Bangalore District Court
M/S Mantri Castles Pvt. Ltd vs M/S B.E. Billimoria & Co. Ltd on 14 March, 2022
1 Com.A.S.No.235/2018
IN THE COURT OF THE LXXXVIII ADDL. CITY CIVIL &
SESSIONS JUDGE (EXCLUSIVE COMMERCIAL COURT):
BENGALURU CITY. (CCH-89)
Present: Sri. P.J. SOMASHEKARA, B.A.,LL.M,
LXXXVIII Addl.City Civil & Sessions Judge
Bengaluru City.
Dated this the 14th day of March 2022
Com.A.S.No.235/2018
Petitioner/: M/s Mantri Castles Pvt. Ltd.,
Plaintiff Mantri House, # 41, Vittal Mallya Road,
Bangalore - 560 001.
Represented by Authorized Signatory
Mr. Adamsab C.B.
(By Sri. CSPK, Advocate)
-vs-
Respondent/: 1. M/s B.E. Billimoria & Co. Ltd.,
Defendant Raheja Towers, Annasalao,
Chennai, Represented by Managing
Director.
2. Justice Sri. N. Kumar (Retd.)
Guha Apartment, No.101, Ground Floor,
Skyline Golden Rays Apartment,
K.P. Poornachandra Tejaswi Road,
Kempegowda Nagara,
Bangalore - 19.
3. Justice V. Jaganathan (Retd.)
No.469, 2nd Cross, 6th Block, 2nd Phase,
Banashankari 3rd Stage,
Bangalore - 62.
4. L.V. Sreerangaraju, No.557, Jyeshta,
3rd Main, Hosakerehalli Cross,
Banashankari 3rd Stage,
Bangalore - 85.
(By Sri. R.R, Advocate)
2 Com.A.S.No.235/2018
JUDGMENT
This is a suit filed by the plaintiff under Sec.34 of the Arbitration and Conciliation Act against the award and rectification award dated 01.07.2018 and 23.08.2017 and sought for to set aside the award passed by the arbitrators and to allow its counter claim and to grant other reliefs which are deems fit.
2. Nutshell of the plaintiff case are as under:
The plaintiff in its plaint has alleged that who is the company registered under the Companies Act formerly known as Land Masters Realtors Pvt. Ltd., later on its name was changed and known as Mantri Castles Pvt. Ltd., having its office at Mantri House, No.41, Vittal Mallya Road, Bangalore, who has engaged in the construction activities of multi storied, commercial and residential complexes and undertaken a project of constructing a multi storied residential apartments off Kanakapura Road, Bangalore South Taluk, which project named as Mantri Serenity and entered into a joint development agreement with Gokulam Shelters Pvt. Ltd., who were the owners of the land bearing Sy.No.51, 56P, 57P, 58P, 59P and 60P of Doddakallasandra Village, Uttarahalli hobli, off Kanakapura Road, Bangalore South Taluk measuring 19.6 acres with an intent to construct 3 Com.A.S.No.235/2018 apartments in 3 phases. 1st phase comprising of 352 apartments of one tower, 2nd phase comprising of 1140 apartments of 2 towers and 3rd phase comprising of 660 apartments of 3 towers. In order to construct multi storied residential complex invited tenders. The defendant No.1 is the successful in accepting its terms and letter of acceptance was received on 30.03.2011, after an elaborate negotiation by way of meetings, exchange of communications and the offer of the defendant No.1 was came to be accepted and a letter of acceptance dated 06.05.2011 was signed, thereafter they entered into an agreement on 13.06.2011 and work was allotted to the defendant No.1 under the work order dated 18.07.2011 which was duly accepted by the 1 st defendant. The 1st defendant was required to carry out the work of phase No.1 as per the drawings furnished by the architect and its approval. The scope of the work that were to be carried out by the defendant No.1 including excavation, substructure, super structure, finishing work including water proofing, external work such as sewage treatment plant and underground sump. The defendant No.1 was required to complete the 1 st phase construction work of 352 apartments in 823 calendar days including the mobilization period. As per the terms of the agreement had agreed to release Rs.30 crores, minus estimated 4 Com.A.S.No.235/2018 value of the materials to be supplied in 3 installments. The 1 st installment of Rs.10 crores to be released within 21 days of requisition date along with submission of all the relevant documents as per terms of contract. The 2 nd installment of Rs.10 crores for phase No.2 was agreed to be released within 21 days of requisition and the 3rd installment of Rs.10 crores for phase-III was agreed to be released upon submission of relevant documents as per contract.
3. The applicant in its plaint has further alleged that after the award of work the defendant No.1 was unable to mobilize the required men and machinery to undertake the project which was assigned to the 1st defendant. The 1st defendant failed to secure approval from electoral inspectorate for setting up of batching plan till 17.11.2011 so also had not taken consent of Karnataka State Pollution Control Board which reflects the defendant No.1 was not earnest in its attempt to carry out the project. The defendant No.1 despite of the same commenced the construction of the building and when carried out inspection of project site several shortcomings on the part of the defendant No.1 were noticed and they were brought to the notice of the same to the defendant No.1 which are stated below:
5 Com.A.S.No.235/2018
i. The beams were not in proper alignment after concreting.
ii. The defendant No.1 was required to chip off bulged areas on the beams and slabs in the internal and external faces in approximately 46 flats. Iii. As there were major undulations, the defendant No.1 was required to grind to match the surface etc., iv. The respondent No.1 allowed movement of vehicles immediately after completion of basement PCC works, which damaged the PCC works. The applicant was required to remove the PCC works already executed and re-do the same.
v. The applicant was constrained to take up back filling to open foundations as the respondent No.1 did not compact the soil properly.
Further, masonry and plastering issues as a result of poor quality of block work, plastering and water proofing due to which the applicant had to undertaken the following measures:
vi. Redo the elevation block work and plastering in all the founr wings;
vii. Respondent No.1 had failed to execute plastering works simultaneously with the block works. As a result, there was seepage inside the stepparents through the shaft walls. The applicant had to re-do the block works and plastering of shaft walls to prevent recurrence of seepage;
viii. Due to poor quality workmanship the applicant had to undertake grouting of retaining wall 6 Com.A.S.No.235/2018 constitutions joints and take up water proofing and socketing some locations etc. ix. The applicant had to clear the debris, undertake house keeping works and attend to snag works in all activities carried out by the respondent No.1.
4. The applicant in its application has further alleged after inspection noticed several defective works which are periodically brought to the notice of the defendant No.1 and he was not attended with sincerely that was required which resulted in the works being carried out in unsafe and dangerous manner. The works carried out was not in consonance with the quality that was expected and the defendant No.1 failed to ensure safety measures prescribed under the agreement, since the works were both defective and delayed and thereby served several notices to the defendant No.1 as the completion date under the contract was 22.08.2013 which was extended to 29.09.2013. The defendant No.1 was however continuing to demand payments without completing the works and since progress was not forthcoming finally on 28.11.2013 was constrained to invoke the bank guarantee which issued by the defendant No.1 at the time of execution of the contract. The said bank guarantee was specifically issued for due performance of the contract within the time agreed by the defendant No.1, thereby invoked the bank 7 Com.A.S.No.235/2018 guarantee which is its right to invoke the same if the works were to remain incomplete even on the revised completion date agreed in the contract and which was the case of the defendant No.1 even after 6 months of the completion date upon invocation of the bank guarantee, the defendant No.1 issued a letter dated 11.03.2014 terminating the agreement, thereby constrained to take over the works and to complete the phase-I of the works as it was committed to hand over the apartments to its customers in the month of January 2014 and despite 6 months of delay the defendant No.1 had not completed even 80% of the works at site and illegally terminated the contract and abandoned the works despite several repeated instructions bringing to the notice of the 1st defendant that the progress of the work of the defendant No.1 was unsatisfactory and did not raised to the occasion in working consonance with the agreement and despite of delay of over 6 months had completed less than 80% of the works while the defendant No.1 was aware of the fact that had committed to its customers to deliver the completed flats with all amenities and facilities on or before January 2014.
5. The applicant in its application has further alleged the defendant No.1 approached for extension of time to complete the work by letter dated 03.02.2012 on untenable and specious 8 Com.A.S.No.235/2018 grounds which was declined to issue letter dated 19.03.2012 and the defendant No.1 by letter dated 28.03.2012 sought for extension of time by 125 days and approached by its letter dated 25.05.2012 seeking for extension of time by 135 days for the delays which had occurred till 29.02.2012 and after elaborate discussion and negotiations considering the interest of the project time was extended by 38 days and revised completion date was fixed as 29.09.2013 instead of 22.08.2013, for which the defendant No.1 has accepted and continued with the works, despite granting extension the defendant No.1 was unable to keep up the schedule for completion of phase-I works that was required for completion of project in a timely manner. The defendant No.1 had defaulted in payments to its workmen, subcontractors and suppliers which were time and again brought to the notice of the 1st defendant who nominated the subcontractors approached and expressed their displeasure and unhappiness over the way the defendant No.1 was postponing their payments. Therefore, there was no option to see that subcontractors and suppliers do not withhold the work which would seriously prejudiced the progress of the work encashed the bank guarantee and paid the said amount to the said persons with the due approval of the defendant No.1. The defendant No.1 9 Com.A.S.No.235/2018 did not object to such payments being made directly and the defendant No.1 has written the letters to make the payments to its vendors, subcontractors out of the encashed bank guarantee amount made several correspondences. The defendant No.1 committed breach of terms of the contract and being unable to complete the project work started raising untenable and unjust contention to avoid liability that it had to pay on account of its folly and finally raised dispute before Dispute Resolution Board and was not satisfied with the decision of the authority, chose to invoke the arbitration clause contained in contract, consequently constituted the tribunal to resolve the dispute between the parties between them, as the defendant No.1 has took up the contention that the delay in release of mobilization of the funds and advanced as the advance was released after 35 days which resulted in breach of the contract which taken place in between them and committed breach of the contract for non issue of construction drawings in time and inordinate delay in releasing the drawings which resulted the delay in progress of the project and delay in procurement of supply of cement and steel due to non fixation/ approval of the procurement prices was expected to procure cement, reinforced steel and structural steel before 3 rd of each month, but same was not supplied in which caused 10 Com.A.S.No.235/2018 hindrance to the progress of the work and raised the contention that the delay in release of the payments including the price variation reimbursement which provision in the contract provided to submit running account RA bills which were required to be certified within 15 days with all necessary documents and on submission of said documents make the payment within 30 days from the date of certification, thereby the delay has been caused in progress of the work and also taken up the contention that delay was caused by the various specialized agencies under which head and the work done by the defendant No.1 dependent upon the effective coordination of the work to be executed by the specialized agencies such as its direct contractors viz., mechanical, electrical, plumber fall ceiling, painting etc., and without assigning any reasons closed subcontractors which is also a cause for delay and require to coordinate the other contractors and also taken up the contention by the defendant No.1 that the restriction in working hours on account of the orders of the Hon'ble High Court and because of the force majeure the work has not been completed and also taken up the contention bank guarantee was encashed on 28.11.2013 in mischievous and illegal manner, thereby also delay was caused in progress of the work and both of them with mutual consent appointed technical 11 Com.A.S.No.235/2018 persons for dispute adjudication board and the order of adjudicating authority being not final, the defendant No.1 wanted its claim to be decided by any arbitration as envisaged in the contract and sought for reference to arbitration and penal of arbitrators i.e. defendant No.2 to 4 were appointed as arbitrators and the defendant No.1 has putforth its claim making a total claim of Rs.70,51,45,334.97/- and interest thereon @ 18% for which has filed its objection to the claim statement and also filed the counter claim for which filed the rejoinder and the arbitrator who passed the award without considering the oral and documentary evidence on record, thereby has filed the instant suit for the following;
GROUNDS a. The claim which filed with an oblique motive for giving harassment and suppressed and misrepresented the material facts before the arbitrators and the claim which raised by the defendant No.1 are barred by limitation which was not taken in to consideration by the arbitrators. The arbitrators have not taken into consideration that there was no lapses on its part in adhering to the terms of the contract as the fault lead solely on the defendant No.1 who failed to improve the speed and quality of works and safety at the site, despite repeated reminders asking to improve the quality of work.
12 Com.A.S.No.235/2018b. The defendant No.1 was not equipped with sufficient men and material to expediate the work on the site which was not taken into consideration by the arbitrators.
c. The arbitrators were not taken into consideration that the defendant No.1 was unable to complete the work within 823 days sought extension of time without any justifiable ground for a period of 136 days initially which was declined, however with great persuasion the time was extended for a period of 38 days which was accepted by the defendant No.1 by continuing the works. In spite of the same was unable to finish the work which was not taken into consideration by the arbitrators.
d. The arbitrators were not taken into consideration that the defendant No.1 became defaulter in payment of monies which had became due to its sub contractors, suppliers who supplied the materials who threatened to stop the works that would have jeopardised the work causing further delay, thereby invoked the bank guarantee and encashed the same and paid to creditors with the due concurrence of the defendant No.1 and encashment of the bank guarantee was after the expiry of time for completion of the works fixed under the contract and time being essence of contract, work should be completed and site should be handed over within the revised agreed time which was not taken into consideration by the arbitrators.
e. The arbitrators were not taken into consideration about the breach which committed by the defendant No.1 while executing of the work, on account of the delay which committed by the defendant No.1 the work was not in progress nor completed within the time which was fixed under the contract and its 13 Com.A.S.No.235/2018 counter claim was not taken into consideration by the arbitrators.
f. The award of the tribunal is primarily in conflicting with most of the basic notions of morality and justice and failed to apply the basic principles of contract law and passed the impugned award contrary to the public policy and law applicable to such contract between them and not taken into consideration for in completion of the work.
g. The tribunal grossly erred even in allowing part claim of the defendant No.1 and committed serious error in rejecting its counter claim in toto and misinterpreted the documents which filed by them and they did not look into the voluminous of documents which placed before the arbitral tribunal and the arbitral tribunal misdirected itself in reading the agreement between them contrary to the actuality and did not appreciate the evidence as a whole but picked what is convenient to the claim which has resulted in gross injustice and rendered a complete distortion of facts and in coherent application of law to the facts of the case, thereby the award of complete perversity of law and justice and grossly erred in not looking into the documents which placed and repeatedly pointed out that the work carried by the defendant No.1 was shabby contrary to the measure to be taken for safety and the tribunal ought to have applied the law of contract relating to executory construction contracts correctly to the materials on record, but failed to do so and come to the wrong and fancious conclusion grossly misinterpreting the entire evidence.
h. The tribunal failed to gather from the correspondence in which the defendant No.1 was guilty in not adhering to the standards agreed 14 Com.A.S.No.235/2018 between them and failed to appreciate that there were no correspondence from the defendant No.1 with regard to the various circumstances that was pleaded by the defendant No.1 for the delay in completion of works and came to the conclusion based on hearsay and prejudice which no tribunal would have come to resulting in gross injustice and failed to properly conduct an analysis of the inaction in carrying out the project by the defendant No.1 which was not only apparent by the documents but also by the photographs pointing the defects at regular interval.
I. The tribunal failed to note on a safe analysis of evidence did demonstrate the defendant No.1 lacked man power expertise to carry out magnitude of work undertaken by it under contract and a gross and manifestly admitted indiscipline on its part in not paying the sub contractors on time and failed to notice that the parties have comprehensively understood the intend and purport of the terms and entered into a contract after an elaborate negotiations and discussions assisted by the legal and technical experts and there was no scope for any deviations or presumptions pleaded or otherwise given weight by the tribunal.
j. The tribunal much of it saying that the clause empowering the defendant No.1 to terminate the agreement having been deleted it was put into unfair situation and failed to consider the fact that the law did not present the defendant No.1 from either terminating the contract or for the defendant No.1 communication from time to time, its inability to perform the contract on account of circumstances based on which the claims have been made and tribunal falsely assumed that merely on account of a clause in the contract defendant No.1 was in 15 Com.A.S.No.235/2018 disadvantages position, its against and the tribunal went beyond the scope of interpreting the agreement and failed to note the contract had explicit and unambiguous exhaustive terms which only binds them.
k. The tribunal failed to note that they entered into contract was bound to seek remedies within the frame work of the contract, but the tribunal misplaced its sympathy on the defendant No.1 in coming to the conclusion that the right of termination is inherent with it, which reasoning is oppose to basic interpretation terms of contract and the tribunal grossly erred in coming to such a conclusion when there was no evina whisper to the effect that the terms of the contract were unfair on their was external forces which made them to enter into agreement.
l. The tribunal failed to appreciate that the defendant No.1 had no right to terminate the agreement in the background of the contract being specified which taken place in between them and failed to notice that the contract did not provide specific date for commencement of project, the duration of working and date of completion of the project. In the commencement of the project was to be specific on 23.05.2011 time for completion was 823 calendar days and the date on which project to be completed was 23.08.2013 as such the whole contract was time bound project and time was the essence of the contract which was not taken into consideration and failed to notice with great reluctance and at the pursuations of the defendant No.1 the time was extended for 38 days which expired on 29.09.2013 and the defendant No.1 did not carryout the work as agreed who committed the breach of agreement 16 Com.A.S.No.235/2018 which was not taken into consideration by the tribunal.
m. The tribunal failed to note that the time for completion of the project having fixed to 22.08.2013 and even after expiry of extended time of 38 days for completion of the project which expired on 29.09.2013 and the defendant No.1 did not committed the breach and unable to complete the project and failed to note that the defendant No.1 could not have terminated the contract, since time for completion of the project having lapsed and the contract was not in force on the day of termination of the contract by the defendant No.1 and the defendant No.1 being fully aware that no power was vested under the contract to terminate the agreement could not have justified the termination which was caused long after the lapse of contract itself and misread the contract and recognized the power of the defendant No.1 to terminate the agreement which is contrary to sound interpretation of the contract between them and failed to note that the termination which is oppose to the facts of the case.
n. The tribunal failed to note that the defendant No.1 was not even able to pay the subcontractors due who threatened to withhold the work and supply of material that necessitated to encash the bank guarantee and to pay the dues to such persons which was not taken into consideration by the tribunal and failed to note that the encashed amount of bank guarantee was paid to subcontractor and suppliers of the defendant No.1 with due notice of the defendant No.1 for which at any point of time the defendant No.1 has not disputed its due to the subcontractors and suppliers which ought to have persuaded the tribunal to reject the claim of the defendant No.1 and 17 Com.A.S.No.235/2018 the bank guarantee has been invoked and amount has been encashed paid to the persons with whom the defendant No.1 was due which was not taken into consideration by the tribunal and the defendant No.1 terminated the contract after the expiry of 2 months of the contract and the termination of the contract after the expiry of more than 200 days demonstrate that the defendant No.1 was not fair which was not taken into consideration by the tribunal.
o. The tribunal erred in compartmentalizing the performance mobilizing funds etc failed to understand the overall impact of the contract that the time was essence of the contract and failure to perform was breach of the contract which was apparent that the defendant No.1 did not complete the work within time which was allowed under the contract and the defendant No.1 committed a breach of the terms of the contract which was not taken into consideration by the tribunal and grossly erred in not noticing the contract is a bible between them, they are bound by the terms of the contract and erred that the subcontractors were not selected with the concurrence of the defendant No.1 which is not even the case of the defendant No.1 and erred in not even assessing its counter claim which was to the tune of Rs.70,45,50,835/- as compensation payable to its customers for the delay in handing over the apartments and the tribunal brushed aside its counter claim on flimsy ground and come to the conclusion that the breach is on its part and who is not entitled to any relief at all which conclusion is completely countenanced by the fact that the time for completion had already lapsed 5 months before the letter of termination.
p. The tribunal erred in passing the award in favour of the defendant No.1 by rejecting its counter claim 18 Com.A.S.No.235/2018 which is oppose to the law, facts and circumstances of the case as well as evidence of the parties and prays for allow the suit and to set aside the arbitration award dated 01.07.2018 and 23.08.2018 and to grant such other reliefs as the court deems fit.
6. In response of the suit summons the defendant No.1 has been appeared through its counsel, though the plaintiff at the time of filing of the instant suit has impleaded the Presiding Arbitrator and member Arbitrators as defendant No.2 to 4, but at the request of the learned counsel for the plaintiff, issuance of summons to them was dispensed with on 16.02.2019. The defendant No.1 filed its statement of objection in which has alleged that the suit which filed by the plaintiff is not maintainable in law or on facts as the unanimous award has been passed by the three Arbitrators, two of them i.e., Presiding Arbitrator and one Co-Arbitrator who are former High Court Judges of Karnataka and it can be safely concluded that they had legal knowledge and prior experience in the law relating to subject Arbitration award and it is a well settled that the scope of interference into an Arbitral award U/Sec.34 of Arbitration and Conciliation Act 1996 with amendments made in 2015, made effective from 23.10.2015 is very limited and one cannot be permitted to regurgitate the issue considered by the Arbitral 19 Com.A.S.No.235/2018 Tribunal in Sec.34 of the Arbitration and Conciliation Act and when the award is sought to be set aside on the limited grounds U/Sec.30 of the 1940 Act or Sec.34 of the 1996 Act, the court cannot sit in Judgment over the award, as if an appeal from a regular suit in civil proceedings, who has been in the business of construction industry carrying out major works for Government department, Public Sector Companies as well as private corporates and multinational companies for that 50 years and has been keeping an unblemished record of completing all the works undertaken, pursuant to the tender notification dated 30.03.2011, after repeated discussion and negotiation work was awarded in its favour by letter of acceptance dated 30.03.2011 and the value of the contract was of Rs.464,16,76,456.62/- which included the component of VAT and sales tax.
7. The defendant in its objection statement has alleged that as per the work, 2152 numbers of Residential flats had to be constructed in 3 phases i.e., phase No.1, phase No.2 and Phase No.3 and phase No.1 work had to be constructed in 832 calendar days and phase No.2 & 3 towers had to be commenced within 45 days after commencement of phase buildings. He has got a rich experience in doing various construction works including similar flats in different phases and towers in Mumbai, New Delhi, 20 Com.A.S.No.235/2018 Chennai, Ahmadabad, Bengaluru, Hyderabad and Pune, various other places as well fullfledged establishment including men, machinery management and supervisory staff and other resources in a manner sufficient to need the requirements for timely completion of the work and upon various reciprocal obligations provided by the applicant without which could not even commence or get along with work including release of good for construction drawings and approvals from time to time. The site was handing over for first phase, the date of commencement turned to be 25.03.2011 with the date of completion falling on 22.08.2013 with a period of 823 days. Phase No.2 & 3 works were to be mutually agreed within a time frame of 45 days from the date of acceptance of LOA i.e., on or before 15.05.2011.
8. The defendant No.1 in its objection statement has alleged that he had mobilized the resources for all the 3 phases as per the terms of the agreement and he was put to trouble loss since the resources meant for usage of the entire construction under 3 numbers of phases could not be effectively and simultaneously utilized, the delay has been caused on the part of the plaintiff in release of mobilization advance agreed as per the agreement, delay in issue of construction drawings, delay in procurement of supplies of cement and steel due to non fixation, in spite of the 21 Com.A.S.No.235/2018 work of phase No.1 was being continued subject to the facilities being made available suffering heavy loss still the applicant highhandedly involved the bank guarantee for the value of Rs.5,29,31,182/- and encashed the same without any legal basis or sanction either under the terms of the contract or the terms of the bank guarantee. The reasons assigned by the Arbitral Tribunal for limiting the reliefs as the interference of this Court is very limited U/Sec.34 of Arbitration and Conciliation Act. The Arbitral Tribunal has got power to correct any computation errors any clerical or typographical errors or any other errors of a similar nature occurring in the award, the tribunal can rectify the same U/Sec.34 of the Arbitration and Conciliation Act and all the averments in Sec.34 of Arbitration and Conciliation Act filed by the plaintiff is not maintainable, the averments relating to productional award including rectified award and the tribunal cannot compel to put to scrutiny by this Court as if an appeal and there is no question of law relied nor any ground U/Sec.34 of the Act cited calling for interference, the averments in para No.6 to 14 relating to encashment of bank guarantee and further cohesive steps adopted were to be decided by the Arbitral tribunal.
22 Com.A.S.No.235/2018
9. The defendant No.1 in its written statement has denied para No.1 to 5 of the plaint stating that the plaintiff has to strict proof of the same, since the averments therein are only relating to production of arbitral award including rectified award and the plaintiff intention to launch the project, construction of the subject work, developments relating to tender processing and award of the work in its favour and the scope of the work etc., since these are matters to be borne out of the undisputed records available before this court are not disputed and the averments which alleged contrary to record and furnishing of bank guarantee and encashment thereof shall be subject to the terms of the bank guarantee alone and the purpose for which the bank guarantee has been furnished, bank guarantee being an arrangement between the bank and the surety, the liability of the bank is to encash it strictly on the terms of the bank guarantee alone. The bank guarantee having been furnished towards the security deposit and for the due performance of the contract, without referring to the terms of the bank guarantee fastening the liability on the bank and who had to convince the arbitral tribunal that it has been invoked strictly in the terms of bank guarantees or otherwise, the importance of furnishing the bank guarantee shall be defeated and the arbitration clause in the 23 Com.A.S.No.235/2018 agreement and actual reference and claim statement which filed by the claimant and time to time at the request, the time has been extended and non payment to subcontractors for want of payment contrary to the specific provision of the agreement and extension of time was sought for which was not ultimately granted and so on which are solely with the province of the arbitral tribunal and cannot be rehesitated in the instant suit and the grounds in para 26 the award is primarily in conflict with the most of the basic notions of morality and justice. The tribunal failed to apply the basic principles of contract, law and passed the award contrary to the public policy and law applicable to such contracts between them and also tribunal failure to appreciate the alleged gross misdoings in failing to complete the works within the agreed time, despite there being no evidence that the delay was caused on account of any of the circumstances which pleased in support of the claims made. These are only the bald statements which alleged by the plaintiff which are not falls within Sec.34 of the Arbitration and Conciliation Act to set aside the award and denied that the tribunal grossly erred even in allowing its part claim and committed a serious error in rejecting the counter claim of the plaintiff in toto and the said allegations has no merits in the eye of law and denied that tribunal misread 24 Com.A.S.No.235/2018 and misinterpreted the documents filed before them and did not look into the voluminous documents placed before it without reference to the any portion of the award and the tribunal after considering the materials on record passed the award.
10. The defendant in its written statement has alleged that the plaintiff in para No.30 of the plaint has alleged that the tribunal grossly erred in not looking into the documents placed and repeatedly point out that the work carried out was shabby contrary to the measures to be taken for safety and the tribunal ought to have applied the law of contract relating to executory construction contracts correctly to the materials on record which failed to do so and come to the wrong conclusion, without pointing out any specific finding or observation on any fact or law which cannot be considered under Sec.34 of the Arbitration and Conciliation Act and he has denied the other averments which alleged by the plaintiff stating that the arbitral tribunal consisting of retired judges of the Hon'ble High Court of Karnataka who are well equipped with legal background including the law on the subject of bank guarantees sitting with co-arbitrator who are also conversant with the arbitration matters having come to the conclusion that the bank guarantee furnished towards mobilization advance of Rs.10 crores had been repaid by means 25 Com.A.S.No.235/2018 of recovery and deduction from RA bills as found in para No.45 of the award it cannot be said that such a finding is wrong, equally the finding in such circumstances, the plaintiff was under
obligation in terms of the contract to release the bank guarantee duly discharged and the plaintiff has no right to hold the bank guarantee as security for the amount due under different heads or in respect of mobilization advance given for any additional work. So the findings is only fully correct, if the bank gives a bank guarantee for a particular purpose either towards mobilization advance or security deposit or due performance of the contract and if mobilization advance is completely recovered the employer has no right to encash the bank guarantee on any other grounds nor is there any liability for the bank to make any payment on its binding. So, the finding of the arbitral tribunal in para 45 that the invocation of the bank guarantee at Sl.No.4 is not lawful and is illegal and in violation of the terms of the contract as well as the terms of the bank guarantee are fully correct. The finding of the arbitral tribunal in para 47 of the award in respect of the bank guarantees furnished in respect of mobilization advance for drilling and cladding works and other two bank guarantees towards performance guarantee as detailed in page 46 and invocation of the bank guarantee is not lawful and applicant 26 Com.A.S.No.235/2018 cannot rehesitate the same points as if in appeal and this court cannot lend any support to the end.
11. The defendant No.1 in its written statement has alleged that the finding of the arbitral tribunal about invocation of bank guarantee at Sl.No.1 as performance guarantee is not lawful and is illegal and contrary to clause 4.2 of the contract and contrary to the terms of the bank guarantee in the light of in para 48 to 51 of the award and cannot be rehesitated as if in an appeal and the invocation of the guarantee is not lawful, the legal inference is that the plaintiff has committed breach of terms of the agreement and denied that the tribunal failed to note that the time for completion of the project having fixed to 22.08.2013 and even after expiry of extended time of 38 days which expired on 29.09.2013 did commit the breach, but has alleged that who was unable to complete the project and if the contract contains reciprocal obligations in the sense the employer has to meet certain obligation of the contract consequent to which only the contractors performance commences and if the employer has failed to meet his obligations the contract cannot be compelled to perform his part of the contract, nor can the contractor be made to wait indefinitely for the employer to take his own sweet time to comply with his obligations for the contractor to discharge his 27 Com.A.S.No.235/2018 obligations. Sec.51 to 55 of the Indian Contract Act deals with such a situations which contain reciprocal obligations on either side of the employer as well as the builder or the contractor and it is settled law that if the employer who has to discharge his obligations first does not do so cannot expect or compel the contractor to do his obligations because of the later obligation is depend upon the farmers performance and law excuses the later the contractor and any assumption against Sec.51 to 55 of the Indian Contract Act cannot be treated as valid and it is a settled law that by the expiry of the period of contract or the extended time the performance that time on wards may not be possible, however the termination or repudiation of the contract and follow up actions including raising the claims based on the facts and circumstances of the case and adjudication of such claims still subsists and that cannot be treated as aborted or terminated automatically on the expiry of the period of contract or the extended time of contract and it is against the fundamental principles of law that the contract can be treated as came to an end only by performance, frustration and rescission or repudiation by eclipse of time only first one stands discharge whereas the contract can be put an end only by termination or repudiation in the absence of frustration and termination of the contract in 28 Com.A.S.No.235/2018 consequence of failure of reciprocal obligations and Sec.51 to 54 of the Indian Contract Act will come into operation and release from the discharge of its obligations. So the tribunal after elaborate discussions regarding invocation of each bank guarantee including bank guarantee towards mobilization advance, security deposit, due performance etc. leads to the irresistible and unanimous conclusion that the invocation of different bank guarantees is not lawful and held that the plaintiff committed breach of terms of the agreement and decision of the arbitral tribunal is final which is binding on them and this court cannot sit as appellate court to interfere the award which passed by the arbitrators and the plaintiff has not been able to bring out any valid grounds under Sec.34 of the Arbitration and Conciliation Act to interfere this court to set aside the award.
12. The defendant No.1 in its objection statement has alleged that the plaintiff has not made out any of the grounds which are enumerated under Sec.34 of the Arbitration and Conciliation Act to interfere this court and the arbitral tribunal has discussed in detail based on the oral and documentary evidence and come to the conclusion that the invocation of all the bank guarantees is not lawful is illegal and arbitrary and termination of the contract is also lawful and the award which passed by the 29 Com.A.S.No.235/2018 arbitral tribunal binding on both parties and which cannot be put to further factual scrutiny before this court and the scope of this court for interference is very limited unless the facts falls within Sec.34 of the Arbitration and Conciliation Act and the plaintiff has taken up the contention that who has committed breach of terms of the contract, but nothing is placed to substantiate the same. That is the reason why the arbitral tribunal held invocation of the bank guarantee is contrary to the agreement which taken place in between them and the arbitrators were recorded the finding that the termination of the contract itself is wrong without the jurisdiction or authority it is only just and fair that to stop the bald allegations wish that the arbitral award can be imposed upon such allegations also and denied that the tribunal erred in passing the award in its favour and rejecting the counter claim of the plaintiff which is oppose to law facts and circumstances of the case and the evidence of the parties and prays for reject the suit.
13. Heard the arguments on both sides.
14. The points that arise for consideration of this court are as under:
1) Whether the plaintiff has made out any of the grounds which are enumerated under Sec.34 of the Arbitration and Conciliation Act to set aside the award?30 Com.A.S.No.235/2018
2) What order?
15. My answer to the above points are as under:
Point No.1: In the Negative;
Point No.2: As per final order, on the following;
REASONS
16. POINT NO.1: The plaintiff being the respondent and the defendant being the claimant before the arbitral tribunal feeling aggrieved by the award has filed the instant suit on the ground that the agreement was taken place in between them to construct multi storied residential complex and the defendant No.1 was unable to mobilize the required men and machinery to undertake the project which assigned and failed to secure approval from the electoral inspectorate for setting up of batching plan till 17.11.2011 and also not taken consent of Karnataka State Pollution Control Board to start the work, but despite the defendant No.1 did not start the construction of the building in spite of several reminders, though started the work, there were defects of the work on the site which was brought to the notice of defendant No.1, not corrected and the work which was carried out was not in consonance with the quality that was expected and failed to ensure the safety measures prescribed under the agreement, since the works both defective and delayed in spite of 31 Com.A.S.No.235/2018 several notice and reminders and failed to complete the work within the time which fixed under the agreement and in spite of extension of time did not complete the project who committed the breach of the agreement and the defendant No.1 had defaulted in payments to its workmen, subcontractors and suppliers, thereby the work was withheld due to the default on the part of the defendant No.1, thereby encashed the bank guarantee and paid the said amount to the said persons and the defendant No.1 committed breach of terms of the contract and invoked the arbitration clause and the arbitrators have been appointed who passed the award. Feeling aggrieved by the said award has filed the instant suit.
17. The learned counsel for the plaintiff in his arguments has submitted the plaintiff is a company registered under the Companies Act formerly known as Land Masters Realtors Pvt. Ltd., later the name of the plaintiff was changed and known as Mantri Castles Pvt. Ltd., engaged in the construction activities of multi storied commercial and residential complexes and undertaken the a project of constructing a multi storied residential apartments of Kanakapura Road, Bangalore South Taluk which project named as Mantri Serenity and the plaintiff had entered into a JDA with one Gokulam Shelters Pvt. Ltd., who are the owners of the land 32 Com.A.S.No.235/2018 bearing resurvey No.51, 56P, 57P, 58P, 59P and 60P of Doddakallasandra Village for the construction of 3 phases and 1 st phase comprising of 352 apartments, 2nd phase comprising of 1140 apartments and 3rd phase comprising of 660 apartments, thereby the plaintiff in order to construct the multi storied residential complex invited the tenders and the defendant No.1 was successful in accepting the terms of the plaintiff and letter of acceptance was received on 30.03.2011 after negotiation by way of meetings, exchange of communications and the offer of the defendant No.1 was accepted and a letter of acceptance dated 06.05.2011 was signed and thereafter the plaintiff and the defendant No.1 were entered into an agreement on 13.06.2011 and the work was allotted to the defendant No.1 under the work order dated 18.07.2011 which was duly accepted by the defendant No.1 and the defendant No.1 require to carry out the work of phase-I as per the drawing furnished by the architect approved by the plaintiff and the scope of the work that were to be carried out by the defendant No.1 including excavation, substructure, superstructure, finishing work including water proofing, external work such as sewage treatment, plant and underground sump.
33 Com.A.S.No.235/2018
18. The learned counsel for the plaintiff while canvassing his arguments has further submitted that the defendant No.1 was require to complete the 1st phase construction work of 352 apartments in 823 calendar days including the mobilization period. As per the agreement which taken place in between the plaintiff and the defendant No.1, the plaintiff had agreed to release 30 crores manures estimated value of the materials to be supplied by the plaintiff in 3 installments, 1st installment of 10 crores to be released within 21 days of requisition date along with submission of all the relevant documents as per the contract, the 2nd installment of Rs.10 crores for 2 nd phase was agreed to be released within 21 days of requisition and 3 rd installment of 10 crores for 3rd phase was agreed to be released upon submission of relevant documents as per the contract, but the defendant No.1 was unable to mobilize the required men and machinery to undertake the project which was assigned to the defendant No.1 that the defendant No.1 has failed to secure the minimum requirements to start the project, despite of the instructions, reminders and the request, though the defendant No.1 has commenced the construction of the building and the plaintiff had inspected the project and found the defects of the construction on the spot, though it was brought to the notice of the defendant 34 Com.A.S.No.235/2018 No.1, the defendant No.1 has not attended the said defects sincerely that was required which resulted in the works being carried out on the spot and the works carried out was not in consonance with the quality that was expected, but the defendant No.1 failed to ensure the safety measures prescribed under the agreement. Because of the defective work and delay the plaintiff could not handing over the residential houses to the respective buyers and the defendant No.1 has committed to handing over the apartments within time because of the attitude of the defendant No.1 the plaintiff had committed to hand over the apartments to its customers in the month of January 2014 and despite 6 months of delay the defendant No.1 did not completed even 80% of work at site and illegally terminated the contract, as the work order has been issued to the 1st defendant on 18.07.2011 and by virtue of the said work order, the defendant No.1 has to complete the work which was entrusted before 22.08.2013, but the defendant No.1 has not completed the same and who has breached the contract and the defendant No.1 was also aware that he had committed the breach, since the defendant No.1 has not completed the construction of the residential apartments nor handing over in favour of the plaintiff, because of non handing over of the residential apartments to the 35 Com.A.S.No.235/2018 plaintiff, the plaintiff had committed to its customers for non delivery of the completed flats with all the amenities and facilities on or before January 2014, though the defendant No.1 has approached for extension of time and extension of time has been accepted and extended the time at the request of the defendant No.1 despite of granting extension, the defendant No.1 was unable to keep up the schedule for completion of phase-I works that was required for completion of project in a timely manner and the defendant No.1 had defaulted in payments of its workmen, subcontractors and suppliers which were time and again brought to the notice of the defendant No.1 to clear the payments, but the defendant No.1 did not do so, unnecessarily has postpone the same for payment to the said persons, thereby the plaintiff has no option to see that subcontractors and suppliers do not withhold the work which would seriously prejudice the progress of the work encashed the bank guarantee and paid the said amount to the said persons with due approval of the defendant No.1, even the defendant No.1 had not objected such payments, when the defendant No.1 has committed the breach of terms of the contract and unable to complete the project work and finally raised the dispute before the Dispute Resolution Board and was not satisfied with the decision of the 36 Com.A.S.No.235/2018 authority chosen to invoke the arbitration clause contained in the contract. Consequently the arbitral tribunal was constituted, but the tribunal without considering the materials which placed rejected the counter claim which filed by the plaintiff and allowed the claim of the 1st defendant without considering the materials on record and though the 1st defendant files the claim statement before the arbitrators for which the plaintiff files the counter claim, so the issue before the arbitrators was for finding on bank guarantee was legal or not and the termination of the contract which terminated was legal or not and the breach which committed by the 1st defendant, but the tribunal has not taken into consideration about the materials which placed and passed the award which falls under Sec.34 of the Arbitration and Conciliation Act, as the arbitrators were recorded the finding that the invocation of the bank guarantee was illegal, without considering the materials on record and held the defendant No.1 is entitled towards payment till 31.03.2014 without considering the works which executed by the defendant No.1 and for non execution of the work as per the agreement and the arbitrators have not taken into consideration the documents which placed on record and there is no finding regarding the payment which made by the plaintiff to the subcontractors and others and the tribunal 37 Com.A.S.No.235/2018 itself reading the agreement which taken place between the parties contrary to the actuality and did not appreciate the evidence as whole but picked up what is convenient to the suit claim and erred in allowing partly the claim of the defendant No.1 by rejecting the counter claim of the plaintiff and the arbitral tribunal failed to consider the conduct of the defendant No.1 for non execution of the work in spite of reminders and the tribunal went beyond the scope of interpreting the agreement and failed to note the contract which taken place in between the parties and failed to notice that the contract did provide a specific date for commencement of project, the duration of working and the date of completion of the project which was not taken into consideration by the arbitral tribunal and the tribunal misread the contract which taken place in between the plaintiff and the defendant, without considering the time for completion of the project nor the materials on record and prays for allow the suit and set aside the arbitration award and rectification award dated 01.07.2018 and 23.08.2018.
19. Per contra, the learned counsel for the defendant while canvassing his arguments has submitted that the suit which filed by the plaintiff is not maintainable in law or on facts, since 3 arbitrators were appointed, out of them Presiding Arbitrator and 38 Com.A.S.No.235/2018 one co-arbitrator who were the former High Court Judges of Hon'ble High Court of Karnataka, they had legal knowledge and prior experience in the law relating to the subject arbitration award and the plaintiff has not made out any of the grounds which enumerated under Sec.34 of the Arbitration and Conciliation Act for interference of this court, as the interference of this court is very limited and this court cannot sit as appellate court either to reappreciate the oral nor the documentary evidence which already on record and this court interference is very limited and the plaintiff has not made out any of the grounds which are enumerated under Sec.34 of the Arbitration and Conciliation Act to set aside the award which passed by the arbitral tribunal and the Arbitration and Conciliation Amended Act 2015 is applicable to the case on hand and as per the fundamental law, appreciation of evidence not available to this court and the agreement was taken place in between the plaintiff and the defendant for the construction of residential apartment and by virtue of the contract the agreement was taken place in between the plaintiff and the defendant No.1 on 13.06.2011 and the work order has been issued on 18.07.2011 and by virtue of the work order, the defendant No.1 has to complete the said work on 22.08.2013 and time to time the said period has been 39 Com.A.S.No.235/2018 extended as the 1st defendant being the company had rich experience in doing various construction works. That is the reason why work was entrusted to the 1st defendant for residential plots had to be constructed in 3 phases i.e. phase No.1, Phase No.2 and Phase No.3 and by virtue of the agreement which taken place in between the plaintiff and the defendant No.1 there is various reciprocal obligations which provided under the agreement and the plaintiff has to release of good for construction drawings and approvals from time to time for the construction of residential apartment and the construction program and deployment of resources including men, machinery, materials, management labour, supervisory staff were totally dependent on the reciprocal obligations to be met by the plaintiff, but the plaintiff could not release arrears or work fronts for different phases and work fronts for construction of phase No.1 work was released only on 23.05.2011 that too without the club house area which was released only on 25.06.2012 which was informed to the defendant No.1 by mail dated 10.05.2012 and the balance areas for construction of phase 2 and phase 3 were never released to the 1st defendant and phase No.1 site has been handing over to the 1st defendant with the completion of the same on 22.08.2013 with a period of 823 days, but because of 40 Com.A.S.No.235/2018 breach on the part of the plaintiff, the defendant No.1 could not complete the work which was entrusted as the plaintiff was in delay in release of mobilization of advance agreed as per the agreement which taken place in between the plaintiff and the defendant No.1 and the work was not commenced with in time due to delay in issuance of construction drawings delay in procurement of supplies of cement and steel and due to non fixation of procurement prices. Delay in release of periodical payments for work done including reimbursement of price variation as per the agreement is on the plaintiff, in spite of the same the defendant No.1 was continued the work with an object to complete the work in terms of the agreement, but the plaintiff highhandedly invoked the bank guarantee for the value of Rs.5,29,31,182/- and encashed the same without any legal basis of sanction either under the terms of contract between the plaintiff and the defendant and the plaintiff has taken such a coercive action with intention of squeezing the 1st defendant to the maximum extent possible and to prevent from continuing with the work, due to the breaches which committed by the plaintiff, the defendant No.1 could not complete the work which was entrusted. The arbitral tribunal held that the invocation of bank guarantee which was invoked by the plaintiff is not lawful 41 Com.A.S.No.235/2018 which is illegal. The arbitral tribunal after elaborate discussions held invocation of each bank guarantee including the bank guarantee towards mobilization advance, security deposit due performance leads to the irresistible and unanimous conclusion that the invocation of different bank guarantee is not lawful and the plaintiff has committed the breach of the terms of the agreement and the arbitrators after considering the materials on record passed the award and question of interference of this court as sought for does not arise and the said counsel submitted the other arguments which are mentioned in the written arguments and prays for dismiss the plaint.
20. The learned counsel for the plaintiff while canvassing his arguments has much argued that the defendant No.1 has not completed the work in pursuance of the contract as per the agreement dated 13.06.2011 in spite of repeated request and demand and extension of time did not complete the work, thereby invoked the bank guarantee to pay the subcontractors and others, since the defendant No.1 did not pay the amount to the subcontractors and others and the defendant No.1 has terminated the contract, thereby arbitral proceedings has been initiated, three arbitrators were appointed to decide the issue and passed the award and the facts which alleged in the plaint comes 42 Com.A.S.No.235/2018 within the purview of Sec.34 of the Arbitration and Conciliation Act. Thus before considering the arguments which advanced by the learned counsel for both the parties and the materials on record, let me know the legal aspects first for the proper appreciation.
1. What is arbitration?
2. When court can interfere with arbitral award?
3. What is the scope of Court's power to interfere with the arbitral award?
4. What are the grounds are required to set aside the award?
5. Setting aside of arbitral award when permissible?
Let me decide one by one for proper appreciation of the materials on record. Thus this court drawn its attention on Sec.2(1)(a) of the Arbitration and Conciliation Act, 1996 which reads like this:
2(1)(a). The definition arbitration means any arbitration whether or not administered by permanent arbitral institution.
Arbitration is a private dispute resolution mechanism agreed upon by the parties.
Arbitration is a binding voluntary alternative dispute resolution process by a private forum chosen by the parties.
Arbitration is a process of settlement extra curses curiae and the parties are at liberty to choose their judge. "The esse visa nce of arbitration without assistance or intervention of the court is settlement of dispute by a tribunal of the own choosing of the parties." Law of arbitration aids in implementation of 43 Com.A.S.No.235/2018 arbitration agreement contract between the parties which remains a private adjudication by a forum consequently chosen by the parties and made on consequential reference.
Now let me know when court can interfere with the arbitral award. Thus this court drawn its attention on Sec.34(43) of the Arbitration and Conciliation Act, 1996 which reads like this:
43. Principles of interference with arbitral award:-
The principles of interference with an arbitral award under Sec.34(2) of the Act are as follows:
(1) An award, which is -
(i) contrary to substantive provisions of law; or
(ii) The provisions of Arbitration and Conciliation Act, 1996, or
(ii) against the terms of the respective contract; or
(iv) Patently illegal or
(v) Prejudicial to the rights of the parties; is open to interference by the court under Sec.34(2) of the Act.
(2) The award could be set aside if it is contrary to:
(a) fundamental policy of Indian Law; or
(b) the interest of India; or
(c) justice or morality.
(3) The award could also be set aside, if it is so unfair and unreasonable that it shocks the conscience of the court.44 Com.A.S.No.235/2018
(4) It is open to the court to consider whether the award is against the speci visa fic terms of the contract and if so interfere with it on the ground that it is patently illegal and opposed to the public policy of India.
So by virtue of the provision which stated above, the court can interfere with the arbitral award in the grounds which mentioned above.
Now let me know what is the scope of Court's power to interfere with the arbitral award? Thus this court drawn its attention on Sec.34(34) of the Arbitration and Conciliation Act which reads like this;
Scope of Court's power to interfere with the arbitral award:
The scope of the interference by the court's in regard to arbitral award is limited. Courts do not sit in appeal over the findings and decision of the arbitrator, nor can it reassess or re- appreciate evidence or examine the sufficiency or otherwise of the evidence.
So by virtue of the provision which stated supra, the scope of interference by the court in regard to the arbitral award is limited scope. The scope of interference under Sec.34 of the Act is limited in view of the judgment of the Hon'ble Supreme Court of India which reported in AIR 2003 SC 2629 in between Oil and 45 Com.A.S.No.235/2018 Natural Gas Corporation Ltd., V/s Shah Pipes Ltd., and in the said judgment, their Lordship held that;
'an award can be set aside if it is contrary to fundamental policy of Indian Law, the interest of India, justice or morality, if it is patently illegal and unfair and unreasonable it shocks the conscience of the court'.
Now let me know what are the grounds are required to set aside the award which passed. Thus this court drawn its attention on Sec.34(18) of the Arbitration and Conciliation Act which reads like this:
18. Grounds to set aside award:- Under the new Act, 1996 misconduct of arbitrator is no ground to set aside an award but court may set aside an award in the following grounds:
(1) if the composition of the arbitral tribunal was not in accordance with the agreement of the parties.
(2) falling such agreement, the composition of arbitral tribunal was not in accordance with the part I of the Act.
(3) if the arbitral proceeding was not in accordance with -
(a) the agreement of the parties.
(b) failing such agreement - the arbitral procedure was not in accordance with part I of the Act. However exception for setting aside the award on the ground of composition of 46 Com.A.S.No.235/2018 arbitral tribunal or illegality of arbitral procedure is that the agreement should not be in conflict with the provisions of part I of the Act from which parties cannot derogate;
(c) if the award passed by the arbitral tribunal is in contravention of the provisions of the Act or any other substantive law governing the parties or is against the terms of the contract.
An award can be set aside, if it is against the public policy of India that is to so it is contrary to:
(1) fundamental policy of Indian law, (2) the interest of India, or (3) justice or morality , or (4) if it is patently illegal.
It could be challenged -
(a) as provided under Sec.13(5); and
(b) Sec. 16(6) of the Arbitration and conciliation Act. So the court can set aside the award, if the grounds found which stated supra.
So if the petitioner is made out the grounds which stated supra, court can set aside the award. Now let me know about the setting aside of arbitral award when permissible. Thus this court drawn its attention on Sec.34(4) of the Arbitration and Conciliation Act, 1996
4. Setting aside of arbitral award when permissible:-
That the court can set aside the arbitral award under Sec.34(2) of the Arbitration and 47 Com.A.S.No.235/2018 Conciliation Act if the party making the application furnishes the proof that:
(i) a party was under some incapacity
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for time being in force.
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or otherwise unable to present his case.
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitrator or it contains visa decisions on matters behind the scope of the submission to arbitration.
(2) The court may set aside the award: (I) (a) if the composition of the arbitral tribunal was not in accordance with the agreement of the parties.
(b) falling such agreement, the composition of the arbitral tribunal was not in accordance with part-1 of the Act.
(ii) if the arbitral procedure was not in accordance with:
(a) the agreement of the parties, or
(b) failing such agreement, the arbitral procedure was not in accordance with part-1 of the Act.
However exception for setting aside the award on the ground of composition of arbitral 48 Com.A.S.No.235/2018 tribunal or illegality of arbitral procedure is that the agreement should not be in conflict within the provisions of part-1 of the Act from which the parties cannot derogate.
(c) If the award passed by the arbitral tribunal is in contravention of provisions of the Act or any other substantive law governing the parties or is against the terms of the contract. (3) The award could be set aside if it is against the public policy of India, that is to say, if it is contrary to:
(a) fundamental policy of Indian Law;
(b) the interest of India; or
(c) justice or morality; or
(d) if it is patently illegal.
(4) It could be challenged-
(a) as provided under Sec.13(5); and
(b) Section 16(6) of the Act."
"B. Further held as follows in this case: (1) The impugned award requires to be set aside mainly on the grounds:
(I) There is specific stipulation in the agreement that the time and date of delivery of the goods was the essence of the contract;
(ii) in case of failure to deliver the goods within the period fixed for such delivery in the schedule, ONGC was entitled to recover from the contractor liquidated damages as agreed;
(iii) it was also explicitly understood that the agreed liquidated damages were genuine pre- estimate of damages;
(iv) on the request of the respondent to extend the time limit for supply of goods, ONGC informed specifically that time was extended 49 Com.A.S.No.235/2018 but stipulated liquidated damages as agreed would be recovered;
(v) liquidated damages for delay in supply of goods were to be recovered by paying authorities from the bills for payment of cost of material supplied by the contractor;
(vii) there is nothing on record to suggest that stipulation for recovering liquidated damages was by way of penalty or that the said sum was in any way unreasonable.
(viii) in certain contracts, it is impossible to asses the damages or prove the same. Such situation is taken care by section 73 and 74 of the Contract Act and in the present case by specific terms of the contract" - Oil and Natural Gas Corporation V Shah Pipes Ltd. (2003)5 SCC 705 : AIR 2003 SC 2629; see also Moona Abousher V M/s. Cholamandalam DBS Finance Ltd. AIR 2019 Mad 233.
21. Apart from above legal aspects, it is just and necessary to reproduce the relief which sought in the counter claim of the plaintiff and the claim of the defendant No.1 which reads like this:
Sl.No. Description of claim Amount In Rs.
1. Compensation payable to Rs.70,45,50,835
customers on account of delay in
handing over apartments
2. Additional costs incurred by the Rs.3,89,84,901 respondent towards completion of pending works in Phase-I
3. Recovery of excess amounts paid Rs.86,60,542 to the claimant for the works done
4. Additional costs incurred towards Rs.121,83,33,542 Phase-II and Phase-III works Direction to claimants to withdraw 50 Com.A.S.No.235/2018 all complaints lodged by claimants in regard to the firm, with the banks of the firm, Monitoring Committee and other for a.
5. Loss of interest on the amount Rs.3,72,00,000 recoverable from customers
6. Litigation expenses Rs.75,00,000 Total Rs.201,52,29,820 CLAIM OF DEFENDANT NO.1 Sl.No. Description Value (RS)
1. Payments due against works 1,88,02,814.00 executed until 31.03.2014
2. Additional charges incurred due 17,26,027.40 to delays caused in the release of mobilization advance by you
3. Additional charges incurred due 36,18,928.00 to delays caused in the release of payments by the respondent
4. Loss of profit due to de scoping of 1,08,44,475.00 NSC's works from BEB's contrl
5. Balance payments due in price 92,05,349.00 variation bills
6. Loss of profit and overheads for 58,50,92,240.93 non release of PHASE II & III
7. Refund of amounts procured by 5,29,31,182.00 way of invoking and encashing the bank guarantees
8. Interest charges in respect of the 29,75,747.55 amounts produced through the invoking of bank guarantees (as in "7" above) as on 21.03.2014
9. Bank guarantee charges towards 14,571.09 the bank guarantees illegally held by the respondent 51 Com.A.S.No.235/2018
10. Indirect costs expended during the 1,99,34,000.00 extended period of stay (up to 31.03.2014) Total 70,51,45,334.97 The above relief which sought in the counter claim and the claim of the defendant No.1 are reflects the plaintiff has sought for Rs.201,52,29,820 from the very defendant, where as the defendant No.1 sought the relief against the very plaintiff for Rs.70,51,45,334.97. Now keeping the provisions and the relief which sought by the plaintiff and the defendant No.1 which referred above in mind, let me know the admitted facts which admitted by both the parties for the proper appreciation.
22. It is an admitted fact the applicant being the company registered under the Companies Act, engaged in construction activities of multi storied commercial and residential complex and undertaken a project of constructing a multi storied residential apartments off Kanakapura Road, Bangalore South Taluk which project was named as Mantri Serenity and entered into a JDA with Gokulam Shelters Pvt. Ltd., who were the owners of the land bearing resurvey No.51, 56P, 57P, 58P, 59P and 60P of Doddakallasandra Village, Uttarahalli hobli, Kanakapura Road, Bangalore South Taluk which measuring 19.6 acres with intend to 52 Com.A.S.No.235/2018 construct apartments in three phases. 1st phase comprising of 352 apartments, 2nd phase comprising of 1140 apartments and 3rd phase comprising of 660 apartments. Thus had invited the tenders in order to construct the multi storied residential complex. The defendant No.1 was successful in accepting the terms of the plaintiff and letter of acceptance was received on 30.03.2011, after elaborate negotiations by way of meetings, exchange of communications and the offer of the defendant No.1 was accepted and the letter of acceptance dated 06.05.2011 was signed, thereafter the agreement was taken place in between the plaintiff and the defendant No.1 on 13.06.2011 work was allotted to the respondent No.1 under the work order dated 18.07.2011. The plaintiff and the defendants were also admitted the plaintiff handing over the site for phase-I and the defendant No.1 has to complete the construction before 22.08.2013 with a period of 823 days and the commencement of phase-II and III works were to be mutually agreed within a time frame of 45 days from the date of acceptance of LOA and the work which was entrusted to the defendant No.1 was not completed and the plaintiff invoked the bank guarantee and the defendant No.1 has terminated the contract, thereafter the arbitral tribunal has been initiated to decide the issue which arisen in between them. 53 Com.A.S.No.235/2018
23. Now let me know the arguments which advanced by both the counsels to know whether the plaintiff has bring the case within the ambit of Sec.34 of the Arbitration and Conciliation Act to set aside the award which passed by the arbitral tribunal. The learned counsel for the plaintiff while canvassing his arguments has submitted the defendant No.1 right from the commencement of the work was unable to mobilize the required men and machinery to undertake the project and the defendant No.1 was required to furnish organization chart and appoint key personnel such as project manager, engineers, supervisors and operators to undertake the work, but the defendant No.1 did not taken any steps to complete the work, despite of receiving the mobilization advance of Rs.10 crores, failed to fully mobilize its men or materials at the work site which resulted in huge loss to the plaintiff in terms of interest, material inventories for which several communications and the meetings were held in between the plaintiff and the defendant No.1, but the defendant No.1 did not complete the work which was entrusted. Apart from failure to complete the work, failed to adhere to the quality measures prescribed under the agreement and the said fact has been time and again brought to the notice of the plaintiff and the quality issues encountered at the time of execution of the works under 54 Com.A.S.No.235/2018 the contract and the defendant has admitted the same and partly rectified some defects and failed to rectify the defects which brought to its notice and the defendant No.1 while execution of the works under the contract ignored the warnings which issued by the plaintiff and continue to execute the works in an unsafe and dangerous manner and at the request of the defendant No.1, time has extended to complete the work and the defendant No.1 has failed to progress of the work in spite of repeated request and reminders and the defendant No.1 had failed to coordinate with the nominated subcontractors and other contractors at site who were taken up the works assigned to them and they were idle due to non availability of work and the defendant No.1 did not paid the amount to them, thereby the plaintiff has invoked the bank guarantee and paid the said amount to the contractors and others. So invocation of the bank guarantee by the plaintiff is legal, but whereas the tribunal held that the invocation of bank guarantee is illegal, without considering the materials on record, but whereas the learned counsel for the defendant No.1 in his arguments has submitted that the plaintiff illegally invoked and encashed the bank guarantee and refuse to deposit the amount covered under the bank guarantees and the plaintiff has committed breach of the terms of the agreement. Therefore, the 55 Com.A.S.No.235/2018 invocation of bank guarantee which was invoked by the plaintiff is illegal, for which the Hon'ble Tribunal not only considered the oral evidence, but also documentary evidence which placed on record found that the invocation of the bank guarantee was illegal. So question of interference of this court does not arise.
24. It is an admitted fact the agreement was taken place in between the plaintiff and the defendant on 13.06.2011 and the work was allotted to the defendant No.1 under the work order dated 18.11.2011 and the work was to be completed within 823 calendar days in respect of phase No.I and date of commencement of the said work from 23.05.2011 and a time for completion for the said work for 823 days and the defendant No.1 has to complete the said work before 22.08.2013. Admittedly, the phase No.1 envisaged construction of one tower with four wings were to be consist of two basements, ground floor, 22 upper floors and the terrace each wing consist of 88 apartments and the total value of the work order to be executed by the defendant No.1 in phase No.I was to the tune of Rs.69,51,54,036.73/- which includes a value of added tax and service tax. In so far as, the phase No.2 and 3 are concerned, the start date was to be agreed mutually between the engineer and the plaintiff. So as per the contract which taken place in between the plaintiff and the 56 Com.A.S.No.235/2018 defendant, the total value of the phase No.1 of the project was Rs.69.51 crores and the defendant No.1 was entitled to mobilization advance of Rs.10 crores. For the release of the said 10 crores of mobilization advance, the defendant No.1 was expected to furnish BG to the extent of Rs.10 crores and the mobilization advance to be periodically recovered from the progress bills raised by the defendant No.1 and 3 bank guarantees of Rs.2,50,000/- each which furnished by the defendant No.1 were returned back to the defendant No.1 after the recovery of the advance. In so far as BG at Sl.No.4 is concerned the entire amount covered under the BG was not recovered before the expiry date of bank guarantee, the defendant No.1 has issued the BG on 18.07.2013 for sum of Rs.1,18,19,500/- being the adjusted advance remaining by reducing the value of bank guarantee and the amount covered under the bank guarantee was recovered by September 2013. As per the contract, once the entire recoveries are made, the plaintiff was under an obligation to return the bank guarantee forthwith. On the contrary, the plaintiff wanted to retain the said BG as a security for the amount and the plaintiff has not placed any materials that the BG which submitted by the defendant No.1 for the purpose which mentioned in the Ex.C.63. So one thing is 57 Com.A.S.No.235/2018 clear in the Ex.C.63 the defendant No.1 has received Rs.10 crores as mobilization advance against the bank guarantee and the entire Rs.10 crores advance has been deducted from the running bill. The defendant No.1 was requested the plaintiff to release the BG along with discharge letter as per the request mail sent to the plaintiff on 23.10.2013. So one thing is clear, Rs.10 crores has been repaid by means of recovery by the plaintiff and deduction from the running bills. The defendant No.1 was not due any amount to the plaintiff towards the said mobilization advance, in respect of which the BG has been submitted. Therefore, the obligation on the plaintiff in terms of the contract to return the BG with a discharge shara, but the plaintiff failed to perform its obligation and the agreement which taken place in between the plaintiff and the defendant nor the materials on record, nowhere empowers to hold the said BG as security for the amounts due under the different heads or in respect of mobilization advance given by the plaintiff to the defendant No.1 for any additional work. Therefore the plaintiff has no right nor authority to withhold the BG of the defendant No.1. That is the reason why Hon'ble Tribunal held that invocation of the BG is not lawful, it is illegal in violation of the terms of the contract which taken place in 58 Com.A.S.No.235/2018 between the plaintiff and the defendant as well as the terms of the bank guarantee.
25. The learned counsel for the plaintiff while canvassing has much argued the defendant No.1 was failed to pay the amounts to its workers, subcontractors and suppliers. Even though they brought to the notice of the defendant No.1 for payment in respect of the work which executed by them. The nominated subcontractors were approached the plaintiff and they expressed their displeasure and unhappiness over the way of the defendant No.1 was postponing their payments, thereby the plaintiff has no other go except to invoking the bank guarantee. After invoking the bank guarantee paid the said amount to them and nothing is wrong which committed by the plaintiff. Now the question arises whether the plaintiff empowers to invoke the bank guarantee and to encash the bank guarantee to pay the workmen, subcontractors and suppliers as alleged, as the sub clause 4.2 of the contract deals with performance security and the said provision is very much clear that the defendant No.1 was under
an obligation to extend the validity of the performance security until the works have been completed and any defects have been remedied. The obligation had to be performed by the defendant No.1 if it all has not become entitle to receive the performance 59 Com.A.S.No.235/2018 certificate by the date 28 days prior to expiry date and clause 4.2 is also very much clear that the employer shall not make a claim under the performance security except in the event of failure by the contractor to extend the validity of performance security, but the plaintiff has not placed any materials on record to show that the defendant No.1 had commit any failure on its part. Therefore invoking of bank guarantee by the plaintiff is not lawful, since any of the clauses of the contract empowers the plaintiff for invocation of the bank guarantee and the materials on record are reflects after invocation the plaintiff did not stop the work has been continued, but the plaintiff has invoked the bank guarantee and did not pay to the defendant No.1 as per the contract which taken place in between them. Therefore, the tribunal after considering the materials on record held that the invocation of the bank guarantee is not legal which was unlawful, contrary to the clause 4.2 of the contract and also contrary to the terms of the bank guarantee and the plaintiff utterly failed to bring the case within the ambit of Sec.34 of the Arbitration and Conciliation Act. Thus the arguments which advanced by the learned counsel for the plaintiff on this aspect holds no water. 60 Com.A.S.No.235/2018
26. The learned counsel for the plaintiff has much argued that the termination of the contract is illegal, and the defendant No.1 has no right to terminate the contract, therefore the termination of the contract which contrary to the contract which taken place in between the plaintiff and the defendant. The learned counsel for the defendant No.1 in his arguments has submitted that huge amounts were due from the plaintiff on the date of invocation of the bank guarantee. Therefore, the termination of the contract by the defendant No.1 is legal. It is an admitted fact the plaintiff has not issued any notice as contemplated under clause 2.5 of the contract before invoking the bank guarantee and the contract do not provide for invoking the bank guarantee. It is an admitted fact clause 16.2 of FIDIC provides for termination by contract, but the said clause was deleted in its entirety in contract entered in between the plaintiff and the defendant, but where as the clause 15.2 empowers the employer to terminate the contract was retained as the termination of the contract is at the instance of the plaintiff for which the tribunal not only discussed the materials on record, but also considered the legal aspects about termination of the contract which terminated by the defendant No.1, since the plaintiff did not make payment in terms of the contract in spite of 61 Com.A.S.No.235/2018 repeated request and demand who committed the fundamental breach of terms of the contract and the circumstances made the defendant No.1 for impossible to continue the work and the performance of the contract impossible to the defendant No.1 to do the work in terms of the contract, thereby the defendant No.1 has no option except to terminate the contract which taken place in between the plaintiff and the defendant No.1 and there is no provision in the contract which taken place in between the plaintiff and the defendant No.1 to terminate the contract by the defendant No.1, for which also the tribunal has considered all the materials on record and found that the termination of the contract which terminated by the defendant No.1 is legal. Therefore, the arguments which advanced by the learned counsel for the plaintiff holds no water.
27. The learned counsel for the plaintiff while canvassing his arguments has submitted the arbitral tribunal allowed the claim of the defendant No.1 in partly without considering the materials on record, but the plaintiff has not placed any of the materials to bring the case within the ambit of Sec.34 of the Arbitration and Conciliation Act. So whenever the party approaches the court by challenging the award under Sec.34 of the Arbitration and Conciliation Act, the burden on the plaintiff to 62 Com.A.S.No.235/2018 make out the grounds which are mentioned in the plaint falls within Sec.34 of the Arbitration and Conciliation Act. In the instant suit, though the plaintiff has challenged the award on the ground that the grounds which mentioned in the plaint falls within Sec.34 of the Arbitration and Conciliation Act, but the plaintiff failed to establish the same through oral and documentary evidence which already on record and moreover this court cannot sit as a appellate court for re- appreciation of the oral and documentary evidence on record nor substitute its view in the finding which recorded by the arbitral tribunal. So one thing is clear from the materials on record and grounds which alleged in the plaint do not fall within the ambit of Sec.34 of the Arbitration and Conciliation Act.
28. The learned counsel for the plaintiff while canvassing his arguments has much argued that the works which was carried out by the defendant No.1 was defective for which he has sustained the loss by the plaintiff, for which the tribunal has considered the materials on record and found that the plaintiff has not placed any materials on record to show the defective works which alleged to have been done by the defendant No.1, if at all the work which executed by the defendant No.1 was in defective works, work out of Rs.1.24 crores, the plaintiff would 63 Com.A.S.No.235/2018 have placed the materials to substantiate the same, for which the tribunal has considered the same and held that the defence which taken on this aspect has not been proved by the plaintiff. So the tribunal after considering all the aspects which raised by the plaintiff and come to the conclusion that the invocation of the bank guarantee was illegal and the termination of the contract which terminated by the defendant No.1 was legal and also held that the defendant No.1 is entitled a sum of Rs.6,45,70,000/- with interest @ 12% p.a. from the date of claim petition till the date of the award and thereafter @ 8% p.a. on the sums awarded from the date of award till the date of payment and the plaintiff has utterly failed to bring the case within the ambit of Sec.34 of the Arbitration and Conciliation Act.
29. The learned counsel for the plaintiff while canvassing his arguments has much argued that the tribunal has not taken into consideration about the counter claim which filed by the plaintiff, as the plaintiff has sustained the loss, because of non execution of the work which entrusted to the defendant No.1, but the tribunal has not taken into consideration of the materials which placed by the plaintiff to consider the counter claim. It is an admitted fact the plaintiff has filed statement of objection along with counter claim before the arbitral tribunal and sought for 64 Com.A.S.No.235/2018 counter claim No.1 for Rs.70,47,31,795/- towards compensation payable to its customers on account of the delay in handing over the apartments. According to the plaintiff, the work which was entrusted to the defendant No.1 has not been completed in spite of extension of time and because of non execution of the work in time as per the contract has sustained the loss and forced to pay the amount to its customers, for which the plaintiff has not placed any materials on record to substantiate the same for which the Hon'ble tribunal considered the materials on record and held that no evidence has been placed on record to show that the plaintiff had paid any damages for the delay in handing over the possession nor produced any materials on record to show that he has paid the rental compensation to its customers in delay in handing over the possession.
30. The plaintiff in its counter claim sought for Rs.1,66,64,040/- towards additional cost incurred for completion of pending works in phase-I for which also the plaintiff has not placed any materials to substantiate the same. That is the reason why the tribunal has held that the plaintiff is not entitled the relief of claim No.2 in the counter claim as sought for, since the plaintiff has not placed any materials to substantiate the same. The plaintiff in its counter claim sought for Rs.86,60,542/- towards 65 Com.A.S.No.235/2018 recovery of excess amount which paid to the 1 st defendant for the works done, but nothing has been produced to substantiate the same, thereby also the tribunal has rejected the claim of the plaintiff and the plaintiff also sought for Rs.121,83,33,542/- towards additional cost incurred, towards phase 2 and 3, but the plaintiff has not placed any materials to substantiate the same, thereby also the tribunal has not awarded the relief which sought by the plaintiff and the plaintiff was also sought for Rs.372.00,000/- towards loss of interest on the amount recoverable from the customers, but the plaintiff has not placed any materials to substantiate the same. That is the reason why the tribunal rejected the counter claim which filed by the plaintiff and the plaintiff has not made out any of the grounds to enumerate under Sec.34 of the Arbitration and Conciliation Act to set aside the award.
31. The learned counsel for the plaintiff while canvassing his arguments has drawn the court attention on the following judgments:
a. CDJ 2021 SC 167 C.A.No.791/2021 b. CDJ 2021 SC 471 c. 2021 SCC Online SC 508 d. C.A.6469/2021 66 Com.A.S.No.235/2018 On careful perusal of the above judgments, in the said judgments their lordship held that under Sec.34 of the Arbitration and Conciliation Act either to dismiss the objection filed and uphold the award or set aside the award if the grounds contained in subsection (2) and 2(a) are made out and there is no power to modify an arbitral award and the legislatures did not intend to use the word modify anywhere in Sec.34 of the Arbitration and Conciliation Act, it was contemplated is only to set aside an award passed by the arbitrator, if it falls within Sec.34 of the Arbitration and Conciliation Act and to see whether the arbitrator has exceed his jurisdiction or not and the scope of judicial review of the arbitral award is a narrow one and the role of the arbitrator is to arbitrate within the terms of the contract. In the instant case though the plaintiff has challenged the award which passed by the arbitral tribunal, but has not bring the case within Sec.34 of the Arbitration and Conciliation Act to set aside the award. Therefore, I do respect to the judgments which relied but the facts and circumstances of the present case and the judgments which are relied are not applicable to the case on hand.
32. The learned counsel for the defendant No.1 while canvassing his arguments has submitted that the decision of the authority for the proposition that where the party specifically 67 Com.A.S.No.235/2018 agree to refer a specific question of law for the decision of the arbitrator and agree to bound by it, the court cannot set aside the award on the ground of an error of law apparent on the face of it, even though the decision of the arbitrator may not accord with law as understood by the court and the contract which taken place in between the parties is binding on them and the court cannot correct the errors of the arbitrator, it can only quash the award leaving the parties free to begin the arbitration again if it is desired and only when the award is in conflict with the public policy of India, court can interfere the award which passed by the arbitral tribunal and the award of an arbitral tribunal once passed was binding on the parties and once it is held that the contractor was not responsible for the delay and the delay accrued only on account of omissions and commissions on the part of the respondents question of awarding the compensation nor liquidated damages does not arise and the said counsel has drawn the court attention on the following judgments:
a. Tarapore and Company Vs. Cochin Shipyard Ltd., Cochin & Ors.
b. U.P. Hotels & Ors. Vs. U.P. State Electricity Board. c. McDermott International Inc. Vs. Burn Standard Co. Ltd & Ors.
d. Associate Builders Vs. Delhi Development Authority. e. Union of India Vs Susaka Pvt. Ltd. & Ors. f. Sutlej Construction Vs Union Territory of Chandigarh g. Ssangyong Engineering & Construction Co. Ltd Vs. National Highways Authority of India (NHAI) h. Delhi Airport Metro Express Pvt. Ltd., Vs Delhi Metro Rail Corp. Ltd.68 Com.A.S.No.235/2018
I. Hindustan Construction Co.Ltd. & Ors. Vs Union of India & Ors.
j. Hind Construction Contractors Vs State of Maharashtra k. State of Karnataka Vs. Coimbatore Premier Constructions l. J.G. Engineers Pvt. Ltd., Vs Union of India & Ors. m. Maharashtra State Electricity Distribution Co. Ltd. Vs Datar Switchgear Ltd. & Ors.
On careful perusal of the above said judgments, their lordship held that the specific question has been referred to the arbitrator for his decision award cannot be set aside only on the ground of error apparent on the face of the award, because question of law wrongly decided of compensation made by the arbitrator which led to dispute covered by arbitral clause quantum of compensation awarded by the arbitrator, never disputed nor questioned and the order passed by the High Court was came to be set aside and the arbitral award cannot be set aside unless the award is in conflict with the public policy of India and the arbitrator is the sole judge of quantity and quality of evidence, when he delivers an arbitral award and once it is found that arbitrators approach is neither arbitrary nor capricious, then no interference is called for on facts and the arbitrator is the sole judge of the quality as well as the quantity of the evidence, the task of being a judge on the evidence before the tribunal does not call upon the court in exercise of its jurisdiction under Sec.34 of the Arbitration and Conciliation Act and once it is held that the 69 Com.A.S.No.235/2018 contract was not responsible for delay and delay accrued only on account of omissions and commissions on part of the respondent it followed the provisions which make decision of a superintending engineer or engineer in charge final and conclusive could be irrelevant, therefore would have jurisdiction to try and decide all the claims of the contractor. So in the instant case, the plaintiff has utterly failed to bring the case within the ambit of Sec.34 of the Arbitration and Conciliation Act. Therefore, the judgments which are relied by the defendant No.1 are applicable to the case on hand. So when the plaintiff has not made any of the grounds which are enumerated under Sec.34 of Arbitration and Conciliation Act, interference of this court is not warranted, unless brings the case under Sec.34 of the Arbitration and Conciliation Act, question of setting aside the award which passed by the arbitrators does not arise.
33. The learned counsel for the plaintiff while canvassing his arguments has submitted that the arbitral tribunal has rightly rejected the additional charges incurred due to delays caused in the release of mobilization advance, but allowed the claim of Rs.36,18,928/- towards additional charges incurred due to delays caused in the release of payments which comes within Sec.34 of the Arbitration and Conciliation Act as the arbitral tribunal without 70 Com.A.S.No.235/2018 considering the materials on record granted the said relief, but whereas the learned counsel for the defendant No.1 in his arguments has submitted that the relief which granted a sum of Rs.36,18,928/- towards additional charges incurred due to delays caused in release of payment is lawful. It is an admitted fact the learned counsel for the plaintiff while canvassing his arguments has stated that the Ex.C.101 is the concocted document and no reliance can be placed on the said document. It is an admitted fact Ex.C.101 is the statement which has been prepared in the prescribed format and the defendant No.1 has submitted the bills in pursuance of the contract. Now the question is whether the defendant No.1 is entitle the said amount in terms of the contract and the R.A. bills which submitted by the defendant No.1 to the plaintiff. The payments which shown in the RA bills from 1 to 33 dated 31.03.2014 are not in dispute and the said RA bills are reflects there is a delay in payment of the bills. That is the reason why the arbitral tribunal after considering the materials on record and awarded the amount. Therefore the arguments which advanced by the learned counsel for the plaintiff on this aspect holds not water.
34. The learned counsel for the plaintiff while canvasing his arguments has submitted that the tribunal awarded an amount of 71 Com.A.S.No.235/2018 Rs.1,08,44,475/- towards loss of profit due to scoping NSES works which is totally illegal without considering the materials on record, but nothing is placed on record to show that the relief which granted an amount of Rs.1,08,44,575/- towards loss of profit due to descoping of NSES works is illegal and capricious. Therefore, the arguments which advanced by learned counsel for the plaintiff on this aspect holds no water.
35. The learned counsel for the plaintiff while canvassing his arguments has submitted that the relief which granted by the arbitral tribunal for Rs.92,05,349/- towards balance payment due in price variation bills is illegal and capricious and the arbitral tribunal without considering the materials on record granted the said relief which is contrary to the contract which taken place in between the plaintiff and the defendant, but the tribunal after considering the materials which produced by the plaintiff and the defendant No.1 found that the defendant No.1 is entitled an amount of Rs.92,05,349/- towards balance payments due in respect of price variation bills as per the contract which taken place in between the plaintiff and the defendant. Therefore, the arguments which advanced by the learned counsel for the plaintiff on this aspect holds no water, as the arbitral tribunal not only considered the oral evidence, but also considered the 72 Com.A.S.No.235/2018 documents which placed on record especially Ex.C.103 and Ex.C.104 which on record and nothing has been placed by the plaintiff to substantiate its contention.
36. The learned counsel for the plaintiff while canvassing his arguments has submitted the tribunal without considering the materials on record and termination of the contract which terminated by the defendant No.1, granted the relief of Rs.14,571/- towards BGs charges. It is an admitted fact the plaintiff has invoked the bank guarantee and encashed the bank guarantee which provided by the defendant No.1 and the arbitral tribunal after considering the materials on record held that the invocation of the bank guarantee which made by the plaintiff was illegal. Now the question arises whether the BG charges which awarded by the arbitral tribunal is illegal, as the plaintiff has not disputed invocation of bank guarantee, therefore the arbitral tribunal after considering the materials on record held that the defendant is entitle a sum of Rs.14,571.09/- towards the BG charges for the period from 01.10.2013 to 28.11.2013. Therefore, the arguments which advanced by the learned counsel for the plaintiff on this aspect holds no water. Therefore, looking from any angle the plaintiff has failed to bring the case within the ambit of Sec.34 of the Arbitration and Conciliation Act to set aside 73 Com.A.S.No.235/2018 the award and to allow the counter claim which sought by the plaintiff. Hence, I am of the opinion that the point No.1 is answered as Negative.
37. POINT NO.2: In view of my answer to point No.1 as stated above, I proceed to pass the following;
ORDER The petition under Sec.34 of the Arbitration and Conciliation Act filed by the petitioner is hereby dismissed.
No order as to costs.
(Dictated to the Stenographer, transcript thereof corrected by me and then pronounced in the open court on this the 14th day of March, 2022) (P.J. Somashekara) LXXXVIII Addl. City Civil & Sessions Judge, (Exclusive Commercial Court), Bengaluru City