15 days appeal to the Chief Engineer and Chief Engineer shall decide within 30 days and thereafter within 30 days the contractor can give notice to the Chief Engineer for appointment of Arbitrator in the prescribed form and then the dispute shall be decided through arbitration by sole Arbitrator appointed by the Chief Engineer. Clause 25 also says that the Arbitrator shall adjudicate on only such dispute as are referred to him by the appointing authority. This clause also states that the 65 CT 1390_Com.A.S.114-2018_Judgment.doc parties invoke arbitration shall give list of dispute with amount claimed. Clause 25 also states that if the contractor does not make any demand for appointment of Arbitrator in respect of any claim in writing within 120 days of receiving the intimation from the Engineer that the final bill is ready for payment, contractor is deemed to have waived his right and contractor is barred from majing claim thereafrter and government stands discharged from all liability.
66. According to the plaintiffs this clause is not followed and except claim No.4 and 14 for other claims they are not claimed within 120 days of arising of the claim and the procedure prescribed in clause 25 is not followed. The learned Arbitrator has considered that this clause 25 has become redundant in view of the appointment of Arbitrator by the Hon'ble High Court. The learned Arbitrator has also referred to the contention of the claimant that the claimant had not sought for appointment of Arbitrator. The admitted fact discloses that after order of the Hon'ble High Court for joint measurement and also preparing final bill, plaintiffs preferred the final bill and sent a letter to the claimant contractor as per C79 on 7/9/2015 wherein compensation of Rs.34,29,198/- was levied and final bill amount was adjusted in the compensation and then balance was claimed. For this letter of the final bill and compensation of the plaintiffs, defendant contractor sent reply on 15/9/2015 as per C80 wherein he has objected for this final bill and also stated in para 7 that the bill is prepared for the convenience of the 66 CT 1390_Com.A.S.114-2018_Judgment.doc plaintiff and did not accept the same and the dispute will be referred to arbitration for settlement at an appropriate time. After this letter stating that he will seek arbitration at appropriate time, plaintiff on 12/10/2015 as per C81 has stated that the Director General has approved appointment of Sri.B. Ravindranathan, Retired Additional Director General as Arbitrator to decide and make his award regarding claim and dispute and the defendant contractor is asked to submit claims within 15 days.
67. On looking to this C80 and C81 it is clear that the appointment of Arbitrator was without any request by the contractor. As per clause 25 of the contract agreement certain procedure is to be followed and the contractor have to make a request to Engineer Incharge and on his decision to Superintendent Engineer then to Chief Engineer, then the contractor shall seek appointment of Arbitrator and then the Arbitrator will be appointed. In this case though the contractor has not asked for appointment of Arbitrator and only stated that he will seek appointment at an appropriate time the employer plaintiff, appointed Arbitrator and asked the contractor to submit the claim within 15 days. Aggrieved by such appointment, contractor approached the Hon'ble High Court and also Hon'ble Supreme Court and then present arbitrator was appointed. As such it is the employer plaintiff who has failed to adhere to clause 25 of the agreement. Moreover in C81 the contractor was asked to submit his claims. As such the finding of the learned Arbitrator that 67 CT 1390_Com.A.S.114-2018_Judgment.doc requirement of clause 25 has become redundant is based on facts of the case and appears proper. In this case when the contractor has not asked for appointment of Arbitrator, the employer has unilaterally appointed an Arbitrator and asked the contractor to submit claims and thereafter, by order of Hon'ble High Court arbitrator was appointed. As such the employer cannot contend that the procedure of clause 25 of the agreement is not followed.
68. Apart from this, clause 25 also states that contractor have to seek appointment of Arbitrator in respect of any claim within 120 days of receiving intimation that the final bill is ready for payment. As per the order of Hon'ble High Court joint measurement has taken place on 22/9/2014 and thereafter the final bill was prepared by the employer and sent to the claimant on 7/9/2015 as per C79. Since the work was stopped and work was stopped, the contractor had not prepared the final bill and as per the direction of Hon'ble High Court the employer has prepared the final bill on 7/9/2015. Therefore for clause 25 of the agreement, this date can be taken as the date on which the final bill is prepared. From this date, the claim petition filed before the learned Arbitrator as SOC on 23/3/2017 before the learned arbitrator appinted by order of Hon'ble High court, is within the period of 3 years. Under Limitation Act, 3 years time is avialable to make a claim. In Clause 25 it is mentioned that within 120 days of final bill, demand for appointment of Arbitrator is to be made. In the present case, within 120 days of the final bill employer 68 CT 1390_Com.A.S.114-2018_Judgment.doc so moto referred the dispute to arbitration. As such there is no necessity of contractor again seeking appointment of Arbitrator within 120 days of final bill i.e. 7/9/2015 as per clause 25, as by that time, parties were already litigating before Hon'ble High Court with regard to the appointment of Arbitrator. Before the learned Arbitrator the contractor has made claim on 22/3/2017 which is within the period of 3 years. As such the contention of the plaintiff that the defendant who is the contractor has waived his other claims except claim No.4 and 14 or that the claim made by the contractor are beyond the period of limitation do not appear to be correct.
69. In the decision relied by the learned counsel for defendant in (1988) 2 SCC 338 (MAJOR (RETD.) INDER SINGH REKHI Vs. DELHI DEVELOPMENT AUTHORITY). In this decision in it is held -
"...On completion of work a right to get payment would normally arise but where the final bills have not been prepared, when assertion of claim is made cause of action arise from that date."
70. In another decision reported in (2001 (2) Arb.LR 133 (Delhi) (SATHA PRAKASH Vs. M.C.D. and another). in para No.5 it is held -
"...It is the duty of the respondent to finalise the account by preparation of final bill and not expect and wait for the contractor to put forth his claim regarding dues in respect of work completed by him."
It is also held that 69 CT 1390_Com.A.S.114-2018_Judgment.doc "..Article 137 of limitation Act is applicable and limitation period is 3 years".
71. Since as per the clause itself there is a scope for seeking appointment of Arbitrator within 120 days of final bill being ready for payment, even previous claims which are not attended, decided and satisfied could also be claimed at the time of making a claim before the learned Arbitrator after final Bill. It is not necessary for the contractor to go on seeking appointment of Arbitrator at every intermediate stage when claims are not considered while making payment of RA bills. Only when the final bill is prepared, the parties will be coming to the exact figure to which the parties are entitled and that would be correct cause of action for initiating arbitration for making claims. With regard to dispute in this work, though previously an arbitrator was appointed, said Arbitrator apperas to have not passed any award for money and same is stated to be a declaratory award. For all these reasons, contention of the plaintiffs that the contractor has waived his right cannot be accepted. On looking to all these aspects, the contention of the plaintiffs, to dispute the learned Arbitrator deciding the claims other than claim 4 and 14, as barred by limitation or waiver or as against clause 25 is not acceptable. On looking to the award, the award of the learned Arbitrator cannot be said to be illegal or outside the jurisdiction of the Arbitrator or beyond the scope of reference to the learned Arbitrator or by ignoring binding clauses of the contract. It is well established principle that interpretation of terms of the contract is left to the learned Arbitrator. The court cannot 70 CT 1390_Com.A.S.114-2018_Judgment.doc interfere with such finding only because some other view also is possible.
72. In the decision reported in 2019 (3) Arb. LR152 (SC) SSANGYONG ENGINEERING & CONSTRUCTION CO.LTD. Vs. NATIONAL HIGHWAYS AUTHORITY OF INDIA(NHAI). in para 41 Hon'ble Supreme court referred to decision of Hon'ble Supreme Court in State of Goa Vs.Praveen Enterprises, in which in para 10 (c) it is held as under:
"10... (c) Where the parties fail to concur in the appointment of the arbitrator(s) as required by the arbitration agreement, or the authority named in the arbitration agreement failing to nominate the arbitrator and refer the disputes raised to arbitration as required by the arbitration agreement, on an application by an aggrieved party, the court can appoint the arbitrator and on such appointment, the disputes between the parties stand referred to such arbitrator in terms of the arbitration agreement."
In para 11 it is held as under:
"11- Reference to arbitration can be in respect of all disputes between the parties or all disputes regarding a contract or in respect of specific enumerated disputes. Where"all disputes"
are referred, the arbitrator has the jurisdiction to decide all disputes raised in the pleadings (both claims and counter claims) subject to any limitations placed by the arbitration agreement....."
On going through this decision and on the facts of the case, finding of the learned Arbitrator on his jurisdiction cannot be said to be either against the public policy or 71 CT 1390_Com.A.S.114-2018_Judgment.doc against fundamental policy of Indian law or is patently illegal as contended.
73. On the merits of the claim, finding of the learned Arbitrator with regard to lapses on the part of the plaintiff on the issue of water supply, power supply, drawings, access to work site etc are also seriously disputed by the plaintiff. Learned Arbitrator has found that the employer has not provided proper water supply for construction activity which is basic need. Learned arbitrator has also noted that though the contractor has requested permission to dig a borewell for the purpose of drawing water the employer has refused to grant permission and stated that they will provide water, provided water storage facility is created by the contractor. The learned Arbitrator has also noted that even for arranging water storage tank water is necessary and there is delay in providing water supply by the employer and employer has not even accepted the request of the contractor. In this connection the plaintiffs contended that as per schedule F of the contract agreement, clause 31A applies as per which the employer may provide water to the contractor for the work and the pipeline etc is to be drawn by the contractor and the employer is entitle to deduct 1% of the bill towards water charges. The learned Counsel for the plaintiffs has vehemently argued that when water was brought in the Tanker it is the employer who has paid the charges as could be seen from the concerned Register produced before the learned Arbitrator. The plaintiffs rely on clause 31A and are 72 CT 1390_Com.A.S.114-2018_Judgment.doc contending that when clause 31A stated that the water can be supplied by the employer, there is no question of applying clause 32 which provides for contractor making arrangement for getting water supply and accordingly the employer has rejected the proposal for digging the borewell. In Schedule F of the agreement produced by the respondent along with SOD at hand written page No.258 it is clearly mentioned that clause 31A shall apply. This schedule F appears to have been signed on 9/3/2012 when agreement between the parties is first signed. However this Schedule F do not say that clause 31 do not apply. As per clause 31 of the contract, contractor shall make his arrangement for water required for the work and nothing extra will be paid for the same. Therefore, as per clause 31 it is the contractor who have to make arrangement for water and as per clause 31A the employer may supply water if available. Therefore in clause 31 when the contractor is required to make arrangement he seeking permission to dig borewell with a condition that after contract is completed borewell will be handed over to the employer without any condition cannot be said to be against the agreed terms. Though clause 32 cannot be applied in view of clause 31A. Clause 31 itself makes its obligatory on the contractor to make his own arrangement for the water. Apart from this, in the agreement dated 24/5/2012 which is also produced by the respondent before the learned Arbitrator, schedule-F do not say that clause 31A shall apply or 31 will not apply. Though both these schedule F's are signed by both the 73 CT 1390_Com.A.S.114-2018_Judgment.doc parties, the schedule-F produced at handwritten page No.412 to 415 is different than the schedue-F appearing in page No.258 to 260. Both are produced by the respondent. Both are signed by both the parties and one appears to have been signed on 9/3/2012 and another on 24/5/2012. This 24/5/2012 signed agreement was given after about 2 ½ months of contractor entering into the work as rightly contended by him. Therefore, there is confusion about the responsibility of providing water supply and the contention of the contractor that water supply was not properly made and that was one of the reason for delay which is upheld by the learned Arbitrator cannot be said to be patently illegal.
74. Regarding the power supply, according to the plaintiff-employer, power supply was ready, but contractor who was required to draw the line was not ready and it is stated that the contractor was required to arrange for requirement of distribution lane, cable safety division etc at his cost and the contractor though has utilized the time of 15 days provided from the LOA dated 15/2/2012, he had not made required arrangement for establishing power supply and contractor could arrange and fix the required electrical board on 20/4/2012 after 44 days of the handover of the site and electrical power was provided on 23/4/2012 and this delay in power supply is attributable to the contractor and not to the employer. The plaintiff also objected for the learned Arbitrator considering hand written note in R64. Along with handwritten note R64 was produced by the employer in the 74 CT 1390_Com.A.S.114-2018_Judgment.doc arbitration proceedings at the initial stage and has made an unsuccessful effort subsequently to withdraw the said note. The learned Arbitrator has relied on the said note and has even referred the same in the award in page No.35 in para 37. In this note, it is mentioned that the contractor has arranged required material to tap the power supply from the identified source, however as on date EMS have not provided the power supply source at the location near project site and on 13/4/2012 it was decided to provide the temporary connection from CCAR building for which manpower is required and the same has been arranged. Therefore, as per this hand written note in R64, contractor had made arrangement to take power supply from the identified source, but the delay is on the part of Employer. This note itself makes it clear that the delay is on the part of the employer in providing power supply source though the contractor was ready to tap the power supply. Inspite of having such a internal note which was even placed before the learned Arbitrator, the employer instead of conceding this delay on their part, has went on to challenging the decision of the Arbitrator to consider the said note itself, by stating that it is an internal note. The note in R64 though is an internal note, it looses its character of internal note once it is produced before the adjudicating authority and the parties to the litigation are having access to the same. This objection raised by Employer for considering Note in R64, even raises doubt about its bonafides. No fault could be found with the learned 75 CT 1390_Com.A.S.114-2018_Judgment.doc Arbitrator in considering this note in R64. On consideration of this note, learned Arbitrator has rightly held that the delay in power supply is due to the lapses of the employer.
75. Regarding access to the site and entry gate point, no specific clause in the contract agreement is shown to state that, out of the three access available to the site, only Main gate is to be used. Contract do not specifically appears to be stating as to which is the access and entry gate to the work site. The contractor contends that he was under the impression that the nearest gate to the work site would be permitted to be used. The employer contends that the contractor was expected to visit the site and know the access before submitting tender. Since the work site has 2-3 gates and the tender do not specifically say as to which is the gate through which the material should be brought, the contractor visiting the site in advance will not make any difference. The contractor contends that he has requested to allow him to use the nearest gate i.e. T & D available and stated that he was under the impression at the time of giving his tender offer that, nearest gate could be used, Contractor contended that, main gate which was permitted to be used was having VVIP movement and higher security checks, which has affected the movement of men and material to the site and has delayed progress of the work. In this connection, employer's document clearly show that at the earliest point of time, employer has denied the request of the contractor for access from the nearest gate T and D. Only because the employer 76 CT 1390_Com.A.S.114-2018_Judgment.doc has denied request of the contractor, it cannot be said that the employer is discharged from its obligation. When there was confusion as to which was the access to work site and the contractor say that he submitted tender by thinking that nearest gate would be allowed, no fault could be found with the contractor and delay due to this nearest access to the site cannot be ruled out. Though the employer is having right to prescribe particular access to the site, employer should have been more clear, at the time of calling the tender by mentioning the access to the site as from front gate when there are more than one access available. Though the contractor cannot make any additional claim on this point as he should have got it clarified before submitting tender, this issue contributing for the delay in progress of the work is clearly established. Therefore, finding of the learned Arbitrator, that proper access to the site was not provided also cannot be said to be patently illegal. The learned Arbitrator has also noted that he has also visited the site and found the difficulty due to improper access to the site.
76. Regarding delay in providing Drawing, the learned Arbitrator in the award has noted that there was inordinate delay in providing drawing and the drawing given were revised many time as shown by the claimant. The employer has seriously challenged the finding of learned Arbitrator about delay in furnishing drawing. By relying on R90 which is the Drawing issue Register which contains signature of the contractor, it is argued that all the drawings were furnished 77 CT 1390_Com.A.S.114-2018_Judgment.doc to the contractor to enable him to proceed with the work. In this petition and also in the written arguments the employer has conceded that some revisions were also made, but it is stated that these revisions were trivial one and have not affected the progress of the work. However, fact remains that though some of the drawings were given in time, revision drawing were also given. Apart from the drawing mentioned in the Drawing issue Register in R90, there were also some other drawing and the revision drawings which were given later. The learned Arbitrator in the award has accepted the contention of the contractor about delay in furnishing the drawing. The learned Arbitrator has found that though the time within which the work was to be completed was 5 months, there was delay in supply of working drawings including their revision, for 3 months to 15 months. The learned Arbitrator has also noted that the drawing pertaining to foundation was revised four times and the learned Arbitrator has rejected the contention of the employer that the delay in Drawing has not affected performance of contract. By considering all the materials, learned Arbitrator has held that for the delay in supply of working drawing, employer is responsible for delay which affected the performance of the contract.
77. Apart from this, as stated above the contract agreement was entered on 9/3/2012 and the work has commenced and work was to be completed within 5 months i.e. by 6/8/2012. However the clear contract document 78 CT 1390_Com.A.S.114-2018_Judgment.doc consisting of many pages was signed only on 24/5/2012 i.e. after 2 ½ months. As stated above there are differences in the earlier agreement signed on 9/3/2012 and also the contract agreement signed on 24/5/2012 as schedule -F in both the documents are having many differences. Only on 24/5/2012 this contract document was finally signed by the contractor. If there are differences between the earlier agreement signed on 9/3/2012 and the contract agreement signed on 25/4/2012, employer is to be blamed and the contractor cannot be said to be responsible. Since signing of this contract agreement took place 2 ½ months even after the agreement, even as per the document produced by the employer, it is clear that employer has contributed much more for the delay in execution of the work. It is stated by the Plaintiffs that immediately after signing the agreement the contractor has started excavation. As for excavation, it do not require much clarity, excavation might have started without delay. But for starting other part of the work, signed contract agreement between the parties is very necessary as only after getting this contract agreement the contractor will be having clarity about the different clauses of the contract which are applicable. As such when the contract agreement itself is signed after about 2 ½ months, as rightly contended by the contractor, contention of the respondent that it had provided the drawing at the earliest by relying on R90, will not be of much help. Without contract agreement with details of application of relevant clause, even if the drawings are 79 CT 1390_Com.A.S.114-2018_Judgment.doc furnished, contractor cannot be expected to proceed with the work as there is possibility of contractor being blamed later by relying on the signed contract agreement. On looking to all these aspects, the finding of the learned Arbitrator about delay caused by the employer in providing drawing and also delay in signing detail contract agreement cannot be said to be against evidence or is by ignoring the documents produced by the respondent.
78. According to the contractor Design and Drawings given by the employer were defective which has lead to several revisions. The contractor even go to the extent of contending that from the beginning, plan and the drawing given by the employer about this work was not fit for the specification for which the work had started. It is also argued for the contractor that even subsequent to the termination of the contract, employer had got work done by different design and drawing which itself makes it clear that earlier drawing were defective and the left out works of this contractor were not got done as it is, but it is got done with the different drawing plan and design. Be that as it may. On considering the award, though learned Arbitrator has not referred to all the documents specifically, learned Arbitrator who himself is qualified and experienced person in the field, being former Deputy Director General and Chief Engineer has considered that the delay in giving drawing and delay in making revision has contributed for the delay in progress of the work and these delays are attributable to the employer.
80CT 1390_Com.A.S.114-2018_Judgment.doc
79. Plaintiffs have serious dispute regarding the lapses on the part of the contractor in not engaging required number of work force for the work. On looking to the documents produced by the plaintiff before the learned Arbitrator, no doubt, plaintiffs had produced several documents showing that the contractor had not engaged sufficient number of staff for the work. Several Registers maintained by the plaintiffs show that number of employees engaged on a particular day was very less compared to the requirement. As rightly contended by the plaintiffs, even before the learned Arbitrator, this contention about lapses on the part of the contractor in not engaging sufficient staff and also not complying with condition of requirement of keeping quality supervising staff at the work spot etc were taken. However, learned Arbitrator by considering the documents has noted that, at every point like signing contract agreement, providing water supply, power supply, issuing of drawing there are lapses on the part of the employer and when the required facilities are not provided like water supply and power and even drawings are not given, deploying man power at the spot of work would have been wasted and not supplying the man power has not affected the progress of the work. Plaintiffs have contended by referring to several registers and even communication asking the contractor to deploy sufficient number of manpower for doing the work, that learned Arbitrator has ignored the poor manpower deployment by the contractor. However, when basic requirement like water 81 CT 1390_Com.A.S.114-2018_Judgment.doc supply and power supply and drawing are not furnished the employer may not be justified in blaming the contractor for not deploying sufficient manpower as in the absence of power supply and water supply and also the drawing, by deploying the manpower no progress could have been achieved and it would have added further claim and would have been a burden on the contractor which naturally come on the head of the employer. Though the learned Arbitrator has not made detailed discussion about deployment of manpower and its necessity, learned Arbitrator has noted this contention and has negatived the same. The learned Arbitrator has noted in para 49, that as stated by the contractor if he had deployed more manpower that would have added to further idling of men without work. Therefore, it cannot be said that the learned Arbitrator has ignored the contention of the employer about non deployment of sufficient manpower for the work.
80. Regarding application of clause 10CC which relates to price escalation, employer has contended that clause 10CC is not applicable. On the other hand, contractor contends that 10CC is very well applicable as in Schedule-F of the agreement which was signed on 24/5/2012 and clause 10cc is incorporated though the blank spaces are not filled. In another Schedule F which is found on page 258of SOD only clause 10CA is stated as not applicable. It is not stated in this schedule F that clause 10CC is not applicable. As stated above, there are two schedule-F which are signed by both the parties, one at page No.258 of SOD and another at page 412 82 CT 1390_Com.A.S.114-2018_Judgment.doc of SOD. However both are not same and there are differences between the two. Some of the clauses which are said to be not applicable in schedule F of page 258 of SOD are still shown in Schedule-F signed on 24/5/2012 appearing in page No.412. Therefore when schedule F produced by the employer itself contains application of different clauses differently, contractor is justified in contending that non signing of the contract agreement till 24/5/2012 is not given clarity on the progress of the work and execution of the contract work. As per this schedule F clause 10CA is not applicable, but in the schedule-F of the page 413 clause 10CA is mentioned and 10CC is also mentioned, but same are kept blank. The learned Arbitrator by considering this anomaly, has held that clause 10CC dealing with price escalation is very well applicable to the present contract.
81. Learned counsel for the plaintiff raised objections for grant of escalation charges and relied on decisions of Hon'ble Madras High Court dt:21.09.2006 in State of Tamil Nadu Vs. K.Ramachandran, in which by relying on decision in states of Orissa Vs. G.C.Roy, it is held that where arbitration agreement contains no escalation clause, the Arbitrator does not have any jurisdiction to award any amount towards escalation. In the present case, though word escalation clause do not find place, in Arbitration ageement clause 25, it is not shown as excepted matter. Clause 25 covers all claims. Moreover, learned arbitrator is appointed by the Hon'ble High Court to decide all claims.
83CT 1390_Com.A.S.114-2018_Judgment.doc Hence this decision will not come in the way of present award in which in claim No.5, escalation cost is awarded.
82. Learned counsel for defendant has relied on the decision reported in 2016(3) Arb. LR 1 ( (SC) National Highways Authority of India Vs.JSC Centrodostroy) In this decision in para No.11 it is held -
"... It has consistently been laid down by this court that construction of the terms of a contract is primarily for an arbitrator or arbitral tribunal to decide and unless the arbitrator or arbitral tribunal construes the contract in such a way that no fair minded or reasonable person could do, no interference by court is called for."
83. Respondents have also relied on the decision reported in 2019 (2) Arb. LR 58 ((SC) MMTC LTD. Vs. VEDANTA LTD.). In this decision in para No.14 it is held -
"It is equally important to observe at this juncture that while interpreting the terms of a contract, the conduct of parties and correspondences exchanged would also be relevant factors and it is within the arbitrator's jurisdiction to consider the same.....".
84. As held in these decisions interpretation of contract is left to the Arbitrator. Whether particular clause is applicable to the contract is left to the consideration by the learned arbitrator, that too when two set of documents showing differently. Therefore, contention of the employer that the application of clause 10CC for price escalation is not proper cannot be accepted. No fault would be found with the learned Arbitrator in applying clause 10CC. Regarding signing and supplying of contract documents on 24/5/2012, 84 CT 1390_Com.A.S.114-2018_Judgment.doc learned Arbitrator has noted in the award and has stated that no work could start before signing and issuing of the contract document to the contractor and as there is serious delay of 2 ½ months in signing and supplying of signed documents it has affected to progress of the work. Observation of the learned Arbitrator that no work could start before issue of signed contract documents is seriously disputed by the plaintiffs and it is stated that there is no such CPWD manual stating that without signing of the contract, work cannot proceed and it is argued that, on the date of LOA itself the work had started and the contractor had started excavation work and he cannot later complain that there was delay in signing contract agreement. However the contractor taking this defense of delay in signing the contract agreement cannot be objected in the facts of the case, as schedule F which was earlier signed with the agreement on 9/3/2012 and the schedule F which is signed along with the contract agreement signed on 24/5/2012 appear differently and some of the clauses are made applicable or not applicable in the subsequent schedule F and therefore the contention of the contractor that there was no clarity in the earlier agreement which was signed by him is to be accepted. The contractor is required to execute the work as per the contract agreement which is signed on 24/5/2012 as could be seen from the records produced. As such, for whatever the work done before that date, if the same is not permitted in the contract, 85 CT 1390_Com.A.S.114-2018_Judgment.doc employer may take objection and this apprehension would definitely prevent the contractor from proceeding further.
85. Regarding use of steel above plinth level, according to the contractor it was an extra item for which suitable rate has to be settled for payment as per clause 12.2 of the contract. When the proceedings for the Arbitrator has started this was admitted and decided claim as in the previous arbitration it was already decided that the contractor is entitle for suitable rate as an extra item for use of steel above the plinth level but rate was not fixed in the previous Arbitration. As per clause 12.2, in case of extra item contractor within 15 days have to raise claim rates supported by proper analysis and Engineer Incharge within one month of the receipt of claim have to fix the rates. Then Contractor shall be paid in accordance with the rates so determined. Even after learned Arbitrator holding in the previous arbitration that the contractor is entitle for this extra item, within 30 days or thereafter the Engineer Incharge has not determined the rates which shall be paid to the contractor as per clause 12.2. Therefore prima facie, the employer has failed to fix the rates as required under clause 12.2 for this use of steel above plinth level and the learned Arbitrator by considering the market rate and his experience has fixed the rate for the use of steel above plinth level in claim No.4 which cannot be said to be patently illegal or is against the fundamental principles of law. As against the claim for Rs.11,46,921/- the learned Arbitrator has awarded Rs.9,13,856/- in claim No.4.
86CT 1390_Com.A.S.114-2018_Judgment.doc Therefore the finding of the learned Arbitrator on claim NO.4 by determining rate cannot be interfered under Section 34 of the Act.
86. The claimant contractor has even raised objection for the employer insisting for particular grade of steel which according to the contractor is against the terms of the agreement. As per the additional terms and conditions and specification item No.8, which is produced in page 263 of SOD, signed by both the parties, contractor shall use TMT bar of Fe 415 D grade and contractor is even permitted to use TMT bar Fe 500 D grade produced by primary producers. Plane reading of this item No.8, makes it clear that the contractor shall use Fe 415 D grade and is also permitted to use Fe 500D grade by following certain procedure. Therefore, as per this clause, contractor is having choice in using Fe 415D grade or Fe 500D grade of steel. However, employer has insisted for use of only Fe 500D grade of steel and the design submitted are all for Fe 500D grade as contended by the claimant which is not denied by the employer. Therefore the learned Arbitrator has rightly held by looking to this clause that, though Fe 500D grade of steel was permitted to be used by the contractor, option was given to the contractor to use either of them. The learned Arbitrator has found that insisting for particular Fe 500D grade of steel is also against the contract terms and is breach of condition. Though the plaintiff employer tried to contend that the contractor had placed order for Fe 500D grade of steel only and insisting by 87 CT 1390_Com.A.S.114-2018_Judgment.doc the employer for use of Fe 500D grade has not caused any loss or inconvenience to the contractor, such insistence is clearly breach of the contract term as rightly held by the learned Arbitrator.
87. The learned Arbitrator has also considered the contention of the claimant about wrongly withholding of the contractor's money which is said to have been affected the progress of the work and non payment of the 3 rd RA bill and levy of compensation of Rs.34,29,198/- by the employer is also considered by the learned Arbitrator and it was found that the same was not justified. The learned Arbitrator has also noted police complaint that was given against the contractor which is said to have been ended with 'B' Report being filed. Regarding this complaint, employer has contended that it is the complaint given by the officer in his personal capacity and cannot be read into present contract work. However, the learned Arbitrator has found that this complaint was given to put undue pressure on the contractor. Though this police complaint given against the contractor by the officer of the employer is beyond the scope of execution of contract work, it definitely demonstrate, the strained relationship between employer and contractor.
88. One of the contention of the employer is that the contractor after entering into agreement had given a bar chart by fixing the date of progress so that the work could be achieved within the stipulated time as required under clause 5 of the contract and it is also contended by the employer that 88 CT 1390_Com.A.S.114-2018_Judgment.doc for not reaching particular goal or the milestone, compensation is also payable and clause 2 provides that if the contractor failed to maintain required progress in terms of clause 5, he shall pay agreed compensation calculated at the rate stipulated in schedule-F. However, in the schedule F at page 412 of SOD no such compensation is fixed and in the schedule F which is found in page 258 of SOD, in clause 5 it is clearly mentioned that no milestones are stipulated. When no time schedule is fixed and milestones are not stipulated, employer cannot insist for bar chart as per clause 5 and even if such chart is given for the progress of the work, that would not bind the contractor and the compensation as per clause 2 cannot be fixed as observed by the learned Arbitrator. The learned Arbitrator by considering non fixing of any milestone as per clause 5 has noted that clause 2 imposing compensation for not achieving the milestone cannot have any effect.
89. Regarding the contention that time was essence of contract, Defendant has relied on the decision reported in AIR 1979 SC 720 (M/s. HIND CONSTRUCTION CONTRACTORS Vs. STATE OF MAHARASHTRA) In this decision in para No.8 it is held -
"...It will be clear from the aforesaid statement of law that even where the parties have expressly provided that time is of the essence of the contract such a stipulation will have to be read along with other provisions may, on construction of the contract, exclude the inference that the completion of the work by a particular date was intended to be fundamental; for instance, if the 89 CT 1390_Com.A.S.114-2018_Judgment.doc contract were to include clauses providing for extension of time in certain contingencies or for payment of fine of penalty for every day or week the work undertaken remains unfinished on the expiry of the time provided in the contract such clauses would be construed as rendering ineffective the express provision relating to the time being of the essence of contract. ..."
90. In view of above decision and in view of grant of several extension of time upto 31.12.2013, it cannot be said that time was essence of the contract. On looking to all these objections raised by the employer, on different finding on facts and also on interpretation of the relevant clause of the contract and on considering the reasoning given by the learned arbitrator for his findings, findings given in the Award cannot be said to be against public policy or patently illegal or that the finding of the learned Arbitrator are not based on reasons as contended by the employer.
91. After considering the lapses on the part of the employer, learned Arbitrator has considered the claims. Regarding claim No.4 it is already discussed above and found that for extra item of use of steel above plinth level the finding of the learned Arbitrator is well founded and justified. In claim No.1 the learned Arbitrator has held that the termination of contract is illegal and unjust. Admittedly the work was to be completed within 5 months i.e. by 6/8/2012. Same was extended by the employer and at the time of extension the employer had put the clause that it would be seeking liquidated damages. Extension was given in C31 90 CT 1390_Com.A.S.114-2018_Judgment.doc upto 31/12/2012. In R19 extension was given upto 31/12/2013. Giving extension upto 31/12/2013 is not in dispute. If really the contractor's progress in the work was not satisfactory and there were no lapses on the part of the employer, as contract which was to be completed by 6/8/2012 was not completed upto 17/10/2013 i.e. nearly more than 1 ½ years, employer would have taken steps at the earliest, as according to employer the time was essence of the contract and it was a prestigious work. However, extension was given upto 31/12/2013. Before expiry of this extended period, on 17/10/2013 the contract is terminated by the employer which has been challenged by the contractor before the Hon'ble High Court and stay was granted. The writ petition was subsequently disposed in 2014 before that date the contractor had applied for another extension and that was rejected by the employer. The plaintiff has contended that though there was a stay for termination of contract, by efflux of time as the extended period has come to an end by 31/12/2013, the contract came to an end even without such termination. It is also contended that even during the period from 17/10/2013 to 31/12/2013 the work is not proceeded. On the other hand the contractor contends that he was not permitted to carry out the work. Be that as it may.
92. Learned counsel for the plaintiffs has relied on the decision reported in 2019 SCC Onling SC 677 ( Ssangyong Engineering & Construction Co. Ltd. Vs. National Highways Authority of India (NHAI) and argued that the 91 CT 1390_Com.A.S.114-2018_Judgment.doc decision of the learned arbitrator on several issues is perverse and patently illegal. In this decision in para No.42 it is held -
"42. What is important to note is that a decision which is perverse, as understood in paragraphs 31 and 32 of Associate Builders (supra), while no longer being a ground for challenge 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 which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on the ground of patent illegality. Additionally, a finding based on documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties, and therefore, would also have to be characterized as perverse."
93. However, learned Arbitrator by considering lapses on the part of the employer and the breach of contractual terms and on the basis of the facts of the case, with regard to water supply, power supply, not issuing drawing, not providing extra item, not providing price escalation under Section 10CC and other lapses, has found that it is the employer who is to be blamed for non progress of the work and the contractor was not responsible. By holding so the learned Arbitrator has held that the termination is illegal and it is the employer who is responsible. This finding of the learned arbitrator is based on facts and is clearly a possible view and cannot be interfered and cannot be said to be perverse.
94. In claim No.2 to 14 which are with regard to different quantified amount which the claimant contractor 92 CT 1390_Com.A.S.114-2018_Judgment.doc has claimed, learned Arbitrator by taking into consideration of the document that were placed has decided the matter and awarded the claims which are stated above. On looking to the award none of the claims awarded are exceeding the claim made by the contractor. The claim No.2 and 3 which are pertaining to payment of revised equitable rates in respect of item of work due to changed circumstances in execution during the period of contract and subsequent to 7/8/2012, learned Arbitrator has referred to the documents produced and found the delay even during the contract period and thereafter, work was executed under changed circumstances and major obstacles and with deviations of the major item of work then provided in the contract and has decided these claims. For these claims annexure 1 is also attached by the learned Arbitrator to the award in which the quantity and rate for the extra work during contract period and beyond the contract period are separately given. This calculation made by the learned Arbitrator who is also well qualified person in the field cannot be said to be patently illegal and the court under Section 34 of the Act cannot interfere with such finding casually, even if court finds that different view is also possible On claim No.5 which is with regard to application of clause 10CC and payment for price escalation the learned Arbitrator has found that 10CC is applicable and then allowed the claim partly. In claim No.6 third RA bill after deducting the amount which is provided by respondent as lift charges for steel, the learned Arbitrator has ordered for payment of 3 rd RA bill.
93CT 1390_Com.A.S.114-2018_Judgment.doc These findings are based on the records and cannot be readily interfered with. Learned Arbitrator has found that levy of compensation of Rs.34,29,200/- by the employer as mentioned in its letter dated 7/9/2015 is not justified. Consequently, claim of the claimant for payment of 3 rd RA bill naturally become a valid claim and the plaintiff cannot object for grant of the same. Finding of the learned Arbitrator that levy of compensation by the employer in its letter dated 7/9/2015 is not valid, is well founded and based on facts of the case. As reason for delay in the progress of the work is held to be employer, employer would not be justified in terminating the contract or in levying of compensation. Similarly, when the mistake is found to be that of the employer, employer is naturally held to be not entitle to forfeit the EMD and Bank guarantee as held in claim No.7. These findings cannot be said to be against the public policy or is patently illegal.
95. Plaintiffs have rerferred to the decision reported in 2019 SCC Online SC 220 (MMTC Ltd. Vs. Vedanta Ltd) is relied by Plaintiffs also and para 12 is referred by plaintiffs. In para 12 it is held -
"12. It is only if one of these conditions is met that the court may interfere with an arbitral award in terms of Section 34(2)(b)(ii), but such interference does not entail a review of the merits of the dispute, and is limited to situations where the findings of the arbitrator are arbitrary, capricious or perverse, or when the conscience of the court is shocked, or when the illegality is not trivial but goes to the root of the matter. An arbitral 94 CT 1390_Com.A.S.114-2018_Judgment.doc award may not be interfered with if the view taken by the arbitrator is a possible view based on facts."
However, on looking to the contentions of the plaintiffs and looking to award, plaintiffs have failed to make out presence of any of those conditions which makes award unsustainable.
96. In a decision relied by plaintiff of Hon'ble Chattisgarh High Court in Arbitration appeal No.78/2016 UNION OF INDIA Vs.M/s. ESKAY BUILD WORKS PVT. LTD. Dt:16.05.2017 on the facts of the case, it is held that plea of loss of profit is not a plea at all and claimant simply claimed that termination of contract is illegal, arbitrary, but there is no whisper in the claim nor any material has been placed to establish that claimant suffered loss of profit which should be awarded to him. In the present case, defendant had pleaded and claimed loss of profit separately and arbitrator has considered the same.
97. Regarding recovery in RA bill No.1 and 2 also Rs.46,352/- is awarded and the same is based on the facts of the case and by considering the illegal unjust deduction made in the previous RA bills. Regarding contractor profit the learned Arbitrator by considering the profit of 10% to 12% has awarded Rs.29,70,000/-. Learned Arbitrator even after upholding claimant's contention that it would have made 15% profit, has awarded reasonable amount. The plaintiffs have contended that this figure of 10% to 12% on Rs.29,70,000/- is a hypothetical figure and the learned Arbitrator has not calculated and not arrived at a particular fixed percentage 95 CT 1390_Com.A.S.114-2018_Judgment.doc which itself show that the awarding of this amount is patently illegal. However, learned Arbitrator by considering the facts, instead of awarding 15%, has awarded less for which the employer cannot complain, when contractor is not disputing the same.
98. In M/s.SMS LTD. Vs. KONKAN RAILWAY CORPORATION LTD. IN OMP(Comm) No.279/2017 dt:11.05.2020 Hon'ble Delhi High Court in para 98 has held-
"Thus, the computation adopted by the arbitral tribunal is based on imaginary and impermissible parameters. The formula adopted of notional proportionate loss has no precedent..." This decision is also based on different facts and cannot be applied in this cas.
99. In claim No.10 which is pertaining to payment of idling charges substantial big amount of Rs.1,08,00,000/- has been awarded. Plaintiff has serious objection for granting this amount. As discussed above the delay at every stage is found to be attributable to the employer. Contract which was to be completed within 5 months has extended for more than 1 and ½ years. During this period according to the contractor he had kept the men and machinery ready. Though there is objection about men, keeping of machinery in a ready condition to execute the contract which was to be completed within the short period cannot be ruled out. By considering this, learned Arbitrator has awarded the idling charges and in annexure-3 the learned Arbitrator has mentioned in detail idling charges for particular machinery like concrete mixture, 96 CT 1390_Com.A.S.114-2018_Judgment.doc vibrator, weighing machine, water pump, tractors. Engineer, supervisors, skilled labour, unskilled labour etc and also considered in item No.3 of the schedule that these quantity was not even disputed and the same is mentioned in the gate pass issued by the employer. However one mistake is found in scaffolding pipes which is mentioned as 300 in Annexure 3 item B at page 129 of the award. This is made much off by the plaintiff. However in the subsequent correction order passed by the learned Arbitrator under Section 33(3) this number is corrected as 211 which is said to be typographical error. Even after passing of such correction order, Plaintiffs in the present petition have contended that the Arbitrator has wrongly mentioned 300 in place of 211. When same is already corrected by the learned Arbitrator on 2/3/2018, plaintiff employer should not have raised this objection. Even otherwise, such trivial mistakes in figures or calculation will not make entire award bad in law and on this ground award cannot be set aside. In claim No.11 due to avoidable prolongation of stay beyond the contract period i.e. upto the date of taking final measurements on 22/9/2014, the learned Arbitrator has awarded considerable amount of Rs.1,25,74,000/-. In this also the learned Arbitrator has considered the over head charges and awarded the amount.
100. Learned counsel for the plaintiff has relied on the decision reported in CIVIL APPEAL No.2991 of 2007 (STATE OF ORISSA Vs.M/s. SAMANTARY CONSTRUCTION 97 CT 1390_Com.A.S.114-2018_Judgment.doc PVT. LTD. & ANR.) dated 11.9.2015. In this decision in para No.17 Hon'ble Supreme Court held as under:
"17. Undoubtedly, the award of the arbitrator may not be interfered with on the ground that the same was erroneous or on the ground that a different view could be taken on merits of the controversy. In considering an objection to the award, the court does not sit in appeal over the decision on merits. However, patent error or perversity could certainly provide basis for interference.
In para 22 it is held -
"22... The arbitrator ought to have ascertained the total value of the machinery. Any reasonable person dealing with a claim on account of loss caused by the wrongful seizure of machinery or equipment will certainly enquire into the total value thereof. The hire charges may, at times furnish the basis for determining the compensation but such determination cannot normally exceed the price of the equipment as the loss caused cannot normally be more than the price of the equipment itself. In absence of such examination, the award can certainly be held to perverse or based on non application of mind."
101. Though regarding awarding of total Rs.1,08,00,000/- towards idling charges for the contract period and beyond the contract period by the learned arbitrator and Rs.1,25,74,000/- towards avoidable prolongation of stay beyond the contract period, this court might have different thought and different view, that itself cannot be a ground to interfere with the award. As held in many decisions by the Hon'ble Supreme Court, even if 98 CT 1390_Com.A.S.114-2018_Judgment.doc different view is possible the court cannot interfere, so long as view of the arbitrator is a possible view.
102. It is argued by the learned counsel for the plaintiff that some amount awarded by the learned Arbitrator towards rent that might have been incurred by the contractor for a particular machinery are so high that the rent calculated is more than the value of the machinery itself. A chart is also given by showing approximate price of the machinery. Such price list of the machinery appears to have not been given before the learned Arbitrator and the price mentioned is only approximate price. Even otherwise, as this finding of awarding idling charges and also over head charges incurred due to avoidable prolongation of stay beyond the contract period are based on facts and the calculation made by the learned Arbitrator and are also part of the guess work, in the absence of any specific document such finding cannot be readily interfered by the court. Similarly in claim No.13 due to loss in turnover and productivity certain amount are awarded by the learned Arbitrator. By considering that a work which was to be completed within 5 months was prolonged for 31 months and by looking to the value of turnover of the work as per original agreed contract for 31 months proportionate turnover amount would have been of Rs.10.97 crores and by considering this, learned Arbitrator has awarded Rs.81 lakhs as against the claim for Rs.206 lakhs and this awarded amount also is based on the facts and also some guesswork 99 CT 1390_Com.A.S.114-2018_Judgment.doc by the learned Arbitrator and the same cannot be said to be patently illegal requiring interference by this court.
103. In awarding avoidable litigation charges in claim No.12 the learned Arbitrator has awarded the claim of Rs.20,63,600/- it is found by the learned Arbitrator that the delay are caused by the employer and employer has made the contractor to approach the Hon'ble High Court and also the Hon'ble Supreme Court for which the contractor has incurred expenditure. The counsel for the plaintiff has vehemently argued that amount awarded is exorbitant and is not even permissible. The learned counsel has even produced copy of the Law commission, 240th report on Cost in civil litigation, wherein awarding of cost towards advocate fee is considered. On the basis of this report, plaintiff tried to contend that award of Rs.20,63,600/- towards cost of litigation by the learned Arbitrator to the contractor is unreasonable, baseless and exorbitant. However, when awarding of litigation expenses is justified and same is arrived by the learned Arbitrator, court under Section 34 cannot interfere even if different view is possible. The facts show that against termination, contractor was forced to approach the Hon'ble High Court. It is contended by the employer that the contractor would have invoked arbitration clause. However, for invocation of arbitration clause under Section 25 certain procedure were required to be followed and before that the contract would have been terminated and as such, contractor approaching Hon'ble High Court with writ petition 100 CT 1390_Com.A.S.114-2018_Judgment.doc cannot be said to be unreasonable. Even subsequently, contractor was compelled to approach Hon'ble high court again. Later, regarding appointment of arbitrator, contractor again approached Hon'ble High Court and even Hon'ble Supreme Court. He was even required to face a police complaint filed by officer of Employer. For all these litigations which were initiated due to the acts of the employer, contractor has incurred expenditure. This finding of the learned Arbitrator in awarding avoidable litigation charges cannot be interfered.
104. In claim No.14 which is with regard to final bill prepared by the employer, learned Arbitrator based on his findings on other points has rightly rejected the final bill which cannot be said to be illegal. Though in the award the total amount awarded is shown Rs.4,87,09,501/- by giving clarification and correction the learned Arbitrator has mentioned the amount as Rs.4,84,08,273/- and which will be the award amount. Regarding interest in claim No.15 the learned Arbitrator has awarded interest at 18% from 18/10/2013 in respect of claim No.2 to 11 and 13 and from 9/2/2017 in respect of claim No.12. This rate of interest awarded and very awarding of interest are seriously disputed by the plaintiffs. However the plaintiff has not shown any clause in the contract which totally bars, awarding of interest. When there is no such bar for awarding of interest in the agreement entered between the parties the Arbitrator has discretion to award interest. As such the finding of the 101 CT 1390_Com.A.S.114-2018_Judgment.doc learned Arbitrator and awarding of interest by the learned Arbitrator cannot be disputed. Though the interest of 18% appears to be on higher side, it is less than the claim of 24% made by the claimant. There is no clause in the agreement showing that no interest is chargeable or that particular rate of interest could only be paid. Under such circumstances, awarding of 18% interest is within the discretion of the learned Arbitrator and when such discretion is exercised the court cannot interfere. Claim No.16 is with regard to GST which has come into force after arbitration proceedings have started. Learned Arbitrator has found that since tax and GST are not recovered on the claim involved in this arbitration as per the records produced by the employer as R52 to R112. No amount has been awarded in this claim, but it is only mentioned that the GST is not recoverable on the claim involved in the arbitration. On this finding also, there are no grounds to interfere.
105. Regarding the counter claims, the learned Arbitrator has rejected all the counter claims. On the counter claim on account of non employment of Technical staff and supervisors, when the lapses are found on the part of the employer non employment of technical staff cannot be made much of by the employer and it is not the case of the employer that it had employed some technical staff or representation for the work in the absence of such staff employed by the contractor and it had incurred expenditure. Under such circumstances rejection of counter claim No.1 102 CT 1390_Com.A.S.114-2018_Judgment.doc also cannot be said to be not proper. In the counter claim No.2 with regard to wasteful expenditure on incomplete building incurred by the employer, the lapses on the part of the contractor resulting in such loss incurred by the employer are not established and as such the finding cannot be interfered. In counter claim No.3 on account of loss of revenue, expenditure on insurance etc the learned Arbitrator has found the same is outside the purview of the contract. Counter claim regarding settlement of final bill as the final bill itself was not acceptable which levied compensation and the amount of the 3rd RA bill was held to be payable and levy of compensation is held to be illegal, naturally counter claim No.4 was liable to be rejected. In counter claim No.5 pertaining to expenditure incurred by way of professional fees paid to advocates the claim was rejected on the ground that it was the act of the employer which has made the contractor to approach the court. In counter claim No.6, the interest on the counter claims are rejected in consequence of rejecting of all the counter claims.
106. Learned counsel for the Defendant has also relied on the decision reported in 2018(1) Arb.LR. 12 (SC) (UNION OF INDIA Vs. SUSAKA PVT. LTD. AND ORS).
"34. It is a well settled principle in arbitration law that the award of an arbitral tribunal once passed is binding on the parties. The reason being that the parties having chosen their own arbitrator and given him an authority to decide the specific disputes arising between them must respect his decision as far as possible and should not make any attempt to find fault in each 103 CT 1390_Com.A.S.114-2018_Judgment.doc issue decided by him only because it is decided against one party. It is only when the issue decided is found to be bad in law in the light of any of the specified grounds set out in Section 34 of the Act, the court may consider it appropriate to interfere in the award else not....".
107. Learned counsel for the defendant has relied on another decision reported in AIR 2011 (SC 2477 (M/s. J.G. ENGINEERS PVT. LTD. V. UNION OF INDIA AND ANR.). In this decision in para No.23 Hon'ble Supreme Court held as under:
"23. Once the Arbitrator recorded the finding on consideration of the evidence/material, that the contractor was not responsible for the delay and that the termination was wrongful and that the respondents were liable for the consequences arising out of the wrongful termination of contract, the question of respondents claiming any of the following from the contractor does not arise:
(i) Extra expenditure incurred in getting the balance of work completed through another contractor under clause 3 of the agreement ...
(ii) Levy of liquidated damages under clause 2 of the agreement at 10% of estimated cost of work for the delay ...
(iii) ...
(iv) ..."
It is also held, "Once it is held that issues relating to who committed breach and who was responsible for delay were arbitrable, the findings of the arbitrator that the contractor was not responsible for the delay and that the termination of contract is illegal are not open to challenge. Therefore, the rejection of the counter claims of the respondents is unexceptionable and the High Court's finding that 104 CT 1390_Com.A.S.114-2018_Judgment.doc arbitrator ought not to have rejected them becomes unsustainable".
108. Decision of the Hon'ble Supreme court reported in 2014 (4) Arb. LR 307 (SC)(ASSOCIATE BUILDERS Vs. DELHI DEVELOPMENT AUTHORITY) is relied by both the counsels. Plaintiffs relied on finding in para No.12 page No.327, wherein, it is held -
"... It is settled law that where-
1. a finding is based on no evidence, or
2. an arbitral tribunal takes into account something irrelevant to the decision which it arrives at; or
3. ignores vital evidence in arriving at its decision, such decision would necessarily be perverse".
In same para 12, under the head Patent illegality in page 332, it is held, "(a) A contravention of the substantive law of India would result in the death knell of an arbitral award. This must be understood in the sense that such illegality must go to the root of the matter and cannot be of a trivial nature..."
109. Defendant also relied on the finding in same para at page 328, wherein it is held, "It must clearly be understood that when a court is applying the "public policy" test to an arbitration award, it does not act as a court of appeal and consequently errors of fact cannot be corrected. A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award. Thus, an award based on little evidence or on evidence which does not measure up in quality to a trained legal mind would not be held 105 CT 1390_Com.A.S.114-2018_Judgment.doc to be invalid on this score. Once it is found that the arbitrator's approach is not arbitrary or capricious, then he is the last word on facts".
As held in this decision, if award is without evidence or it takes into account something irrelevant or by ignoring vital evidence or is in contravention of substantive law, it can be set aside under section 34. However, illegality must go to the root of the matter and should not be trivial. It is also clear that errors of facts cannot be corrected. As discussed above most of the findings are based on facts.
110. On looking to the entire award and on considering each of the claims along with contentions and objections of the plaintiff on findings on each claims, most of the finding are based on facts and by intepretation of terms of contract. Plaintiffs contntion that the learned Arbitrator has proceeded beyond the terms of the contract and thereby has not passed the award in terms of Section 28(3) of the Arbitration & Conciliation Act and has not taken into account the terms of the contract and also trade usage applicable to the transaction is not established. As discussed above, learned arbitrator has taken note of the different clauses of contract and has interpreted the terms of the contract and then gave the finding.
111. Learned counsel for plaintiff by contending that it is obligation of Arbitrator to give reasons and lack of reasons, makes an award legally flawed has relied on the decision reported in (2009) 10 SCC 259 (SOM DATT BUILDERS 106 CT 1390_Com.A.S.114-2018_Judgment.doc LIMITED Vs. STATE OF KERALA). In this decision in para 25 it is held-
"25. The requirement of reasons in support of the award under section 31(3) is not an empty formality. It guarantees fair and legitimate consideration of the controversy by the Arbitral Tribunal. It is true that the Arbitral Tribunal is not expected to write a judgment like a court nor is it expected to give elaborate and detailed reasons in support of its finding(s) but mere noticing the submissions of the parties or reference to documents is no substitute for reasons which the Arbitral Tribunal is obliged to give. Howsoever brief these may be, reasons must be indicated in the award as that would reflect the thought process leading to a particular conclusion. To satisfy the requirement of Section 31(3), the reasons must be stated by the Arbitral Tribunal upon which the award is based; want of reasons would make such award legally flawed."
112. The contention of the plaintiff that the award is without giving reasons is also found to be not acceptable. As per Section 31(3), arbitral award shall show reasons upon which it is based. According to the plaintiff this award is not based on reasons. However the award which runs to 129 pages with corrections and additional clarification is with reasons and cannot be said to be unreasoned award.
113. Plaintiffs also contended that the award passed by learned arbitrator is without reasons and is against section 31(3) and is to be set aside. Plaintiffs have relied on the decision rported in (2019) 20 SCC 1 (Dyna Technologies 107 CT 1390_Com.A.S.114-2018_Judgment.doc Private Ltd. Vs. Crompton Greavs Ltd). In this decision in para 34, it is held as under:
"34. The mandate under section 31 (3) of the Arbitration Act is to have reasoning which intelligible and adjudicate and which can in appropriate cases be even implied by the courts from a fair reading of the award and documents referred to thereunder, if the need be. The aforesaid provision does not require an elaborate judgment to be passed by the arbitrators having regard to the speedy resolution of justice."
In para 35, Hon'ble Supreme court has held that three characteristics of reasoned order are proper, intelligeble and adequate. It is also held that, if reasoning is improper, it reaveal flaw in decision making process. It is also held that if challenge to an award is based on impropriety or perversity in the reasoning, then it can be challenged strictly on the grounds provided under section 34 of the Act. On going through this decision and the present award, for the discussions made above, present award cannot be said to be without reasons. Hence, this decision do not help the plaintiffs.
114. Learned counsel for the Plaintiffs, has relied on the decision reported in Hon'ble High Court of Delhi in GOVT OF NCT Vs. M/s. Hurryson Enterprises, in CMP No.608/2008 dt: 18.12.2018, wherein arbitral award shown that several important documents have not been considered by the learned Arbitrator and Arbitrator completely ignores even clauses of contract and language in the award shown that Arbitrator used language used by claimant contractor 108 CT 1390_Com.A.S.114-2018_Judgment.doc itself, Hon'ble High Court even by considering other aspects has set aside award contained in some of the paras. However, this decision is entirely on facts of the particular case and in the facts of the present case this decision cannot be applied. Though the arbitrator has not distinctly referred to each and every document produced by the parties, substance of the documents as understood by the learned arbitrator, can be made out from the award. Though the learned Arbitrator has not referred to each and every document produced by the employer, total meaning that could be gathered from those documents is definitely considered by the learned Arbitrator. Another decision in OMP 728/2019 dt:02.07.2019 in UNION OF INDIA Vs.M/s. OM CONSTRUCTION CO, also Arbitrator not mentioning about many of the documents produced is considered. This decision is also on facts and cannot be applied to present case. As such award cannot be said to be unreasoned award.
115. Defendant has also relied on the decision reported in 2018 (4) Arb. LR 210 (SC) SUTLEJ CONSTRUCTION LIMITED Vs. UNION TERRITORY OF CHANDIGARH). In this decision in para No.11 it is held -
"It has been opined by this court that when it comes to setting aside of an award under the public policy ground, it would mean that the award should shock the conscience of the court and would not include what the court thinks is unjust on the facts of the case seeking to substitute its view for that of the arbitrator to do what it considers to be "justice"..."109
CT 1390_Com.A.S.114-2018_Judgment.doc
116. The plaintiff has also failed to establish that the award deal with the dispute not contemplated or not falling within the submission to the arbitration. In the letter dated 15/9/2015 the contractor has not asked for appointment of the arbitrator. It was the employer who had communicated that the arbitration is initiated and contractor was asked to submit the claim within 15 days and thereafter the matter went to the Hon'ble High Court and the Hon'ble Supreme Court and then present Arbitrator is appointed. Before the present Arbitrator all the disputes between the parties and the claim and the counter claim were placed. It cannot be said that the dispute not falling within the terms of submission to arbitration or are barred by limitation are decided by the learned Arbitrator. Since within 3 years of communicating about the final bill by the employer on 7/9/2015 the claims are made and arbitration proceedings are commenced, claims cannot be even said to be barred by limitation.
117. Decision of Hon'ble Supreme Court in Appeal (civil) 1291 of 2002 dt: 01.03.2002 (General Manager Northern Railway and another Vs. Sarvesh Chopra) is relied for the plaintiffs. In that decision Hon'ble Supreme Court considered clause 63 of GCC, which provided for arbitration, but excluded certain clauses as excepted matters. In the present case, plaintiffs have not shown any clause of the agreement, as per which any of the claims made by the defendant contractor is excepted matter and is not arbitrable.
110CT 1390_Com.A.S.114-2018_Judgment.doc Hence, it can be held that some of the claim are not arbitrable and the learned arbitrator has exceeded his jurisdiction.
118. In the decision reported in 1960 SCR (2) 793 (M/ s. Alopi Parshad & sons ltd. Vs.The Union Of India) relied by plaintiffs, award of arbitrators, awarding additional expenses under the head of establishment and contingencies together with iterest thereon is held to be erroneous on the face of it, when contract stipulated for payment of charges at rates specified therein and Union of India not agreed to pay to the agents. This decison is not applicable to present case, as Arbitrator overstepping the clauses of contract to allow any claim is not made out by the petitioners .
119. The plaintiffs have also failed to establish that the award is in conflict with public policy of India and the passing of the award is induced or affected by fraud or coercion or in violation of section 75 which deals with confidentiality or section 81 which deals with admissibility of document. It is also not established that the award is in contravention with fundamental policy of Indian law or is in conflict with most basic notion of morality or justice. The contention of the plaintiff that this award is patently illegal as per clause 34 (2A) of the Act is also not established.
120. In the decision in SSANGYONG ENGINEERING & CONSTRUCTION CO.LTD. referred above, in para No.40, Hon'ble supreme court referred to decision of Court of Appeal of Singapore, in CRW Joint Operation Vs.PT Perusahaan 111 CT 1390_Com.A.S.114-2018_Judgment.doc Gas Negara (Persero) TBK, in which in para No.32 it is held as under-
"... 32. Second, it must be noted that a failure by an arbitral tribunal to deal with every issue referred to it will not ordinarily render its arbitral award liable to be set aside. The crucial question in every case is whether there has been real or actual prejudice to either (or both) of the parties to the dispute. ....."
In para 48 Hon'ble supreme court held as under:
"...Under no circumstances, can any court interfere with an arbitral award on the ground that justice has not been done in the opinion of the court. That would be an entry into the merits of the dispute which, as we have seen, it contrary to the ethos of Section 34 of the 1996 Act, as has been noted earlier in this judgment."
121. The plaintiffs in their anxiety to challenge the award, have even highlighted trivial mistake like Arbitrator not signing every page of the Award, some mistakes of calculation, mentinoing date of agreement wrongly etc. The plaintiff has raised objection for the learned Arbitrator relying on written note of plaintiffs in R64, though it is produced by the plaintiffs before the learned Arbitrator. The contention of the plaintiffs that R64 was internal noting and its internal communication etc will not stop the learned Arbitrator in his quest for truth. When such documents are available and are produced, plaintiffs cannot prevent the learned Arbitrator from considering the same to understand the real facts. It is not open to the court to reexamine and reappraise the evidence considered by the Arbitrator to hold that the 112 CT 1390_Com.A.S.114-2018_Judgment.doc appreciation of evidence done by the Arbitrator is wrong. It is also settled principle that award cannot be challenged on the ground that the tribunal has arrived at a wrong conclusion or has not properly appreciated the facts. In this case the contention of the plaintiff that the award is without reasons and the finding of the Arbitrator is not supported by reasons etc are not established. Similarly the contention that the award is against the terms of the contract and that the tribunal has not properly interpreted the terms of the contract and also the contention that the award is patently illegal or is against public policy and is against the fundamental policy of Indian law are not established by the plaintiff. Though each and every document produced by the plaintiff employer is not referred in the award in detail, gist of the documents and the interpretation of the document has been made by the learned Arbitrator as could be seen from the award that is sufficient compliance of Section 31(3) and also Section 28 of the Arbitration & Conciliation Act. Though with regard to the amount that has been awarded on particular claims like idling charges, price escalation, loss of profit etc different view is possible, only on that ground the award cannot be interfered. The finding of the learned Arbitrator that the delay in execution of the work is for the lapses on the part of the employer is supported by reasons and the documents. This finding of the learned Arbitrator cannot be interfered lightly by the court.
113CT 1390_Com.A.S.114-2018_Judgment.doc
122. Learned counsel for the plaintiff has referred to the decision reported in 1992 Supp (2) SCC 312 (H.B.GANDHI, EXCISE AND TAXATION OFFICER-CUM- ASSESSING AUTHORITY, KARNAL AND OTHERS Vs. M/s GOPINATH & SONS AND OTHERS) - which is entirely on different facts, Hon'ble Supreme Court considered judicial review on assessment. In para 7 it is held "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 outrageously defies logic as to suffer from the vice of irrationality incurring the blame of being perverse, then the findings rendered infirm in law." In another decision reported in (1999) 2 Supreme Court Cases 10 KULDEEP SINGH Vs. COMMISSIONER OF POLICE AND OTHERS similar observation is made in para 9 and 10. However these decisions are not under Arbitration and Conciliation Act. Even otherwise, plaintiffs have failed to show that finding given by learned arbitrator is based on, no evidence or is by excluding relevant material or is by taking irrelevant materials into consideration.
123. In a recent decision reported in 2021 SCC Online SC 695 (Delhi Airport Metro Express Private Limited v. Delhi Metro Rail Corporation Limited) Hon'ble Supreme Court has held in para 25 as under:
"This court has in several other judgments interpreted Section 34 of the 1996 Act to stress on the restraint to be shown by courts while examining the validity of the 114 CT 1390_Com.A.S.114-2018_Judgment.doc arbitral awards. The limited grounds available to courts for annulment of arbitral awards are well known to legally trained minds. However, the difficulty arises in applying the well-established principles for interference to the facts of each case that come up before the courts. There is a disturbing tendency of courts setting aside arbitral awards, after dissecting and reassessing factual aspects of the cases to come to a conclusion that the award needs intervention and thereafter, dubbing the award to be vitiated by either perversity or patent illegality, apart from the other grounds available for annulment of the award. This approach would lead to corrosion of the object of the 1996 Act and the endeavours made to preserve this object, which is minimal judicial interference with arbitral awards. That apart, several judicial pronouncements of this Court would become a dead letter if arbitral awards are set aside by categorizing them as perverse or patently illegal without appreciating the counters of the said expressions."
124. This judgment of the Hon'ble Supreme Court clearly states that reassessing the factual aspects by the court under Section 34 is not permissible. In the present case, as noted above, Arbitral Tribunal has considered the factual aspects in detail and this court u/s 34, cannot reassess the same as held in various judgments and reiterated in this latest judgment. On considering all these aspects, plaintiffs have failed to make out any ground to set aside the award passed by the learned Arbitrator under Section 34 of the Arbitration & Conciliation Act and award also cannot be set aside as is without reasons as contended. Accordingly point No.1 is answered in the negative.
115CT 1390_Com.A.S.114-2018_Judgment.doc
125. POINT No.2 : For the discussion made on above point, following order is passed:
ORDER Arbitration suit filed under Section 34 of the Arbitration & Conciliation Act to set aside, the award dated 22/2/2018, correction orders passed under Section 33(3) of the Act on 2/3/2018 and the clarifications dated 28/3/2018 issued by the learned Arbitrator, is dismissed.
In the circumstances of the case, there is no order as to costs.
[Dictated to the Judgment Writer; transcript thereof corrected, signed and then pronounced by me, in the Open Court on this the 30th day of March 2022] [Ravindra Hegde] LXXXIII Additional City Civil Judge.
BENGALURU.
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