Calcutta High Court
Visva Bharati vs Sarkar & Sarkar on 20 December, 2010
Author: I.P. Mukerji
Bench: I.P. Mukerji
1
A.P. No. 248 of 2006
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
Original Side
PRESENT:
Hon'ble Justice I.P. Mukerji
VISVA BHARATI
Versus
SARKAR & SARKAR
For the petitioner : Mr. Srenik Singhvi, Adv.
Mr. D. Bhattacharya, Adv.
For the respondent : Ms. Sumita Mukherjee, Adv.
Ms. Kumkum Das (Dutta), Adv.
Heard on: 02.12.2010
Judgment on: 20th December 2010
I.P. MUKERJI, J.
This is a section 34 application. It is made by Visva Bharati to set aside an award dated 15th February 2006 passed by a learned Arbitrator. He was appointed by an order dated 22nd May 2003 of the Hon'ble the Chief Justice of this Court, in a section 11 application (A.P. No. 32 of 2002). The award has directed Visva Bharati to pay a sum of Rs. 1,74,607/- to the respondent contractor. This award represents awards for claim Nos. 1,2,3,4 and 5 together with a sum of Rs.1,00,000/-(Rupees one lakh) awarded as costs. Further, interest has been awarded @ 12% per annum on Rs.1,74,607/- from 2 18th December 2001 till the date of the award and @15% per annum from the date of the award till payment. No interest has been awarded on costs. The petitioner Visva Bharati entered into a contract with the respondent, by a work order dated 25th February 2000. The respondent contractor was to construct one class room, computer and teacher's room for the use of the department of Plant Protection at Sriniketan. The value of the contract was Rs.3,33,139.79/-. Work was to begin from 6th March 2000. Twenty weeks were stipulated for completion which was to end on or about 23rd July 2000. The work was not completed by the respondents, according to Visva Bharati. They alleged that the contractor abandoned the work. What appears from the records is that only 34% of the work was done by the respondent. Claim No.1 was for inter alia refund of deduction made in the first R.A. Bill drawn by the petitioner. The sum claimed was Rs.93,673/-. The amount awarded was Rs.37,433/-. I am satisfied with the reasons given by the learned Arbitrator at pages 11 and 12 of the award that the deductions were not made in accordance with the agreement. The learned Counsel for the petitioner has argued, on a reliance on clause 25 of the agreement being the arbitration clause and clause 2 that the arbitrator could not make this award. I do not think his argument is well founded. Clause 2 of the agreement only says that the decision of the Vice Chancellor regarding imposition of penalty is final. It is to be taken as 3 finally made at the end of the university. This means that there is no further appeal from this decision to any other authority of the university. That does not mean that the dispute becomes non arbitrable. Neither clause 25 nor clause 2 says so. If imposition of penalty became non arbitrable then there is no point in having an arbitration agreement between the parties, as in almost each and every dispute the imposition of penalty is challenged by the contractor. In the Supreme Court case of Executive Engineer, R.E.O. - v - Suresh Chandra Panda (Dead) Through Lrs. reported in (1999) 9 SCC 92, cited on behalf of the petitioner the clause provided that certain alterations ordered by the Engineer-in-Charge and the rate for such alteration as determined by the Engineer-in-Chief would be final. The Supreme Court held that the rate determined by the Engineer-in-Chief was final. Such decisions can be final because they involve the quantity of work to be done and the rate at which they are to be paid for. These matters relate to formation or alteration of contract and not to any dispute, out of such contract. In my opinion, the facts of that case have no application to facts here, because to say that levy of damages by the employer Visva Bharati would not be subject to arbitration would amount to making a very absurd interpretation of clause 2.
Further, a sum of Rs.50,750/- was claimed as claim No. 2 for work done but not measured. The amount awarded was Rs.34,094/-. This part of the award is well reasoned and I do not see any reason to interfere with it.
4For the same reason I do not wish to interfere with the award for Rs.54.705/- on claim No. 3 for Rs.91,905/- for work done according to instructions at work site. For claim No. 4 a full award of Rs.6025/- on account of return of an earnest/security deposit may be supported on the ground that there is a finding that both parties were responsible for the delay.
I am not satisfied with the principles applied in making an award for Rs.42,350/- on a claim for Rs.56,000/- on account of idle staff and establishment being claim No. 5 from 24th July 2000 to 23rd February 2001. There is a specific finding that both parties were responsible for the delay. Therefore, if extra expenses were found to be Rs. 42,350/-, the respondent contractor should have been awarded only 50% of it, that is, Rs.21,175/- and Rs.21,175/- should have been disallowed as being attributable to the fault of the contractor. Therefore, this part of the award has to be revised accordingly.
I have to make a few comments regarding the award of interest. When it has been specifically held by the learned Arbitrator that both parties were to blame for the delay, then this amount could not have been payable from 18th December, 2000. No reason has been given for awarding interest from 18th December 2000. The contractor was on the site up to 23rd February 2001. Therefore, interest could at best be given after 23rd February 2001. Further, the rate of interest does 5 not match the lending or borrowing rate of banks. In my opinion, the correct rate of interest should have been 12% per annum from 15th March 2001 (by making an allowance of about 20 days being a reasonable time for Visva Bharati to make payment of the contractor's claim) till the date of payment. The learned Arbitrator has held that both parties were at fault. He has also held that imposition of penalty under clause 2 was not proper. The contract was discharged with fault on both sides. Therefore, the counterclaim of the petitioner was rightly rejected by the Arbitrator. The claims of the respondent allowed by the learned Arbitrator relate to unpaid work. I have modified the award in claim No.5 by apportioning damages equally between the parties. Therefore, the above award is modified as follows:
Principal sum awarded: 1,74,607/-
Less: 21,175/-
Principal sum awarded according to this judgment 1,53,432/-
The respondents are to be paid interest by the petitioner 12% from the above sum from 15th March 2001 till the date of payment.
Costs awarded are excessive. They are reduced to Rs.50,000/- and to be added to the above award, without interest.
This application is allowed to the above extent.
6Urgent certified photocopy of this judgment and order, if applied for, to be provided upon complying with all formalities.
(I.P. MUKERJI, J.)