Bangalore District Court
Jmf Projects (India) Ltd vs Bangalore Metro Rail Corp. Ltd on 28 September, 2022
1 Com.A.P.No.27/2020
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 28th day of September 2022
Com.A.P.No.27/2020
Applicant: JMF Projects (India) Ltd.,
A Company incorporated
Under the Companies Act, 1956
Having its Corporate Office at
6th Floor, Kalpataru Synergy,
Opp. Grand Hyatt Hotel,
Santacruz (East), Mumbai - 400 055,
Rep. by its authorised signatory
Mr. Praveen Ezra.
(By Sri. N.M., Advocate)
-vs-
Respondent: 1. Bangalore Metro Rail Corp. Ltd.,
A company incorporated under the
Companies Act, 1956, having its
Registered office at III Floor,
BMTC Complex, K.H. Road, Shantinagar,
Bangalore - 560 027,
Rep. by its Chief Engineer,
2. Mr. R. Gururajan, Retd. Judge,
High Court of Karnataka,
2 Com.A.P.No.27/2020
Presiding Arbitrator,
3. Mr. A.N. Venugopala Gowda,
Retd. Judge, High Court of Karnataka,
Member Arbitrator,
4. Mr. K.N. Keshavanarayana,
Retd. Judge, High Court of Karnataka,
Member Arbitrator.
(By Sri. A.V./A.R.B. Advocates)
JUDGMENT
This is a suit filed by plaintiff under Sec.34 of the Arbitration and Conciliation Act and sought for to set aside impugned award of majority arbitral tribunal on issue No.6 in part as far as it relate to finding on the Clause 2.2 and 8.3 of GCC and to set aside the impugned award in respect of issue No.1(a), (b), (c), (d), (e), (f),
(h), (k), (m) and issue No.2, 3, 5 and 6 and to pass such other orders as this court deems fit.
2. Nut shell of the plaint are as under:
The plaintiff being the claimant and the defendant No.1 being the respondent before the arbitral tribunal, feeling aggrieved by the award has filed the instant suit stating that who is a prominent engineering and construction services company incorporated under the Companies Act, 1956 and having its registered office at Ahmedabad and corporate office at Mumbai, 3 Com.A.P.No.27/2020 undertakes as a contractor civil engineering works and has been in the business for over 30 years having ample experience in the construction of metro railway project and provide its services to a wide area of sectors in both domestic and international markets represented by its authorized signatory Mr. Praveen Ezra who has been authorize to do so. The defendant No.1 is a joint venture of Government of India and Government of Karnataka having registered office at 3rd floor, BMTC Complex, K.H. Road, Shantinagar, Bangalore. The defendant NO.1 is a special purpose entrusted with the responsibility of metro rail project in the city of Bangalore. The disputes have been arisen out of the contract for construction of elevated structures (viaduct) of length of 2.5 km between Ch.(-) 3700 M to Ch.(-) 6182 M (including lay bye length of 250 M) from Peenya Village station (excluding) to Hesaraghatta cross (including) and construction of three numbers of elevated metro stations viz., Jalahalli, Dasarahalli and Hesaraghatta cross stations in reach 3 extension of north side of North-South corridor of Bangalore Metro Rail Project - Phase-1 entered into between the parties through contract agreement No.BMR/VIA and 3 Stns./R3b/ extension/ 2010-11/C-373 dated 17.09.2010. The defendant NO.1 floated a tender for the construction of the viaduct and three elevated metro stations on 12.08.2009 and its 4 Com.A.P.No.27/2020 tender package on 22.10.2009 and the letter of acceptance was issued by the defendant NO.1 on 21.07.2010 and the contract period for the completion of the project was 27 months from the date of LOA i.e., until 20.10.2022. The contract price of project was Rs.2,12,65,42,695/- and to construct 83 numbers of piers which were given a number of identification which falling within the scope of works were given numbers P-451 to P-533. In addition to the construction work of 3 stations and construction of viaduct from P-451 to P-533 as per the original terms of the contract. In the month of February 2012 the defendant no.1 had entrusted construction work of further 10 additional piers upto P- 543 as part of extension of viaduct portion and lay bye line. The progress of the viaduct was to be measured with reference to 10 Key dates, the last date being the date of completion and the progress of the 3 stations were to be measured with reference to 5 key dates. The defendant no.1 has promised inter-alia to give physical possession of the land necessary for executing the construction work in 3 phases land in 1 st phase was to be handed over on or before 20.08.2010. The land in the 2 nd phase was to be handed over on or before 20.09.2010. The land in the 3 rd phase was to be handed over on or before 20.11.2010. The contract work was to be performed under the supervision of the 5 Com.A.P.No.27/2020 Central consultant appointed by the defendant no.1. GC contract consisted of a consortium or joint venture between several consulting engineering firms like Systra of France, Rights of India, PBI of USA and OC of Japan. The contract required to communicate with or through the GC. The authority and the powers granted to, or possessed by, the GC were to be gathered from the terms of the contract between the parties. The defendant no.1 inter-alia delayed in handing over the land issuance and approval of drawings, shifting of utilities and determination of rates for the extended/additional works entrusted. The delays significantly effected the progress of the project as a result of which could not complete the works within the original stipulated contract period of 27 months from the date of LOA. The works was extended by another 32 months. The cause of delay of 32 months which occurred beyond 20.10.2012.
3. The plaintiff in its plaint has further alleged on several occasions sought for extension of time in accordance with the general conditions of the contract, seeking extension of time for the completion of the contract from the original commencement date and delay was caused not on its fault and who has completed the work of viaduct as a whole and handed it over or about 28.02.2014, enabling the defendant no.1 to undertake the 6 Com.A.P.No.27/2020 work of laying railway tracks on the viaduct. The work of 3 stations located at Jalahalli, Dasarahalli and Hesaragatta Cross, were further delayed beyond 20.08.2014, thereby sought for extension of time citing the reasons thereof. On 13.03.2014 the Managing Director of the defendant visited to each of 3 stations and demanded certain changes/additional to be attended to and responded to the letter clearly stating that had stopped the works upon receiving suggestions from the Managing Director was not disputed by the defendant no.1. The location of EFO, TO and AFC gates were shifted from ground level to concourse level/flat form lever on 30.04.2014 as per the instructions given by the Managing Director of the defendant no.1. The entire works of ACP glassing and louvers was stopped from 18.03.2014 until 29.07.2014 as instructed by the Managing Director of the defendant for reviewing of possible cost reduction. Revised drawings were submitted and works could not be taken up only upon receiving final approval to the revised drawings. The work could be started only around 18.08.2014, even after the delay there were many changes made on 18.02.2015, the defendant through GC advised for additional scope of glassing/louver works to prevent splashing of train water at flat form level and the said works completed around 31.03.2015 and compelled to do some 7 Com.A.P.No.27/2020 ACP and glassing works even after commercial operation of Metro services.
4. The plaintiff in its plaint has further alleged the contract provided for an item of street light force of 6.5 mts, however GC wide letter dated 09.05.2013 instructed to provide for street light pole of 5.5 mts., a proposal for non tender item for providing 5.5 meter highlight poles was submitted vide letter dated 11.06.2014 and 13.06.2014. The GC letter dated 23.10.2014 clarifies that NT item not required and 6.5 meter hi-pole as per original scope may be used for the works and general arrangement drawing approved vide letter dated 24.11.2014. On 03.12.2014 lighting details conveyed after the visit of Director rolling stock signaling and Electrical. On 30.12.2014 locations for street light pole and bracket were decided and proactively placed the order on 02.12.2014 for tentative quantities, but confirmation on exact quantities could be conveyed only after 30.12.2014 and installation was completed by 14.02.2015. As on 12.11.2014 the signage layout drawing for stations was finalized, after receipt of drawings only additional works of conducting and wiring to facilitate signage work could be taken up, quantity of which was very huge, after getting the layout drawings required at least 7 days time for calculating the quantity before placing the order 8 Com.A.P.No.27/2020 with the vendor and lengths of wire to be ordered were Jalahalli 266800 RM, Dasarahalli:242200RM & Hesaragatta:243400RM. The wire to be manufactured was project specific with no competition, the vendor took its time before fulfilling the orders and the goods to be dispatched only after factory inspection and approval of inspection note by GM-Electrical and entire process consumed about 8 to 10 weeks to procure and install the special wire. On 03.12.2014 representative of the defendant no.1 gave the 2 kinds of LED lights to be fixed in lobby area for mock up and called the representative of the defendant on 05.12.2014 to inspect and decided to provide LED lights of specific type in lobby area on 12.12.2014 and gave in principle approval through E-mail and same was an extra work. Instructions to carry out the works of fire drive way with 80 MM Paver block(extra item) were given on 19.01.2015 and work was completed on 28.02.2015 and has to execute the work of providing glassing and louvers in the connecting bridge area of AFC gates at platform level. AS per the instructions of the Managing Director of the defendant decided to omit work informed on 30.04.2015, during the rain of 2015 noticed rain water entering the area of AFC gates and the defendant decided to reverse its earlier decisions and ordered to fix glazing and louvers in the connecting bridge area on 9 Com.A.P.No.27/2020 04.06.2015 to avoid ingress of rain water. On 18.02.2015 the defendant no.1 instructed to provide additional SS hand railing at end gate barriers and for escalators and the same was an extra work which was completed on 27.02.2015. The defendant no.1 had undertaken to supply power for the purpose of testing and commissioning of panels in congestion/synchronizing with that of the interfacing agencies and completed the testing of pump room, UPS, DG and fire fighting works, sometime around September 2014 through temporary power supply and completed testing and commissioning around 2 nd week of February 2015 and made 6 applications for extension of time under clause 8.4.1 and final formal extension was applied vide letter dated 27.04.2015 and completed the whole work by 31.03.2015, pursuant to the completion of work on or about 31.03.2015, on 02.04.2015 the Commissioner of Metro Railway safety conducted an inspection and the commercial operation of the Metro was commenced on 01.05.2015. The submission and acceptance of "As built"
drawings were the last stage in respect of entire work under the contract. The process was started on 17.03.2015 and completed on 27.03.2015 with effect from 01.07.2015. The defendant no.1 had deliberately decided to levy liquidated damages for the 3 stations for Hesargatta, liquidated damages to be levied from 10 Com.A.P.No.27/2020 01.10.2014 to 15.04.2015, for Jalahalli liquidated damages to be levied from 30.11.2014 to 15.04.2015 and for Dasarahalli liquidated damages to be levied from 01.01.2015 to 15.04.2015. Though submitted letter of substantial condition on 17.02.2015, since 15.04.2015 could not be disputed by the defendant no.1 as too accepted on 15.04.2015 as the actual date of competition. Therefore, in the light of the delay in completion of the over all works disputes have arisen between them and adjudication of which sought for before the Arbitral tribunal and filed statement of claims for which defendant filed statement of defence and counter claim for which filed rejoinder to the counter claim, thereafter Arbitral tribunal passed the award feeling aggrieved by the said award filed the instant suit for the following:
Grounds A. The impugned award which passed by the Arbitrators is arbitrary, mechanical and biased manner without application of mind while interpreting the evidence placed on record before the Arbitral tribunal and ignored the material admission which made by the defendant with regard to the reasons for the delay.
B. The impugned award which passed by the Arbitral Tribunal by way of 2 divergent award with respect to interpretation of clauses, the majority Arbitral tribunal while appreciating the 11 Com.A.P.No.27/2020 submission and evidence placed on record held that the defendant had not proved the time is the essence of the contract.
However held the defendant has proved the contractual clauses
2.2 and 8.3 to provide for no damage, no compensation to the contractor.
C. The impugned award which passed by the majority arbitral tribunal is not in accordance with law or Principles of Natural Justice, the award which passed by the former Justice Mr.R.Gururajan, the presiding Arbitrator appreciating the Principles of Law and held its claim cannot be thrown out on the ground of clause 8.3 and 2.2 of GCC. The majority Arbitral tribunal has proceeded to interpret the arbitral clause in the mechanical manner without an application of mind. D. The impugned award is liable to be set aside which is against to the public policy and which vitiates patient illegality and clause 8.3 and clause 2.2 of the GCC would show that it grants a blanket and unlimited protection for the defaults and deficiencies which is contrary to conscience and the public policy in view of Sec.73 of the Indian Contract Act.
E. The impugned award which passed by the Arbitral tribunal ignored the principles of Natural justice and arbitrarily rejected its claim despite of holdings of Supreme Court, such contracts which 12 Com.A.P.No.27/2020 are unilateral in nature which imposed Arbitral restrictions and ignored the vital materials and crucial evidence which violates most basic notions of justice.
F. The impugned award has not been examined in the terms of the contract in the light of the principles of law laid down by the Supreme Court and not considered delay in handing over the site, delay in preparing drawing for the execution of work and failed to analyze and ascertain the delay caused by the defendant.
G. The impugned award is contrary to the facts and law without deciding who is responsible for the delay and then proceed to decide entitle for the delay claims and mechanically held that the fibitary clauses 8.3 and 2.2 of GCC are bar for claim damages, but erroneously concluded that both parties are responsible for prolongation of the work which is contrary to the evidence available on record.
H. The impugned award which passed without considering the materials on record and passed the award which is patently illegal and against the public policy and the entire findings on the basis of certain prohibitory clauses of the GCC without deciding who is responsible for the delay is entirely flawed and erroneous. 13 Com.A.P.No.27/2020
I. The impugned award which passed by the Arbitral tribunal contrary to the agreement and which passed claiming any compensation or delay damages and the clause 2.2 and 8.3 of GCC empowers the absolute power vested on the defendant and the Arbitral tribunal failed to interpret in the light of principles of laws laid down by the Supreme Court and award vitiated with patent illegality .
J. The impugned award is contrary to the law and facts and when the contract provides for extension of time, such terms of the contract would render in effective the express terms relating to the time being essence of the contract and has not taken into consideration that the defendant has not proved that the time is the essence of the contract and not considered the delay on the part of the defendant and once it is found that there was a delay in executing the contract due to the conduct of the defendant.
K. The impugned award which passed against to the principles of Natural justice and the tribunal has not considered the delay in handing over the land, delay in preparing the drawings for the execution of the works in time manner and failed to exercise its powers and Arbitrarily and mechanically proceeded to pass the impugned award.
14 Com.A.P.No.27/2020L. The impugned award ought to have consider the facts of the case and the substantial laws which incurred and the provisions of substantial law has not been taken into consideration and failed to take note of 2019 amendment to Sec.28 of the Act and passed the award relying the old Judgments which are not applicable to the present facts and circumstances of the case.
M. The impugned award which passed by the Arbitrators failed to appreciate and comprehend the facts of the present case and the award is entirely wrongful and contradictory in nature and the Arbitral tribunal has not decided the issue in terms of the contract and trade usages and failed to appreciate its submission and the award is against to the public policy.
N. The impugned award which passed is contrary to Sec.23 of Indian contract Act and became obnoxious and appreciate to public conscience and opposed to the public policy and the award passed has no application of mind and failed to apply and appreciate the Central Principles of law and failed to consider the settled principles of law while passing the order and not considered the notice aspect while answering the questions. O. The impugned award passed by the Arbitrator by ignoring vital documentary evidence and oral evidence and majority 15 Com.A.P.No.27/2020 arbitral tribunal has arbitrarily held that Sec.55 of Indian contract Act has no reference and minority Arbitral award which passed contrary to the law and facts and not considered the delay claims and the award is perverse illegal which is liable for rejection. P. The impugned award which passed contrary to the own findings and being biased towards the defendant and not considered the obligatory on the part of the respondent to issue detailed working drawing for construction work termed as GFC and wrongly rejected its legitimate claims.
Q. The impugned award which passed by the Arbitral tribunal failed to appreciate delay was dominating delay and the availability of the land and failed to appreciate of the defendant and the delay was caused on the part of the defendant and ought to have given to the principles of business efficacy and officious by stander test but ignored the law led down by the Supreme Court.
R. The impugned award which passed by the Arbitral tribunal has failed to appreciate the fact that the reason for delay and the determination of extension of time till 28.02.2014 was not in dispute as such the tribunal was only required to look into the aspects about entitlement to the delay damages or whether it 16 Com.A.P.No.27/2020 bars delay damages as per clause 2.2 and 8.3, but the tribunal has not taken into consideration of the materials on record.
S. The impugned award which passed has not been taken into consideration about failed to furnish drawings/designs for the execution of the work in a time bond manner and failed to appreciate the mitigating measures which was under taken for the completion of the project and failed to consider the extensive delay events from the inception of the project.
T. The impugned award which passed by the Arbitral tribunal contrary to the law and failed to take note of the illegality involved in determination under clause 3.5 of GCC and failed to understand the scope and nature of clause 8.4.1 and clause 8.4.3 of GCC and failed to identify dominate delays responsible for the project and measurably failed to understand the aspects of delay analysis attribution of delay events.
U. The impugned award which passed by the Arbitral tribunal is against to the principles of Natural justice and failed to appreciate the principles embedded in Sec.52 & 53 of Contract Act and failed to appreciate delay in handing over land and drawings and failed to appreciate the priority and order of performances of reciprocal promises which is contrary to settle principles of law.
17 Com.A.P.No.27/2020V. The impugned award which passed by the Arbitral tribunal is against to the contract which taken place in between them and ignored the material facts and proceeded to hold in favour of the defendant and erred in holding the non repudiation of contract and failed to appreciate substantive including the trade practice and usage and failed to understand impractical for any contract to anticipate actual impact of such site conditions during execution of such a huge infra project and failed in understanding the trade practices.
W. The impugned award which passed by the Arbitral tribunal is contrary to the contract without considering the work which was effected and the delay on the part of the defendant rejected its delay claims under issue No.1(a) to (f), (h), (k) & (m) and failed to consider the delay on the part of the defendant and failed to appreciate the fact that the designated contractors were executing their scope of work even during the extended period and the additional works which was entrusted by the defendant has been ignored by the Arbitral tribunal and failed to consider damages which suffered on account of inordinate delay on the part of the defendant X. The impugned award which passed by the Arbitral tribunal contrary to the settled principles of law and failed to appreciate 18 Com.A.P.No.27/2020 the materials placed on record and erred in holding that who is also equally responsible for extension of the project beyond the original period of contract and erred in not appreciating the certificate of auditors and failed to appreciate the market presence and multiple projects and failed to appreciate the materials placed on record and failed to give true effect to clause 19.1 of SCC while rejecting the claim for price adjustment and failed to appreciate the vast and voluminous documents produced as evidence on record and failed to appreciate the Electronic evidence and erred in understanding the computation method and arrived arbitrary findings without considering the materials on record which is perverse in nature.
Y. The impugned award which passed by the Arbitral tribunal has not been taken into consideration about the delay which caused by the defendant and ought to have decided the delays based on the judicial admissions and settled principles of laws which is in the contrary could amounts to violations of fundamental policy and prays for allow the suit and set aside the majority award passed by the Arbitral tribunal on Issue No.6 and in respect Issue No.1(a), (b) to (f), (h), (k), (m) & Issue No.2, 3, 5 & 6 and prays for allow the suit.
19 Com.A.P.No.27/2020
5. In response of the summons the defendant No.1 has been appeared through its counsel and the defendant No.2 to 4 who are the Presiding Arbitrator and Co-Arbitrators. The defendant No.1 in its objection statement has alleged that the suit which filed under section 34 of the Arbitration and Conciliation Act by the plaintiff is not maintainable in law or on facts since the plaintiff failed to disclose under which sub clauses of sub Section 2 to challenge the impugned award and the plaintiff has not pleaded anything in the suit to fall within the ambit of Sec.34 of Arbitration and conciliation Act and after the award passed expressed its desire of payment of the Arbitration award after deducting its dues with the ultimate of preventing further litigation and plaintiff accepting the said proposition has received the arbitration award which consists of certain claims allowed in favour of the plaintiff by the Arbitral tribunal. The plaintiff did not disclose the payment received either without under protest or without prejudice to its right of contesting the Arbitration suit. The notice of the Arbitration suit has been received on 02.02.2021 as against the payment released on 10.07.2020(towards award amount) and 30.07.2020(towards interest). Therefore, the proceedings initiated by the plaintiff hit by the rule of estoppal on this ground alone. the suit which filed 20 Com.A.P.No.27/2020 by the plaintiff is not maintainable and the Arbitral tribunal disallowed the major claims relating to claim for compensation for delay and the instant suit has been filed only for setting aside some of the claims disallowed by the Arbitral tribunal, if any reasons allowed the present suit in the present form it would result in setting aside the award only in part in as much as the relief sought is only in respect of the claims which have been disallowed by the Arbitral tribunal. Now it is settled law led down by the Supreme Court the power of this Court only either confirming the award or to set aside the award it does not have the power to modify the Arbitral award. Therefore, award cannot be challenged by the plaintiff in the present form and the plaintiff in the plaint has made sweeping reference to various factual findings and conclusion of the tribunal and Court cannot correct the errors of the tribunal and the award can be set aside only if the grounds which falls under section 34(2)(a)(b)(i) of the Arbitration and conciliation Act and apart from the grounds and the circumstances for challenging the award only other ground on which an award can be challenged is where in terms of section 34(2)(b)(ii) of the Arbitration and Conciliation Act and the plaintiff has not pleaded nor established that the award was induced or effected by fraud or corruption or that it was violation of Sec.75 21 Com.A.P.No.27/2020 or 81 of the Arbitration and Conciliation Act nor stated the award is against to the Public policy of India or stated that it shocks the conscience of the Court that it violates the basic notions of justice.
6. The defendant No.1 in its statement of objection has further alleged that they have entered into contract for construction of 3 elevated stations and some length of viaduct and as part of the said contract entered into series of agreement, including the general conditions of the contract and agreed in the event of any delay in handing over the sites or drawings the contractor would not liable to pay any damages or compensation but entitled for reasonable extension of time for completion of work. The plaintiff has not challenged the validity or legality of the said clauses which is binding on them nor approached the civil Court getting the declaration that the said clauses are invalid and challenged the validity of the said clauses in the instant proceedings which is not permissible under law and the said clauses binding on the plaintiff and who is not entitle any compensation even if there was delay in handing over the site or drawings and plaintiff voluntarily sought additional time on the ground that there was a delay in handing over site and drawings and granted the additional time and the plaintiff was benefited 22 Com.A.P.No.27/2020 extension of time, if the plaintiff was not satisfied for not handed over the lands or drawings from time to time within the prescribed time, the plaintiff had option of terminating the contract at the end of contract period or accept the extension of time subject to the condition of payment of compensation as provided in Sec.55 of Indian Contract Act which option was not exercised by the plaintiff for the reasons best known to him, having voluntarily sought time and executed the work and having received full payment for such work. The Tribunal has elaborately discussed in the award relating to Sec.23 of Contract Act and the parties can waive their rights for seeking compensation under section 73 of Indian Contract Act and tribunal after considering the oral and documentary evidence come to the conclusion that the both parties basing on the principles laid down by the Supreme Court, the Civil Court cannot to come to different conclusion based on the fact. The plaintiff was equally responsible for non completion of the work during the extension of time and the plaintiff failed to achieve the key dates which are periods prescribed in the contract for progressive completion of different stages of work from time to time and the plaintiff failed to prove adequate resources men and materials in terms of the contract and there is a finding of all the three Arbitrators to the 23 Com.A.P.No.27/2020 effect that the plaintiff as well as the defendant are responsible for the delay in execution and completion of the work and there is absolutely no scope for granting compensation to the plaintiff and the findings of all the three Arbitrators is to the effect the plaintiff as well as defendant are responsible for the delay in completion of the contract work. As per the settled principles, the Arbitral tribunal is the final authority on the facts and elaborately dealt with the deposition of witnesses various exhibits produced and marked and the plaintiff has miserably failed to refer any evidence which was either not considered or wrongly appreciated by the tribunal and the claim of the plaintiff is solely on the ground of delay by following Judgment of Hon'ble Supreme Court no compensation can be paid in respect of contractual embargo under clause 2.2 and 8.3 of GCC and the plaintiff was equally responsible for the delay is not entitled for any compensation and the minority award also concurres with the factual findings and conclusions that the plaintiff equally responsible for the delay in execution of the work and the tribunal has elaborately discussed in the award and all the findings of the tribunal based on the material evidence and impugned award do not warrants any interference of this Court. The plaintiff is already received the total sum of Rs.7,74,94,499/- being the amount which awarded by 24 Com.A.P.No.27/2020 the tribunal and denied the allegations which made by the plaintiff in the plaint and prays for dismiss the suit.
7. Both counsels filed written arguments.
8. Heard the arguments on both sides.
9. The points that arise for consideration of this court are as under:
1) Whether the plaintiff has made out any of the grounds which enumerated under Sec.34 of the Arbitration and Conciliation Act to set aside the majority award?
2) What order?
10. 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
11. POINT NO.1: The plaintiff being the claimant and the defendant No.1 being the Respondent before the arbitrators feeling aggrieved by the award has approached the court on the ground that the contract agreement was taken place in between them for the construction of elevated structures at Jalahalli, Dasarahalli and Hesargatta Cross station but the defendant did not deliver the site nor drawings within time, because of the negligence on the part of the defendant delay has been caused in 25 Com.A.P.No.27/2020 completing the project, thereby the dispute has been arisen in between them, arbitral proceedings has been initiated, and filed statement of objection for which the defendant filed the statement of objection with counter claim for which rejoinder has been filed and out of three Arbitrators majority award has been passed and Presiding Arbitrator passed the minority award. So, feeling aggrieved by the award the plaintiff has filed the instant suit.
12. The learned counsel for the plaintiff apart from written arguments has submitted the defendant called the tender for the construction of viaduct and three elevated metro stations for which the plaintiff has submitted the tender package and letter of acceptance has been issued by the defendant on 21.07.2010 and the contract period for the completion of the project was 27 months from the date of letter of acceptance and the contract price of project was Rs.212,65,42,695/- during the execution of the project the defendant had caused the delay in handing over the land issuance and approval of drawings and the delay which caused by the defendant significantly effected the progress of the project, thereby the plaintiff could not complete the construction work within the stipulated period of 27 months, thereby the work was extended by another 32 months and the delay of 32 months 26 Com.A.P.No.27/2020 which occurred beyond 20.10.2012 and the plaintiff in several occasions sought for extension of time in accordance with general condition of contract and completed the work viaduct as a whole and handed it over on or about 28.02.2014. The managing Director of the defendant visited 3 stations and demanded certain changes to be attended to and the entire works of ACP glazing and louvers was stopped from 18.03.2014 until 29.07.2014. The defendant caused delay in issue of drawings. The defendant inspected on 05.12.2014 decided to provide LED lights of specific and the Managing Director of the defendant informed about omitting of work and the plaintiff completed the whole work by 31.03.2015, but the defendant has not issued payment in terms of work which done by the plaintiff. Pursuant to the completion of the work on or about 31.03.2015 and 02.04.2015 the Commissioner of Metro Railway safety conducted an inspection and the commercial operation of the Metro was commenced on 01.05.2015, but the defendant arbitrarily decided to levy liquidated damages for the 3 stations which is illegal not in accordance with law.
13. The learned counsel for the plaintiff while canvassing her arguments has further submitted the Arbitral tribunal has not applied its mind while interpreting the evidence placed on record 27 Com.A.P.No.27/2020 by the plaintiff before the Arbitral tribunal and ignored the material admissions and the Tribunal has not taken into consideration about the extension of time as per the agreement and the Arbitral tribunal passed to divergent awards with respect to interpretation of clauses and the majority Arbitral tribunal consisting of Former Justice A.N.Gopala Gowda and Former Justice K.N.Keshava Narayan have held that the defendant has not proved that the time is the essence of the contract and former justice R.Gururajan being a presiding Arbitrator has passed the separate award and the right of the plaintiff cannot be thrown out on the ground of clause 8.3 and clause 2.2 of General conditions of the contract and soon after the contract 27 months has been granted and thereafter in view of the works as per the contract has been extended by another 32 months which was not taken into consider by the Arbitral tribunal and the delay was not caused on the part of the plaintiff, it was caused on the part of the defendant and the plaintiff is not responsible for the delay and defendant alone is responsible for the delay in completing of the work. The Arbitral tribunal failed to interpretate the clause which appeared in the agreement and once found the delay has been caused on account of the defendant and the defendant breaches the agreement not the plaintiff and the Arbitral tribunal 28 Com.A.P.No.27/2020 come to the wrong conclusion against the settled principles and failed to appreciate the oral and documentary evidence on record. Therefore, this court interference is required to set aside the award and the tribunal held that the time is not the essence of the contract and the plaintiff being the contractor has completed the work as the tender work has been allotted to the plaintiff and prays for allow the suit and set aside the majority Arbitral tribunal award.
14. Per-contra the learned counsel for the defendant apart from written arguments has submitted the plaintiff has not made out any of the grounds which are enumerated under section 34 of the Arbitration and conciliation Act to set aside the majority award and the plaintiff and the defendant were entered into contract for construction of 3 elevated stations and some length of viaduct and they were also entered into a series of agreement including general conditions of the contract and agreed in the event of any delay by the defendant in handing over the sites or drawings the defendant would not be liable to pay any damages or compensation, but the contractor entitled for reasonable extension of time such contractual provision of granting additional time for the completion of work instead of paying monetory compensation. So, tribunal cannot grant any 29 Com.A.P.No.27/2020 compensation in violation of such contract and the tribunal after considering not only the oral and documentary evidence but also the legal aspects passed the award, even the plaintiff has not challenged validity of the clauses and in the absence of any challenges regarding the clauses and the said clauses are binding on the parties and the plaintiff has sought time for completion of work and delay was caused on the part of the plaintiff and the clause 2.2 and 8.3 of GCC barres the contractor i.e., the plaintiff to claim any monetory compensation on the ground of delay and the plaintiff failed to prove adequate resources men and materials in terms of the contract.
15. The learned counsel for the defendant in his arguments has further submitted the defendant expressed its desire of payment of the arbitration award after deducting its dues with the ultimate object of preventing further litigation. The plaintiff accepting the said proposition had received the arbitration award amount which consists of certain claims allowed in favour of the plaintiff by the arbitral tribunal, but the plaintiff did not disclose at the time of filing of the instant suit and the claim which made by the plaintiff would disclose that amongst the claims sought by the plaintiff before the arbitral tribunal it was only few items of claims which were allowed by the arbitral tribunal allowing either partly or fully 30 Com.A.P.No.27/2020 also disallowing the majority claims relating to claim for compensation for delay. The present suit which filed by the plaintiff only for setting aside some of the claims which was disallowed by the arbitral tribunal, if for any reason this court allows the instant suit in the present form which filed by the plaintiff it would result in setting aside the award only in part, as such the relief which sought by the plaintiff is not maintainable which is deserved for dismissal in view of the judgment of the Hon'ble Supreme Court passed in Project Director, National Highways. In the said decision their lordship held that the civil court has no power either to modify or re-appreciation of the evidence which appreciated by the arbitral tribunal and the civil court having power only either to confirm the award or to set aside the award and it does not have the power to modify the arbitral award. As such the instant case which filed by the plaintiff is not maintainable, if award is set aside only in respect of sum of the claims which sought by the plaintiff nor rejected it nothing but modification of the arbitral award which passed by the arbitral tribunal which is not permissible under law. The plaintiff has challenged the various factual findings and conclusions of the arbitral tribunal as set out in the present suit and the plaintiff has made sweeping references to various factual findings and 31 Com.A.P.No.27/2020 conclusion of the arbitral tribunal and the civil court cannot independently assessment on merits and based on the facts come to the conclusion which is different from the conclusion of the arbitral tribunal and court cannot correct the errors of the arbitral tribunal. The arbitral tribunal was constituted by the Hon'ble High Court of Karnataka consisting of three Hon'ble High Court Judges which evident from the award which passed by the arbitral tribunal and the plaintiff has not made out any of the grounds which are enumerated under Sec.34 of the Arbitration and Conciliation Act to interfere of this court and to set aside the award as sought by the plaintiff and the arbitral award can be set aside only if the court finds that the subject matter of the dispute is not capable of settlement by arbitration. The plaintiff neither pleaded nor established that any of the dispute which are enumerated under Sec.34 of the Arbitration and Conciliation Act. The explanation which appended in the very provision clarifies that if the award is in conflict with the public policy of India or making of the award was induced or effected by fraud or corruption and it violates Sec.75 or 81 or it contravention of fundamental policy of Indian law and it is in conflict with the most basic notions of morality or justice then interference of this court was very much needed, but the plaintiff has not pleaded nor 32 Com.A.P.No.27/2020 proved any of the grounds which are enumerated under Sec.34 of the Arbitration and Conciliation Act and with regard to the meaning which attached to the public policy of India, the plaintiff has not pleaded nor established that the award which passed by the tribunal either induced or effected by fraud or corruption or it violates Sec.75 or 81 of the Arbitration and Conciliation Act, but the plaintiff has mechanically stated the award is against to the public policy of India, it shocks the conscious of the court and it violates the basic notions of justice, but failed to demonstrate the said facts either in the pleading nor placing any materials to show that the award which passed is contravention of fundamental policy of Indian law or with conflict with the basic notion of morality or justice and failed to demonstrate the alleged conflict with the most basic notions of morality in view of Sec.34 of the Arbitration and Conciliation Act and the plaintiff and the defendant were entered into contract for construction of 3 elevated stations and some length of viaduct and part of the said contract both parties had entered into series of agreements including the general conditions of contract. So as per clause 2.2 and 8.3 of the general conditions of contract, the parties have agreed that in the event of any delay by the defendant in handing over the sites or drawings the defendant being the contractor 33 Com.A.P.No.27/2020 would not be liable to any damages or compensation, but would be entitle for reasonable extension of time by the contractor, such a contractual provision of granting additional time for completion of work instead of paying monetary compensation. Therefore, question of granting the compensation for the delay as alleged by the plaintiff does not arise and the arbitral tribunal after considering the clauses which are enumerated under the general conditions of contract rightly rejected the claim of the plaintiff. So question of interference of this court does not arise and award which passed by the arbitral tribunal binds on the parties.
16. The learned counsel for the defendant in his arguments has submitted the statement of claim which filed by the very plaintiff before the arbitral tribunal did not challenge the validity nor legality of the clauses 2.2 nor 8.3 of the general conditions of the contract, which are remained unchallenged. Now he cannot challenge that the plaintiff is entitle the compensation for the alleged delay of delivery of sites and drawings. The plaintiff without availing the benefit of the opportunity soon after the contract, after receipt of majority of payments now challenging the said clauses which is not maintainable and the plaintiff has no right to question the legality of the said clauses before this court 34 Com.A.P.No.27/2020 without challenging the same before the arbitral tribunal. The plaintiff has not placed any materials to show that he has challenged the said provisions before the arbitral tribunal. In the absence of any challenge to the said clauses, the plaintiff is bound by the said clauses. As such the plaintiff is not entitled for any compensation, even if there was a delay on the part of the defendant in handing over the site or drawings. The plaintiff had voluntarily sought additional time on the ground that there was a delay in hand over the site and drawings and the defendant had considered such request of the plaintiff granted the additional time. That itself is clear the plaintiff has waived his right in challenging the said clauses. Now he cannot contend that because of the delay in handing over the site and drawings, the defendant is liable to pay the compensation which is not permissible under law. The plaintiff has not satisfied to show that the defendant has caused delay in handing over the site and drawings, since the defendant has deliver the site and drawings from time to time within a prescribed time. If at all the defendant had not delivered the site and the drawings within the prescribed time, the plaintiff had an option of terminating the contract at the end of contract period or accept the extension of time subject to the condition of payment of compensation, but the plaintiff did 35 Com.A.P.No.27/2020 not do so in view of Sec.55 of the Indian Contract Act. Now contending that the tribunal should have declared the said clauses as void-ab-initio. Such contention is absolutely baseless before this court, since the plaintiff had not challenged those clauses before the arbitral tribunal who has accepted the said clauses and accepted the payments. The plaintiff has filed the instant suit and sought for acceptance of minority view which passed by the presiding arbitrator under Sec.28(3) of Arbitration and Conciliation Act. The arbitral tribunal while deciding and making an award taken into account of the terms of the contract and trade usages applicable to the transaction, but the arbitral tribunal has not taken into consideration not only the terms of the contract but also the trade usages which are applicable. The plaintiff has not placed any materials to show that he has mobilized men and materials in terms of the contract. Therefore, the tribunal in the award held that the plaintiff had failed to prove that it had adequate resources men and materials in terms of the contract and proceeded to conclude in para No.268 of the award that the plaintiff was also responsible for non completion of contract work within the stipulated period. Therefore, the facts which alleged in the plaint are made by the plaintiff only to file the instant suit, nothing is more. When there is a finding of all the 36 Com.A.P.No.27/2020 three arbitrators to the effect the plaintiff as well as the defendant are responsible for the delay in execution and completion of the work, there is absolutely no scope for granting compensation to the plaintiff. It is an concluded findings of all the three arbitrators and the tribunal has elaborately dealt with the materials which was placed on record and after appreciation of the oral and documentary evidence held that the plaintiff is not entitle the compensation as sought for. So question of interference of this court does not arise and the claim of the plaintiff for compensation is solely on the ground of delay by the respondent which is not permissible under law and moreover the plaintiff has failed to establish that it has necessary resources men and materials to complete the contract within the agreed time. On this aspect the arbitral tribunal categorically held the plaintiff was equally responsible for the delay and failed to place the materials to show he was mobilized men and machinery to complete the work and the findings which recorded by the arbitral tribunal based on the materials on record. So question of interference of this court does not arise and prays for dismiss the suit.
17. It is an admitted fact the plaintiff has filed the instant suit against the majority award which passed by the member 37 Com.A.P.No.27/2020 arbitrators on the ground the arbitrators were not taken into consideration regarding the oral and documentary evidence and the contract which taken place in between them relating to issue No.1-a to f, h, k, m, and issue No.2, 3, 5 and 6 but come to the wrong conclusion that who is not entitle the compensation under the said issues, thereby has filed the instant suit against the defendant. So, before considering the oral and documentary evidence as well as the arguments which advanced by both the counsels, it is just and necessary to consider the legal aspects first for the proper appreciation of the arguments which advanced by both counsels.
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.38 Com.A.P.No.27/2020
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 essence 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 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.39 Com.A.P.No.27/2020
(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.
(4) It is open to the court to consider whether the award is against the specific 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.40 Com.A.P.No.27/2020
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 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.41 Com.A.P.No.27/2020
(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 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 42 Com.A.P.No.27/2020 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 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.43 Com.A.P.No.27/2020
(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 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;44 Com.A.P.No.27/2020
(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 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.
The above provisions which referred above are very much clear when court can interfere with the arbitral award and what is the scope of court's power to interfere with the arbitral award and what are the grounds are required to be set aside the award as well as setting aside of arbitral award when permissible. 45 Com.A.P.No.27/2020
18. Apart from the above legal aspects, let me know the claim and counter claim of the plaintiff and the defendant before the arbitral tribunal for the proper appreciation of the arguments which advanced by both the parties is necessary for reproduction of the claim of the plaintiff and the counter claim of the defendant which stated below:
Sl.No Claim Head Amount in Rs. Reference
1. Compensation for under utilization 21,02,90,033 Annexure-1
of plant and machinery during
original as well as extended period
2. Unrecovered site overheads during 21,57,04,782 Annexure-2
the original period and extended
stay
3. Unrecovered regional office and 20,52,77,814 Annexure-3
Head office overheads during the
original period and extended stay
4. Loss of opportunity during 4,82,47,751 Annexure-4
extended period
5. Unrecovered labour cost of 3,15,00,914 Annexure-5
extended period
6. Payment of price adjustment on 4,09.91,397 Annexure-6
Other Materials during extended
period
7. Cost unrecovered due to freezing of 50,90,828 Annexure-7
indices for stations
8. Effect on price adjustment due to 2,56,04,938 Annexure-8
wrong classification for application
of index for price adjustment for
plant and machinery spares
components
9. Payment for provision of standard 64,95,645 Annexure-9
laps and spacers
10. Revision of rate for the items of 3,09,15,397 Annexure-10
reinforcement steel provided in
46 Com.A.P.No.27/2020
stations
11. Compensation for reduction in 4,43,58,774 Annexure-11
piling quantity
12. Payment of certified amount 4,84,34,272 Annexure-12
against various running account
bills and statement at completion
13. Interest @ 18% on the delay in 35,10,07,248 Annexure-13
payment of amount certified for
statement at completion and claims
Total additional cost payable to the 126,39,19,793 claimant by the respondent Sl.No. Description Amount in (Rs)
1. Recovery of consequential loss of 27,94,00,000.00 productivity
2. Recovery of additional expenditure incurred 60,83,334.00 due to extension of the services of the project management consultants for the extended period due to delay in completion of the works
3. Recovery of amount deposited by the 2,43,11,685.00 respondent to NHAI towards restoration of road, drain and other damages done by the claimant during the course of construction activities
4. Recovery of land rental charges 3,17,85,713.00
5. Recovery of LD 35,04,78,740.00
6. Claim for benefit gained from rental charges 1,33,44,232.00 due to non-utilization of land for casting yard located at M/s KSDL premises at Yeshwanthpura Grand Total Rs.70,54,03,704.00
19. Apart from the claim and counter claim of both parties which referred above, it is just and necessary for the proper 47 Com.A.P.No.27/2020 appreciation to reproduce majority of the award which passed by the arbitral tribunal which reads like this:
AWARD The claims of the claimant are allowed in part in the following terms:
(a) Claim No.7, covered by issue No.1 (g) towards unrecovered cost due to freezing of indices for stations is allowed in its entirety for a sum of Rs.50,90,828/-
(b) Claim No.9 covered by issue No.1(i) towards payment for provision of standard laps and spacer is allowed in part to an extent of Rs.14,77,196/- as against the total claim of Rs.64,95,645/-
(c) Claim No.10 covered by issue No.1(j) towards revision of rate of reinforcement steel provided in stations is allowed in its entirety for a sum of Rs.03,09,15,397/-
(d) Claim No.12 covered by issue No.1(I) towards payment of certified amount against various running account bills and statement at completion is allowed in its entirety for a sum of Rs.04,84,34,272/- together with interest at 10% p.a. on the said sum from the date of claimant's entitlement to the said amount till the date of payment;
(e) respondent shall pay to the claimant the awarded amounts under (a) to (c) above along with future interest at the rate of 10% per annum from the date of award till the date of payment;
(f) Prayer for costs of this arbitral proceedings as sought in para 30 (F) of SOC is allowed in part holding that claimant is entitled for Rs.20,00,000/- towards the expenses incurred by it. Respondent shall pay this amount to the 48 Com.A.P.No.27/2020 claimant within 90 days from today, failing which it shall carry interest at the rate of 12% p.a. from the date of award till the date of payment;
(g) Prayer made at para 30 (E) of SOC is allowed declaring that claimant is entitled to have performance certificate issued and respondent is directed to issue performance certificate in terms of clause 10.9 of GCC to the claimant in respect of contract work involved in this proceeding within 30 days from the date of this award;
(h) Prayer made at para 30(c) of SOC is allowed declaring that the claimant is entitled to have all the banks guarantees furnished towards performance security and retention money released immediately and respondent is directed to immediately release all the bank guarantees furnished by claimant as detailed in para 30© of SOC;
(I) Claim No.1 to 6 covered by issue No.1 (1) to
(f), claim No.8 covered by issue No.1(h) and claim NO.11 covered by issue No.1 (k) are all rejected in their entirety;
(j) Claim No.13 covered by issue No.1(m) towards past interest up to the date of submission of statement of claim on the sums claimed under claim No.1 to 6, 8 and 11 covered by issue No.1A(a) to (f) (h) and (k) is rejected in its entirety;
(k) Prayer made at para 30(D) of SOC for direction to respondent to release Rs.12,38,8560/- alleged to have been deducted in cash from the certified bills is rejected in its entirety;
(l) Counter claims 1 to 6 of the respondent are rejected in their entirety directing the 49 Com.A.P.No.27/2020 respondent to bear its own cost of this arbitral proceedings;
(m) The claimant shall pay requisite stamp duty on this award as per Karnataka Stamp Act.
So keeping the provisions and the claim and counter claim of both parties as well as award passed by the arbitral tribunal in mind, now let me know the arguments which advanced by both the counsels.
20. The learned counsel for the plaintiff while canvassing her arguments has much argued that the arbitral tribunal without considering the object of contract which taken place in between the plaintiff and the defendant and the delay which caused by the defendant to deliver the site and to drawings rejected the claim of the plaintiff as sought in issue No.1-a to f, h, k and m. Admittedly, the plaintiff has sought for the relief in respect of issue No.1-a towards compensation on account of under utilization of the plant and machineries during the original as well as extended period of Rs.21,02,90,333/-. The claimant in the claim petition filed before the arbitral tribunal also stated that who is entitle the compensation of so much towards under utilization of plant and machinery during the original as well as extended period for which the defendant No.1 has denied the same. The tribunal while deciding the said issue has held 27 50 Com.A.P.No.27/2020 months period has been mentioned in the contract tenders and the tender conditions will made known to the tenders and the tenders were required to visit the spot and accordingly along with the bids the very plaintiff has submitted certificate confirming the site visit, discussions were held and thereafter the defendant has issued LOA and the plaintiff was fully aware of the contract conditions, cost of the contract work and the period of contract and when the plaintiff accepted the contract which taken place in between them question of claiming the compensation under utilization of the plant and machinery during either original or extended period does not arise,. It is an admitted fact, there is an obligation on the part of the plaintiff that the contract work shall be complete within 27 months with various terms and conditions mentioned in the contract which known by the plaintiff and when the plaintiff could not complete the contract work within 27 months extended the time for completion of the contract work and the plaintiff in terms of the contract condition was require to maintain a minimal number of plant and machineries as per the contract and the claimant has not disputed the document which placed on record marked as Ex.R.6 and he was required to provide all the details as specified therein. As per the said statement plaintiff was require to maintain a construction 51 Com.A.P.No.27/2020 equipment and other materials and require to provide transport equipment and to provide lab testing equipments and the documents which are on record which produced by the very plaintiff marked as Ex.C.567 with regard to the compensation for under utilization of the plant and machinery during the original as well as extended period if the monthly progress report are taken into consideration there was no progress of the work on the part of the plaintiff and there is no reference to minimum requirement in the FT10, though has stated maintained machineries which are under utilized, in the absence of the reference to FT10 which is binding on the plaintiff and the plailntiff nowhere stated who has maintained the machineries in terms of FT10. So if the materials on record are taken into consideration as per the arguments which advanced by the plaintiff, the plaintiff has failed to maintain the minimum machineries required in terms of FT10. If the FT10 and the arguments which advanced by the counsel for the plaintiff are taken into consideration, the plaintiff did not maintained the required number of plant and machineries in terms of FT10. Even the materials on record reflects the plaintiff has not submitted MPRS for 15 months and failed to maintain the necessary machineries in terms of the contract conditions. 52 Com.A.P.No.27/2020
21. The document which is on record marked as Ex.R.24 which is the copy of communication dated 16.06.2012 from the Engineer to the plaintiff reflects GC as stated in relation to viaduct that only 15 no's of pile caps and 8 no's of pierce are completed since March 2012 and no pierce is cast till date in current month and only two pierce were cast in the last month, if the said progress of work are taken into consideration it is clear due to shortage of labour and cranes the work was not progress with regard to the Hesaraghatta station and there has been no activity since casting of the last portion of the concur level slab on 18.04.2012. So the plaintiff has not accumulated a requirements of machineries and labours in terms of the contract and the plaintiff has not placed materials on record to show that he was provided a sufficient equipment in terms of the contract condition and he has suffered loss, if that is so the matter would have been different. When the mistake is on the part of the plaintiff in terms of the contract, question of compensation during the original and extended period does not arise and moreover the plaintiff has not placed materials to show that he has provided sufficient equipment in terms of the agreement. If the findings and the materials are taken into consideration that the plaintiff did not provided sufficient equipments in terms of the contract 53 Com.A.P.No.27/2020 conditions. Though records reflects the plaintiff had promise to maintain the minimum number of machineries but failed to comply in terms of the contract condition and the plaintiff is standing in the foot of promissory failed to comply with the promise as per Sec.55 of the Indian Contract Act. Thus this court drawn its attention on Sec.55 of the Indian Contract Act which reads like this:
55. Effect of failure to perform at a fixed time, in contract in which time is essential.--When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promise, if the intention of the parties was that time should be of the essence of the contract. --When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promise, if the intention of the parties was that time should be of the essence of the contract."
Effect of such failure when time is not essential.--If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time; but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure. --If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the 54 Com.A.P.No.27/2020 failure to do such thing at or before the specified time; but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure." Effect of acceptance of performance at time other than that agreed upon.--If, in case of a contract voidable on account of the promisor's failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time other than that agreed, the promisee cannot claim compensation for any loss occasioned by the non-performance of the promise at the time agreed, unless, at the time of such acceptance he gives notice to the promisor of his intention to do so.1 --If, in case of a contract voidable on account of the promisor's failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time other than that agreed, the promisee cannot claim compensation for any loss occasioned by the non-performance of the promise at the time agreed, unless, at the time of such acceptance he gives notice to the promisor of his intention to do so.1"
The above provision is very much clear when a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed. So when the promissor failed to perform a specified work in the specified time question of entitlement of the compensation does not arise and the finding which recorded by the arbitral tribunal on this aspect is not falls 55 Com.A.P.No.27/2020 within the purview of Sec.34 of the Arbitration and Conciliation Act and the plaintiff has failed to bring the case within the ambit of Sec.34 of the Arbitration and Conciliation Act. Therefore, the tribunal after considering the materials on record and non performing of the promise by the plaintiff has rightly rejected the claim which made by the plaintiff as sought in issue No.1(a). So question of interference of this court does not arise, since the grounds which urged by the plaintiff on this claim do not fall within the ambit of Sec.34 of the Arbitration and Conciliation Act.
22. The learned counsel for the plaintiff while canvassing her arguments has submitted that the plaintiff is entitled a compensation of Rs.21,57,04,782/- towards unrecovered site overheads during the original period and extended period and also entitled a sum of Rs.20,52,77,814/- towards unrecovered over head charges maintenance of office, head office, regional office and casting yard as sought in issue No.1(c) stating that he has incurred the expenses towards the site overhead have been considered for the period from August 2010 to 31 st March 2015 and for apportionment of overhead expenses of casting yard the same method has been followed as has been done for the apportionment of cost of plant and machinery. The cost claimed under the head are related and unrecovered portions have been 56 Com.A.P.No.27/2020 claimed on the basis of evaluation of unrecovered part for elevating unrecovered cost of equipment and it is the claim of the plaintiff towards the unrecovered regional office and head office overheads for the financial years 2010-2011 to 2014-2015 and the claimant has calculated Rs.68,25,820/- per month for which the respondent in the objection has denied the same. The arbitral tribunal while considering the said claims held that though the plaintiff has relied the Ex.C.568 regarding the expenses but the plaintiff has not proved the said document and the tribunal held that mere marking of the statement by itself would not prove the contents of the documents and mere filing of the statement cannot be accepted as proof in case where monetary claim has been involved. The plaintiff has placed the document marked as Ex.C.519 which relied by the plaintiff but the report has not been placed, only statement has been placed before the arbitrators. That is the reason why the arbitral tribunal held mere production of the statement by itself would not prove the contents of the document unless those basis statements are fully available on record and the documents which are on record also reflects about the progress of the work and the review meetings as well as reduction in labour strength in each of the stations which indicates the very documents which placed by the plaintiff. So the 57 Com.A.P.No.27/2020 arbitral tribunal consider the letters No.2395 dated 05.08.2013 produced as part of Ex.R.24 address to Mr. S.K. Tripati, Mr. Sudhir Chandra and BMRCL about the reduction of labours, it shows the shortage of labour leading to delay progress and completion of the works for which the letters which on record reflects the defendant has been complained about the reduction in labour strength, plaintiff had assured that there would be improvement in labour strength but failed to increase the labour strength. If the materials on record are taken into consideration, there is an reduction in labour force in terms of the contract conditions. When the plaintiff has not placed the materials to show the labour strength and other materials in terms of the contract, question of claiming the relief under issue No.1(b) and 1(c) does not arise, for which the tribunal has taken into consideration not only the documentary evidence but also oral evidence on record. So question of re appreciation of the evidence by this court does not arise, even the act not empowers this court for re appreciation of the evidence which already appreciated by the arbitral tribunal, thereby the arbitral tribunal rejected these claims of the plaintiff and the plaintiff has failed to bring the case within the ambit of Sec.34 of the Arbitration and Conciliation Act for interference of this court.
58 Com.A.P.No.27/2020
23. The learned counsel for the plaintiff while canvasing her arguments has submitted the plaintiff has sustained the loss of Rs.4,82,47,751/- during the extended period but the tribunal has not taken into consideration. It is an admitted fact the materials placed on record reflects that he has sustained loss of opportunity during the extended period has been calculated for Rs.4,82,47,751/- on the ground if the plaintiff had been completed the project work within 27 months, it could have taken up a new project of similar nature and thereby would have earned minimum profit of 2.09% that is the reason why he was sustained loss of opportunity. So in order to claim loss of opportunity because of non completion of the project work within 27 months has to place a strong evidence and the materials for which the tribunal not only consider the documentary evidence but also considered the oral evidence and the admission which admitted by the plaintiff for which it is clear the plaintiff has not placed a sufficient machineries in terms of the tender contract, because of that reason the work was delayed on account of want of machineries and the materials on record reflects the plaintiff taken machineries on hire basis, even the materials placed on record reflects shortage of labour and reduction of the labour strength, though defendant has requested for increase of labour 59 Com.A.P.No.27/2020 strength on machineries though plaintiff has assured to increase the man power and the machineries but he did not do so, because of him only the work has not been completed and the materials on record reflects the claimant had sought interest free advance of Rs.10 crores from the defendant. That itself shows that the plaintiff did not have sufficient funds, machineries and also man power for the project. When the work was not completed within time is on the fault of the plaintiff which reflects from the materials on record. So question of breaching the contract by the defendant does not arise. On the other hand, the materials on record reflects the plaintiff has committed breach by way of failure to keep its promise in terms of the tender conditions in the matter of providing men and machinery. Therefore, loss of opportunity which alleged by the plaintiff does not arise and the plaintiff has failed to bring the case within the ambit of Sec.34 of the Arbitration and Conciliation Act to show that because of breach which committed by the defendant as sustained opportunity during the extended period. Therefore, the tribunal has rightly rejected the claim of the plaintiff. So question of interference of this court does not arise.
24. The learned counsel for the plaintiff while canvassing 60 Com.A.P.No.27/2020 her arguments has much argued that the defendant is liable to pay an amount of Rs.3,15,914/- towards undiscovered labour cost of extended period on the ground the labour cost has been increased which is not compensated fully through the price adjustment formula provided under the contract condition. On the other hand, the learned counsel for the defendant has submitted though price variation covers labour component also and the plaintiff has not spelled out about the method of calculation of the amount which claimed as the contents of Annexure 5 is reflects the minimum labour wages as stood on the date of opening the tender have been deducted from the labour wages as stood on the next day of contract period of 27 months. As per the terms of the contract, the contract period covers the defect liability period also and the plaintiff is not entitled for making separate claim for extended period. Thus this court drawn its attention on Clause 1.1.5.2 of the GCC which reads like this:
'Cost means all expenditure properly incurred (or to be incurred) by the contractor whether or of the site including overhead and similar charges, but does not include profit.' So, whatever the cost which incurred by the plaintiff is not liable for entitlement from the defendant and the plaintiff has not placed any materials on record to show that the plaintiff is entitled the cost towards unrecovered labour cost of extended 61 Com.A.P.No.27/2020 period for which the tribunal has taken into consideration of Ex.C.571 found that the said document indicates that on the basis of the value of actual total work done as per the IPC for the period between November 2012 to March 2015 and taken into consideration about the work which was turned out by the plaintiff held that the plaintiff is not entitled an amount of Rs.3,15,914/- towards unrecovered labour cost of extended period. So, if the materials on record and the clause which referred above are taken into consideration, the GCC not empowers the plaintiff to claim labour cost during the extended period. That is the reason why the arbitral tribunal after considering not only Ex.C.571 but also other materials which on record as well as the clause 19.3 of SCC found the plaintiff is not entitle the said relief and the plaintiff has not bring the case within the ambit of Sec.34 of the Arbitration and Conciliation Act either to consider the finding which given by the arbitral tribunal is contrary to law or falls within the purview of Sec.34 of the Arbitration and Conciliation Act. Therefore, the plaintiff has utterly failed to prove its case within the ambit of Sec.34 of the Arbitration and Conciliation Act.
25. The learned counsel for the plaintiff while canvasing her arguments has submitted the plaintiff is entitled a sum of 62 Com.A.P.No.27/2020 Rs.4,09,91,397/- towards the payment of price adjustment on other materials during the extended period, for which the arbitral tribunal has not taken into consideration either the oral nor the documentary evidence on record contending that as per the price variation mechanism under clause 19.3 of the SCC the plaintiff is entitle to get price variation and it was agreed in the contract project was completed within the original completion date and the defendant was required to compensate by paying price variation on the balance 15% also whereas the learned counsel for the defendant while canvassing his arguments has submitted that the plaintiff is not entitle the relief as sought for since the tribunal after considering the materials on record has been rejected its claim. So, question of considering its claim by this court does not arise, as the claim which made by the plaintiff is not tenable as per the terms of the contract, the contract period covers defect liability period and even the provisions relating to price variation and the plaintiff is not entitled the separate claim for the extended period. Thus this court drawn its attention on clause 11 of the contract price and payment as per general conditions of contract which reads like this:
11.1.1 Unless otherwise stated in the special conditions of contract, the contract price shall be accepted BOQ rates and amount subject to any adjustment thereto in accordance with the 63 Com.A.P.No.27/2020 contract. The contract price shall be inclusive of all taxes, levies, duties, royalties and other charges leviable and payable to the authorities.
The contract price shall not be adjusted I respect of any increase or decrease of cost to the contractor in carrying out the work by reason including of;
1) an alteration in the rates of wages or allowances payable to labour or a change in the conditions of employment thereof;
2) a change in the cost of materials (whether for the permanent or temporary works) consumables stores, fuel of power.
3) a variation in the rates of freight or insurance;
4) variation in the incidence of landing charges;
5) a variation in the cost of any other matter or thing of whatsoever nature except as stated in special conditions of contractor.
Nothing extra shall be payable over the quoted rates, notwithstanding any provision to the contrary in any law for the time being in force, save and except what is specifically provided in general or special conditions of contract.
11.1.2 The contract price shall not be adjusted to take into account any increase or decrease in cost resulting from any change in taxes, duties, levies from the last date of submission of the tender to the completion date including the date of the extended period of contract unless a contrary provision exists in special conditions of contract.
The above clauses are very much clear unless otherwise stated in the special conditions of the contract, the contract price shall be accepted BOQ rates and amount subject to any adjustment thereto in accordance with the contract and the contract price shall not be adjusted to take into account any increase or 64 Com.A.P.No.27/2020 decrease in cost resulting from any change in taxes, duties, levies from the last date of submission of the tender to the completion date including the date of the extended period of contract unless a contrary provision exists in special conditions of contract.
26. So, if the clause which referred above are taken into consideration, the plaintiff is not entitled a sum of Rs.4,09,91,397/- towards the payment of price adjustment during the extended period unless there is a contract in between the parties, but the plaintiff has not placed any materials on record to show that there is a special conditions of the contract in between them by virtue of the said special conditions of the contract nor under the GCC is entitle towards the payment of price adjustment during the extended period. So the arbitral tribunal after considering not only the materials on record, but also the clauses which appeared in the GCC and SCC has rightly held that the plaintiff is not entitle an amount of Rs.4,09,91,397/- towards the payment of price adjustment during the extended period.
27. The learned counsel for the plaintiff while canvassing her arguments has submitted the plaintiff though entitle a sum of Rs.2,56,04,938/- towards adjustments due to wrong classification for application for index for price adjustment for plant and machinery spares and components, but the tribunal has not taken 65 Com.A.P.No.27/2020 into consideration as the computation of price adjustment as per clause 19.3 of special conditions of contract was the date of opening of the tender, so for the price adjustment of plant and machinery spares components was specified as a index published in the RBI bulletin for all India average wholesale price index for heavy machinery and parts. Therefore, the plaintiff is entitle for so much of claim and the unrecovered cost price adjustment due to use of construction machinery, but whereas the learned counsel for the defendant while canvassing his arguments has submitted that the plaintiff is not entitled the relief as sought for as per the provisions which referred, thereby the tribunal after considering all the materials has rightly held the plaintiff is not entitle the claim. It is an admitted fact the parties are governed by the RBI index issued from time to time for price adjustment and the RBI issued a circular dated 10.06.2012 as construction machinery for computation of price adjustment of plant and machineries as well as spare components. Thus this court drawn its attention on Clause 19.3 of special conditions of the contract which reads like this:
19.3 Price Variation The rates and price as per pricing document, shall be applicable till the completion of the work and will be varied only to the extent of permissible price variation under this Clause.
However, this adjustment shall be to the extent 66 Com.A.P.No.27/2020 that full compensation for any rise or fall in costs to the contractor is not covered by the price variation formula, the rates and price in the pricing document shall be deemed to include amounts to cover the contingency of such rise or fall of costs.
The price variation will be payable only on the Indian currency component (no adjustment for foreign currency component) of the contract price as per the price variation formula.
The above provision is very much clear that in relation to the adjustment for plant and machinery spare component any raise or fall in the costs of the contractor is not covered by the price variation formula. The arbitrators after considering the materials on record rightly held the claimant i.e. the plaintiff not entitle the claim No.8 covered by issue 1(h). Thus the claim of the plaintiff was came to be rejected and the plaintiff has not made out any of the grounds to bring the case with the ambit of Sec.34 of the Arbitration and Conciliation Act.
28. The learned counsel for the plaintiff while canvassing her arguments has submitted that the plaintiff is entitle an amount of Rs.4,43,58,774/- towards reduction in piling activity, but the arbitrators have not considered the claim of the plaintiff, it was came to be rejected, since the contract provides for mechanism to vary the agreed rate provided the variation in quantity of the particular item or group of item is more than 25%, that in case of 67 Com.A.P.No.27/2020 piling quantity. The variation on a negative side happen to an extent of approximately 50% against the BOQ quantity of 24,591/- running meters. The actual executed quantity was 12,543.89 RMT. The contract provides that the limit of 25% is not applicable in case of foundation works, but still a rate cannot remain valid for any extent of variation that piling is a machinery intensive work and requires various machineries to be deployed by the contractor in view of the foreseen quantity of work as per the tender quantities and the plaintiff had deployed the various machineries required for execution of piling quantity as contemplated in the BOQ, but where as the learned counsel for the respondent in his arguments has submitted as per the line programme submitted by the plaintiff though it ought to have deployed 3 no's of hydraulic rigs for viaduct works and 3 no's of additional hydraulic rigs for station work it mobilized first rig in the month of September 2010 and demolished the same in the month of December 2012 as evident from MPR covering period of 28 months and the 2nd rig was mobilized for piling work in the month of November 2010 and demobilized in the month of June 2011 as evident from the concerned APR covering period of 8 months. Therefore, used only two rigs for executing 12,543 mts of piling work in both viaduct and stations and reduced deployment 68 Com.A.P.No.27/2020 of machineries corresponding to the reduced length of piling work, as such it can be inferred that there is no reduction of productivity so as to claim any compensation. So the materials on record reflects as per the BOQ total piling quantity in relation to viaduct and 3 stations was 24,591 RMT where as the actual executed quantity is 12,543.89 RMT, thereby there was a reduction in the quantity of piling work relevant term of contract as per clause 26 of SCC. So if the reading of clause 26.1.0 would show that the quantities of items shown in the BOQ are approximate and liable to vary during actual execution of the work and there has been reduction in quantum of work in relation to piling activity compared to the quantity mentioned in BOQ. As such there was a variation within the meaning of clause 26 of SCC. The variation on account of reduction of 25% and more is not attracted and in terms of clause 26.1(b)(ii) of SCC. So the tribunal after considering the materials on record found that the plaintiff is not entitled the claim as shown in Ex.567 since the plaintiff had mobilized one hydraulic rig for piling work in the month of September 2010 and another rig was mobilized in the month of November 2010 and two rigs were shown to be at site from November 2010 to June 2011 and only one rig was at site upto December 2012. So as per the employees requirement the 69 Com.A.P.No.27/2020 plaintiff was to deploy 3 rigs for viaduct and 3 for stations. So the claim of the plaintiff was came to be rejected. Though the plaintiff has taken up the contention on account of reduction in piling quantity than the BOQ quantum suffered loss, but the plaintiff has failed to bring the case with the ambit of Sec.34 of the Arbitration and Conciliation Act. So question of interference of this court as sought by the plaintiff does not arise.
29. The learned counsel for the plaintiff while canvasing her arguments has submitted the plaintiff is entitled an amount of Rs.35,10,07,248/- towards interest @ 18% p.a. on the delay in payment of amounts, for which the arbitral tribunal in the award itself has stated that they have already held that the claimant is not entitled for claims 1 to 6, 8 and 11 accordingly rejected those claims. Considering the rejection of those claims, rejected the interest and the plaintiff has not made out any of the grounds which enumerated under Sec.34 of the Arbitration and Conciliation Act to interfering of this court to set aside the award as sought for, but the tribunal hold that the plaintiff is entitle for payment of interest @ 10% p.a. from the date of entitlement to the date of payment on Rs.4,84,34,272/- covered by claim No.12 and the claim No.13 covered by issue No.1(m) was came to be allowed.
70 Com.A.P.No.27/2020
30. The learned counsel for the plaintiff while canvassing her arguments has submitted that the plaintiff though completed the work in terms of the contract has not been awarded the claim which made by the plaintiff and the plaintiff had achieved the key dates for completion of the work within the agreed time scheduled as per the terms of the contract and the plaintiff had adequate resources and men and material in terms of the contract and the defendant has failed to prove that the plaintiff had inadequate resources and for execution of the work. Admittedly, the arbitral tribunal after considering the materials on record found that the plaintiff had failed to provide adequate resources and men and materials in terms of the contract and also found that the plaintiff failed to achieve the key dates for completion of the work within the agreed time schedule as per the terms of the contract. So the arbitral tribunal after considering all the materials which placed on record came to be rejected the claim of the plaintiff which are challenged before this court and the plaintiff has failed to bring the case within the ambit of Sec.34 of the Arbitration and Conciliation Act.
31. The learned counsel for the plaintiff while canvassing her arguments has submitted the arbitral tribunal has not taken into consideration of the clauses which appeared in the general 71 Com.A.P.No.27/2020 conditions of the contract, nor special conditions of the contract. Therefore, interference of this court is necessary and drawn the court attention on the following judgments:
1. Associate Builders Vs. DDA (2015) 3 SCC 49
2. Delhi Development Authority Vs N.N. Buildcon Pvt. Ltd., 2017 SCC OnLIne Del 11494.
3. Ssangyong Engg. & Construction Co. Ltd. Vs NHAI (2019) 15 sCC 131
4. National Highways Authority of India Vs M. Hakeem (2021) 9 SCC 1
5. National Highways Authority of India Vs P. Nagarju, 2022 SCC OnLine SC 864.
On careful perusal of the said judgments, in the said judgments their lordship held that none of the grounds contained in Sec.34(2)(a) deals with the merits of the decision rendered by an arbitral award, it is only when arbitral award is in conflict with public policy of India as per Sec.34(2)(b)(ii) of Arbitration and Conciliation Act that merits of an arbitral award are to be looked into under specified circumstances. When any of the heads or subheads of the test of public policy is applied to an arbitral award, court does not act as court of appeal and interference is permissible only when findings of arbitrator are arbitrary, capricious or perverse or when consciousness of the court is shocked or when illegality is not trivial but goes to the root of the matter, court can interfere the award which passed by the arbitrators and permissibility of interference on a specific sub 72 Com.A.P.No.27/2020 grounds if arbitrator not adopting judicial approach and breach of principles of natural justice and contravention of statue if it is a patent illegality under Sec.34(2-A) and 4 court can interfere the award which passed by the arbitrator and Sec.34 of the Arbitration and Conciliation Act provides only for setting aside the award on very limited grounds if such grounds brought on record the recourse open to the court to set aside the award. But the plaintiff has not bring the court within the ambit of Sec.34 of the Arbitration and Conciliation Act to set aside the award as sought for. Therefore, I do respect to the judgments which relied, but the facts and circumstances of the present case and the judgments which relied are different.
32. The learned counsel for the plaintiff while canvassing her arguments has submitted that the majority arbitral tribunal award which passed falls within the purview Sec.34 of the Arbitration and Conciliation Act, though the majority of the arbitral award reflects the claim of the plaintiff was came to be rejected based on the clause 2.2 and 8.3 of GCC, but whereas minority arbitral award reflects the plaintiff is also entitle the compensation, but it was not taken into consideration by the majority arbitral award and the said counsel has drawn the court attention on the following judgments:
73 Com.A.P.No.27/2020
1. Bharat Drilling & Foundation Treatment (P) Ltd. Vs State of Jharkhand (2009) 16 SCC 705.
2. G. Ramachandra Reddy Vs. Union of India, (2009) 6 SCC 414
3. Simplex Concrete Piles (India) Ltd., Vs Union of India 2010 SCC OnLIne Del 821.
4. Prestress Wire Industries Vs. Uppal Builders Pvt. Ltd., 2018 SCC OnLine Del 7117.74 Com.A.P.No.27/2020
On careful perusal of the said judgments, in the said judgments their lordship held that the government not communicating its acceptance to the contractor's condition and maintaining silence in spite of contractors remainders. Contractor completing the work and claiming 20% extra payment over and above the original rate having regard to the materials held the contractor entitle to the increased rates and the powers of the state under an agreement entered into by it with a private person providing for assessment of damages for breach of conditions and recovery of the damages will stand confined only to those cases where the breach of condition is admitted or it is not disputed. The respondent entered into a contract with the appellant for construction of building under the contract, if the work was not completed within the stipulated time, the contractor had a right to get extension of time. On failure to grant the extension, the contractor could claim difference in price, where the contract which are unconscionable, unfair, unreasonable and oppose to the public police or void under the Indian Contract Act. If the arbitrator on the face of the award arrives at an inconsistent conclusion even on his own finding are arrives at a decision by ignoring very material documents which throw abundant light and the controversy to help reach a just and fair decision, court can 75 Com.A.P.No.27/2020 interfere the award and if the award contrary to the terms of the contract, such award would be open to interference by the court under Sec.34(2)(b)(ii) of the Arbitration and Conciliation Act and bar in contract against claim for compensation in case of extension of time limit for completion of work in case of deficiency in supply of materials and tools by employer and contract warrants construction when its terms are vague and ambiguous and Sec.23, 55 and 73 of the Contract Act damages for breach of contract, but the plaintiff has utterly failed to bring the case within the ambit of Sec.34 of the Arbitration and Conciliation Act. Admittedly there is a clause in the general conditions of the contract which is binding on the parties as they are the signatories to the contract which is binding on them in view of Sec.37 of the Contract Act. Therefore the facts and circumstances of the present case and the judgment which relied by the learned counsel for the plaintiff which referred above are different.
33. The learned counsel for the defendant has rightly submitted the plaintiff has failed to bring the case within the ambit of Sec.34 of the Arbitration and Conciliation Act and he has submitted that the arbitral tribunal after considering all the materials passed the award. So question of interference of this 76 Com.A.P.No.27/2020 court does not arise and the said counsel has drawn the court attention on the following judgments:
1.Continental Construct Co. Ltd. Vs State of MP (1988) 4 SCC 93
2. Associated Engineering Enterprises Vs. Government of AP and Others (1991) 4 SCC 93
3. CH. Ramalinga Reddy Vs Superintending Engineer and another (1999) 9 SCC 610.
4. Steel Authority of India Ltd. Vs J.C. Budharaja, Government and Mining Contractor (1999) 8 SCC 122
5. Rajasthan State Mines & Minerals Ltd. Vs Eastern Engineering Enterprises and another (1999) 9 SCC 283
6. General Manager, Northern Railway & another Vs Sarvesh Chopra (2002) 4 SCC 45
7. Ramnath International Construction (P) Ltd., Vs Union of India (2007) 2 SCC 453
8. Union of India Vs Chandalavada Gopalakrishna Murthy & others (2010) 14 SCC 633
9. Oil and Natural Gas Corporation Vs Wig Brothers Builders and Engineers Pvt. Ltd.,
10. Public Works Department Vs Navayuga Engineering Co. Ltd., 2014 SCC Online Del 1343.77 Com.A.P.No.27/2020
On careful perusal of the above judgments, in the said judgments their lordship held that the court interference with award is very limited, where the arbitrator misconducted has been established then the court can interference with the award which passed and if the award beyond the limits of the contract which taken place in between the parties and court can interfere if the claim barred by the terms of the contract, award passed in disregard of express terms of contract would be arbitrary, capricious and without the jurisdiction and allowing of the claims by the arbitrator in a non speaking award where the contractors statement of claims did not even given any suggestion as to why four claims regarding the delay machinery laying idle and increase of cost of materials should not be considered to be covered by the expected matter category under clause 6 of the general conditions and if the terms of the contract providing that if in case of any delay attributable either to the contractor or the employer or to both the contractor sought and obtained extension of time would not be entitle to claim any compensation on the ground of such delay and in order to claim compensation has to establish the fundamental breach of the contract. Admittedly the plaintiff has not established its case within the ambit of Sec.34 of the Arbitration and Conciliation Act. So the 78 Com.A.P.No.27/2020 principles laid in the judgments which relied by the learned counsel for the defendant are applicable to the case on hand.
34. The learned counsel for the defendant while canvassing his arguments has submitted though the defendant has sought for counter claim which was came to be rejected by the arbitrators and the defendant has not challenged the finding on the counter claim which filed by the defendant and the plaintiff has not established anything for interference of this court in view of Sec.34 of the Arbitration and Conciliation Act and the said counsel has drawn the court attention on the following judgments.
1. J.G. Engineers Pvt. Ltd. Vs Union of India & Anr. (2011) 5 SCC 758
2. Associate Builders Vs Delhi Development Authority (2015) 3 SCC 49
3. Ssangyong Engineering and Construction Co. Ltd. Vs National Highways Authority of India (NHAI) (2019) 15 SCC 131
4. Delhi Airport Metro Express Pvt. Ltd., Vs Delhi Metro Rail Corporation Ltd. 2021 (4) RCR (Civil) 206
5. PSA SICAL Terminals Pvt. Ltd., Vs Board of Trustees of Chidambranar Port Trust, Tuticorin & Ors. 2021 SCC Online SC 508
6. Union of India Vs M/s Warsaw Engineers & Anr. COMAP No.25 of 2021,
7. MC Dermott International Inc. Vs Burn Standard Co. Ltd. And Ors. (2006) 11 SCC 181
8. Kinnari Mullick Vs Ghanshyam Das Damani (2018) 11 SCC 328
9. MMTC Ltd. Vs Vendhanthe Ltd (2019) 4 SCC 163
10. Dakshin Haryana Bijli Vitran Nigam Ltd., Vs Navigant Technologies Pvt. Ltd. 2021 SCC Online SC 157 79 Com.A.P.No.27/2020
11. Project Director National Highways Vs M. Hakeem (2021) SCC Online SC 473.
80 Com.A.P.No.27/2020On careful perusal of the above judgments, in the above judgments their lordship held that the contract itself cannot be empower one of the parties to contract to decide it and only when the award is in conflict with the public policy of India, then only interference of the court is required and contravention of public policy of India is also ground for interference of the court and the finding of the arbitral tribunal that the defects were not cured is one of fact which cannot be interfered with by the court and no interference with pure question of fact and appreciation of evidence and no interference with when the view taken by the arbitrators is a possible view and limited grounds on which arbitral award may be interfered which summarized and as per Sec.34 of the Arbitration and Conciliation Act court does not sit in appeal over the arbitral award and may interfere on merits only on the well settled limited grounds which are enumerated under Sec.34 of the Arbitration and Conciliation Act. When the award rendered by the majority arbitrators and final award has been delivered unless made out the grounds which are enumerated under Sec.34 of the Arbitration and Conciliation Act court cannot interfere the award which passed and opinion of the arbitrator differing from the award rendered by the majority arbitrators when it must be supplied to the parties held mandatory with the 81 Com.A.P.No.27/2020 majority award and Sec.34 of the Arbitration and Conciliation Act provides only for setting aside the awards on very limited grounds such as grounds being contained in subsection (2) and clause 3 of 34 of the Arbitration and Conciliation Act and in order to decide the essence of the contract is to be gathered from the terms of the contract and the time can be made of the essence of contract by fixing a further period for completion and mere fixing of time for delivery of the goods will not make a time of essence of the contract and the agreement should be read as a whole along with corresponding obligations of the parties in order to gather the true intention.
35. So in the instant case also, the contract which taken place in between the parties is binding on them and they cannot go beyond the contract which taken place in between them and the plaintiff has not bring the case within the ambit of Sec.34 of the Arbitration and Conciliation Act. On the other hand, the defendant has made out that the award which passed by the arbitrators that is the majority award do not call for any interference of this court. Therefore, the principles which are laid down in the judgments which referred above are applicable to the case on hand, So looking from any angle, the plaintiff has failed to bring the case within the ambit of Sec.34 of the Arbitration and 82 Com.A.P.No.27/2020 Conciliation Act to interference of this court and to set aside the award as sought for. Hence I am of the opinion that the point No.1 is answered in the Negative.
36. 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 plaintiff 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 28th day of September, 2022) (P.J. Somashekara) LXXXVIII Addl. City Civil & Sessions Judge, (Exclusive Commercial Court), Bengaluru City