Gujarat High Court
State Of Gujarat vs Vijay Mistry Construction & on 22 March, 2013
Author: Chief Justice
Bench: Chief Justice
STATE OF GUJARAT....Appellant(s)V/SVIJAY MISTRY CONSTRUCTION & RAJKAMAL BUILDERS PVT LTD C/FA/3688/2012 CAV JUDGEMNT
FA36882012Cj.2doc IN THE HIGH COURT OF GUJARAT AT AHMEDABAD FIRST APPEAL NO. 3688 of 2012 With CIVIL APPLICATION NO. 13144 of 2012 In FIRST APPEAL NO. 3688 of 2012 FOR APPROVAL AND SIGNATURE:
HONOURABLE THE CHIEF JUSTICE MR.
BHASKAR BHATTACHARYA and HONOURABLE MR.JUSTICE J.B.PARDIWALA ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ?2
To be referred to the Reporter or not ?` 3 Whether their Lordships wish to see the fair copy of the judgment ?4
Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ?5
Whether it is to be circulated to the civil judge ?
========================================================= STATE OF GUJARAT Versus VIJAY MISTRY CONSTRUCTION & RAJKAMAL BUILDERS PVT LTD & ANR ========================================================= Appearance:
MS VACHA DESAI, ASST. GOVT. PLEADER for the Appellant.
MR MIHIR THAKORE, SR. COUNSEL with MR. MV CHOKSHY AND MR. VIRAL K SHAH, for the Respondent No. 1 RULE UNSERVED for the Respondent No. 2 ========================================================= CORAM:
HONOURABLE THE CHIEF JUSTICE MR.
BHASKAR BHATTACHARYA and HONOURABLE MR.JUSTICE J.B.PARDIWALA Date : 22/03/2013 CAV JUDGEMNT (PER : HONOURABLE THE CHIEF JUSTICE MR. BHASKAR BHATTACHARYA)
1. This First Appeal under section 37 of the Arbitration & Conciliation Act, 1996 [the Act] is at the instance of the State of Gujarat and is directed against judgment dated 7th December 2011 in Regular Civil Appeal No. 22 of 2011, whereby the learned Principal District Judge, Anand, treating the appeal as an application for setting aside the award under section 34 of the Act, dismissed the prayer of the appellants for setting aside the Award dated 15th May 2010 passed by the learned Arbitral Tribunal.
2. The facts giving rise to the filing of this appeal may be summed up thus:
2.1 The respondent No.1 was entrusted with the construction of a two-lane bridge across the River Mahi and its approaches, near Vasad on Ahmedabad-Vadodara section of the National Highway No. 8 under BOT Scheme with fee rights, and a Concession Agreement was executed on 16th November 1998 between the Government of India and Government of Gujarat on one part and M/s. Vijay Mistry Construction and Rajkamal Builders Pvt. Ltd., on the other part.
2.2 According to the Agreement, the date of commencement of the work was 16th January 1999 and the period of concession was 95 months and 3 days including the construction period of 2 years and, thus, the concession period expired on 18th December 2006.
2.3 Some disputes had arisen between the parties and the respondent No.1 referred the matter to the Arbitral Tribunal and the following claims and counter-claims were made before the Tribunal:-
1. Whether the claimant proves that it is entitled, under the provisions of the agreement dated 16/11/1998, to recover loss caused on account of issues of monthly and return passes at concessional rates to the local residents, who were everyday users of the facility ; and further proves that the Claimant's entitled to receive compensation in the principal sum or Rs.65,58,750.00 or any other amount?
2. Whether the Claimant proves that it is entitled under the provisions of the agreement dated 16/11/1998, to receive compensation in the principal sum of Rs.94,411.00 or any other amount on account of Gujarat Bandh on 3rd and 4th August 2000?
Whether the Claimant proves that it was stopped from collecting Toll on 27/09/2000 due to unlawful conduct of the Police Officers as alleged in Para 8.1 to 8.4 of the Statement of Claims? And further proves that it is entitled, under the provisions of the agreement dated 16/11/1998 to receive compensation on this count in the principal sum of Rs.227,846.00 or any other amount?
4. Whether the Claimant proves that it is entitled, under the provisions of the agreement dated 16/11/1998, to receive reimbursement to the extent or Rs.5,14,80,000.00 being the amount paid by the Claimant towards Minimum Alternative Tax( MAT )?
5. Whether the Claimant proves that it is entitled for declaration that the Respondent is liable, under the provisions of the agreement dated 16/11/1998, to reimburse amount/s paid by the Claimant towards MAT subsequently to the payment of Rs.5,14,80,000.00?
6. Whether the Claimant proves that it is entitled, under the provisions of the agreement dated 16/11/1998, to receive the extra cost of Rs.91,80,225.00 or any other amount due to increase/decrease in the scope of work?
7. Whether the Claimant proves that it is entitled to receive an amount of Rs.85,04,350.00 or any other amount being the rightful remuneration for the work or repairing of the old bridge?
8. Whether the Claimant proves that the effect of communal riots in Gujarat lasted from 28/02/2002 to 31/05/2002 on collector to toll?
9. Whether the Claimant proves that it is entitled to receive compensation, under the provisions of the agreement dated 16/11/1998, in the principal sum of Rs.97,15,984.00 or any other amount, for the loss in the Toll collection during the communal riot?
10. Whether the Claimant proves that there was unprecedented rainfall during periods as alleged in para 15.1 of the Statement of claims?
11. Whether the Claimant proves that it is entitled to receive compensation, under the provisions of the agreement dated 16/11/1998, in the principal sum of Rs.24,78,340.00 or any other, for the loss in the Toll collection during the periods unprecedented rainfall?
12. Whether the Claimant proves that it is entitled to receive an amount of Rs.4,14,462.00 or any other amount being the rightful remuneration for the work of repairing of the Expansion joints of the old bridge?
13. Whether the Claimant proves that it is entitled under the provisions of the agreement dated 16/11/1998, to receive compensation in the principal sum of Rs.2,01,172.00 or any other amount on account of Transporter's Strike on 12th and 13th June 2006?
14. Whether the Claimant proves that there was unprecedented rainfall during the period 21/07/2006 to 31/08/2006 as alleged in para 18.1 of the Statement of Claims?
15. Whether the Claimant proves that it is entitled to receive compensation, under the provisions of the agreement dated 16/11/1998, in the principal sum of Rs.37,94,610.00 or any other amount, for the loss in the Toll collection during the aforesaid period of unprecedented rainfall?
16. Whether the Respondent proves that it is entitled to deduct or recover an amount of Rs.1,09,65,071.00 due to increase/decrease in the scope of work?
17. Whether the Respondent proves that it is entitled to the counter claim of Rs.1,21,40,945.00 towards alleged saving in the cost of well?
18. Whether the Respondent proves that it is entitled to the counter claim of Rs.11,10,91,000.00 towards alleged saving in the cost of maintenance under the terms of agreement dated 16/11/1998?
19. What order as to interest?
20. What order as to costs?
21. What Award?
2.4 Ultimately, the Tribunal, by its order dated 15th May 2010 made the following awards as would appear from paragraphs 230 and 231 thereof.
230. We have already recorded our findings as above and have also decided the amount awarded against each of the claims/counter claim allowed and the same is summarized hereunder:
Claim/ Issue No. Particular Amount of Claim in Rs.
Amount of Award in Rs.1/1
Loss on account of issue of monthly and return passes at the concessional rate 65,58,750.00 NIL 4/2 Loss suffered on account of Gujarat Bandh on 3rd & 4th August, 2000 94,411.00 94,411.00 5/3 Loss of toll collection due to unlawful act of police officer 2,27,846.00 2,27,846.00 8/4-5 On account of reimbursement of new taxes levied and charged subsequent to award of the contract 5,14,80,000.00 4,98,52,746.00 9/6 Claim on account of increase/decrease in scope of work 91,80,225.00 NIL 10/7 Claim on account of repairing of old bridge.
85,04,350.00 85,04,350.00 11/8-9 Loss of toll fee due to disturbance in Gujarat State due to prolonged riots.
97,15,984.00 53,09,200.00 12/10-11 Loss of toll collection due to unprecedented rain 24,78,340.00 23,44,194.00 13/12 On account of repairs to expansion joints of the old bridge over river Mahi 4,14,462.00 NIL 14/13 Loss of toll collection on 12th and 13th June, 2006 due to Transporter s strike.
2,01,172.00 NIL 15/14-15 Loss of revenue due to unprecedented rainfall in states of Gujarat and Maharashtra in 2006 37,94,610.00 23,84,896.00 TOTAL 9,26,50,150.00 6,87,17,643.00 COUNTER CLAIMS 1/16 On account of increase/decrease in scope of work 1,09,65,071.00 1,09,65,071.00 2/17 On account of saving in cost of well 1,21,40,945.00 Claim not pressed for.3/18
On account of saving in Maintenance Cost 11,10,91,000.00 Claim not pressed for.
TOTAL 1,09,65,071.00 1,09,65,071.00
231. The upshot of our adjudication of the dispute between the parties is that we make an award in the following terms:-
a. A sum of Rs.6,87,17,643/-(Rupees Six Crore Eighty Seven Lacs Seventeen Thousand Six Hundred Forty Three) is awarded to the claimant against the claims allowed as above.
b. The interest is awarded at the rate of 12% p.a. On the amount of Rs.6,87,17,643/-(Rupees Six Crore Eighty Seven Lacs Seventeen Thousand Six Hundred Forty Three) awarded against the claims allowed. The period for which the interest has been granted is the date of invocation of Arbitration i.e. 25.11.2006 till the date of award i.e. 15.5.2010 i.e. for 1267 days which comes out to Rs.2,86,24,193/-(Rupees Two Crores Eighty Six Lacs Twenty Four Thousand One Hundred Ninety Three).
C. A sum of Rs.
16,06,255.00/-(Rupees Sixteen Lacs Six Thousand Two Hundred Fifty Five) is also awarded in favour of the claimant by way of reimbursement corresponding to the respondents' share of the fees and expenses etc. of the Arbitral Tribunal paid by the claimant.
d. A sum of Rs.1,09,65,071/-(Rupees One crore Nine Lacs Sixty Five Thousand Seventy one) is awarded to the respondents against Counter Claim no.1 e. A sum of Rs.45,67,478/-(Rupees Forty Five Lacs Sixty Seven Thousand Four Hundred Seventy Eight) is awarded to the respondents against interest at the rate of 12% p.a. on the amount awarded against the Counter Claim no.1. The period for which the interest has been granted is the date of invocation of Arbitration i.e. 25.11.2006 till the date of award i.e. 15.5.2010 i.e. for 1267 days.
f. Claims no. 2,3,6. & 7 are rejected as not pressed by the Claimant.
g. Counter Claims no. 2 & 3 are rejected as not pressed and withdrawn by the Respondents.
h. Respondents shall pay a total sum of (Rs.9,89,48,091/-) minus (Rs.1,55,32,549/-) is equal to Rs.8,34,15,542/-(Rupees Eight Crore Thirty Four Lacs Fifteen Thousand Five Hundred Forty two) to the Claimant and the Claimant shall be entitled to recover the same amount from Respondents against this award.
i. Keeping in view the totality of the facts and circumstances we direct with regard to the future interest that in case the total due amount under this award is paid by the Respondents to the claimant within a period of 90 days from the date of award, no interest will be payable for this period of 90 days. In case the respondents fail to make the payment within 90 days from the date of award, the claimant shall be entitled to recover and the Respondent shall pay the future interest (simple) at the rate of 15% p.a. from the date of award.
j. Respondents and Claimant are to bear their own costs.
2.5 Being dissatisfied, the State of Gujarat filed a Regular Civil Appeal being No. 22 of 2011 before the Principal District Judge, Anand, under section 34 of the Act.
2.6 Before the learned Principal District Judge, the following issues had arisen for determination.
1. Whether the appeal as laid is maintainable?
2. Whether this court has jurisdiction?
3A. Whether the objection as to claim No.1 on account of issue of monthly and return passes at the concessional rates is agitable?
3B. Whether the claim for Rs.91,80,225-00 on account of increase/decrease in scope of work is required to be agitated?
3C. Whether the claim for Rs.4,14,462-00 on account of repairs to expansion joints of the old bridge over river mahi and also claims of Rs.2,01,172-00 for loss of toll collection on 12th and 13th June, 2006 due to transporters strike are required to be agitated?
Whether findings of award as to loss suffered on account of Gujarat Bandh on 3rd and 4th August, 2000 amounting to Rs. 94,411 is liable to be set aside?
5. Whether findings in respect of loss of Rs.2,27,846 for toll collection due to unlawful act of police officer is liable to be set aside?
6. Whether findings in respect of reimbursement of new taxes to the tune of Rs.5,14,80,000 levied and charged subsequent to award of the contract is liable to be set aside?
7. Whether finding of tribunal in respect of claim on account of repairing of old bridge amounting to Rs. 85,04,350 is liable to be set aside?
8. Whether the finding of tribunal in respect of loss of toll fee amounting to Rs.97,15,984 due to disturbance in Gujarat state due to prolong riots is liable to be set aside?
9. Whether the finding of tribunal in respect of loss of toll collection amounting to Rs.24,78,340 due to unprecedented rain and also loss of revenue amounting to Rs.37,94,610 due to unprecedented rainfall in state of Gujarat and Maharashtra in 2006 are liable to be set aside?
2.7 The learned Principal District Judge, by the order impugned in this appeal, answered those issues in the following way.
In the negative.
2. In the affirmative.
3A. In the negative.
3B. In the negative.
3C. In the negative.
4. In the negative.
5. In the negative.
6. In the negative.
7. In the negative.
8. In the negative.
9. In the negative.
10. As per order.
2.8 The appeal, as stated above, was treated by the learned Principal District Judge, Anand, as an application for setting aside the award under section 34 of the Act, and he ultimately dismissed it on merit.
2.9 Being dissatisfied, the State of Gujarat has come up with the present appeal under section 37 of the Act.
3. Ms. Desai, the learned Assistant Government Pleader appearing on behalf of the appellant-State, however, has restricted her submissions on the findings of the learned Principal District Judge on points No. 2, 4, 5, 6, 8 and 9 indicated above.
4. In order to decide the issues involves in the present appeal, it would be profitable to refer to the following clauses of the Concession Agreement:
4. FORCE MAJEURE:
4.1 As used in this Agreement a Force Majeure Event shall mean any or all of the acts or events set out in Section 4.2 hereinafter which prevent the party claiming Force Majeure (the Affected Party ) from performing its obligations under this Agreement or complying with any conditions required by other parties hereto under and in accordance with the provisions of this Agreement and which act or event is (i) beyond the reasonable control and not the fault of the Affected Party, and (ii) the Affected Party has been unable to overcome such act or event or it's effect on the obligations of the affected party in this agreement by the exercise of due diligence and reasonable efforts.
4.2 For the purpose of this Section 4 of the Agreement, Force Majeure Event shall mean one or more of the following acts or events:
4.2.1 NON-POLITICAL ACTS AND EVENTS:
(i) act of God or event beyond the reasonable control of the Affected Party which could not reasonably have been expected to occur at the place, and at the time of year in question, exceptionally adverse weather conditions, lightening, earthquake, volcanic eruption or fire (to the extent originating from a source external to the Project Site or not designed for/in the Construction Works)or landslide; the occurrence of which is in no way connected with the work of project site;
(ii) Radio active contamination or ionising radiations;
(iii)Strikes or boycotts interrupting supplies and services to the project site (other than those involving the entrepreneur, contractors engaged by the entrepreneur for the project ( Entrepreneur, Contractors ), or their respective employees, agent or representatives or any strike or boycott attributable to any unfair policy or practice of the aforementioned persons) not being an indirect Indian political event set forth in subsection 4.2.2 of the section 4.2 here of; or
(iv) Any event of circumstances of nature analogous to the foregoing.
4.2.2 INDIRECT INDIAN POLITICAL EVENT:
(i) An act of war (whether declared or undeclared) invasion, armed conflict or act or foreign enemy, blockade, embargo, prolonged riot, insurrection, terrorist or military action, civil commotion or politically motivated sabotage;
(ii) industry wide or state or India wide strikes or industrial action (other than those involving primarily the Affected Party's own employees or those of any of the Affected Party's Contractors);
(iii)the unlawful or unauthorised revocation of, or such refusal by the Government to renew without valid cause, any consent required by the entrepreneur or any of the entrepreneur's contractors to perform their obligations under the Project Documents or any unlawful or unauthorised such refusal by the Government to grant any such consent (other than a consent the obtaining of which is a condition precedent).
4.2.3 GOI POLITICAL EVENT:
(i) Change in Law adversely and materially affecting fee rights of the entrepreneur.
Explanation:
(a) The enactment of any new Indian law or Indian Government Directive;
(b) the repeal in whole or in part (unless re-enacted with the same effect), or modification of any existing Indian law or Government Directive;
(c) A change in the interpretation or application of any Indian law or Government Directive such interpretation being legally binding on the parties to this Agreement.
(ii) expropriation or compulsory acquisition by any Indian Governmental Agency or any State Government Agency of material assets or rights of the entrepreneur;
(iii)any other unlawful or unauthorised action on the part of GOI occurring after commencement date which is directed against the Project (other than action taken in connection with or pursuant to a commercial contract between the GOI and entrepreneur.) 4.3 The following events are expressly excluded from force Majeure Event and are the sole liability of the Affected Party.
(a) Any act or event at the works of any vendor or sub-contractor of any of the entrepreneur affecting the Project whether or not beyond the reasonable control of such vendor or sub-contractor or the entrepreneur's Contractor.
(b) Late delivery of any equipment or materials.
(c) Economic hardship e.g. insufficiency of funds.
(d) Failure of the entrepreneur to obtain financial help or to achieve the financial closure of the project.
4.4 In the event of occurrence of any Force Majeure Event prior to the date of completion of project construction but after Financial Close, in relation to the Affected Party and concerning and adversely affecting the Project, the following shall apply.
4.4.1 If the Force Majeure Event one or more of the acts and events set forth in Section 4.2.1 above.
(a) There shall be no termination of the Agreement except as provided in Sub-clause (d) of this Section 4.4.1.
(b) Project Milestone dates set forth in this agreement ( Project Mile-stone Schedule ) shall be extended by the period the Force Majeure Event shall exist.
(c) All costs arising out of or concerning such Force Majeure Event shall be borne by the entrepreneur to the extent not covered by or not recovered from the insurance taken out for the Project by the entrepreneur pursuant Agreement (the Project Insurance ).
(d) If the Force Majeure Event subsists for a continuous period of 120 (one hundred and twenty) days or more, the Affected Party or GOI may at their sole option terminate this Agreement by 30 days notice in writing to the other parties hereto without being liable in any manner whatsoever, same as provided in Sub-clause (e) of this Section 4.4.1 below and
(e) Upon termination of this Agreement pursuant to the above referred Sub-clause (d) of this Section 4.4.1 hereof, the entrepreneur shall be entitled to total outstanding long term loans obtained by the entrepreneur from Banks and Financial Institutions (collectively the Term Lenders ) for meeting the capital cost of the Project and spent on the project it found reasonable and margin money for working capital advances and spent on the Project (the Project Debt ) less proceeds of the Project Insurance.
(f) Compensation payable to the entrepreneur by GOI pursuant to Sub-clause (e) of this Section 4.4.1 shall be due and payable upon fulfilling the following:
execution of transfer deeds and other writings in favour of GOI transferring and assigning the Project and Project Assets to GOI, and to be taken over by GOI (collectively the Project Assets ) and
(ii) the delivery of possession of the Project and Project to GOI, whichever is later, free from all encumbrances, charges and liens whatsoever.
4.4.2 If the Force Majeure Event is one or more of the acts and events set forth in Section 4.2.2 above.
(a) There shall be no termination of the Agreement except as provided in Sub-clause (d) of this Section 4.4.2.
(b) Project Milestone Schedule set forth in this agreement shall be extended by the period the Force Majeure Event shall exist;
(c) All costs directly arising out of and attributable to such Force Majeure Event and relatable directly to the Project (the Force Majeure Costs ) shall be borne by the entrepreneur to the extent covered by or recovered from the Project Insurance, and to the extent such Force Majeure Costs exceed the Project Insurance, the same shall at the option of GOI, be factored into fees which the entrepreneur is authorised to charge pursuant to the Agreement (the fees ) or by extension of the term of the Agreement for a period reasonable considered appropriate by the GOI to facilitate recovery of such Force Majeure Costs.
(d) If the Force Majeure Event subsists for a continuous period of 120 (one hundred and twenty) days or more, the Affected Party or GOI may at their sole discretion terminate this Agreement 30 days notice in writing to the other parties hereto without being liable in any manner whatsoever, save as provided in Sub-clause (e) of this Section 4.4.2. below;
and
(e) Upon termination of this Agreement pursuant to the above referred Sub-clause (d) of this Section 4.4.2 hereof, the entrepreneur shall be entitled to an amount by way of compensation equal to:
(i) the total outstanding debt to the extent spent if found reasonable on the project as on the date of termination of this Agreement less proceeds of Project Insurance;plus.
(ii) the issued and paid up (subscribed in cash) equity share capital of the entrepreneur to the extent spent if found reasonable on the project as on the date of termination (the Paid up Equity Capital ) with interest thereon at the State Bank of India prime lending rate prevailing on the date of signing of the agreement ( SBI PLR ) per annum from the date of payment of the subscription to the Paid up Equity Capital till the date of occurrence of Force Majeure Event; plus
(iii) 100% of the stamp duty, registration and transfer charges, if any, payable on the transfer of the Project and Project Assets (as defined in Sub-clause
(f) below) to GOI.
(f) Compensation payable to the entrepreneur by GOI pursuant to sub clause (e) of this section 4.4.2 shall be due and payable upon fulfilling the following.
(i) Execution of transfer deeds and other writings in favour of GOI transferring assigning the project and the project assets to GOI and to be taken over by GOI (Collectively the Project Assets ) and
(ii) The delivery of possession of the project and the project to GOI whichever is later free from all encumbrances charges and liens whatsoever.
(g) Notwithstanding anything to the contrary contained in Sub-clause (e) above of this Section 4.4.2 the GOI shall pay for and behalf of and the Entrepreneur hereby irrevocably instructs and authorises the GOI to pay to the Term Lenders from the compensation payable to the Entrepreneur by GOI pursuant Sub-clause (e) above of this Section 4.4.2, their respective portion of the outstanding Project Debt and such payment by GOI to the Term Lenders shall constitute valid discharge of GOI obligation to pay compensation to the Entrepreneur pursuant Sub-clause (e) above of this Section 4.4.2. Such payment by GOI to term Lenders shall be deemed to be the payment of the compensation amount pursuant hereto by GOI to the Entrepreneur in discharge of its obligations in respect thereof under this Agreement. In such an event the entrepreneur irrevocably subbrogate its right to receive the amount recoverable from the Insurance company in favour of GOI. The entrepreneur confirms that the subbrogation is irrevocable and shall not be contested in any proceedings before any Court or authority and entrepreneur shall have no right to prevent, obstruct, injunct or restrain the GOI or Employer's Agent.
4.4.3 If the Force Majeure Event is one or more of the acts and events set forth in Section 4.2.3 above.
(a) There shall be no termination of the Agreement except as provided in Sub-clause (d) of this Section 4.4.3;
(b) Project Milestone Schedule set forth in this agreement shall be extended by the period the Force Majeure Event shall continue to exist;
(c) All costs arising out of and attributable directly to such Force Majeure Event and relatable directly to the Project at the option of GOI be factored into fees which the entrepreneur is authorised to charge pursuant to this agreement (the fees;) or compensated by extension of the term of the agreement for a period reasonably considered appropriate by the GOI to facilitate recovery of such force majeure costs.
(d) If the Force Majeure Event subsists for a continuous period of 120 (One hundred and twenty) days or more, the Affected Party or GOI may at their sole option terminate this Agreement by 30 days notice in writing to the other parties hereto without being liable in any manner whatsoever to them, save as provided in Sub-clause (e) of this Section 4.4.3 below; and
(e) Upon termination of this Agreement pursuant to Sub-clause (d) of this Section 4.4.3 above, the entrepreneur shall be entitled as compensation to an amount equal to
(i) total outstanding Project Debt as on the date of termination of this Agreement less proceeds of Project Insurance; plus
(ii) The Paid up Equity Capital with interest thereon at the rate of SBI PLR plus 2% per annum from the date of subscription till the date of occurrence of Force Majeure Event, plus
(iii) 100% of the stamp duty, registration and transfer charges, if any, payable on the transfer of the Project and Project Assets to GOI
(f) Compensation payable to the entrepreneur by GOI pursuant to Sub-clause (e) of this Section 4.4.2 shall be due and payable upon fulfilling the following:
(i) Execution of transfer deeds and other writings in favour of GOI transferring and assigning the Project and Project Assets to GOI, and to be taken over by GOI (collectively the Project Assets ) and
(ii) the delivery of possession of the Project and Project to GOI, whichever is later, free from all encumbrances, charges and liens whatsoever.
(g) Notwithstanding anything to the contrary contained in Sub-Clause (e) above of this Section 4.4.3 the GOI shall pay for and behalf of and the entrepreneur hereby irrevocably instructs and authorises the GOI to pay to the Term Lenders from the compensation payable to the entrepreneur by GOI pursuant Sub-clause (e) above of this Section 4.4.3, their respective portion of the outstanding Project Debt and such payment by GOI to the Term Lenders shall constitute valid discharge of GOI obligation to pay compensation to the entrepreneur pursuant Sub-clause (e) above of this Section 4.4.3. Such payment by GOI to Term Lenders shall be deemed to be the payment of the compensation amount pursuant hereto by GOI to the entrepreneur in discharge of its obligations in respect thereof under this agreement. In such an event the entrepreneur irrevocably subrogate its right to receive the amount recoverable from the Insurance company in favour of GOI. The entrepreneur confirms that the subrogation is irrevocable and shall not be contested in any proceedings before any Court or authority and entrepreneur shall have no right to prevent, obstruct, injunct or restrain the GOI or Employer's Agent.
4.5 In the event of occurrence of any Force Majeure Event after the completion date in relation to the Affected Party and concerning and adversely affecting the Project, the following shall apply:
4.5.1 If the Force Majeure Event is one or more of the acts events set forth in Section 4.2.1 above:
(a) There shall be no termination of the Agreement except as provided in Sub-clause (d) of this Section 4.5.1;
(b) Project Milestone Schedule shall be extended by the period the Force Majeure Event shall exist and also by the period required to restore the facility;
(c) GOI would provide on terms mutually agreed between GOI and the entrepreneur a loan to the extent of 25% of the principal amount of the portion of the Project Debt service obligation of the entrepreneur for the year in which such Force Majeure Event occurs i.e. 25% of the principal amount of the portion of the Project Debt due to payment to the Term Lenders in the year in which such Force Majeure Event occurs ( Debt Service Obligation ) provided the entrepreneur is unable to meet its Debt Service Obligation for that year by reason of such Force Majeure Event. Such loan shall bear interest at the rate of SBI PLR per annum prevailing at the time of signing of the agreement plus 2% per annum and shall be repaid by the entrepreneur out of revenues of the entrepreneur in equal to number of remaining years of the Concession Period. If the Agreement is terminated for any reason whatsoever and any sums are due and payable by GOI to the entrepreneur pursuant to this agreement or otherwise, the GOI shall have the right and the entrepreneur hereby expressly consents to the appropriation of all such sums against the said loan notwithstanding anything to the contrary contained herein;
(d) If the Force Majeure Event subsists for a continuous period of 120 (one hundred and twenty) days or more, the Affected Party or GOI may at their sole option terminate this Agreement by 30 days notice in writing to the other parties hereto without being liable in any manner whatsoever save as provided in Sub-clause (e) of this Section 4.5.1 below; and
(e) Upon termination of this Agreement pursuant to Sub-clause (d) of this Section 4.5.1 above, the entrepreneur shall be entitled as compensation to an amount equal to total outstanding Project Debt less proceeds of Project insurance.
(f) Compensation pursuant to Sub-clause (e) of Section 4.5.1 above shall be due and payable upon fulfilling the following:
(i) execution of transfer deeds and other writings in favour of GOI transferring and assigning the Project and project assets to GOI, and
(ii) delivery of possession of the Project and Project Assets to GOI, whichever is later, free from all encumbrances, charges and liens whatsoever.
(g) Notwithstanding anything to the contrary contained in Sub-Clause (e) above of this Section 4.5.1 the GOI shall pay for and behalf of and the entrepreneur hereby irrevocably instructs and authorises the GOI to pay to the Term Lenders from the compensation payable to the entrepreneur by GOI pursuant Sub-clause (e) above of this Section 4.5.1, their respective portion of the outstanding Project Debt and such payment by GOI to the Term Lenders shall constitute valid discharge of GOI obligation to pay compensation to the entrepreneur pursuant Sub-clause (e) above of this Section 4.5.1. Such payment by GOI to Term Lenders shall be deemed to be the payment of the compensation amount pursuant hereto by GOI to the entrepreneur in discharge of its obligations in respect thereof under this Agreement. In such an event the entrepreneur irrevocably subrogate its right to receive the amount recoverable from the Insurance in favour of GOI. The entrepreneur confirms that the subrogation is irrevocable and shall not be contested in any proceedings before any Court or authority and entrepreneur shall have no right to prevent, obstruct, injunct or restrain the GOI or Employer's Agent.
4.5.2 If the Force Majeure Event is one or more of the acts events set forth in Section 4.2.2 above:
(a) There shall be no termination of the Agreement except as provided in Sub-clause (e) of this Section 4.5.2;
(b) Project Milestone Schedule shall be extended by the period the Force Majeure Event shall exist and reasonable restoration time if any;
(c) All costs directly arising out of and attributable to such Force Majeure Event and relatable directly to the Project (the Force Majeure Costs ) shall be borne by the entrepreneur to the extent covered by or recovered from the Project Insurance, and to the extent such Force Majeure Costs exceed the Project Insurance, the same shall at the option of GOI, be factored into fees which the entrepreneur is authorised to charge pursuant to the Agreement (the fees ) or by extension of the term of the Agreement for a period reasonably considered appropriate by the GOI to facilitate recovery of such Force Majeure Costs.
(d) In addition to the Sub-clause (c) above GOI would provide on terms mutually agreed between GOI and the entrepreneur a loan to the extent of 50% of the principal amount of the portion of the Project Debt service obligation of the entrepreneur for the year in which such Force Majeure Event occurs i.e. 50% of the principal amount in the portion of the Project Debt due to payment in the year in which such Force Majeure Event occurs provided that the entrepreneur is unable to meet its such Project Debt Service Obligation for that year by reason of such Force Majeure Event. Such loan shall bear interest at the rate of SBI PLR per annum prevailing at the time of signing of the agreement plus 2% per annum and shall be repaid by the entrepreneur out of revenues of the entrepreneur equal to number of remaining years of the Concession Period. If the Agreement is terminated for any reason whatsoever and any sums are due and payable by GOI to the entrepreneur pursuant to this agreement or otherwise, the GOI shall have the right and the entrepreneur hereby expressly consents to the appropriation of all such sums against the said loan notwithstanding anything to the contrary contained herein;
(e) If the Force Majeure Event subsists for a continuous period of 120 (one hundred and twenty) days or more, the Affected Party or GOI may at their sole option terminate this Agreement by 30 days notice in writing to the other parties hereto without being liable in any manner whatsoever to them, save as provided in Sub-clause (f) of this Section 4.5.2 below;
and
(f) Upon termination of this Agreement pursuant to Sub-clause (e) of this Section 4.5.2 above, the entrepreneur shall be entitled as compensation to an amount equal to the outstanding debt and the sum arrived at on the basis of return on paid Equity Capital @ 20% for the balance remaining years of the term of this Agreement discounted @ 12% per annum plus 100% of the stamp duty, registration and transfer charges, if any, payable on the transfer of the Project Assets to GOI.
(g) Compensation pursuant to Sub-clause (e) of Section 4.5.2 above shall be due and payable upon fulfilling the following:
(i) execution of transfer deeds and other writings in favour of GOI transferring and assigning the Project and Project assets to GOI, and
(ii) delivery of possession of the Project and Project Assets to GOI, whichever is later, free from all encumbrances, charges and liens whatsoever.
(h) Notwithstanding anything to the contrary contained in Sub-Clause (e) above of this Section 4.5.2 the GOI shall pay for and behalf of and the entrepreneur hereby irrevocably instructs and authorises the GOI to pay to the Term Lenders from the compensation payable to the entrepreneur by GOI pursuant Sub-clause (e) above of this Section 4.5.2, their respective portion of the outstanding Project Debt and such payment by GOI to the Term Lenders shall constitute valid discharge of GOI obligation to pay compensation to the entrepreneur pursuant Sub-clause (e) above of this Section 4.5.2. Such payment by GOI to Term Lenders shall be deemed to be the payment of the compensation amount pursuant hereto by GOI to the entrepreneur in discharge of its obligations in respect thereof under this Agreement. In such an event the entrepreneur irrevocably subrogate its right to receive the amount recoverable from the Insurance company in favour of GOI. The entrepreneur confirms that the subrogation is irrevocable and shall not be contested in any proceedings before any Court or authority and entrepreneur shall have not right to prevent, obstruct, injunct or restrain the GOI or Employer's Agent.
4.5.3 If the Force Majeure Event is one or more of the acts events set forth in Section 4.2.3 above:
(a) There shall be no termination of the Agreement except as provided in Sub-clause (d) of this Section 4.5.3;
(b) Project Milestone Schedule shall be extended by the period the Force Majeure Event shall exist and reasonable restoration time if any;
(c) All costs arising out of and attributable directly to such Force Majeure event and ratable directly to the project shall be reimbursed by GOI to the Company as under:
(d) If such Force Majeure Event shall continue beyond seven (7) days, in that event during which such Force Majeure Event continues shall be reimbursed by payment of an amount equal to (i) the Project Debt service obligation prorated for such period of the continuance of such Force Majeure Event, plus (ii) operation and maintenance costs of the project prorated for such period of the continuance of such Force Majeure event plus (iii) an amount equal to return on paid up Equity Capital for such period (beyond the first seven days) of the continuance of such Force Majeure calculated at the rate of 20% per annum.
(e) If the Force Majeure Event subsists for a continuous period of 120(one hundred and twenty) days or more, the Affected Party or GOI may at their sole option terminate this Agreement by 30 days notice in writing or the other parties hereto without being liable in any manner whatsoever to them, save as provided in Sub-clause (e) of this Section 4.5.3 below; and
(f) Upon termination of this Agreement pursuant to Sub-clause (d) of this Section 4.5.3 above, the company shall be entitled as compensation to an amount computed in the following manner.
Sum equal to return @ 20% per annum on paid up Equity Capital for the balance remaining term of the Agreement discounted @ 12% per annum plus outstanding debt and 100% of the stamp duty, registration and transfer charges, if any, payable on the transfer of the Project and Project Assets to GOI.
(g) Compensation pursuant to Sub-clause (e) of Section 4.5.3 above shall be due and payable upon fulfilling the following:
(i) execution of transfer deeds and other writings in favour of GOI transferring and assigning the Project and Project assets to GOI, and
(ii) delivery of possession of the Project and Project Assets to GOI, whichever is later, free from all encumbrances, charges and liens whatsoever.
(h) Notwithstanding anything to the contrary contained in Sub-Clause (e) above of this Section 4.5.3 the GOI shall pay for and behalf of and the Company hereby irrevocably instructs and authorises the GOI to pay to the Term Lenders from the compensation payable to the Company by GOI pursuant Sub-clause (e) above of this Section 4.5.3, their respective portion of the outstanding Project Debt and such payment by GOI to the Term Lenders shall constitute valid discharge of GOI obligation to pay compensation to the Company pursuant Sub-clause (e) above of this Section 4.5.3. Such payment by GOI to Term Lenders shall be deemed to be the payment of the compensation amount pursuant hereto by GOI to the Company in discharge of its obligation in respect thereof under this Agreement. In such an event the Company irrevocably subrogate its right to receive the amount recoverable from the Insurance company in favour of GOI. The company confirms that the subrogation is irrevocable and shall not be contested in any proceedings before any Court or authority and Company shall have no right to prevent, obstruct, injunct or restrain the GOI or Employer's Agent.
xxxx xxxx xxxx xxxx 4.8.1 Neither party may claim relief for a Force Majeure Event unless it shall have notified the other party in writing of the occurrence of the Force Majeure Event as soon as responsibility practicable, and in any event withing seven (7) days after the effected party knew, or ought reasonably to have known, of its occurrence and that the Force Majeure Event would be likely to have a material impact on its performance of its obligation under this Agreement.
4.8.2 Any notice pursuant to this Article shall include full particulars of:
(i) the nature of each Force Majeure Event which is the subject of any claim for relief under this Agreement together with an estimate of its's expected duration;
(ii) the effect which such Force Majeure Event is having or likely to have on the affected party's performance of its obligations under this Agreement;
(iii) the measures which the affected party is taking, or proposes to take, to alleviate the impact of those Force Majeure Events; and
(iv) any other information relevant to the affected party's claim For so long as the affected party continues to claim to be affected by a Force Majeure Event, it shall provide the other party with regular (and not less than monthly) written reports containing;
(1) the action called by this Article; and (2) such other information as the other party may reasonably request the affect party claim.
4.8.3. Where the Concessionary/entrepreneur is the affected party, it shall promptly notify GOG and GOI in writing when any Force Majeure Event which is the subject of any claim under this Agreement or when there is any material change in its impact on the entrepreneur performance of its obligations under this Agreement.
5. At the very outset, it may be mentioned here that the appellant invited tenders for the work construction of Two-Lane-Bridge across the river Mahi and it approaches near Vasad on Ahmedabad Vadodara Section of NH-8 on build operate transfer basis whereby the respondent was required to invest in the project and recovery of such investment was to be made through the levy of toll from the vehicles using the project facility at a predetermined rate as provided in the Concession Agreement for the accepted concession period. The appellant accepted the respondent s offer for a concession period of 95 months and 3 days, which included construction period of 24 months whereby the operation period came to be 71 months and 3 days. In terms of the Concession Agreement, in case the project is completed prior to or after the construction period of 24 months, the respondent would be allowed to start collection of fees i.e. commercial operation after the construction certificate would be issued by the appellant for the balance concession period. Therefore, in case of early completion, the benefit of such completion should go to the respondent. The Concession Agreement between the respondent and the appellant was signed on November 16, 1998. The commencement date is the date which would be the 60 days after the signing of Concession Agreement and thus, the commencement date would be January 16, 1999, the project completion date came to be January 15, 2001 and the end of concession period would be midnight of December 18, 2006. The respondent completed the work earlier than the stipulated completion period and commenced toll collection in accordance with the fee schedule from vehicles using the facility from April 9, 2000 and thus, the respondent was benefited for the earlier completion period from April 9, 2000 to January 15, 2001.
6. During the concession period, the respondent raised certain claims and in accordance with the Concession Agreement, the claims were referred to the Steering Group. Most of the claims were decided against the claimant except for three claims, but the appellant did not release even that amount. According to the provision of Concession Agreement, such relief was to be in the form of extension in concession period. Since the appellant took back the facility in accordance with the agreement at the midnight of December 18, 2006, the question of granting relief in the form of extension in concession period did not arise. The respondent further contended that due to wrongful refusal of the appellant in respect of claims in following the terms of Concession Agreement, the compensation for damages should be paid.
7. We have already pointed out that the Tribunal has passed the award and, as indicated earlier, an application for setting aside such award has been dismissed by the Court below.
8. The first question that arises for determination in this appeal is whether the Arbitral Tribunal had jurisdiction to decide the disputes. It was sought to be argued that the disputes having arisen out of work contract, the matter should have been referred under the provisions of Gujarat Public Work Dispute Arbitration Tribunal Act, 1992. It appears from clause 9.3 of the agreement between the parties that in case the decision of the steering committee is not acceptable to any of the parties, the dispute should be referred to the Arbitral Tribunal under the provisions of the Arbitration and conciliation Act, 1996 as amended from time to time and according to clause 9.4, the place arbitration should be Ahmedabad. Thus, the parties having decided to come within the provisions of the Act of 1996, the said point is not tenable in the eye of law. We, thus, overrule the aforesaid objection.
9. The next question that arises for determination in this appeal is, whether the finding in respect of loss of Rs.2,27,846/- for toll collection due to unlawful act of a Police Officer is liable to be set aside.
9.1 According to the respondent, on September 27, 2000 at about 12.30 PM, a vehicle bearing No.GJ-6T-6540 arrived at the toll plaza from the side of Vadodara and insisted on paying Rs.2/- as toll fee instead of Rs.10/-, the notified fee. The attendant at the toll plaza refused to allow the vehicle to pass through the toll plaza without payment of the notified fee of Rs.10/-. The occupant of the vehicle was a Police Officer in the civil dress. When the attendant did not allow the vehicle to pass through toll plaza, the Police Officer turned violent and threatened the attendant with serious consequences. Thereafter, he turned his vehicle from toll plaza and went back in the direction he came from. After half an hour, the same Police Officer returned with a number of policemen armed with hockey sticks and rifle, entered the toll booth and forced all the attendants to leave the collection-booth and suspended toll collection. The respondent informed the higher Police Officers with the help of its Officers i.e. Deputy Executive Engineer and Assistant Engineer. With the intervention of Senior Police Officers, the normal situation was restored and toll collection was resumed at 3.00 PM on the same day. However, at 4.00 PM once again the police stopped toll collection, arrested all the security guards and supervisor and attempted to take them to Chhani Police Station; however, all the staffs were released on the way before reaching the Chhani Police Station. Once again, the senior officials intervened and normality was restored and the toll-collection resumed at 11.00 PM on September 27, 2000. It appears that before the Arbitral Tribunal as well as the Court of Appeal below, it was contended on behalf of the appellant that in the absence of any FIR being lodged, such claim was not tenable. The Tribunal as well as the Court below turned down such contention on the ground that it had been well established from the evidence on record that in view of illegal action on the part of the State police, the collection of toll was suspended and such fact has been proved by the FAX letter and other letters and in such circumstances, it was held that non-filing of any First Information Report before the police did not stand in the way of the respondent in claiming compensation for the loss. The Tribunal as well as the Appellate authority held that in the previous day to the incident, the collection of toll was Rs.3,42,857/-, whereas on September 27, 2000 it was Rs.1,15,011/- and on that basis, a sum of Rs.2,27,846/- was allotted in favour of the respondent. We find that the finding recorded by both the Arbitral Tribunal and the Court below were perfectly justified and there is no scope of any interference with such finding.
10. The next question is, whether the finding in respect of reimbursement of new taxes to the tune of Rs.5,14,80,000/- levied and charged subsequent to award of contract was liable to be reimbursed.
10.1 It appears that one of the conditions of Concession Agreement is that the respondent should take into consideration all the taxes that the respondent was liable to pay prior to the commencement date, which was defined as 60 days after the date of signing of the Concession Agreement. The Concession Agreement provides for reimbursement of payment of new taxes levied or charged on the respondent after the commencement date. The Concession Agreement was signed on November 18, 1998 and thus, the commencement date came to be January 16, 1999. It has been established from the facts of the present case that prior to January 16, 1999, the respondent was not liable to pay Minimum Alternative Tax (MAT). The respondent became liable to pay MAT with effect from April 1, 2000. According to the Concession Agreement, the MAT paid by the claimant was required to be reimbursed by the appellant. It has been established that the respondent paid MAT to the extent of Rs.5,14,80,000/- till December 2006, the proof whereof was submitted to the appellant. The appellant, however, has failed to honour such claim of reimbursement and referred the matter to the Steering Group. The Steering Group, in its turn, sought legal opinion from the Legal Department of the Government of Gujarat and the legal opinion was that MAT was not a new tax as it existed on the statute book at the time of agreement as well as at the time of commencement of Concession Agreement. The Steering Group decided to go by the opinion of the Legal Department.
10.2 The Arbitral Tribunal, on interpretation of the relevant provision of the taxing statute, came to the conclusion that the MAT was not a newly imposed tax but a modification of taxation scheme. According to it, the tax was not imposed on the fees collected from the road users of the project, but it is the tax payable by the respondent company on book profit. The MAT was in existence since April 1, 1998 and was amended from time to time under the Income Tax Act under Section 115 JA after April 1, 1997 up to April 1, 2001 and the total income of the assessee chargeable to tax for the relevant previous year should be deemed to be an amount equal to 30% of the book profit. The Tribunal, ultimately, held that on January 16, 1999, the date of commencement of work, or on November 18, 1998, the date of agreement, there was no liability under any law to pay Minimum Alternative Tax and the MAT became a liability for payment with effect from April 1, 2000. The Tribunal relied upon clause 3.1.5(f) and held that for all practical purposes, it was a new tax in the sense that the same was not payable on the two crucial dates as mentioned above. According to the Tribunal, the clauses of Concession Agreement have to be read as a whole and have to be given a purposeful meaning to the intention of the parties and as to how such clauses could be understood by any person of normal prudence and consequently, held that the said amount has to be reimbursed.
10.3 The First Appellate Authority below also took the same view taken by the Arbitral Tribunal.
10.4 In our opinion, the view taken by both the authorities below, on interpretation of the relevant provision, is quite reasonable and cannot be said to be an impossible view or a perverse one and within the narrow scope of Section 34 or Section 37 of the Act, there is no scope of interference with such finding.
11. The next question is, whether the finding of the Tribunal in respect of loss of toll fee amounting to Rs.97,15,984/- due to disturbance in Gujarat State due to prolonged riots was liable to be set aside.
11.1 On the above aspect, the Tribunal came to the conclusion that there was no dispute that there was prolonged communal riot in the State of Gujarat from February 28, 2002. In the Concession Agreement, the definition of Project and Force Majeure events are stipulated and remedy and relief to affected party is also provided. We have already quoted the aforesaid provisions. It appears that the definition of Project includes fee collection arrangement and collection of fees. Clause 4 is pertaining to Force Majeure. Clause 4.1 stipulates pre-condition for the affected party claiming Force Majeure. Clause 4.2 provides for Force Majeure of different categories, namely, 4.2.1 Non Political acts and events, 4.2.2, Indirect Indian Political event and 4.2.3. GOI Political event. Clause 4.3 provides for exclusion from the Force Majeure events and it is the sole liability of the affected party. Such events are as follows:-
(a) Any act or event at the works of any vendor or sub-contractor of any of the entrepreneur affecting the project whether or not beyond the reasonable control of such vendor or sub-contractor or the entrepreneur s contractor.
(b) Late delivery of any equipment or materials
(c) Economic hardship e.g. insufficiency of funds.
(d) Failure of the entrepreneur to obtain financial help or to achieve the financial closure of the project.
11.2 The Tribunal held that prolonged communal riot in the State of Gujarat had fallen within the category of clause 4.2.2, viz, Indirect Indian Political Events and the event of riots falls under clause 4.2.2(i). This event had occurred after completion of project construction and relief for which is provided under clause 4.5 and 4.5.2. The Tribunal, ultimately, held that the claimant was entitled to relief under clause 4.5.2 (c) due to riots. It may not be out of place to mention here that the Steering Group had also accepted this fact and only dispute was the period during which the toll collection was affected. The Tribunal below, on detailed analysis of evidence on record, by a well-reasoned order, arrived at the figure of Rs.53,09,200/- We find that the aforesaid finding is based on correct interpretation of the Concession Agreement and the Court of Appeal below rightly refused to interfere within the narrow scope of Section 34 of the Act, We, thus, find no reason to interfere with such concurrent finding recorded by the Tribunal and the First Appellate Court.
12. The last question is, whether the finding of the Tribunal in respect of loss of toll collection amounting to Rs.24,78,340/- due to unprecedented rain and also loss of revenue amounting to Rs.37,94,610/- due to unprecedented rainfall in Gujarat and Maharashtra in the 2006 should be interfered with.
12.1 On the basis of materials placed before the Tribunal, it came to the conclusion that normal monsoon period and normal rain during the period is a known fact and that there was unprecedented rain during July 21, 2006 and August 31, 2006. The Tribunal recorded that neither of the parties disputed such fact. The only dispute was whether the unprecedented rain can be termed as force majeure event. The Tribunal below in this connection examined clauses 4, 4.2.1 and 4.3 of the agreement and came to be conclusion that unprecedented rain is a force majeure event covered under clause 4.2.1(i) viz. exceptionally adverse weather condition, as also under clause 4, viz. any event of circumstances of nature analogous to the events stipulated in clause 4.2.1 (i) to (iv). The Tribunal further held that unprecedented rain is also not included in the list of exclusion under clause 4.3.
12.2 We find substance in the contention of Mr Thakore, the learned Senior Advocate appearing for the respondent, that the findings recorded by both the Tribunal and the Court below are quite reasonable on interpretation of the above clauses of the Concession Agreement.
13. At this stage, we may profitably refer to the following observations of the Supreme Court in the case of Rashtriya Ispat Nigam Ltd. v. M/s. Dewan Chand Ram Saran reported in AIR 2012 SC 2819 where the said court pointed out the scope of interference with the finding of the Arbitral Tribunal on the interpretation of the Arbitration Clauses:
29. In any case, assuming that clause 9.3 was capable of two interpretations, the view taken by the arbitrator was clearly a possible if not a plausible one. It is not possible to say that the arbitrator had travelled outside his jurisdiction, or that the view taken by him was against the terms of contract. That being the position, the High Court had no reason to interfere with the award and substitute its view in place of the interpretation accepted by the arbitrator. The legal position in this behalf has been summarized in paragraph 18 of the judgment of this court in SAIL v. Gupta Brother Steel Tubes Ltd., (2009 AIR SCW 7191) (supra) and which has been referred to above. Similar view has been taken later in Sumitomo Heavy Industries Ltd. v. ONGC Ltd.
reported in [2010 (11) SCC 296] : (AIR 2010 SC 3400 : 2010 AIR SCW 5171) to which one of us (Gokhale J.) was a party. The observations in paragraph 43 thereof are instructive in this behalf. This paragraph 43 reads as follows (Para 36 of AIR, AIR SCW):
"43.The umpire has considered the fact situation and placed a construction on the clauses of the agreement which according to him was the correct one. One may at the highest say that one would have preferred another construction of Clause 17.3 but that cannot make the award in any way perverse. Nor can one substitute one's own view in such a situation, in place of the one taken by the umpire, which would amount to sitting in appeal. As held by this Court in Kwality Mfg. Corpn. v. Central Warehousing Corpn*. The Court while considering challenge to arbitral award does not sit in appeal over the findings and decision of the arbitrator, which is what the High Court has practically done in this matter. The umpire is legitimately entitled to take the view which he holds to be the correct one after considering the material before him and after interpreting the provisions of the agreement. If he does so, the decision of the umpire has to be accepted as final and binding."
*[2009 (5) SCC 142]: (AIR 2009 SC (Supp) 2276).
13.1 We have already pointed out that in the case before us, both the Tribunal and the court below have correctly applied the relevant provisions of the agreement and the findings are in tune with the aforesaid provisions. We, therefore, find no reason to interfere with the concurrent findings based on correct interpretation of the relevant provisions of agreement.
14. All the points taken by Ms Desai having failed, we find no merit in this appeal and the same is dismissed.
14.1 In view of the above order passed in the main First Appeal, the Civil Application also stands dismissed. The interim relief granted earlier stands vacated forthwith.
14.2 In the facts and circumstances, there will be, however, no order as to costs in both the matters.
(BHASKAR BHATTACHARYA, CJ.) (J.B.PARDIWALA, J.) mathew FURTHER ORDER After this judgment was pronounced, Ms. Desai, the learned Assistant Government Pleader appearing for the State, prays for stay of operation of our judgment for a period of one month to enable her client to challenge this judgment before the higher forum.
The prayer is granted. We stay the operation of our judgment for a period of one month from today.
Certified copy be given immediately, if applied for.
(BHASKAR BHATTACHARYA, CJ.) (J.B.PARDIWALA, J.) mathew Page 44 of 44